7th FEB International Scientific
Conference
Strengthening Resilience by Sustainable Economy and Business –
Towards the SDGs
Editors
Zlatko Nedelko
Romana Korez Vide
May 2023
Title
7th FEB International Scientific Conference
Subtitle
Strengthening Resilience by Sustainable Economy and Business –
Towards the SDGs
Editors
Zlatko Nedelko
(University of Maribor, Faculty of Economics and Business)
Romana Korez Vide
(University of Maribor, Faculty of Economics and Business)
Reviewers
Madalena Abreu (ISCAC Coimbra Business School, Portugal), Jani Bekő
(University of Maribor, Faculty of Economics and Business, Slovenia),
Jernej Belak (University of Maribor, Faculty of Economics and Business,
Slovenia), Stefan Bongard (Ludwigshafen University of Business and
Society, Germany), Katarina Borisavljević (University of Kragujevac,
Faculty of Economics, Serbia), Barbara Bradač Hojnik (University of
Maribor, Faculty of Economics and Business, Slovenia), Carmen Elena
Cirnu (National Institute for Research and Development in Informatics
ICI Bucharest, Romania), Agnes Csiba-Herczeg (Széchenyi István
University Győr, Hungary), Vesna Čančer (University of Maribor, Faculty
of Economics and Business, Slovenia), Kristina Črnjar (University of
Rijeka, Faculty of Tourism and Hospitality Management, Opatija, Croatia),
Silvo Dajčman (University of Maribor, Faculty of Economics and Business,
Slovenia), Matjaž Denac (University of Maribor, Faculty of Economics and
Business, Slovenia), Violeta Domanović (University of Kragujevac, Faculty
of Economics, Serbia), Fanni Dudás (Corvinus University of Budapest,
Hungary), Teodor Dziubek Ireneusz (Calisia University - Kalisz, The
Centre for Implementation Research, Poland), Alptekin Erkollar
(University, Business School, Sakarya Turkey), Anisa Feshti (University of
Tirana, Faculty of Economics, Albania), Sanja Franc (University of Zagreb,
Faculty of Economics and Business, Croatia), Blaž Frešer (University of
Maribor, Faculty of Economics and Business, Slovenia), Mariel Frroku
(University of Tirana, Faculty of Economics, Albania), Ineza Gagnidze
(Ivane Javakhishvili Tbilisi State University, Georgia), Nataša Gajšt
(University of Maribor, Faculty of Economics and Business, Slovenia),
Blerina Gjaci (University of Tirana, Faculty of Economics, Albania), Judit
Grotte (Kodolányi János University, Hungary), Robert Horvat (University
of Maribor, Faculty of Economics and Business, Slovenia), Ivona Huđek
(University of Maribor, Faculty of Economics and Business, Slovenia),
Anica Hunjet (University North, Croatia), Matjaž Iršič (University of
Maribor, Faculty of Economics and Business, Slovenia), Timotej Jagrič
(University of Maribor, Faculty of Economics and Business, Slovenia), Arta
Kadriu (University of Tetova, North Macedonia), Botond G. Kálmán
(Kodolányi János University Budapest, Hungary), Alenka Kavkler
(University of Maribor, Faculty of Economics and Business, Slovenia),
Romana Korez Vide (University of Maribor, Faculty of Economics and
Business, Slovenia), Tatjana Koropec (University of Maribor, Faculty of
Economics and Business, Slovenia), Lumír Kulhánek (VSB – Technical
University of Ostrava, Faculty of Economics, Czechia), Jiří Kulička
(University of Pardubice, Faculty of Transport Engineering, Czechia),
Fjona Kurteshi (University of Tirana, Faculty of Economics, Albania),
Sonja Sibila Lebe (University of Maribor, Faculty of Economics and
Business, Slovenia), Klavdij Logožar (University of Maribor, Faculty of
Economics and Business, Slovenia), Mateja Lorber (University of Maribor,
Faculty of Health Sciences, Slovenia), Zoltán Major (Széchenyi University,
Hungary), Ivan Malbašić (University of Zagreb, Faculty of Organization
and Informatics, Croatia), Domen Malc (University of Maribor, Faculty of
Economics and Business, Slovenia), Tatiana Manasterska (Calisia
University – Kalisz, Poland), Janko Marovt (University of Maribor, Faculty
of Economics and Business, Slovenia), Adam Marszk (Gdansk University
of Technology, Poland), Borut Milfelner (University of Maribor, Faculty of
Economics and Business, Slovenia), Desantila Muja (University of Tirana,
Faculty of Economics, Albania), Damijan Mumel (University of Maribor,
Faculty of Economics and Business, Slovenia), Zlatko Nedelko (University
of Maribor, Faculty of Economics and Business, Slovenia), Jelena Nikolić
(University of Kragujevac, Faculty of Economics, Serbia), Wioletta Nowak
(University of Wroclaw, Poland), Birgit Oberer (Kadir Has University,
Turkey), Matevž Obrecht (University of Maribor, Faculty of Logistics,
Slovenia), Žan Jan Oplotnik (University of Maribor, Faculty of Economics
and Business, Slovenia), Iztok Palčič (University of Maribor, Faculty of
Mechanical Engineering, Slovenia), Nino Papachashvili (Sulkhan-Saba
Orbeliani University, Georgia), Olena Parkhomenko (VN Karazin Kharkiv
National University, Karazin Business School, Ukraine), Igor Perko
(University of Maribor, Faculty of Economics and Business, Slovenia),
Lorena Pikl (University of Zagreb, Faculty of Organization and
Informatics, Croatia), Aleksandra Pisnik (University of Maribor, Faculty of
Economics and Business, Slovenia), Kristijan Poljanec (University of
Zagreb, Faculty of Economics and Business, Croatia), Vojko Potočan
(University of Maribor, Faculty of Economics and Business, Slovenia),
Andreja Primec (University of Maribor, Faculty of Economics and
Business, Slovenia), Fatmira Qema (University of Tirana, Faculty of
Economics, Albania), Catalin Radu (Carol I National Defence University,
Bucharest, Romania), Zijada Rahimić (University of Sarajevo, Faculty of
Economics, Bosnia and Hercegovina), Vasja Roblek (Faculty of
Organisation Studies, Novo mesto, Slovenia), Dejan Romih (University of
Maribor, Faculty of Economics and Business, Slovenia), Maja Rožman
(University of Maribor, Faculty of Economics and Business, Slovenia),
Marko Senekovič (University of Maribor, Faculty of Economics and
Business, Slovenia), Aleša Saša Sitar (University of Ljubljana, Faculty of
Economics and Business, Slovenia), Eda Spahiu (Faculty of Economics,
University of Tirana, Albania), Vida Sruk (University of Maribor, Faculty
of Economics and Business, Slovenia), Marjan Sternad (University of
Maribor, Faculty of Logistics, Slovenia), Simona Sternad Zabukovšek
(University of Maribor, Faculty of Economics and Business, Slovenia),
Sebastjan Strašek (University of Maribor, Faculty of Economics and
Business, Slovenia), Loredana Sulejmani (University of Tirana, Faculty of
Economics, Albania), Tamás Szemlér (Budapest Business School,
Hungary), Cecilia Szigeti (Budapest Business School, Hungary), Simona
Šarotar Žižek (University of Maribor, Faculty of Economics and Business,
Slovenia), Karin Širec (University of Maribor, Faculty of Economics and
Business, Slovenia), Tjaša Štrukelj (University of Maribor, Faculty of
Economics and Business, Slovenia), Hana Štverková (VŠB-TUO, Faculty
of Economics, Ostrava, Czechia), Nataša Šuman (University of Maribor,
Faculty of Civil Engineering, Transportation Engineering, and
Architecture, Slovenia), Lenka Švajdová (VŠB-TUO, Faculty of
Economics, Ostrava, Czechia), Sabina Taškar Beloglavec (University of
Maribor, Faculty of Economics and Business, Slovenia), Polona Tominc
(University of Maribor, Faculty of Economics and Business, Slovenia),
Sonja Treven (University of Maribor, Faculty of Economics and Business,
Slovenia), Igor Vrečko (University of Maribor, Faculty of Economics and
Business, Slovenia), Daniel Zdolšek (University of Maribor, Faculty of
Economics and Business, Slovenia), Tomasz Zema (Wroclaw University of
Economics and Business, Poland), Dejana Zlatanović (University of
Kragujevac, Faculty of Economics, Serbia), Branka Zolak Poljašević
(University of Banja Luka, Faculty of Economics, Bosnia and
Hercegovina), Zdenka Ženko (University of Maribor, Faculty of
Economics and Business, Slovenia)
Technical editor
Jan Perša
(University of Maribor, University Press)
Cover designer
Jan Perša
(University of Maribor, University Press)
Cover graphic
Graphic material
Conference
Date & location
of the conference
Programme
committee
World € plant, author: mohamed_hassan from pixabay.com, CC0, 2023
Authors
7th UM FEB International Scientific Conference
16 May, 2023, Maribor, Slovenia
Zlatko Nedelko (University of Maribor, Faculty of Economics and
Business, Chair of Programme Committee), Vito Bobek (University of
Maribor, Faculty of Economics and Business, Slovenia and FH Joanneum
Graz, Austria), Stefan Bongard (Ludwigshafen University of Business and
Society, Ludwigshafen, Germany), Katarina Borisavljević (University of
Kragujevac, Faculty of Economics, Serbia), Francesco Caputo (University
of Naples "Federico II”, Naples, Italy), Katja Crnogaj (University of
Maribor, Faculty of Economics and Business, Slovenia), Silvo Dajčman
(University of Maribor, Faculty of Economics and Business, Maribor,
Slovenia), Jasmina Dlačić (University of Rijeka, Faculty of Economics and
Business, Croatia), Raul Espejo (Syncho Research UK, World Organisation
of Systems and Cybernetics, International Academy for Systems and
Cybernetic Sciences, United Kingdom, Mejra Festić (University of Maribor,
Faculty of Economics and Business, Slovenia), Sanja Franc (University of
Zagreb, Faculty of Economics, Croatia), Nataša Gajšt (University of
Maribor, Faculty of Economics and Business, Slovenia), Mustafa Ghulam
(NTNU-Norwegian University of Science and Technology, Faculty of
Economics and Management, Alesund, Norway) Anica Hunjet (University
North, Croatia) Romana Korez Vide (University of Maribor, Faculty of
Economics and Business, Slovenia) Domen Malc (University of Maribor,
Faculty of Economics and Business, Slovenia), Zoraida MendiwelsoBendek (Lincoln International Business School, United Kingdom), Borut
Milfelner (University of Maribor, Faculty of Economics and Business,
Maribor, Slovenia), Guido Modugno (University of Trieste, Trieste, Italy),
Afghan Nasir (School of Nuclear and Radiological Leadership for Safety,
IAEA, Vienna, Austria), Wioletta Nowak (University of Wroclaw, Faculty
of Law, Administration and Economics, Wroclaw, Poland), Mirjana Pejić
Bach (University of Zagreb, Faculty of Economics, Croatia), Kęstutis K.
Peleckis (Vilnius Gediminas Technical University, Vilnius, Lithuania), Jose
Perez Rios (University of Valladolid, Computer Engineering School of
Valladolid, Spain), Igor Perko (University of Maribor, Faculty of
Economics and Business, Slovenia), Aleksandra Pisnik (University of
Maribor, Faculty of Economics and Business, Maribor, Slovenia), Vojko
Potočan (University of Maribor, Faculty of Economics and Business,
Slovenia), Andreja Primec (University of Maribor, Faculty of Economics
and Business, Slovenia), Judit Sági (University of Applied Sciences,
Budapest Business School, Hungary), Mahsa Samsami (University of
Agder, Kristiansand, Norway), Aleša Saša Sitar (University of Ljubljana,
Faculty of Economics, Slovenia), Thomas Schøtt (University of Agder,
Kristiansand, Norway), Nimisha Singh (Business Analytics, SCMHRD,
Pune, India), Rahul Singh (Centre for Sustainable Tourism and
Development, BIMTECH Birla Institute of Management Technology,
Uttar Pradesh, India), Frank Stowell (University of Portsmouth, United
Kingdom), Katarzyna Szalonka (University of Wroclaw, Faculty of Law,
Administration and Economics, Wroclaw, Poland), Simona Šarotar Žižek
(University of Maribor, Faculty of Economics and Business, Slovenia),
Marinko Škare (Juraj Dobrila University of Pula, Faculty of Economics and
Tourism »Dr. Mijo Mirković«, Croatia), Tjaša Štrukelj (University of
Maribor, Faculty of Economics and Business, Slovenia), Polona Tominc
(University of Maribor, Faculty of Economics and Business, Maribor,
Slovenia), Stuart A. Umpleby (George Washington University,
Washington, USA), Bistra Vassileva (University of Economics-Varna,
Bulgaria), Igor Vrečko (University of Maribor, Faculty of Economics and
Business, Maribor, Slovenia), Sunčica Vujić (University of Antwerp,
Antwerpen, Belgium), Yingjie Yang (De Montfort University, Faculty of
Computing, Media and Engineering, United Kingdom), Irena Zavrl
(University of Applied Sciences, FH Burgenland, Austria), Jarmila
Zimmermannová (Moravian Business College Olomouc, Czech Republic),
Dejana Zlatanović (University of Kragujevac, Faculty of Economics,
Serbia)
Organizational
committee
Published by
Založnik
Issued by
Izdajatelj
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Published at
Sanja Kocijan (University of Maribor, Faculty of Economics and Business,
Slovenia), Vesna Novak (University of Maribor, Faculty of Economics and
Business, Slovenia)
University of Maribor
University Press
Slomškov trg 15, 2000 Maribor, Slovenia
https://press.um.si, zalozba@um.si
University of Maribor
Faculty of Economics and Business
Razlagova ulica 14, 2000 Maribor, Slovenia
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1st
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Maribor, Slovenia, May 2023
© University of Maribor, University Press
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Text / Besedilo © Authors & Nedelko, Korez Vide, 2023
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005:004(4)(082)(0.034.2)
FEB International Scientific Conference (7 ; 2023 ; Maribor)
7th FEB International Scientific Conference [Elektronski vir] : strengthening
resilience by sustainable economy and business - towards the SDGs : [16May, 2023,
Maribor, Slovenia] / editors Zlatko Nedelko, Romana Korez Vide. - 1st ed. Maribor : University of Maribor, University Press, 2023
Način dostopa (URL): https://press.um.si/index.php/ump/catalog/book/778
ISBN 978-961-286-736-2 (PDF)
doi: 10.18690/um.epf.3.2023
1. Nedelko, Zlatko
COBISS.SI-ID 151268355
ISBN
978-961-286-736-2 (pdf)
DOI
https://doi.org/10.18690/um.epf.3.2023
Price
Free copy
For publisher
Attribution
Prof. Dr. Zdravko Kačič, Rector of the
University of Maribor
Nedelko, Z., Korez Vide, R. (eds.) (2023). 7th FEB
International Scientific Conference: Strengthening Resilience by
Sustainable Economy and Business – Towards the SDGs.
University of Maribor, University Press. doi:
10.18690/um.epf.3.2023
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE
STRENGTHENING RESILIENCE BY SUSTAINABLE ECONOMY AND
BUSINESS – TOWARDS THE SDGS.
Z. Nedelko, R. Korez Vide (eds.)
Table of Contents
KEYNOTE SPEECHES
1
Innovative Entrepreneurship for Sustainable Development
Tiit Elenurm
3
Born sustainable: Promoted by the Ecosystem for Sustainable
Entrepreneurship
Thomas Schøtt
4
Global South Perspective on Circular Economy – The Case of India
Rahul Singh, Bhavesh Sarna
5
PROCEEDINGS
7
Non-financial Reporting Practices in Hungary – Opportunities and
Challenges in Preparation for CSRD
Zsuzsanna Győri, Cecília Szigeti
9
Examination and Optimization of the Ecological Footprint of
Embedded Rail Structures
Zoltán Major, Róbert Horváth, Áron Szennay, Cecília Szigeti
19
Urban Development Decisions Based on the Ecological Footprint
Jenő Zsold Farkas, Áron Szennay, Zoltán Major, Cecília Szigeti
29
The Role of New Keynesian Semi-structural Macroeconomic
Forecasting Model in Realisation of Sustainable Development Goals in
Uzbekistan
Elyor Davlatov, Judit Sági
37
Application and Comparison of Online Calculators for Calculating the
Economic Efficiency and Sustainability of Vehicles
Stefan Bongard, Moritz Main
47
The Role of Social Media in Sustainable Consumption: A Class-wise
Analysis
Ceren Cubukcu Cerasi, Yavuz Selim Balcioglu, Asli Kilic, Farid Huseynov
57
ii
TABLE OF CONTENTS.
The Impact of the Covid-19 Pandemic on Financial Markets: A Metaanalysis From a Global Perspective
Morina Fisnik, Gajraku Qlirim
67
Public Policy Opportunities for the Transition to a Circular Economy:
Highlights of Scientific Research
Nino Papachashvili, Tamta Mikaberidze, Vasja Roblek
79
Individual Differences and Job Attitudes in the Function of Increasing
Organizational Citizenship Behavior (OCB):
A Case Study
Nikolina Kišić, Ivan Malbašić
89
Energy Sales Forecasting in a Sustainable Development Context:
Bibliometric Review
Tomasz Zema, Adam Sulich, Lumir Kulhanek
99
Overview of Emission Calculators to Support Transport Sustainability
Stanislav Machalík
109
Exploring the Value of the Sea: A Study of the Blue Economy in the EU
and Portugal
Sara Sousa, Carla Henriques, Joana Leite
117
Slow Fashion and Sustainable Development
Lenka Švajdová, Jana Mikolašova
127
Sectoral Differentiation of the Interval Effect in the Time of the COVID19 Pandemic: The Case of WSE
Bartłomiej Lisicki
137
The Performance of EU CEE Universities Against the UN Sustainable
Development Goals
Tamás Szemlér
147
Sustainability Evaluation of the Supply Chain Under the Greenpact: A
Framework Proposal for the Textile Sector
José Santos, Joana Leite, Eva Rodrigues, Paulo Sanches, Sara Sousa, António
Trigo, Elisabete Correia
155
Examining Success Factors of Hungarian SMEs During Multiple Crises
Judit Csákné Filep, Áron Szennay, László Radácsi
163
Factors Influencing Entrepreneurs’ Decision-making Concerning SDGs
Judit Csákné Filep, Áron Szennay
171
TABLE OF CONTENTS
iii.
Green Economy and Uncertainty Avoidance as a Dimension of National
Culture
Alona Sova, Maja Rožman, Romana Korez Vide
181
Challenges of Ukraine on the Way to Climate Neutrality
Tetiana Sobolieva
189
Social Protection Intervention to Attain Sustainable Development Goal
One in Albania
Fatmira Qema
199
Empirical Evidence of the Relationship Between the SDGs and
Economic Growth in Albania: The Role of Education
Desantila Muja
207
Relationship Factors Between Supply Chain Actors
Tímea Kozma, Katalin Faragóné Lepp, Rita Szabó-Geletóczki
217
Assessment of Organizational Aspects Affecting Knowledge
Management in Auditing and Consulting Firms
Jurgita Raudeliūnienė, Mirna Kordab
227
Public Urban Green Spaces: Combining Goals for Sustainability, Urban
Health and Well-being
Herta Czédli, Zsolt Varga, Cecília Szigeti
237
ESG Scores and Firm's Performance in Eastern and Southern Europe
Loredana Pamfile
247
Corruption in Public Private Partnerships as a Barrier to Sustainable
Development: The Case of Albania
Soana Teka, Silvana Doçi
257
An Overview of the Active Labour Market Programs in Albania
Eda Spahiu
267
Public and Private Financing Instruments to Support SDGs: The Case of
Albania
Blerina Gjaci
277
Interaction Mechanisms and the Performance of Production Enterprises
as Social Systems: The Truth of The Human Spirit
Raul Espejo
289
Industry 5.0: Guidelines to Digital Transformation as a Strategy
for Sustainability
Birgit Oberer, Alptekin Erkollar
299
iv
TABLE OF CONTENTS.
Sustainable Human Resource Management
Ana Marija Gričnik, Matjaž Mulej, Simona Šarotar Žižek
309
Change in Development Vectors of Ukrainian Enterprises in War
Conditions
Veronika Verba, Olena Kyzenko, Olena Hrebeshkova
321
The Relationship Between Organizational Pride, Job Characteristics and
Job Satisfaction: A Literature Review
Lorena Pikl
329
Are Slovenian Manufacturing Companies Ready for Industry 4.0?
Iztok Palčič, Klemen Kovič
337
The Failure of Bureaucracy on “Nextgenerationeu” Funds Destined to
Refurbishing Buildings in Catalonia
Arnau Guix Santandreu
347
Sustainable Organisations to Implement the Strategic Concept of
Sustainability
Nomi Hrast, Tjaša Štrukelj
357
International Trade in Waste: The Case of Croatia
Maja Bašić, Mile Bošnjak, Ivan Novak
365
Investigation Into the Use of Big Data and Analytics in Ghanas
Insurance Industry
Kevin Kwasi Anno Firempong-Boakye, Diego Navarra
377
Multidisciplinarity and Interdisciplinarity: Key Elements for Teaching
Environmental Sustainability at Economic and Business Faculties
Gregor Radonjič, Matjaž Denac
385
Adoption of Sustainable Technologies in Smart Cities: A Governance
Framework
Ahmed M. Ragab, Diego Navarra
397
Post CSRD World: Prospective Amendments to Slovenian Legislation in
the Field of Auditing
Daniel Zdolšek
407
Blockchain Technology in Banking as a Tool Towards the SDGs
Aleksandra Amon, Timotej Jagrič
415
Sustainable Financing – European Legislative Framework and Impact
on the Economy
Sanja Gongeta, Stjepan Draganić, Vedran Gongeta
425
v.
TABLE OF CONTENTS
Emotional Intelligence Training Tools for Business
Yuliia Fedorova, Anna Pilková, Juraj Mikuš, Marian Holienka
435
Exploring the Role of Game-Based Learning in Enhancing
Sustainability Knowledge: A Qualitative Study
Birgit Oberer, Alptekin Erkollar
445
What are the Young People's Perceptions of the Circular Economy?
Cecilia Szigeti, Sándor Remsei, Katalin Bándy
455
Advantages and Challenges of Developing a Sustainable Supply Chain
Klavdij Logožar
463
University 5.0 for Resilience - A Systemic Approach
Ineza Gagnidze
471
Defining the Impact of Non-financial Reporting on the Process,
Instrumental and Institutional Dimensions of Corporate Governance
Matic Čufar, Andreja Primec, Jernej Belak
479
The Use of Biofuels as an Example Solution to Energy Security
Challenges in Poland
Ireneusz Teodor Dziubek, Tatiana Manasterska
489
Sustainability Management in the Light of Quantum Physics
Dušan Kučera
497
Youth Clusters in the Field of Digitalization
Attila Kurucz, Adrienn Dernóczy-Polyák, Kornelia Osieczko-Potoczna
505
Coal Bed Methane: Opportunities and Challenges in India
Nidhija Rejo, Santanu Purohit, Arvind Kumar Jain
517
Comparative Analysis of the Use of Wine Pouch Based
on Sustainability and Consumer Resilience Aspects
Boglárka Eisinger Balassa, Réka Koteczki, Bence Lukács, Ágnes Csiba-Herczeg
529
Challenges in ESG Ratings: Understanding ESG Rating Disagreement
and its Effects on Financial Decision Making
Helena Naffa, Fanni Dudás
539
Local Government Financing and Sustainable Development:
The Case of Albania
Mariel Frroku
549
Identification and Sustainability Study of LMS for Teaching and
Learning of Foreign Languages
Vesna Cacio Vukmir, Simona Sternad Zabukovšek, Tjaša Štrukelj
559
vi
TABLE OF CONTENTS.
Nexus Amongst Remittances and Inequality in Western Balkan
Countries: Global Pandemic Crisis vs. Financial Crisis
Arjan Tushaj, Elona Dushku, Valentina Sinaj
569
Digital Transformation in Healthcare: An Analysis of Telemedicine and
Public Policy
Larisa Mihoreanu, Daniel-Gabriel Dinu, Andreea Stoian Karadeli
579
Women Participation in the Labor Force: The Case of Albania
Loredana Sulejmani
589
Consumption and Production Relationship with the Environment: An
In-depth Analysis for the Albanian Economy
Fjona Kurteshi
599
Business Schools Development Sustainability Throughout
Strengthening the Third Sector and Civil Society Capacity
Zoraida Mendiwelso-Bendek
609
Customer Genetic Data for Business: Empowering Your Genes for
Sustainable Product Development
Ivelina Ivanova-Kadiri
619
Development of Tourism Sector Through Small and Medium-sized
Enterprises: The Case of Albania
Anisa Feshti
629
Can the Concept of the Common Good be the Foundation of Ethical
Marketing?
María Elena Rodríguez Benito
639
Future Ways in Sustainable Economic Higher Education
Botond Géza Kálmán
649
Socially Responsible Tourist Behaviour in the Goričko Nature Park
Miran Grah, Sonja Sibila Lebe, Borut Milfelner
659
Balancing Exploration and Exploitation in Organizations: The Role of
Organizational Design, Leadership Style and Employee Personality
Aleša Saša Sitar, Sabine Bergner, Katarina Katja Mihelič, Miha Škerlavaj,
Aljoša Valentinčič, Ajda Merkuž
669
CSR-performance Relations from the Holistic Point of View: Application
of Causal Loop Diagrams
Dejana Zlatanović, Violeta Domanović, Јеlena Nikolić
677
TABLE OF CONTENTS
vii.
Smart Education for Corporate Sustainability Reporting
Peter Glavič, Helena Levičnik, Aida Szilagyi, Thomas Schönfelder,
Jarmila Bilikova, Pavel Ruzicka, Eugenia Atin, Oihana Hernaez, Ibon Zugasti
687
Contribution of Industry 4.0 to Sustainable Development
Zlatko Nedelko, Marko Laitila, Mustafa Ghulam, Vojko Potočan
697
INNOVATIVE ENTREPRENEURSHIP
FOR SUSTAINABLE DEVELOPMENT
TIIT ELENURM
Estonian Business School, Tallinn, Estonia
tiit.elenurm@ebs.ee
Abstract The aim of this presentation is to highlight sustainable
development challenges and opportunities for innovative
entrepreneurs and investors interested in start-ups that have
green agendas. One perspective in the sustainable development
discourse is focused on reversing the globalization trend and
developing the self-sufficiency of local communities. Innovative
start-up logic is however focused on scalable business models
and digital tools for engaging entrepreneurs and customers in
different countries to save and recycle resources. Global
campaigns such as World Cleanup Day can inspire innovative
entrepreneurs in different regions. Even initiatives from small
countries can build bridges between communities at a global
scale, including all levels of society – from citizens to business
and government institutions. Sustainable development goals
assume matching values of organizations and young people eager
to contribute to innovation. Sustainability motivation is based on
the synergy between competence, autonomy, and relatedness of
all stakeholders. Calls to limit consumption are not enough to
create sustainable motivation. The success of creative start-up
entrepreneurship assumes aligning the vision to contribute to the
sustainable development path of the World and the change
management process that makes a start-up business itself more
sustainable. Regeneration of ecological systems in a socially
sustainable way is a crucial challenge for innovators that have to
overcome the “not in my backyard” mentality. Agility has to be
balanced with long-term potential problem analysis.
International networking contributes to knowledge sharing and
financial sustainability.
DOI https://doi.org/10.18690/um.epf.3.2023.1
ISBN 978-961-286-736-2
Keywords:
sustainability,
innovation,
start-up,
innovation,
entrepreneurship
JEL:
L26, Q01
BORN SUSTAINABLE: PROMOTED BY
THE ECOSYSTEM FOR SUSTAINABLE
ENTREPRENEURSHIP
THOMAS SCHØTT1, 2, 3
University of Agder, Kristiansand, Norway
American University in Cairo, Cairo, Egypt
3 University of Southern Denmark, Odense, Denmark
tsc@sam.sdu.dk
1
2
Keywords:
entrepreneurship,
startups,
sustainability,
ecosystem,
national,
global
JEL:
M13, D02
Abstract The institutions and resource endowments for
entrepreneurial engagement with sustainability in a country are
forming a ‘national ecosystem for sustainable entrepreneurship.’
The ecosystem for sustainable entrepreneurship is a context for
businesses pursuing sustainability. Little is known, however,
about the effect of the system on business pursuits of
sustainability. We explored whether the ecosystem promotes
businesses that are born sustainable in that they, from their start,
are pursuing strategies and practices for sustainability. The
national ecosystems for sustainable entrepreneurship in 47
countries, with a large representative sample of starting and
operating businesses, were surveyed in 2021 by the Global
Entrepreneurship Monitor. Hypotheses about the effect of an
ecosystem on business engagement with sustainability were
tested by hierarchical linear modeling. Elaboration of national
ecosystems for sustainable entrepreneurship is found to promote
sustainability pursuits in newborn businesses more than in older
businesses. This finding contributes to evidence-based
theorizing of the nexus between entrepreneurial ecosystems and
business pursuits of sustainability.
https://doi.org/10.18690/um.epf.3.2023.2 DOI
978-961-286-736-2 ISBN
GLOBAL SOUTH PERSPECTIVE ON
CIRCULAR ECONOMY –
THE CASE OF INDIA
RAHUL SINGH,1 BHAVESH SARNA2
Birla Institute of Management Technology, Uttar Pradesh, India
rahul.singh@bimtech.ac.in
2 University of Jyvaskyla, Jyväskylä, Finland
bhavesh.b.sarna@jyu.fi
1
Abstract Environment deterioration, waste management, and
energy deficiency are inherent problems in India’s linear model
of industrialization. The drive to transform Indian carbon and
waste burdens by 2030 is under implementation by the
government of India. In one domain, i.e., waste management,
India has progressed from 18% waste processing in 2014 to 70%
in 2021. Household and agricultural waste is significant in size to
India’s organic waste and is experiencing a transformation from
linear to circular biotreatment methods, producing compressed
natural gas (CNG) and contributing to the energy and farming
needs of the country. The change is an outcome of catalyst
factors identified by multi-stakeholders in the ecosystem, which
are demand, policy, and supply. Based on primary and secondary
research, our research presents a catalyst framework to transform
the linear model into a circular model in the bio-waste sector in
rural and urban India.
DOI https://doi.org/10.18690/um.epf.3.2023.3
ISBN 978-961-286-736-2
Keywords:
Bio-CNG,
catalyst, circular
economy,
India, sustainable
development,
waste management
JEL:
Q57, Q41
NON-FINANCIAL REPORTING
PRACTICES IN HUNGARY –
OPPORTUNITIES AND CHALLENGES
IN PREPARATION FOR CSRD
ZSUZSANNA GYŐRI, CECÍLIA SZIGETI
Budapest Business School, CESIBUS, Budapest, Hungary
gyori.zsuzsanna@uni-bge.hu, szigeti.cecilia@uni-bge.hu
Abstract Under the CSRD (Corporate Sustainability Reporting
Directive), companies already covered by the NFRD (NonFinancial Reporting Directive) will have to report on
sustainability issues from 2024, large companies not covered by
the NFRD from 2025 and listed SMEs from 2026. As of 2018,
Hungarian companies under NFRD were required to report nonfinancial data in their annual reports. In our research, we seek to
answer the question of what domestic non-financial reporting
practices will be able to be relied upon by preparers under CSRD.
Companies preparing to report under the CSRD often use the
NFRD reports which have been already prepared by those
currently required to report as a benchmark, that is why we use
the list of companies under NFRD as a sample. We identify
which international reporting guidelines are followed and what
are the most frequent topics in NFRD reports with content
analysis. Among the sub-elements, the companies surveyed write
most about the environment and social/employment issues in
their annual reports, while fight against corruption and human
rights are rarely mentioned. Based on our research, we highlight
good practices that can be followed in terms of international
guidelines and company examples.
DOI https://doi.org/10.18690/um.epf.3.2023.4
ISBN 978-961-286-736-2
Keywords:
non-financial
reporting,
CSRD,
NFRD,
Hungary,
SDG,
GRI
JEL:
G38
10
1
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING
RESILIENCE BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Introduction
Corporate sustainability issues as well as the communication and dialogue with
stakeholders about them are getting more and more significant in every economy.
In the European Union, Europe 2020 strategy and the related regulations mean
important milestones in this process. From the perspective of our topic, nonfinancial reporting, Directive 2014/95/EU (Non-Financial Reporting Directive,
NFRD, EP and EC, 2014) is of high interest, which introduced reporting obligations
for the largest European companies to promote their responsible and long-term
sustainable operation. NFRD complements two European Accounting Directives
(78/660/EEC and 83/349/EEC, EC 1978 and 1983) and is based on more
international benchmarks, like IFRS, GRI or ISO 26000 (Kardos and MadarasiSzirmai, 2022). It has made companies’ operations more transparent, identified the
sustainability risks affecting their operations, and increased investor and consumer
confidence. From 2018, NFRD made reporting of non-financial information
mandatory for all companies with assets of more than €20 million or net sales of
more than €40 million and more than 500 employees. In Hungary, under Chapter
III, Section 95/C of the Act C of 2000 on Accounting (Government of Hungary,
2000), as of 2018, organizations as defined by the NFRD were required to report
non-financial information in their annual reports, including: environmental
protection; social and employment issues; respect for human rights; anti-corruption
and bribery.
Already when the NFRD was drafted, the EU expressed its intention to extend
sustainability reporting obligations for an increasingly wide range of companies. In
addition, experience has shown that the quality of the data published varied widely,
based on the relatively permissive regulation, which only described the issues,
contrary to the principles of known reporting guidelines (mainly Global Reporting
Initiative, GRI) and the legislator’s aim to publish comparable, reliable information
that would influence stakeholders' decisions and companies’ sustainability
performance.
In this paper, after the overview of the newest non-financial reporting regulation of
EU and its connection to the most significant sustainability reporting scheme, GRI,
we seek answers for the following research questions:
Z. Győri, C. Szigeti: Non-financial Reporting Practices in Hungary – Opportunities and
Challenges in Preparation For CSRD
11.
1. Which domestic non-financial reporting practices will be able to be used
under CSRD (Corporate Sustainability Reporting Directive)?
2. Which international reporting guidelines are followed in Hungary and what
are the most frequent topics in reports?
3. What are the main strengths of best practices?
In our analysis we only used Hungarian reports and good practice examples. In a
further step of research, with broadening the scope to international cases we will be
able to provide readers with a better understanding of how companies can overcome
the challenges highlighted in the paper.
2
Theoretical Background
CSRD (Corporate Sustainability Reporting Directive, Directive 2022/2464/EU, EP
and EC, 2022), adopted by the European Commission on 28 November 2022
changes the scope of companies covered by the NFRD (to all large companies from
2025 and to listed SMEs from 2026). Additionally, CSRD takes major steps towards
the creation of a single European Sustainability Reporting Standard (ESRS)
(EFRAG, 2022), which means that companies that were obliged by the NFRD as
well, also will have to report on much more indicators from 2024.
The first version of the ESRS provides European companies with 4 sets of
standards: horizontal (cross cutting), environmental, social and governance
standards (ESG). The indicator groups will be structured in a similar way to the GRI
Standards (GRI, 2022).
Going beyond indicators, perhaps an even more important part of international
reporting standards is the definition of principles. In the context of the GRI 2022
revision, materiality and stakeholder engagement were highlighted as key principles,
emphasizing that they are the key to the usefulness and meaning of the reporting
process for both the company and its stakeholders. ESRS is also like the GRI in its
principles (EFRAG, 2022):
−
−
ESRG 1 Double materiality;
ESRG 2 Characteristics of information quality;
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING
RESILIENCE BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
12
−
−
−
−
ESRG 3 Time horizons;
ESRG 4 Boundaries and levels of reporting;
ESRG 5 EU and international alignment;
ESRG 6 Connectivity.
This allows for a parallel between the GRI and the proposed ESRS indicator
structure. This recognition will allow European companies already using GRI to
comply with the new standard from the beginning. The main points of possible
alignment are shown in Table 1.
Table 1: Comparison and parallels of ESRS and GRI Standards
Indicators in GRI Standards
Indicators in ESRS
GRI 3 Material Topics
ESRS 4 Sustainability material impacts,
risks and opportunities
GRI 3-1 Process to determine material topics
GRI 3-2 List of material topics
GRI 3-3 Management of material topics
Environmental standards
GRI 302 Energy
GRI 303 Water and Effluents
GRI 304 Biodiversity
GRI 305 Emissions
GRI 306 Effluents and Waste
Other environmental standards
Employment standards
GRI 401 Employment
GRI 403 Occupational Health and Safety
GRI 405 Diversity and Equal Opportunity
GRI 404 Training and Education
Social standards
GRI 413 Local communities
GRI 414 Supplier social assessment
GRI 416 Customer health and safety
GRI 417 Marketing and labelling
GRI 418 Customer privacy
ESRS E1 Climate change
ESRS E3 Water & marine resources
ESRS E4 Biodiversity & ecosystems
ESRS E1 Climate change
ESRS E2 Pollution
ESRS E5 Circular economy
ESRS 3 Sustainability governance and
organisation
ESRS 5 Definitions for policies, targets, action
plans and resources
ESRS S1 Own workforce – general
ESRS S2 Own workforce – working conditions
ESRS S3 Own workforce – equal opportunities
ESRS S4 Own workforce – other work-related
rights
ESRS S6 Affected communities
ESRS S5 Workers in the value chain
ESRS S7 Consumers/End-users
Z. Győri, C. Szigeti: Non-financial Reporting Practices in Hungary – Opportunities and
Challenges in Preparation For CSRD
Indicators in GRI Standards
Economic standards
GRI 201 Economic Performance 2016
GRI 202 Market Presence
GRI 203 Indirect Economic Impacts 2016
13.
Indicators in ESRS
ESRS G1 Governance, risk management and
internal control
ESRS G2 Products and services, management
and quality of relationships with business
partners
ESRS G3 Responsible business practices
Source: Authors’ research based on EFRAG (2022) and GRI (2022).
3
Methodology
Already prepared NFRD reports can serve as a benchmark for companies that will
have to report under the CSRD. That is why they can be a starting point for our
research regarding the preparedness of Hungarian companies for the new EU
regulation.
We seek to answer the question of what domestic non-financial reporting practices
will be able to be used under CSRD. We identify which international reporting
guidelines are followed in Hungary and what are the most frequent topics (SDGs;
UN, 2015) in NFRD reports with content analysis. Based on our research, we
highlight good practices that can be followed.
In our research, we used the sample of Hungarian companies under NFRD included
in the research of Lippai-Makra (2022 (Table 2)). The author reported that the
identification of companies was a complex process because there is not a central
register of these firms. Our only review was that out of the 23 companies in her
sample, 2 have been dissolved or merged, so 21 companies were examined further
by us.
Our research relied mainly on company statements (integrated and consolidated
reports) and we used content analysis by using the topics and related terms that are
defined by the NFRD. In a second phase, we searched the downloaded reports for
3 keywords: SDG, ESG, GRI as we consider the using of these well-known
international standards as good practice to integrate sustainability content at a
strategic level within an organization and to make the relationship between financial
and sustainability issues clearly visible.
14
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING
RESILIENCE BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Table 2: List of Hungarian companies that had to comply with the non-financial disclosure
requirements under the NFRD in 2022
Length of
Annual
Report 2021
(pages)
No.
Name
Website address
1
Any PLC
Magyar
Telekom
PLC
Masterpl
ast PLC
MOL
PLC
OPUS
GLOBA
L PLC
Rába
PLC
Richter
Gedeon
PLC
Waberer'
s PLC
OTP
Bank
PLC
Takarék
Jelzálogb
ank PLC
MKB
Bank
PLC
Budapest
H. és F.
Bank
PLC
CIB
Bank
PLC
https://www.any.hu/
69
https://www.telekom.hu/rolunk/befektetoknek/penzugyi_jele
ntesek
233
https://www.masterplastgroup.com/document_folder/master
plast-konszolidalt-eves-jelentesek/
76
https://molgroup.info/hu/befektetoi-kapcsolatok/jelentesek
112 +115
https://opusglobal.hu/befektetoknek/#608-610-ii-penzugyijelentesek-1641809116
215
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
Citibank
E. PLC
ERSTE
BANK
H. PLC
K&H
PLC
https://raba.hu/befektetoknek/
not issued
in 2021
https://www.gedeonrichter.com/hu-hu/befektetok
310
https://www.waberers.com/hu/befektetoknek
75
https://www.otpbank.hu/portal/hu/IR_Eves_jelentes
83
https://www.takarekjzb.hu/sw/static/file/takarekjzb.hu-files22-87156.pdf
122
https://www.mkb.hu/befektetoknek/mkb-bankrol/penzugyijelentesek
168
From 31 March 2022, Hungarian National Bank approved the
merger of MKB Bank and Budapest Bank. The merged bank
operates under the name MKB Bank Plc.
not issued
in 2021
https://www.cib.hu/document/documents/CIB/kommunika
cio/evesjelentesek/IFRS_2021_CIB-Group__HU-220325.pdf
187
https://www.citibank.com/icg/sa/emea/hungary/assets/docs
/annualreports/2021_Annual_Report_of_Citibank_Europe_plc_HU.p
df
116
https://www.erstebank.hu/hu/ebh-nyito/bankunkrol/erstebank-hungary-zrt/vallalatiranyitas/eves-jelentesek
https://www.kh.hu/csoport/bank/eves-jelentesek
not issued
in 2021
219
Z. Győri, C. Szigeti: Non-financial Reporting Practices in Hungary – Opportunities and
Challenges in Preparation For CSRD
15.
Length of
Annual
Report 2021
(pages)
No.
Name
Website address
17
Raiffeise
n Bank
PLC
https://www.raiffeisen.hu/raiffeisencsoport/sajtoszoba/penzugyi-adatok/jelentesek
18
Sberban
k
Takarék
Jelzálogb
ank PLC
The European resolution authority has opened winding-up
proceedings against Sberbank Europe AG, the parent company
of Sberbank Hungary. Hungarian National Bank has
withdrawn the operating licence of Sberbank, citing a serious
liquidity problem and a weak capital position of Sberbank
Hungary. At the same time, Russia's Sberbank announced its
complete withdrawal from the European market.
not issued
in 2021
https://www.unicreditbank.hu/hu/rolunk/hasznos_informaci
ok/penzugyi_informaciok.html
109
https://www.aegon.hu/eves-jelentes/eves-jelentes-2021.html
n.d. (html)
19
20
21
22
23
Unicredi
t Bank
Hungary
PLC
AEGO
N
Magyaro
rszág
PLC
Allianz
Hungária
PLC
Generali
Biztosító
PLC
Groupa
ma
Biztosító
PLC
130
https://www.allianz.com/en/investor_relations/resultsreports/annual-reports.html
208
https://www.generali.hu/Rolunk/miagenerali.aspx#Jelentesek
105
https://www.groupama.hu/hu/rolunk.html?fenntarthatosag
119
Source: Authors’ research based on Lippai-Makra (2022).
The first major difficulty of our research was the lack of a permanent place for
annual reports on websites. Most often the reports are found under ‘about us’ and
‘for investors’ but often only in a ‘downloads’ or ‘documents’ submenu. The
availability and page numbers of the reports are shown in Table 2. In three cases, we
did not find the annual report on the website, either only a report in English on the
parent company’s website, or only some information, e.g. an executive summary. In
total, 18 reports were downloaded and analyzed (signed with white in Table 2).
Because of the small number of reports, we didn’t use Nvivo or other software, but
searched directly in the documents found.
16
4
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING
RESILIENCE BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Results
Of the 18 reports analyzed, 2 mention SDG and 9 mention ESG or GRI. There are
9 reports that do not mention either term. There are 2 reports where all three terms
are mentioned. Among the sub-elements, the companies surveyed write most about
the environment and social/employment issues in their annual reports, while fight
against corruption and human rights are rarely mentioned. We would like to
highlight three good practices.
One is Magyar Telekom PLC (2022), one of Hungary’s largest telecommunications
service providers. SDGs are mentioned as the main defining international guidelines
and GRI is also applied. One of Magyar Telekom’s commitments is to publish an
annual report on its sustainability performance. ESG is included in the report e.g. as
the company is a member of the FTSE Russel ESG Rating Sustainable Index. A
stand-alone sustainability report is also available on their website, where the criteria
of selecting topics/SDGs are presented. According to their materiality analysis
process which is the part of stakeholder involvement scheme, SDG 4, 11, and 12 are
the main goals to which the company can contribute.
CIB Bank PLC (2022) has been reporting its sustainability performance annually
since 2005 in line with the GRI, so priority topics are defined in accordance with its
requirements – the detailed materiality matrix is particularly noteworthy. Since 2018,
financial report has also been supplemented by a shorter non-financial report, which
was included in the financial chapter of the financial statements. For the first time,
the researched 2021 edition report combines the previous sustainability report and
the actual non-financial report (resulting in an integrated report), which includes a
separate chapter on SDGs. The operating model and business conduct focus on
seven SDGs (SDG 3, 5, 8, 9, 10, 12, 13) which are given priority attention. The
definition of the topics is based on materiality analysis with the participation of
stakeholder groups. ESG is mentioned 44 times in the Bank’s report.
OTP Bank PLC’s (2022) annual report is particularly good, with a strong
organizational framework supporting the full integration of sustainability, which was
completed in 2021. ESG transformation for both OTP Bank and its subsidiaries is
managed by a permanent ESG Committee established by the Board of Directors.
The OTP Group also reports on its social, environmental and wider economic
Z. Győri, C. Szigeti: Non-financial Reporting Practices in Hungary – Opportunities and
Challenges in Preparation For CSRD
17.
impacts and performance in a separate sustainability report. The sustainability report
for the year 2021 is Group-wide, compliant with the GRI and assured by an external
independent party. Although the annual report does not go into detail on the SDGs
here, the sustainability report justifies their selection in detail. It refers to detailed,
stakeholder-led materiality analysis. OTP Bank focuses on SDG 4, 6, 7, 9, 13, 16 and
17.
5
Discussion and Conclusion
Our research shows that Hungarian companies who are regulated by the CSRD face
significant challenges. Even the few companies under the NFRD cannot fully
comply with the requirements. Except of the good practices, companies try to avoid
detailed data sharing and neither the auditors, nor the state or other stakeholders
really expect more information. This practice provides a validation for the EU’s new
regulative motivation: like in the other EU member states, in Hungary as well,
companies don’t take the non-financial reporting regulation seriously, so it needs to
be taken to a new level both in its scope and detailedness. That is the only direction
in which non-financial reporting can achieve its real goal, to enable a more
sustainable economic operation.
At the same time, companies are not alone in this challenge as there are a lot of
effective guidelines and initiatives related to corporate sustainability issues and
reporting connected to them. Moreover, EFRAG, authorized by the EU works on
a comprehensive standard system (ESRS) which will provide useable indicators for
reporting about the material sustainability impacts which are relevant for both the
companies and their stakeholders.
There are more contributions of our paper. Firstly, in the theoretical part we
demonstrated the parallelism of GRI and the new European system, ESRS in
preparation. It shows that companies actively using GRI will have adequate
experience in the transition to the new system. And today’s good practices will be
examples for other regulated organizations as well. This is particularly true as GRI
is the mostly used international reporting framework for companies under NFRD
in Hungary.
18
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING
RESILIENCE BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Secondly, in the empirical part, relating the topics, we concluded that different SDGs
are in focus at different companies, which is a natural consequence of their different
field of activity. The main message of the good practices is to involve stakeholders
to the definition of significant, material topics.
Thirdly, we highlighted the main points of best practices. Looking at Magyar
Telekom PLC’s and CIB Bank’s reports, which are at the forefront in terms of
content and detail, we see that one company continues to produce a separate
sustainability report, while the other merges it with the annual report. Both solutions
have advantages and disadvantages. If the financial and non-financial reports are in
the same structure, the content may be very fragmented, or the presentation of each
issue may not be sufficiently detailed. When a separate sustainability report and other
supplementary information is provided, this may not be sufficiently addressed. A
recommended practice (as seen at OTP Bank) is to maintain the independent
sustainability report beside the integrated one.
References
CIB Bank PLC. (2022). Consolidated financial statements prepared in accordance with International
Financial Reporting Standards. Retrieved from:
https://www.cib.hu/document/documents/CIB/kommunikacio/evesjelentesek/IFRS_2021
_CIB-Group__EN-220325.pdf
EFRAG. (2022). PTF-ESRS Batch 1 working papers – Cover note and next steps. Retrieved from:
https://www.efrag.org/Assets/Download?assetUrl=/sites/webpublishing/SiteAssets/Cover
%20note%20for%20Batch%201%20WPs.pdf
European Council. (1978). Directive 78/660/EEC.
European Council. (1983). Directive 83/349/EEC.
European Parliament and Council. (2014). Directive 2014/95/EU.
European Parliament and Council. (2022). Directive 2022/2464/EU.
Global Reporting Initiative, GRI. (2022). Consolidated Set of the GRI Standards. Retrieved from:
https://www.globalreporting.org/how-to-use-the-gri-standards/gri-standards-englishlanguage/
Government of Hungary. (2000). Act C of 2000 on Accounting.
Kardos, B. and Madarasi-Szirmai, A. (2022). New trends in corporate reporting in the light of
sustainability. Proceedings 6th FEB International Scientific Conference, University of Maribor
Press. DOI: https://doi.org/10.18690/um.epf.5.2022.28 ISBN 978-961-286-600-6
Lippai-Makra, E. (2022). A magyar közérdeklődésre számot tartó gazdálkodók nem pénzügyi
beszámolási gyakorlatának vizsgálata (Examining the non-financial reporting practices of
Hungarian public interest entities). PhD dissertation, Szegedi Tudományegyetem. Retrieved
from: https://doi.org/10.14232/phd.11248
Magyar Telekom PLC. (2022). IFRS consolidated and separate annual report for 2021. Retrieved from:
https://www.telekom.hu/about_us/investor_relations/financial
OTP Bank PLC. (2022). Annual Report 2021. https://www.otpbank.hu/portal/hu/IR_Eves_jelentes
United Nations, UN. (2015). Transforming our world: the 2030 Agenda for Sustainable Development.
EXAMINATION AND OPTIMIZATION
OF THE ECOLOGICAL FOOTPRINT
OF EMBEDDED RAIL STRUCTURES
ZOLTÁN MAJOR,1 RÓBERT HORVÁTH,2 ÁRON SZENNAY,3
CECÍLIA SZIGETI4
Széchenyi University, Győr, Hungary
majorz@sze.hu
2 H - Planer Mérnökiroda Kft., Bátaszék, Hungary
hplanerkft@gmail.com
3 Budapest Business School, Budapest LAB, Budapest, Hungary
szennay.aron@uni-bge.hu
4 Budapest Business School, CESIBUS, Budapest, Hungary
szigeti.cecilia@uni-bge.hu
1
Abstract In urban planning practice, there has been a growing
trend towards the displacement of car traffic, thereby reducing
traffic congestion and air pollution, creating the foundations of
a healthier, more livable urban environment. In the Hungarian
cities, large-scale investments have recently been carried out or
are being planned. Most of the investments focused the
modernization and renovation of existing line sections, but there
are also examples of new lines being built. Due to the increasing
demands placed on rail transport (reduction of noise and
vibration loads, as well as of life cycle costs), the use of embedded
superstructures is gaining ground in Hungary as well. These
superstructures are excellent from a technical point of view and
have a lower environmental impact in terms of noise and
vibration, but the cost savings and ecological footprint (EF)
reductions vary between designs. The aim of our research is to
explore how the social and economic sustainability development
goals of rail transport infrastructure development can be
achieved with the least environmental impact. The use of the EF
indicator can also help corporate and policy makers to select and
support the right construction technology.
DOI https://doi.org/10.18690/um.epf.3.2023.5
ISBN 978-961-286-736-2
Keywords:
urban planning,
ecological
footprint,
tram tracks,
construction
projects,
Hungary
JEL:
L7, O14, Q51 R42
20
1
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING
RESILIENCE BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Introduction
One of the greatest challenges of the 21st century, while maintaining the continuous
development of society, is the protection of the environment, especially including
the achievement of climate targets (Skala, 2022). A globalized, industrialized world
requires us to maintain, expand and modernize both passenger and freight transport
in our cities and countries, as well as between countries, in response to ever-changing
demands. Transport concerns are linked to five objectives among the 17 SDGs:
target 3.6, 7.3, 9.1, 11.2 12.c (Brussel et al. 2019). In this study, we focus primarily
on target 9.1. In the EU, increased attention is being paid to the development of rail
and public transport as opposed to individual transport. The construction and
operation of transport networks generates significant CO2 emissions, which do not
entail the emissions of the transport vehicles themselves. During construction and
operation, emissions are primarily generated by the production, transport, and
installation of materials. In this article, we compare two possible versions of socalled embedded track structures, which are frequently found in the tramway
network of large cities, in terms of technical parameters and ecological footprint
(EF).
2
Literature Review
The reason for selecting the carbon footprint as the ecological footprint indicator
for our research was that it is one of the most widely used physical metric (Lin et al.,
2018; Wackernagel et al., 2019). The Global Footprint Network (GFN)
conceptualizes the EF indicator as comprising five land use categories, of which we
only considered the ecological footprint from carbon emissions. In 2010, Chambers
et al. (2010) developed the principles for the EF calculations used, which were
further developed by Wackernagel and Beyers in 2019. Its applications therefore also
include measuring material use in construction (McBain et al., 2018; Szigeti et al.,
2023). There are some examples of ecological footprint calculations of transport
network construction (de Bortoli, 2020; Gassner et al., 2018; Lv et al., 2021) in the
literature, but the comparison of superstructural variants is a novelty of our research.
Z. Major et al.: Examination and Optimization of the Ecological Footprint of Embedded Rail
Structures
3
Methodology
3.1
Technical analaysis of two tramway tracks structures
21.
The two superstructure designs shown in Figure 1 are the subject of our comparative
analysis. The technical solutions presented comply with the regulations in force for
the Budapest Transport Company's line network. From a technical point of view,
they can be considered equivalent, since both designs are dimensioned for the same
load and their useful life is also considered to be the same, since the tested rails can
be kept in the track up to the same wear value. The left side of the figure shows the
structure with a B3 block rail and the right side with a 59Ri2 rail. The typical
differences between the two variants are attributable to the height of the rail system
used, so the block rail design results in a more economical structure. In the figure,
the rails are shown in grey, the embedding material in red, the material-saving PVC
tubes in blue and the reinforced concrete track slab in green. It is assumed that the
structure of the load-bearing layer under the slab is the same in both cases, so that
the lower plane of the slab (top of subgrade) is 170 mm deeper in the 59Ri2 rail
structure, which requires additional excavation work.
Figure 1: The performance of the investigated structures
Source: Authors’ own illustration
3.2
Determination of the typical CO2 emissions of the presented
technical solutions
The CO2 emissions of the main components of the technical solutions presented in
Chapter 3.1 (e.g. the embedding material) are considered from two perspectives. The
first aspect is the so-called intrinsic emissions of the component material, while the
second aspect is the emissions from the transport of the material. The CO2 emissions
from the installation are not
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING
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addressed in this article, as the technological possibilities are manifold and would
increase the number of variations to be investigated beyond the scope of this paper.
Another reason for simplification is that, since we are making a comparison, we are
interested in the difference in CO2 emissions between the two variants, which would
not change significantly assuming the same construction method. However, if the
difference in emissions between the technologies is to be considered, it is of course
possible to quantify it. For similar reasons, the structure of the load-bearing layer
under the subgrade is also not considered. In our analysis, the total useful lifetime
emissions are differentiated according to the assumed useful lifetime of each
component and expressed in kgCO2/track meter/year.
In order to perform the comparative analysis, the five components shown in the
following subsections were examined in detail. The specific CO2 emissions for each
material were all considered according to the Inventory of Carbon and Energy
Database (ICE) v3.0. The first step in the study was to determine the mass of rail
material per 1 m of track for both test cases. This was 109.22 kg/track meter for B3
rails and 116.28 kg/track meter for 59Ri2 rails. Based on ICE database v3.0, the
specific value of CO2 emissions is 1.27 kgCO2/kg (structural steel). Taking this value
into account, the CO2 emissions of installed rail steel are 138.7 kg/track meter for
B3 rails and 147.7 kg/ track meter for 59Ri2 rails.
In determining the amount of elastic embedding material, it was assumed that the
thickness of the bottom layer of embedding compound used was a uniform 20 mm.
Substituting this value into the formulae defined by Zoltán Major for average crosssectional geometries of elastic embedding, the specific volume of the embedding
material per 1 m of track was calculated. In the case of the 59Ri2 rail, the placement
of 2 material-saving PVC tubes with a diameter of 70 mm each was also considered.
The specific volume is 16,22 l/track meter for rail B3 and 52,61 l/track meter for
rail 59Ri2. As different materials from several manufacturers may be technically
suitable for use in the track structure as elastic embedding, an average density value
of 0.9 kg/l was considered for the embedding material. The specific weight
calculated on this basis is 14.6 kg/track meter for the B3 rail and 47.3 kg/track meter
for the 59Ri2 rail. The specific value of CO2 emissions based on ICE V3.0 is 4.84
kg CO2/kg (flexible polyurethane foam). Taking this value into account, the specific
CO2 emissions for the installed elastic embedding material are 70.7 kg/track meter
for the B3 rail and 229.2 kg/track meter for the 59Ri2 rail. Since the quantity of PVC
Z. Major et al.: Examination and Optimization of the Ecological Footprint of Embedded Rail
Structures
23.
tubes installed is secondarily small compared to the volume of the other
components, the CO2 emissions from the PVC tubes are not considered in our
analysis.
The load-bearing track slab consists of two components: concrete and a reinforcing
steel frame. As a good approximation, the amount of reinforcing steel is calculated
as 3% of the specific volume of the track slab. The specific volume of the concrete
slab was first determined from its geometrical dimensions to calculate its own
emission. Assuming a panel width of 2200 mm, the specific volume of the slab was
calculated to be 0.396 m3/track meter for a 180 mm thick slab and B3 rail, and 0.770
m3/m for a 350 mm thick slab and 59Ri2 rail. In our calculations, the rail ducts have
been omitted as an approximation for reasons of simplification. For concrete, a
density of 2500 kg/m m3 was assumed, at 97% of the volume. Thus, the specific
mass of the concrete for the B3 rail is 0.96 t/ track meter, while for the 59Ri2 rail it
is 1.87 t/track meter. Based on ICE V3.0, the specific value of CO2 emissions is
0.132 kg CO2/kg (precast concrete pavement). Taking this value into account, the
CO2 emissions for the installed concrete material are 130.7 kg/track meter for the
B3 rail and 254.1 kg/track meter for the 59Ri2 rail. The mass of the reinforcing steel
installed, with the previous simplifications, is 93.2 kg/track meter for rail B3 and
181.3 kg/track meter for rail 59Ri2. Based on ICE V3.0, the specific value of CO2
emissions is 1.99 kg CO2/kg (reinforcing steel). Taking this value into account, the
CO2 emissions for the installed concrete material are 185.6 kg/track meter for the
B3 rail and 360.9 kg/track meter for the 59Ri2 rail.
For the calculation of the subsoil’s intrinsic emission, we only consider the excess
soil excavation due to the difference in thickness of the two track slabs, which is 170
mm for 59Ri2 rails. We do not consider the soil excavation required to construct the
load-bearing layer structure underneath the track slab. For 59Ri2 rails, while
considering the required additional track slab thickness of 170 mm and a width of
2200 mm, the additional excavation required is 0,374 m3/track meter. The density
of the soil was considered at 2000 kg/m3. The mass of the excavated soil is 748
kg/track meter. Based on ICE V3.0, the specific value of CO2 emissions is 0.024
kgCO2/kg (compacted soil). Taking this value into account, the CO2 emission is
17.95 kg/track meter for 59Ri2 rails. For rail B3, an excess of 0 mm can be
considered, resulting in CO2 emissions of 0.0 kg/track meter.
24
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING
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Results
To determine the CO2 value from the transport of each component, the specific
masses per 1 track meter as defined in Chapter 3.2. The data were used and results
summarized in Table 1.
Table 1: Transport data
Component
Transport
distance
[km]*
Transport
method*
500
railway
Embedding
m.
500
Track slab
250
Subsoil
50
road (solo
truck, >26t)
road (solo
truck, >26t)
road (solo
truck, >26t)
Rail
gCO2/tkm**
B3 rail
kgCO2/t.m
59Ri2 rail
kgCO2/t. m.
26.7
1.458
1.552
199.3
1.455
4.718
199.3
47.847
93.036
199.3
0.000
7.450
Source: *: author’s own assumption, **: Treibhausgasemissionen durch die Schieninfrastruktur und
Schienenfahrzeuge in Deutschland
3.3
Calculation of the specific CO2 emissions for the variants
The values per structure determined in Chapter 3 have been weighted by the
estimated useful lifetime of each component to be able to consider the lifetime
specific CO2 emissions. Our results are summarized in Tables 2 and 3. The estimated
useful lifetimes are our own assumptions.
Table 2: CO2 emissions weighted by the estimated useful life of the component for B3 rails
Component
Rail
Embedding
m.
Track slab
Subsoil
Material
Transport
ΣCO2
Useful
life
Specific value
kgCO2/track m
kgCO2/track m
kgCO2/track m
year
kgCO2/track m/year
138.7
1.458
70.7
1.455
72.155
15
4.810
354.5
0
47.847
0
402.347
0
60
60
Σ
6.706
0.000
20.860
Source: Authors’ research
140.158
15
9.344
Z. Major et al.: Examination and Optimization of the Ecological Footprint of Embedded Rail
Structures
25.
Table 3: CO2 emissions weighted by the estimated useful life of the component for 59Ri2
rails
Component
Rail
Embedding
m.
Track slab
Subsoil
Material
Transport
ΣCO2
Useful
life
Specific value
kgCO2/track m
kgCO2/track m
1.552
4.718
kgCO2/track m
year
kgCO2/track m/year
147.7
229.2
689.4
17.95
93.036
7.450
782.436
25.4
60
60
Σ
13.041
0.423
39.009
149.252
233.918
15
15
9.950
15.595
Source: Authors’ research
Based on the results of Tables 2 and 3, it is evident that when optimizing the same
track structure types, it is possible to significantly reduce CO2 emissions by selecting
the appropriate superstructure variant. If the total CO2 emissions of the assumed
track structures over a given
analysis period is to be investigated. For our investigation, the analysis period was
expediently set equal to the maximum useful life of 60 years.
The ecological footprint, expressed in global hectares (gha), can be defined as the
product of CO2 emissions in tons multiplied by the Footprint Intensity of Carbon
published by the Global Footprint Network (Lin et al., 2018) (Table 4).
Table 4: Ecological footprint in relation to the analysis period
B3 rails
59Ri2 rails
CO2
t/track m
1,251599
2,315116
EF
gha/ track m (CO2* 0,338)
0.42304
0.782509
Source: Authors’ research
The results show that the 59Ri2 version has almost twice the ecological footprint of
the B3 version.
5
Discussion and Conclusion
It appears that there are significant savings with respect to the reinforced concrete
slabs and the embedding material, which make the B3 rail variant more favorable in
terms of ecological footprint (too). It is evident that there are significant savings
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING
RESILIENCE BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
regarding reinforced concrete slabs and embedding material, which make the B3 rail
variant more favorable in terms of ecological footprint. Even without a precise
calculation, it is clear that the cost of the structure will also be lower than the other
variant in the comparison, making it more eco-efficient. We therefore recommend
the use of an ecological footprint in transport planning decisions, which provides
decision-makers with a simple way of interpreting information on the complex
environmental impact of the solution to be implemented.
Acknowledgment
This research was supported by the Ministry of Innovation and Technology of Hungary from the
National Research, Development and Innovation Fund, financed under the Tématerületi Kiválósági
Program 2021 (TKP2021-NKTA) funding scheme (Project no. TKP2021-NKTA-44).
References
Brussel, M., Zuidgeest, M., Pfeffer, K., & van Maarseveen, M. (2019). Access or Accessibility? A
Critique of the Urban Transport SDG Indicator. ISPRS International Journal of GeoInformation, 8(2), 67. MDPI AG. Retrieved from http://dx.doi.org/10.3390/ijgi8020067
Chambers, N., Simmons, C., & Wackernagel, M. (2010). Sharing nature's interest: Ecological footprints as an
indicator of sustainability. Earthscan.
de Bortoli, A., Bouhaya, L., Feraille, A. (2020). A life cycle model for high-speed rail infrastructure:
Environmental inventories and assessment of the Tours-Bordeaux Railway in France. The
International Journal of Life Cycle Assessment, 25(4), 814–830. https://doi.org/10.1007/s11367019-01727-2
Gassner, A., Lederer, J., Kanitschar, G., Ossberger, M., & Fellner, J. (2018). Extended ecological
footprint for different modes of urban public transport: The case of Vienna, Austria. Land Use
Policy, 72, 85–99. Retrieved from: https://doi.org/10.1016/j.landusepol.2017.12.012
Inventory of Carbon and Energy database (n.d.) https://circularecology.com/embodied-carbonfootprint-database.html
Lin, D., Hanscom, L., Murthy, A., Galli, A., Evans, M., Neill, E., & Mancini, M. (2018). Ecological
Footprint Accounting for Countries: Updates and Results of the National Footprint Accounts,
2012–2018. Resources, 7(3), 58. MDPI AG. Retrieved from
http://dx.doi.org/10.3390/resources7030058
Lv, T., Zeng, C., Stringer, L. C., Yang, J., Wang, P. (2021). The spatial spillover effect of transportation
networks
on
ecological
footprint.
Ecological
Indicators,
132,
108309.
https://doi.org/10.1016/j.ecolind.2021.108309
McBain, B., Lenzen, M., Albrecht, G., & Wackernagel, M. (2018). Building Robust Housing Sector
Policy Using the Ecological Footprint. Resources, 7(2), 24. MDPI AG. Retrieved from
http://dx.doi.org/10.3390/resources7020024
Schmied, M., Mottschall, M. (2013): Treibhausgasemissionen durch die Schieneninfrastruktur und
Schienenfahrzeuge in Deutschland (FKZ 363 01 244).
https://www.oeko.de//oekodoc/1852/2013-520-de.pdf accessed on 01.24.2023
Skala, A. (2022). Sustainable Transport and Mobility—Oriented Innovative Startups and Business
Models. Sustainability, 14(9), 5519. MDPI AG. Retrieved from
http://dx.doi.org/10.3390/su14095519
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Szigeti, C., Major, Z., Szabó, D. R., & Szennay, Á. (2023). The Ecological Footprint of Construction
Materials—A Standardized Approach from Hungary. Resources, 12(1), 15. MDPI AG. Retrieved
from http://dx.doi.org/10.3390/resources12010015
Wackernagel, M., Beyers, B., & Rout, K. (2019). Ecological footprint: Managing our biocapacity budget. New
Society Publishers.
Wackernagel, M., Lin, D., Evans, M., Hanscom, L., & Raven, P. (2019). Defying the footprint oracle:
Implications of country resource trends. Sustainability, 11(7), 2164.
https://doi.org/10.3390/su11072164
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING
RESILIENCE BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
URBAN DEVELOPMENT DECISIONS
BASED ON THE ECOLOGICAL
FOOTPRINT
JENŐ ZSOLT FARKAS,1 ÁRON SZENNAY,2 ZOLTÁN
MAJOR,3 CECÍLIA SZIGETI4
Centre for Economic and Regional Studies, Kecskemét, Hungary
farkas.jenozsolt@krtk.hu
2 Budapest Business School, Budapest LAB, Budapest, Hungary
szennay.aron@uni-bge.hu
3 Széchenyi University, Győr, Hungary
majorz@sze.hu
4 Budapest Business School, CESIBUS, Budapest, Hungary
szigeti.cecilia@uni-bge.hu
1
Abstract In the Hungarian cities, large-scale investments have
recently been carried out or are being planned. Most of the
investments focused the modernization and renovation of
existing line sections, but there are also examples of new lines
being built. Due to the increasing demands placed on rail
transport (reduction of noise and vibration loads, as well as of
life cycle costs), the use of embedded superstructures is gaining
ground in Hungary as well. These superstructures are excellent
from a technical point of view and have a lower environmental
impact in terms of noise and vibration, but the cost savings and
ecological footprint (EF) reductions vary between designs. The
aim of our research is to explore how the social and economic
sustainability development goals of rail transport infrastructure
development can be achieved with the least environmental
impact. The use of the EF indicator can also help corporate and
policy makers to select and support the right construction
technology.
DOI https://doi.org/10.18690/um.epf.3.2023.6
ISBN 978-961-286-736-2
Keywords:
ecological
footprint, urban
development,
construction
projects,
sustainability,
Hungary
JEL:
L7, O14, Q51
30
1
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING
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Introduction
Kecskemét was a Hungarian market town and agricultural trading center, which
became the county seat of Bács-Kiskun county after the county restructuring in the
1950s (Figure 1). Over the past 70 years, the city's economic profile has increasingly
shifted towards services and industry, with an important milestone being the
announcement of the Daimler-Benz car assembly plant in 2008. The factory's
establishment briefly revitalized the city's development, resulting in an increase in
population from 107,000 in 2001 to 112,000 in 2014 (HCSO), despite the natural
decrease of around -1% typical of the city (Lechner Knolewledge Center, n.d.).
Figure 1: The geographical location of Kecskemét
Source: ArcMagyarország (2021).
In addition to the Mercedes plant, suppliers and other related service providers
(logistics, facility management) also settled in the city, which overall significantly
improved the city's employment (the ratio of taxpayers increased from 46.16% in
2010 to 52.03% in 2018) and unemployment (decreased from 7.26% in 2010 to
3.07% in 2018) indicators (Lechner Knowledge Center, n.d.). However, the city
failed to exploit this high-prestige FDI investment fully, and over the past decade, it
J. Zsolt Farkaset al.: Examination and Optimization of the Ecological Footprint of Embedded
Rail Structures
31.
has not been able to diversify its economy (e.g. by developing tourism). As a result,
a strong dependence on the automotive industry has developed.
The Mercedes investment positively affected housing construction in the early
2010s, when there was a significant increase in demand for rental apartments and
houses. As a result, the proportion of new-built homes between 2010 and 2013
significantly exceeded the national average (0.42-0.72% compared to 0.17-0.48%).
After a two-year downturn between 2014 and 2016, another upward trend started
from 2017 onwards. In 2018, the proportion of new-built homes was more than
twice the national average (0.92% compared to 0.4%), and in 2019 it was also
significantly above (0.81% vs 0.47%) (Lechner Knowledge Center, n.d.). This is
because the city is in a favorable geographical location, the capital is easily accessible
from here, and there was no significant drop in property prices after the 2008 crisis
due to the Mercedes investment. In fact, since 2017, the average price per square
meter of residential real estate has nearly tripled (from 565 EUR/sqm to 1.507
EUR/sqm) (ingatlannet.hu).
The first residential parks appeared in Kecskemét in the second half of the 2000s.
According to Hegedűs and Csatári (2012), there were five residential parks in the
city in 2009, totalling 448 apartments. Over the past decade, numerous new
residential parks have been created in the city, including Boróka Park, the subject of
our research. The project started in 2016 and is in its second phase, with two-thirds
of the planned 600 apartments already sold. The sales experience indicates that about
two-thirds of buyers are investors who purchase the properties for rental purposes
or in the hope of future price increases. Of the 23-hectare area owned by the
investors, only 3 hectares are planned for residential real estate development, while
the rest of the area will be used for commercial and green areas, as well as other
services such as healthcare, in collaboration with the municipality, creating a new
city center (Portfolio.hu, 2022) (Figure 1).
2
Theoretical Background
The EF is one of the best-known and most widely used complex measures of the
environmental impact of consumption or production in terms of land area. It is as
broad and versatile as money (Wackernagel et al., 2019a; Wackernagel et al., 2019b).
Our former researches (see Szennay et al., 2021; Szigeti et al., 2021; 2023) suggest
32
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that there is a demand for an easy-to-use EF calculator, which is free, and SMEs
(Small and Medium Enterprises) could reliably and without any professional
expertise measure environmental impacts of their activity. Results of (Szigeti et al.,
2021) showed that it is feasible to develop a standardized calculator for SMEs
considering only the common elements of environmental impacts (i.e. meals, fossil
fuels, electricity, etc.), while EF of material usage could be added by using sector
specific satellite calculators (Szennay et al., 2021). In the case of the construction
industry, such a calculator was developed and tested on Hungarian dwellings by
(Szigeti et al., 2023). EF calculation of construction materials is based on the
(unpriced) construction breakdown system (CBS), which is generally accepted in the
Hungarian industry and consists of four steps. First, item materials are identified and
converted into a common and preferred measurement (e.g., m2, m3, etc.). It is
important, as some material types are used in more phases or in different types.
Then, in the second step, materials are aggregated for the whole project. Third,
measurement units are converted into more appropriate units only for calculation if
needed. Finally, in the fourth step, EF is calculated using Inventory of Carbon and
Energy 1.6a (Hammond & Jones, 2008) or 3.0 (Embodied Carbon Footprint
Database, n.d.). For some unique items, such as windows and doors, EF is calculated
in a separate analysis.
3
Methodology
The first practical test of the previous theoretical building material ecological
footprint calculation (Szigeti et al., 2023) was carried out on the construction of the
Boróka housing estate. Using a sample of two new build condominiums from
Hungary with two and five stories and 28 and 123 apartments, respectively, (Szigeti
et al., 2023) calculated a specific EF of 0.20 and 0.17 global hectares per square
metres of useful floor area. The difference can be explained by the fact that the
smaller condominium was built in three separate buildings with only two stories, so
much more structural elements, namely structural concrete and steel, were needed.
An important limitation of the calculation is that the as-built condition was
considered in both cases, while mechanical (e.g., electricity, heating, water, heating,
cooling, etc.), fencing, and all items not included in the CBS were excluded. In our
further calculations, since we are mainly interested in orders of magnitudes here, we
will use the value of 0.2 gha per square meter. The research was conducted in January
and February 2023.
J. Zsolt Farkaset al.: Examination and Optimization of the Ecological Footprint of Embedded
Rail Structures
33.
The first phase of development includes 59 apartments with various floor plans. The
typical apartment sizes are: 33 m2 flats, 48-54 m2 apartments with 1.5 - 2 bedrooms,
68-78 m2 2.5-bedroom apartments, 110 m2 4-bedroom apartments.
The condominium was built on an undeveloped plot of land of approximately 3000
m2 (Figure 2). According to our calculations based on the building plans, the total
area of the first floor is 857.16 m2. The second development phase includes 2x63
apartments with a variety of floor plans. The typical apartment sizes are: 25 to 30 m2
of flats, one-and-a-half or two-bedroom apartments between 35 and 45 m2, 50-55
m2 living room + 2 bedrooms, 60-65 m2 living room + 3 bedrooms. The
condominium will be built on an undeveloped plot of land of approximately 6600
m2 (Figure 2). According to our calculations based on the building plans, the total
area of the first floor is 1347.2 m2.
Figure 2: The Boróka Residential Park development phases
Source: OpenStreetMap
Based on the results of structural and energy audits, we estimate that the buildings
have an expected lifetime of 50 years, after which they can continue to operate after
the necessary interventions. In our further calculations, since we are primarily
interested in orders of magnitude, we use the life expectancy of 50 years.
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING
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34
4
Results
The main results of our research are summarised in Table 1. Column A shows typical
dwelling sizes (30, 50, 70 and 110 square meters). These are compared with
hypothetical family sizes (column B). The per capita square meter values are given
in column C. Column D shows the flat sizes multiplied by the ecological footprint
per square meter ( A*0.2 gha/ m2). In column E, the value in column D is divided
by the expected life of the dwellings (50 years). Finally, column F is the quotient of
the values in columns E and B.
Table 1: Summary of our results
A
B
C
D
E
F
floor area
(m2)
family size
(capita)
floor area/capita
(m2)
total footprint
(gha)
footprint/year
(gha)
footprint/year/capita
(gha)
30
30
50
50
50
70
70
70
70
110
110
110
110
110
1
2
1
2
3
1
2
3
4
1
2
3
4
5
30.00
15.00
50.00
25.00
16.67
70.00
35.00
23.33
17.50
110.00
55.00
36.67
27.50
22.00
6
6
10
10
10
14
14
14
14
22
22
22
22
22
0.12
0.12
0.20
0.20
0.20
0.28
0.28
0.28
0.28
0.44
0.44
0.44
0.44
0.44
0.12
0.06
0.20
0.10
0.07
0.28
0.14
0.09
0.07
0.44
0.22
0.15
0.11
0.09
The results in Table 1 show that this value is between 0.06 gha/person and 0.44
gha/person. When interpreting the results, it is essential to note that we are only
looking at the completion of the dwelling up to its structural condition, we do not
include the building envelope or new appliances, and we do not consider the
ecological footprint of the use. Our research includes many simplifications, we have
not considered the footprint of built-up areas and energy used in construction, so
our estimates only consider the part of the real environmental impact.
J. Zsolt Farkaset al.: Examination and Optimization of the Ecological Footprint of Embedded
Rail Structures
5
35.
Discussion and Conclusion
According to the latest Global Footprint Network data (2022), Hungary has a per
capita ecological footprint of 3.9 gha. In our research, we used the example of
Boróka Park to investigate how much buying a dwelling contributes to the annual
ecological footprint. At this stage of the research, it is not possible to say what the
overall impact of the construction of Boróka Park will be on the footprint of the
people moving there, but at around 25 square meters per capita, the ecological
footprint per capita will remain at 0.1 gha per capita per year. This can be easily
compensated by the more favorable energy characteristics of the new housing. It is
also advisable to link public subsidies to limited dwelling sizes and larger family sizes.
The resulting EF value can be used to position the homes for sale and to help
consumer choice in the environmentally conscious consumer segment. This is the
first application of the prior theoretical results of our research (Szigeti et al., 2023)
so we do not have comparative data, which is a limitation of the interpretation of
the results.
The transition to sustainable cities and the related SDG11 will be one of the biggest
economic challenges in the coming years, where ecological footprinting can provide
significant support in both the planning and implementation phases. The
cornerstones identified in our research can provide real help in planning and
decision-making.
Acknowledgment
This research was supported by the Ministry of Innovation and Technology of Hungary from the
National Research, Development and Innovation Fund, financed under the Tématerületi Kiválósági
Program 2021 (TKP2021-NKTA) funding scheme (Project no. TKP2021-NKTA-44).
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https://doi.org/10.3390/su11072164
THE ROLE OF NEW KEYNESIAN
SEMI-STRUCTURAL
MACROECONOMIC FORECASTING
MODEL IN REALISATION OF
SUSTAINABLE DEVELOPMENT
GOALS IN UZBEKISTAN
ELYOR DAVLATOV,1 JUDIT SÁGI2
University of Szeged, Szeged, Hungary
davlatov.elyor@o365.u-szeged.hu
2 Budapest Business School – University of Applied Sciences, Budapest 1149, Hungary
sagi.judit@uni-bge.hu
1
Abstract New reforms have been adopted in banking system of
Uzbekistan since 2017 as monetary policy framework directed
from monetary targeting to inflation targeting (IT). Liberalization
of the national currency, reaching 5% inflation target on
medium-term and operational independence of the Central Bank
of Uzbekistan (CBU) have started progress of the reforms. The
CBU has set policy rate as the primary tool of monetary policy
in the context of inflation targeting regime. According to the
experience of countries that implemented inflation targeting
regime successfully, it is recommended to use the NewKeynesian semi-structural macroeconomic forecasting model to
achieve price stability with the help of policy rate. This paper
analyses efficiency of monetary policy by proposing to use NewKeynesian semi-structural macroeconomic forecasting model for
Uzbekistan. The model includes 4 main blocks: Demand block
(Output gap), Supply block (Philips curve), Exchange rate block
(Uncovered Interest Rate Parity (UIP)), Interest rate block
(Taylor rule). We expect that this model helps to forecast
medium-term macroeconomic scenarios especially reaching
inflation target and steady state of the economy.
DOI https://doi.org/10.18690/um.epf.3.2023.7
ISBN 978-961-286-736-2
Keywords:
policy rate,
output gap,
uncovered interest
rate parity,
dollarization,
money market
JEL:
E47
38
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING
RESILIENCE BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Introduction
Practical monetary policy has greatly improved because of the adoption of inflation
targeting. Inflation-targeting central banks can still make significant advancements
by being more precise, organized, and open about their operational goals (for
example, by using an explicit intertemporal loss function), their forecasts (for
example, by selecting the best projections of the instrument rate and the target
variables), and their communication (in the form of announcing optimal projections
of the instrument rate and target variables) (Svensson, 2007). The president of
Uzbekistan signed an official document as a formal strategy to inflation targeting
regime in 2017 1. This decree determined the main guidelines and priorities of
moving from money targeting to inflation targeting regime. According to the decree,
the CBU is responsible for making inflation 10% in 2021 and 5% inflation target in
2023. Also, coordination of fiscal and monetary policy, preferential loan termination,
and keeping fiscal deficit under 1.5 percent to GDP are determined as a smooth
transition to IT regime. CBU has developed operational mechanism forecasting and
analytical framework since the transition period. As an improvement of operational
mechanism, CBU uses repo and swap auction when there is shortage of liquidity in
money market, or it uses deposit auctions and repo operations when there is excess
liquidity. CBU uses a variety of econometric models to forecast macroeconomic
variables such as Bayesian VAR model for forecasting inflation and the Dynamic
Factor Model for forecasting GDP 2.
This paper introduces a small macroeconomic quarterly projection model (QPM)
for Uzbekistan. We propose to use simple canonical QPM model to analyze interest
rate and exchange rate channel of monetary policy. The QPM is a semi-structural
model for open economies that help formulate medium-term macroeconomic
forecasts.
President decree 5877, “Improving monetary policy by step-by-step transition to inflation targeting regime”.
https://lex.uz/docs/-4600824
2 Guidelines of Monetary policy for 2021-2023. https://cbu.uz/en/monetary-policy/trend/
1
E. Davlatov, J. Sági: The Role of New Keynesian Semi-structural Macroeconomic Forecasting
Model in Realisation of Sustainable Development Goals in Uzbekistan
2
39.
Theoretical Background
Tex Norman and Schmidt-Hebbel defined the monetary transmission mechanism
as “the process through which changes in monetary policy instruments affect the
rest of the economy and, in particular, output and inflation” (Norman & Klaus
2002). Monetary policy impulses transmit through various channels, affecting
different variables and different markets, and at various speeds and intensities. The
QPM is a tool for cogently organizing ideas and data into baseline assessments, risk
comparisons to baseline predictions, and the nature of policy responses to various
types of shocks (Berg et al., 2006.a). Research of Al Rasasi and Cabezon showed that
the interbank market has seen rapid development since the introduction of inflation
targeting regime in Uzbekistan but there are still some signs of market segmentation,
as some banks are consistently borrowers or lenders in the market. Another problem
with interbank market is underdeveloped government security markets (Al Rasasi &
Cabezon, 2022).
There are certain factors that impede the effective conduct of monetary policy for
Central Asian Countries (Isakova, 2008). A significant level of dollarization and
financial sector underdevelopment can pose a serious obstacle to the functioning of
monetary transmission. Additionally, exchange rate pass-through is the strongest
channel of monetary transmission in Asian Countries. It is possible to consider QPM
as a method which consists of two calibrated models (Cote et al., 2006). The first
model is used to study determinants of long-term equilibrium in the economy and
the constant impact of economic shocks or policy changes. The second model is
made up of a set of dynamic relationships that show paths leading from initial
conditions to the implicit steady-state solution, or long-term equilibrium. According
to Berg, QPM has four main blocks: aggregate demand block (IS curve), inflation
block (Phillips curve), monetary policy rule block (monetary policy reaction
function) and exchange rate block (assuming uncovered interest rate parity) (Berg et
al., 2006b). The model is structural because each of its equations has an economic
interpretation, but the equations are not fully micro-founded. It is perceived as a
general equilibrium model because it describes how the equilibrium is established in
the economy, and not only in some markets or sectors. It is considered as a
stochastic model in that random shocks affect each endogenous variable, and it is
possible to use the model to derive measures of uncertainty in the underlying
baseline forecasts.
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING
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Some applications of the QPM model have been documented in the literature. For
example, Nelyubina (2021) researched regional indicators of Russia with the help of
QPM model. It allows the policy maker to investigate how shocks in one location
spread to others, how various regions react to global shocks, and what the ideal
monetary policy should be, according to the author. Another implementation of
QPM was used on a study to determine neutral interest rate for Kyrgyzstan. The
paper analyzed data from 2000 Q1 to 2019 Q2 and concluded that the real neutral
interest rate for Kyrgyzstan was 4% based on various model estimates (TimeVarying Parameter Vector Autoregressions, Dynamic stochastic general equilibrium)
and 3.7% based on the QPM model. This figure is higher than from many
developing countries due to high public debt, high-risk premiums, low restricted
creditors' rights, the rule of law, and low local savings (Teodoru & Toktonalieva,
2020). Drovbishevskiy (2008) conducted research on transmission mechanism to
assess the effectiveness of monetary transmission of Russian economy based on data
from 1999-2007, by using the method of vector auto regression to compare
effectiveness of three channels. His result was that credit channel is the most
effective channel compared to the other two ones (i.e. the interest rate channel, and
the asset price channel).
Empirical research to analyze monetary policy transmission in Emerging Markets
and Developing Economies has been done by IMF researchers (Marques et al.,
2020). The results show that interest rate rises are the main sources of reducing
economic growth and inflation. In addition, the findings suggest that central banks
with modern monetary policy framework such as adapting to inflation targeting, high
level of transparency and independence tend to focus more on monetary policy
transmission mechanism than financial market development. According to
Papadamou, there is a link between central bank transparency and the transmission
of monetary policy through interest channel for emerging market economies. It has
been shown that when the central bank's monetary policy is more transparent, the
monetary transmission is more effective (Papadamou et al., 2014). The main reason
for the low efficiency of the monetary transmission is the imperfection of methods
for forming the volume and structure of the monetary base (Mishchenko et al.,
2021). Banks’ characteristics, such as the capital ratio, exposure to domestic
sovereign debt, percentage of non-performing loans and stability of funding
structure are the reasons for heterogeneity in the pass- through of conventional
monetary policy changes and the location of a bank is irrelevant in this respect
E. Davlatov, J. Sági: The Role of New Keynesian Semi-structural Macroeconomic Forecasting
Model in Realisation of Sustainable Development Goals in Uzbekistan
41.
(Altavilla et al., 2020). In small open economies with rigid exchange rates, the
effectiveness of domestic monetary policy through the interest rate channel is quite
limited (Petrevski & Bogoev, 2012). Iddrisu (2020) and others studied interest rate
channel and lending channels of monetary policy transmission for South Africa. The
results show that one percent reduction of key policy rate increase bank lending rate
to 0.29%. In turn, one percent rise of bank lending rate reduces investment to
0.063%. One percentage decline of investments brings to fall inflation by 0.074%.
Musil and Pranovich (2018) made a small structural model by considering economic
structure of Belarus. New blocks explain added wage policy, direct lending by
government to state-owned enterprises, dollarization in Belarus. Andrle and
coauthors (2013) developed a semi-structural new-Keynesian open-economy model
for Kenya, a low-income country. The results show that while the imported food
price shocks contributed to Kenya's inflation dynamics in 2008 and thereon, it was
found that an accommodating monetary policy also played a significant influence.
Benes et al. (2017) estimated effectiveness of monetary policy transmission
mechanism by using a production version of QPM. The model incorporates specific
features of Indian economy such as agricultural sector, food and non-food prices
and credibility of Central Bank of India.
3
Methodology
QPM model was developed by IMF economists as a part of forecasting and
monetary policy analysis system (Berg et al., 2006b). Based on the literature above,
we have made core model structural equations and parameters. The equations are
made by considering specific features of economy of Uzbekistan. The core equations
are as follows:
Output gap equation
𝑙𝑙_𝑦𝑦_𝑔𝑔𝑔𝑔𝑔𝑔𝑡𝑡 = 𝑔𝑔1 𝑙𝑙_𝑦𝑦_𝑔𝑔𝑔𝑔𝑔𝑔𝑡𝑡−1 + 𝑔𝑔2 𝑙𝑙_𝑦𝑦_𝑔𝑔𝑔𝑔𝑔𝑔𝑡𝑡+1 − 𝑔𝑔3 𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑡𝑡−1 + 𝑔𝑔4 𝑙𝑙_𝑦𝑦_𝑔𝑔𝑔𝑔𝑔𝑔𝑔𝑔𝑡𝑡 +
𝑠𝑠ℎ𝑜𝑜𝑟𝑟𝑜𝑜_𝑙𝑙_𝑦𝑦_𝑔𝑔𝑔𝑔𝑔𝑔𝑡𝑡
𝑙𝑙_𝑦𝑦_𝑔𝑔𝑔𝑔𝑔𝑔𝑔𝑔𝑡𝑡 = 𝑔𝑔5 𝑙𝑙_𝑦𝑦_𝑔𝑔𝑔𝑔𝑔𝑔𝑔𝑔𝑡𝑡−1 + 𝑠𝑠ℎ𝑜𝑜𝑟𝑟𝑜𝑜_𝑙𝑙_𝑦𝑦_𝑔𝑔𝑔𝑔𝑔𝑔𝑔𝑔𝑡𝑡
(1)
(2)
Output gap equation estimated business cycle. It resembles Euler equation and
approximates how monetary conditions index(mci), foreign output gap(l_y_gapf)
and demand shock determines output gap (l_y_gapt) of the domestic economy. The
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING
RESILIENCE BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
lag of output gap (l_y_gap) at time (t-1) is added to capture the persistence of the
business cycle. This is a structural stochastic equation; therefore, it includes the
structural demand shock. Unlike in the domestic part of the model, there is no
economic structure (or economic interpretation) in the foreign block. All variables
in the foreign or external block follow simple, auto regressive processes (order one)
as the second equation above (i.e., the foreign output gap). Monetary conditions
index (equation 3) approximates weighted average of two variables: the real interest
rate gap (r) and the real exchange rate gap (z). Both variables are determined
calculating deviation from the long-term trend or equilibrium level. When both gaps
are zero, monetary policy is neutral, which means that there is no stimulating or
contracting demand in the economy.
Monetary conditions index (rmci)
𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑡𝑡 = 𝑔𝑔6 𝑟𝑟_𝑔𝑔𝑔𝑔𝑔𝑔𝑡𝑡 + (1 − 𝑔𝑔6 )(−𝑧𝑧)_𝑔𝑔𝑔𝑔𝑔𝑔𝑡𝑡
(3)
Philips curve
By considering inflation factors in Uzbekistan, we divided ordinary Philips curve
equation into 4 sub-part equations, and then we aggregated all sub-parts.
Philips curve for non-food items
𝑑𝑑𝑙𝑙_𝑟𝑟𝑔𝑔𝑟𝑟_𝑛𝑛𝑔𝑔𝑡𝑡 = 𝑔𝑔7 𝑑𝑑𝑙𝑙_𝑟𝑟𝑔𝑔𝑟𝑟_𝑛𝑛𝑔𝑔𝑡𝑡+1 + (1 − 𝑔𝑔7 − 𝑔𝑔8 )𝑑𝑑𝑙𝑙_𝑟𝑟𝑔𝑔𝑟𝑟_𝑛𝑛𝑔𝑔𝑡𝑡−1 + 𝑔𝑔8 𝑑𝑑𝑙𝑙_𝑟𝑟𝑔𝑔𝑟𝑟_𝑟𝑟𝑟𝑟𝑔𝑔_𝑛𝑛𝑔𝑔𝑡𝑡 +
(4)
𝑔𝑔9 𝑟𝑟𝑟𝑟𝑟𝑟_𝑛𝑛𝑔𝑔𝑡𝑡 + 𝑠𝑠ℎ𝑜𝑜𝑟𝑟𝑜𝑜_𝑑𝑑𝑙𝑙_𝑟𝑟𝑔𝑔𝑟𝑟_𝑛𝑛𝑔𝑔𝑡𝑡
The equation (4) shows Philips curve for non-food item. According to the equation,
expected value (dl_cpi_nft+1) and lag value (dl_cpi_nft-1) are the variables that
determine non-food inflation equation. Importantly, import of non-food items
(dl_cpi_imp_nft) and real marginal cost index (rmc_nft) are the other variables of
the non-food inflation equation. We made a separate equation for imported nonfood inflation. Imported non-item inflation equation includes lag of its own value,
inflation of food items and deviation of nominal exchange rate from its trend value.
The QPM has separate equation for real marginal cost index. This index is a weighted
average of two gap variables, namely the output gap, and the exchange rate gap. We
will show equation of the real marginal cost index later, together with food items.
E. Davlatov, J. Sági: The Role of New Keynesian Semi-structural Macroeconomic Forecasting
Model in Realisation of Sustainable Development Goals in Uzbekistan
43.
Philips curve for food items
𝑑𝑑𝑙𝑙_𝑟𝑟𝑔𝑔𝑟𝑟_𝑔𝑔𝑡𝑡 = 𝑔𝑔10 𝑑𝑑𝑙𝑙_𝑟𝑟𝑔𝑔𝑟𝑟_𝑔𝑔𝑡𝑡+1 + (1 − 𝑔𝑔10 − 𝑔𝑔11 )𝑑𝑑𝑙𝑙_𝑟𝑟𝑔𝑔𝑟𝑟_𝑔𝑔𝑡𝑡−1 + 𝑔𝑔11 (𝑑𝑑𝑙𝑙_𝑟𝑟𝑔𝑔𝑟𝑟_𝑟𝑟𝑟𝑟𝑔𝑔_𝑔𝑔𝑡𝑡 ) +
(5)
𝑔𝑔12 𝑟𝑟𝑟𝑟𝑟𝑟_𝑔𝑔𝑡𝑡 + 𝑠𝑠ℎ𝑜𝑜𝑟𝑟𝑜𝑜_𝑑𝑑𝑙𝑙_𝑟𝑟𝑔𝑔𝑟𝑟_𝑔𝑔𝑡𝑡
Variables of food items of Philips curve is almost the same with the non-food items.
It covers expected value (dl_cpi_ft+1) and lag value (dl_cpi_nft-1), imported food
inflation variable (dl_cpi_imp_ft) and real marginal cost index (rmc_ft).
Real marginal costs
𝑟𝑟𝑟𝑟𝑟𝑟_𝑛𝑛𝑔𝑔𝑡𝑡 = 𝑔𝑔13 𝑙𝑙_𝑦𝑦_𝑔𝑔𝑔𝑔𝑔𝑔𝑡𝑡 + (1 − 𝑔𝑔13 )(𝑙𝑙_𝑧𝑧_𝑔𝑔𝑔𝑔𝑔𝑔𝑡𝑡 )
𝑟𝑟𝑟𝑟𝑟𝑟_𝑔𝑔𝑡𝑡 = 𝑟𝑟14 𝑙𝑙_𝑦𝑦_𝑔𝑔𝑔𝑔𝑔𝑔𝑡𝑡 + (1 − 𝑔𝑔14 )(𝑙𝑙_𝑧𝑧_𝑔𝑔𝑔𝑔𝑔𝑔𝑡𝑡 )
(6)
(7)
As we can see from equation (6) and (7), real marginal cost index for both food and
non-food items are determined by output gap which is the pressure by domestic
firms to produce one additional unit of output and exchange rate gap which varies
with the relative prices of imports.
Philips curve for regulated items and services
𝑑𝑑𝑙𝑙_𝑟𝑟𝑔𝑔𝑟𝑟_𝑟𝑟𝑒𝑒𝑔𝑔𝑡𝑡 = 𝑔𝑔15 𝑑𝑑𝑙𝑙_𝑟𝑟𝑔𝑔𝑟𝑟_𝑟𝑟𝑒𝑒𝑔𝑔𝑡𝑡−1 + (1 − 𝑔𝑔15 )𝑑𝑑4𝑙𝑙_𝑟𝑟𝑔𝑔𝑟𝑟𝑡𝑡 + 𝑠𝑠ℎ𝑜𝑜𝑟𝑟𝑜𝑜_𝑑𝑑𝑙𝑙_𝑟𝑟𝑔𝑔𝑟𝑟_𝑟𝑟𝑒𝑒𝑔𝑔𝑡𝑡
(8)
Philips curve for regulated items include the lag value of the regulated items with
(dl_cpi_regt-1), year on year inflation rate d4l_cpit and the shock to the regulated
items.
Finally, we can aggregate all Philips curve subpart equations (equations 4,5,6,7 and
8) to make a single Philips curve. The equation below shows aggregated Philips curve
equation for our model.
𝑙𝑙_𝑟𝑟𝑔𝑔𝑟𝑟𝑡𝑡 = 𝑔𝑔16 𝑙𝑙_𝑟𝑟𝑔𝑔𝑟𝑟_𝑔𝑔𝑡𝑡 + 𝑔𝑔17 𝑙𝑙_𝑟𝑟𝑔𝑔𝑟𝑟_𝑛𝑛𝑔𝑔𝑡𝑡 + (1 − 𝑔𝑔16 − 𝑔𝑔17 )𝑙𝑙_𝑟𝑟𝑔𝑔𝑟𝑟_𝑟𝑟𝑒𝑒𝑔𝑔𝑡𝑡 +
𝑠𝑠ℎ𝑜𝑜𝑟𝑟𝑜𝑜_𝑙𝑙_𝑟𝑟𝑔𝑔𝑟𝑟𝑡𝑡
(9)
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING
RESILIENCE BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Interest rate – Taylor rule
Next block of our model is the interest rate rule. It bases on the Taylor rule. The
model assumes that the central bank reacts to the deviation of inflation and output
gap in a structured way. The equation for interest rate rule is as follows:
𝑟𝑟𝑟𝑟𝑟𝑟𝑡𝑡 = 𝑔𝑔18 𝑟𝑟𝑟𝑟𝑟𝑟𝑡𝑡−1 + (1 − 𝑔𝑔18 )(𝑟𝑟𝑟𝑟𝑟𝑟_𝑡𝑡𝑛𝑛𝑑𝑑𝑡𝑡 + 𝑔𝑔19 𝑑𝑑𝑒𝑒𝑑𝑑_𝑟𝑟𝑔𝑔𝑟𝑟𝑡𝑡 + 𝑔𝑔20 𝑙𝑙_𝑦𝑦_𝑔𝑔𝑔𝑔𝑔𝑔𝑡𝑡 ) + 𝑠𝑠ℎ𝑜𝑜𝑟𝑟𝑜𝑜_𝑟𝑟𝑟𝑟𝑟𝑟𝑡𝑡
(10)
The lag value of policy rate (irrt-1) signals that the central bank reacts to changes
smoothly not abruptly. The equation also has neutral interest rate irr_tndt and
deviation of inflation dev_cpit and output gap l_y_gapt. The equation is structural,
so it has policy shock that is shock_irrt.
Exchange rate rule (UIP condition)
The last block of domestic part of our model is the uncovered interest rate parity
(sometimes called UIP condition). UIP simply says that the exchange rate at time t
is equal to the expected level of the exchange rate in the next period and the
differential between foreign and domestic interest rates. Our model takes more
sophisticated version of the UIP condition that considers differences in risk and
liquidity of domestic and foreign assets. The equation for UIP condition is as
follows:
𝑙𝑙_𝑠𝑠𝑡𝑡 = (1 − 𝑔𝑔21 )𝑙𝑙_𝑠𝑠_𝑡𝑡𝑔𝑔𝑟𝑟𝑡𝑡 + 𝑔𝑔26 (𝑙𝑙_𝑠𝑠𝑡𝑡−1 − (𝑟𝑟𝑡𝑡 − 𝑟𝑟_𝑔𝑔𝑡𝑡 − 𝑔𝑔𝑟𝑟𝑒𝑒𝑟𝑟𝑡𝑡 )/4) + 𝑠𝑠ℎ𝑜𝑜𝑟𝑟𝑜𝑜_𝑙𝑙_𝑠𝑠𝑡𝑡
(11)
Equation (11) shows that the nominal exchange rate at time t is determined based
on the target level of exchange rate (l_s_tart), nominal exchange rate at time t-1 and
the interest rate differential between domestic and foreign country that considers the
risk premium.
Untill now, we have finished 4 main building blocks of domestic part of our model.
Foreign blocks are determined with simple auto regressive processes (AR1). The
next step is to choose parameterization before running model simulation. According
to the literature (Musil, 2018; Berg et al., 2006b), we may select model parameters by
E. Davlatov, J. Sági: The Role of New Keynesian Semi-structural Macroeconomic Forecasting
Model in Realisation of Sustainable Development Goals in Uzbekistan
45.
considering Uzbekistan’s economic development level and current position. Table 1
shows the parameters that we chose to simulate our model.
Table 1: Model parameters
a1
0.40
a11
0.05
a2
0.30
a12
0.25
a3
0.15
a13
0.85
a4
0.15
a14
0.85
a5
0.80
a15
0.80
a6
0.85
a16
0.43
a17
0.35
a7
0.30
a18
0.50
a8
0.05
a19
1.20
a9
0.25
a20
0.50
a10
0.30
a21
0.50
Source: Authors’ estimations.
The parameters above have been chosen based on the studies of the International
Monetary Fund working papers (Benes et al., 2017; Musil and Pranovich, 2018). This
parameter is used to evaluate poor and developing countries. Once we have checked
different parameter values, reasonable values are chosen for simulation. Based on
the simulation results, we checked impulse response of variables with 0.5 shock
parameter for demand shock. Once the shock applied, output gap rises dramatically
in the first period of analysis and reaches long-term trend in the first quarter of 2026.
As the output gap increases, inflation rate also raises in the same quarter and the
central banks also decides to increase policy rate. Next, we checked variables by
applying non-food supply shock with 1.10 parameter and food supply shock with
1.0. The inflation rate rises in both cases and central bank responds with
contractionary monetary policy in the first period. Then, as the demand declines,
inflation and interest rates come back to target level in the first quarter of 2026.
4
Discussion and Conclusion
Uzbekistan is one of the post-Soviet countries which have made structural reforms
in monetary policy. The country adapted to inflation targeting regime in 2017 and
since then CBU changes the monetary policy framework accordingly. In general,
inflation targeting central banks use policy rate as a main tool to effect business cycle
then the inflation rate. The objective of this paper was to make a model to analyze
how effectively interest rate and exchange rate channel work in Uzbekistan. The
paper illustrates structural equations of QPM model that is used by IMF and central
banks in inflation targeting countries. Implementation of the model can be made by
the MATLAB software with the help of IRIS toolbox.
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING
RESILIENCE BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
References
Altavilla, C., Canova, F., Ciccarelli, M. (2020). Mending the broken link: Heterogeneous bank lending
rates and monetary policy pass-through. Journal of Monetary Economics, 110 (C), 81-89. doi:
10.1016/j.jmoneco.2019.01.001
Nelyubina, A. (2021). Forecasting Regional Indicators Based on the Quarterly Projection Model.
Russian Journal of Money and Finance, 80(2), 50–75. doi: 10.31477/rjmf.202102.50
Andrle, M., Berg, A., Morales, A., Portillo, R., Vlček, J. (2013). Forecasting and Monetary Policy Analysis in
Low-Income Countries: Food and non–Food Inflation in Kenya. IMF Working Paper No. 13/61.
Berg, A., Karam, P., Laxton, D. (2006a). A Practical Model-Based Approach to Monetary Policy Analysis:
Overview. IMF Working Paper No. 06/80.
Berg, A., Karam, P., Laxton, D. (2006b). A Practical Model-Based Monetary Policy Analysis—A How-To
Guide. IMF working paper No. 06/81.
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G.V., Portillo, R., Wang, H., Zhang, F. (2017). Quarterly Projection Model for India: Key Elements
and Properties, IMF Working Paper No. 17/33.
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Emerging Markets and Developing Economies. IMF working paper No. 20/35
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transmission mechanism channels in Ukraine. Banks and Bank Systems, 16(3), 48-62.
doi:10.21511/bbs.16(3).2021.05
Musil, K., Pranovich, M., Vlcek, J. (2018). Structural Quarterly Projections Model for Belarus. IMF working
paper No. 18/254.
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paper No. 20/87.
APPLICATION AND COMPARISON
OF ONLINE CALCULATORS FOR
CALCULATING THE ECONOMIC
EFFICIENCY AND SUSTAINABILITY
OF VEHICLES
STEFAN BONGARD, MORITZ MAIN
Ludwigshafen University of Business and Society (LUBS), Ludwigshafen, Germany
stefan.bongard@hwg-lu.de, mo.main@t-online.de
Abstract The aim of this work is to use different online
comparison calculators in order to compare the results and to
work out limitations and potentials for improvement. The
research hypothesis is that due to uniform initial data of the case
study, the different calculators provide approximately the same
results. To investigate this hypothesis, four steps are carried out:
first research and categorization of online calculators; second
creating a case study and scenarios; third application of online
calculators and fourth comparing the results of the calculations,
also with the benchmark calculator DIPO-tool, for a critical
evaluation. Generally, one can say that only a small number of
the reviewed calculators can provide a functionality that is
necessary for a professional and proper comparison of economic
efficiency and sustainability. For the economic comparison, one
can state, that in some cases, the calculation results deviate
strongly from each other, contrary to the formulated hypothesis.
When considering sustainability, it becomes very clear that tankto-wheel and well-to-wheel considerations fall far short of the
mark and must be supplemented by a holistic approach that
includes the manufacturing phase and the after-use phase
(recovery and recycling).
DOI https://doi.org/10.18690/um.epf.3.2023.8
ISBN 978-961-286-736-2
Keywords:
alternative drive
technologies,
calculation tool,
case study,
life cycle
assessment,
profitability
analysis
JEL:
M10, R40, Q56
48
1
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING
RESILIENCE BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Introduction
Against the backdrop of climate change and increasingly concrete political measures
such as the EU ban on new combustion engine cars from 2035, there is growing
interest in finding out about the sustainability of vehicles. However, this is not just
about an ecological assessment, but also about making an economic decision.
Numerous online comparison calculators are available for this purpose, and this
article takes a closer look at them. The focus is on the question of whether different
comparison calculators deliver the same results with the same initial data.
2
Theoretical Background
The basic prerequisite for comparing vehicles is the availability of comparison
criteria for assessing economic efficiency and sustainability. Criteria for the
economic efficiency of vehicles mainly concern the acquisition costs minus any
subsidies and the residual value of a vehicle as well as running costs such as energy
consumption (Bertram & Bongard, 2014; Hacker et al., 2015) The decision criterion
for assessing economic viability is usually the total cost of ownership (TCO) of the
vehicles (Jöhrens et al., 2021). For the consideration of environmental sustainability,
generic terms in the literature include environmental accounting, life cycle analysis
(LCA) or life cycle assessment (LCA). These terms holistically encompass the phases
of production, use, and recycling or disposal of products (Koch & Toedter & Weber,
2020). Other terms commonly used in this context are "Well-to-Tank (WtT)", which
covers greenhouse gas emissions on the production side from the source to the
vehicle tank, and "Tank-to-Wheel (TtW)", which stands for a purely consumptionbased view. The term Well-to-Wheel (WtW) is the sum of energy (WtT) and vehicle
processes (TtW) (Schmied & Mottschall, 2014).
A wide range of online comparison calculators for calculating the economy and
sustainability of a vehicle are available on the Internet, which include a wide variety
of factors and data in their comparative calculations.
Comparison calculators with stored databases have a limited selection of vehicles
and models that the user can select for comparison. Some user-related parameters
can be determined by the user, such as the annual mileage or energy prices. Vehiclerelated data such as list prices and costs for insurance, inspection or taxes are
S. Bongard, M. Main: Application and Comparison of Online Calculators for Calculating the
Economic Efficiency and Sustainability of Vehicles
49.
predefined with approximate values. Examples of this type of online comparison
calculator include Alternative Fuels Data Center (U.S. Department of Energy, 2022),
E-Fahrer (E-Fahrer, 2022), Journey Cost Calculator (Zap-Map, 2022), and Linz AG
(Linz AG, 2022). Due to the numerous features of the Linz AG e-mobility
calculator, it is considered for this case study.
Comparison calculators with stored formulas do not access databases. The user must
research all data, such as acquisition or running costs, on the Internet or via other
sources of information. This takes time, but is rewarded by more precise results, as
no approximate or average values are used. Another advantage is that users are not
restricted by a limited choice of vehicle models. Examples of this type of online
comparison calculator include EMIL from the Vorarlberg Energy Institute
(Energieinstitut Voralberg, 2022), e-Stations (e-Stations, 2022), and Stromdrive
(Stromdrive, 2022).
3
Methodology
The EMIL and e-Stations calculators were selected for the case study. The reasons
for this are the diverse input options and features for sustainability consideration. A
case study comparing an internal combustion engine (ICE) vehicle, Mini Cooper S,
with a comparable electric vehicle (BEV), Mini Cooper SE, is used to evaluate the
selected online comparison calculators.
Configuration of the comparison vehicles and case study data are shown in Table 1.
The annual mileage is 20,000 km and after a holding period of five years the vehicles
are sold with a residual value of 30 %. Prices are constant over the entire holding
period.
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING
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Table 1: Configuration of the comparison vehicles and case study data
Feature
Engine power
Energy consumption
CO2-Emissions
Tank capacity / Battery size
Mini Service Inclusive Plus package (p. a.)
Comparison price with equivalent equipment
Subsidy
Insurance
Vehicle tax/Other costs
Gasoline/Power
GHG Bonus (Elektroauto-News, 2023)
Mini Cooper S
(ICE)
(131 kW) 178 PS
6.9 l / 100 km
160 g/km
44 l
€460.13
€37,180
€830.36
€124/€48
1.90 €/l
Mini Cooper SE
(BEV)
(135 kW) 184 PS
18 kWh /100 km
0 g/km
32.6 kWh
€449.82
€39,980
€9,000
€652.75
0/€32
0.49 €/kWh
plus €5.99 per month
€350
Source: https://www.mini.de/de_DE/home/the-mini-family.html?&tl=sea-glDE_MINI_NEWCARS_CONFIGURATOR_DEU_BND_SEA_MINI2023DE%20LO%20AL%20002-mixmiy-MINI+%C3%BCbergreifend-sech-BRAND_BG_CONFIGURATOR_PERF-.-pmini%20cooper%20konfigurator-.-.&clc=sea-glDE_MINI_NEWCARS_CONFIGURATOR_DEU_BND_SEA_MINI2023DE%20LO%20AL%20002-mixmuks&gclid=EAIaIQobChMIvNm--ub-_QIV6oxoCR1rlAnuEAAYASAAEgKwIPD_BwE&gclsrc=aw.ds
3.1
Application of online calculators
The following is a brief description of how the data from the case study was
processed with the selected comparison calculators. Limitations of the comparison
result from the fact that in some cases not all data of the case study could be
considered. Examples of this are the GHG-bonus, which could only be taken into
account with EMIL and the benchmark comparison calculator DIPO-Tool, the
missing input option of a residual value with e-Stations and Linz AG and the missing
recording options of the charging current subscription fee and the costs for
TÜV/AU with EMIL, e-Stations and Linz AG.
3.1.1
Online calculator of Linz AG
A database with approx. 400 gasoline, diesel and electric vehicles is stored in this
calculator. The Mini Cooper SE and Mini Cooper S vehicles selected for TCO
calculations are not available with their individual configuration and must be created
in the database itself. In the comparison calculator, a useful life of 12 years is fixed
for the vehicles. The shorter holding period cannot be stored. Annual mileage,
financial support for car purchase, prices for fuel and electricity, and maintenance
S. Bongard, M. Main: Application and Comparison of Online Calculators for Calculating the
Economic Efficiency and Sustainability of Vehicles
51.
costs can be set variably according to the case study. However, a vehicle tax is fixed
and cannot be adjusted to the actual vehicle tax to be paid. For sustainability, only
the TtW-CO2 for fully electric vehicles (0 kgCO2 /kWh) are shown. No values are
stored for combustion vehicles, so that the CO2 savings shown in the evaluation are
not comprehensible.
3.1.2
Online calculator EMIL
The calculator EMIL determines the TCO of the vehicles to be compared with the
aid of stored formulas. For individual vehicle categories standard values are stored.
The two Mini Coopers can be assigned to the small car category. Performance and
consumption values already stored can be replaced by values researched by the user.
Gasoline is selected as the energy source for the Mini Cooper S, while the Austrian
electricity mix (0.27 kg CO2e/kWh) is selected as one of the four available choices
for the Mini Cooper SE. Holding period and annual mileage can be specified
individually.
An environmental bonus and a GHG-bonus can be deposited for the Mini Cooper
SE. The annual maintenance costs, tax/insurance and energy costs for fuel (in €/l)
or electricity (in €/kWh) as well as the expected residual values at the end of the
holding period can be set according to the case study. Sustainability is determined in
terms of cumulative greenhouse gas emissions over the entire life cycle. The
subdivision is made into the category’s vehicle production, production of
fuel/electricity, driving operation and battery disposal. The greenhouse gas
emissions generated during vehicle production and battery disposal are allocated
proportionately to the useful life of the vehicles. Other environmental parameters
that are calculated pro rata over the entire life cycle of the vehicles are, for example,
particulate matter emissions and NOx-pollutant emissions.
3.1.3
Online calculator e-Stations
This comparison calculator works with formulas, but it has also a database of hybrid
and electric vehicles, which, however, only contains data on acquisition costs,
consumption and capacity of the battery. For the TCO comparison, the data from
the calculator is replaced by the acquisition costs from the configuration of the BEV.
The data for a conventional vehicle with an internal combustion engine must be set
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING
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by the user. All data of the case study can be transferred except the residual value
and income from the sale of the GHG quota are not considered. Only Tank-toWheel-CO2-emissions are considered for sustainability. For gasoline, a value of 2.32
kgCO2 per liter is stored as the CO2-TtW coefficient. Since full electric vehicles have
no greenhouse gas emissions during driving, 0 kgCO2 per kWh is shown as the TtWvalue.
3.1.4
Benchmark calculator DIPO-Tool
The DIPO tool is a professional solution for the holistic consideration of the
economic efficiency and sustainability of vehicles in the field of fleet management
and controlling. It consists of various Excel tables and was designed for teaching
and research purposes at the Ludwigshafen University of Applied Sciences (Bongard
& Friesenhahn & Wolff, 2022; Bongard & Schröder, 2022). In the expansion stage
used, the calculation of LCA values in particular was advanced. Bases on an
approach developed by Fraunhofer ISI (Wietschel et. al. 2019), depending on a
vehicle class a CO2-value is assigned to the respective vehicle for the manufacturing
phase and assumed to be 13 years for a vehicle lifetime. For small cars, these values
are 5.0 tCO2 (0.385 tCO2 p. a.) for internal combustion vehicles and 8.4 tCO2 (0.646
tCO2 p. a.) for electric vehicles. If we now assign values for a small vehicle to both
vehicles, the following picture emerges when the useful life is considered on a pro
rata basis:
Figure 1: DIPO-Tool LCA Chart
Source: Author's research.
S. Bongard, M. Main: Application and Comparison of Online Calculators for Calculating the
Economic Efficiency and Sustainability of Vehicles
53.
The proportional CO2-consumption of the manufacturing phase forms a foundation
that considers the CO2-emissions of the manufacturing phase. Further inclusion of
the recovery and recycling phase in the calculation methodology of the DIPO tool
is already being planned.
4
Results
Table 2 and 3 show the calculation results for the two vehicles of the case study.
Table 2: Results for Mini Cooper S (ICE)
Mini Cooper S
Profitability analysis
TCO in Euro (5 years)
Deviation to benchmark absolute (in
Euro)
Deviation to benchmark in %
Preferable alternative related to TCO
Sustainability analysis
TtW-CO2-emission in kg
WtW-CO2-emission in kg
LCA-CO2-emission in kg
(comparison basis)
Deviation to benchmark absolute (in
kg)
Deviation to benchmark in %
preferable alternative related to CO2
Linz AG
EMIL
e-Stations
DIPO tool
(Benchmark)
38.120
46.206
57.362
46.448
-8.328
-242
10.914
-17,9 %
no
-0,5 %
no
23,5 %
no
100
not
available
not
available
14.704
18.789
16.008
not
available
not
available
21.697
-
-103
-
-
-0,5 %
no
-
no
16.700
19.900
21.800
no
Source: Authors’ compilation
In case of the combustion vehicle, it can be stated for the economic efficiency that
all calculators do not show the combustion vehicle as the more economical
alternative. The EMIL calculator shows the smallest deviations in the TCO (-0.5 %),
while the other two calculators show considerable deviations of -17.9 % (Linz AG)
and 23.5 % (e-Stations). In terms of sustainability, the weaknesses of the Linz AG
and e-Stations calculators are clearly evident, as they do not report any LCA values.
The deviation between the benchmark and the EMIL calculator is very small at
-0.5 %.
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING
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Table 3: Results for Mini Cooper SE (BEV)
Mini Cooper SE
Profitability analysis
TCO in Euro (5 years)
Deviation to benchmark absolute (in
Euro)
Deviation to benchmark in %
Preferable alternative related to TCO
Sustainability analysis
TtW-CO2-emission in kg
WtW-CO2-emission in kg
LCA-CO2-emission in kg
(comparison basis)
Deviation to benchmark absolute (in
kg)
Deviation to benchmark in %
preferable alternative related to CO2
Linz AG
EMIL
e-Stations
DIPO tool
(Benchmark)
27.240
31.591
45.313
32.088
-4.848
-15,1 %
yes
-497
-1,5 %
yes
13.225
41,2 %
yes
yes
0
not
available
not
available
0
0
not
available
not
available
12.000
-
yes
5.346
9.872
0
8.800
-2.128
-
-17,7 %
yes
Source: Authors’ compilation
For the electric vehicle, it can be stated for the economic efficiency that all
calculators show the electric vehicle as the more economical alternative. The EMIL
calculator shows the smallest deviations for the TCO (-1.5 %), while the other two
calculators show proper deviations of -15.1 % (Linz AG) and very high 41.2 % (eStations). In terms of sustainability, there are larger deviations between the
benchmark and the EMIL calculator, which shows LCA CO2 emissions 17.7 %
lower.
5
Discussion and Conclusion
The assumption that different comparison calculators provide the same results based
on the same input data cannot be upheld, as there are sometimes considerable
deviations. Basically, the results are only correct in the sense that the electric vehicle
is shown to be the more advantageous alternative for the case study, both in terms
of economic efficiency and sustainability. Compared to the DIPO tool as a
benchmark, the EMIL calculator performs very well. One limitation, however, is
that the EMIL calculator only offers a choice of four electricity CO2-coefficients.
S. Bongard, M. Main: Application and Comparison of Online Calculators for Calculating the
Economic Efficiency and Sustainability of Vehicles
55.
From the user's point of view, it is therefore important to find out about the
corresponding quality of the expected results before using a comparative calculator.
It is helpful here to benchmark against a scientifically based calculator that has been
tested in numerous practical case studies, such as the DIPO tool used here.
Particularly against the backdrop of an urgent need for a more sustainable
orientation in the acquisition and use of vehicles, it is imperative to apply a holistic,
systemic view based on approaches to vehicle life cycle analysis.
References
Bertram, Mathias; Bongard, Stefan (2014): Elektromobilität im motorisierten Individualverkehr. Grundlagen,
Einflussfaktoren und Wirtschaftlichkeitsvergleich. Wiesbaden.
Bongard, Stefan; Friesenhahn, Andreas; Wolff, Jacob (2022): Tool-Supported profitability analysis of
alternative drive technologies. Maribor. DOI https://doi.org/10.18690/um.epf.5.2022.35
Bongard, Stefan; Schröder, Stefan (2022): Tool-gestützte Wirtschaftlichkeitsanalyse alternativer
Antriebstechnologien für die Mobilität der Zukunft. Tagungsband zum TAE Kolloquim
Future Mobility 2022. Ostfildern.
E-Fahrer (2022): Kostenrechner für Elektroautos. Retrieved December 3, 2022, from
https://efahrer.chip.de/kostenrechner
Elektroauto-News (2023): Jetzt aktiv werden: Endspurt für THG-Prämie 2022. Retrieved March 1, 2023,
from https://www.elektroauto-news.net/2023/thg-praemie-elektroauto-2022
Energieinstitut Voralberg (2022): EMIL: Elektromobilitätsrechner. Retrieved December 3, 2022, from
https://www.energieinstitut.at/tools/EMIL/vlbg/basis/
e-Stations (2022): Kostenrechner: Finden Sie mit unserem Kostenrechner heraus, ob die Anschaffung eines
Elektroautos nicht nur die Umwelt, sondern auch Ihr Konto nachhaltig schonen kann. Retrieved December
3, 2022, from https://www.e-stations.de/elektroautos/kostenrechner
Hacker, Florian; von Waldenfels, Rut; Mottschall, Moritz (2015): Wirtschaftlichkeit von Elektromobilität in
gewerblichen Anwendungen. Betrachtung von Gesamtnutzungskosten, ökonomischen Potenzialen und möglicher
CO2-Minderung im Auftrag der Begleitforschung zum BMWi Förderschwerpunkt IKT für Elektromobilität
II: Smart Car – Smart Grid – Smart Traffic. Abschlussbericht. Aktualisierte Fassung April 2015.
Jöhrens, Julius; Allekotte, Michel; Heining, Florian; Helms, Hinrich; Räder, Dominik; Schillinger,
Maybritt; Thienel, Maximilian; Dürrbeck, Konrad; Schwemmer, Martin; Köllermeier, Nadine.;
Waßmuth, Volker (2021): Potentialanalyse für Batterie-Lkw - Teilbericht im Rahmen des Vorhabens
„Elektrifizierungspotenzial
des
Güterund
Busverkehrs
My
eRoads“.
https://www.ifeu.de/publikation/potentialanalyse-fuer-batterie-lkw/.
Koch, Thomas;Toedter, Olaf; Weber, Philipp (2020): VDI-Studie zur: Ökobilanz von Pkws mit verschiedenen
Antriebssystemen. Düsseldorf.
Linz AG (2022): Mehr Transparenz mit dem E-Mobilitätsrechner: Rechnet sich der Kauf eines E-Fahrzeuges?
Retrieved December 3, 2022, from
https://www.linzag.at/portal/de/privatkunden/unterwegs/e_mobilitaet_1/e_mobilitaetsrec
hner
Schmied, Martin; Mottschall, Moritz (2014): Berechnung des Energieverbrauchs und der Treibhausgasemissionen
des ÖPNV. Leitfaden zur Anwendung der europäischen Norm EN 16258. Berlin.
Stromdrive (2022): Wirtschaftlichkeitsrechner: Berechnen Sie mit unserem Wirtschaftlichkeitsrechner ihr individuelles
Einsparpotenzial, welches sich durch den Einsatz eines Elektrofahrzeugs ergibt. Retrieved December 3,
2022, from https://www.stromdrive.de/29-0-Rechner.
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RESILIENCE BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
U.S. Department of Energy (2022) Vehicle Cost Calculator. Retrieved December 3, 2022, from
https://afdc.energy.gov/calc/
Wietschel et al. (2019): Klimabilanz, Kosten und Potenziale verschiedener Kraftstoffarten und Antriebssysteme für
Pkw und Lkw. Endbericht. Karlsruhe.
Zap-Map (2022): Journey Cost Calculator. Retrieved December 3, 2022, from https://www.zapmap.com/tools/journey-cost-calculator/
THE ROLE OF SOCIAL MEDIA IN
SUSTAINABLE CONSUMPTION: A
CLASS-WISE ANALYSIS
CEREN CUBUKCU CERASI, YAVUZ SELIM BALCIOGLU,
ASLI KILIC, FARID HUSEYNOV
Gebze Technical University, Gebze, Kocaeli, Turkey
cerencubukcu@gtu.edu.tr, ysbalcioglu@gtu.edu.tr, aslikilic@gtu.edu.tr,
fhuseynov@gtu.edu.tr
Abstract Public opinion must change if green consumerism is to
be promoted and making this change will be easier with an
understanding of society's movement toward green
consumption. Businesses can benefit from this adjustment and
make their processes and products more sustainable and
eliminate any kind of waste. This study uses sentiment analysis
to determine social media’s contribution to the promotion of
sustainability. It intends to quantify public attitudes toward green
consumption and identify significant points of attitude shift by
applying text mining and deep learning algorithms on structural
and semi-structured data from YouTube. Long Short-Term
Memory, Support Vector Machines and Random Forest
algorithms were used in this study. In addition, class-wise
performance was measured. The keywords related to ecofriendly consumption were selected and then a class-wise
performance analysis was performed related to each word
structure. Encouraging sustainability and sustainable
consumption by businesses can be very beneficial for them. In
this way, companies will be able to strengthen both their own
and their country's resilience with a sustainable economy.
DOI https://doi.org/10.18690/um.epf.3.2023.9
ISBN 978-961-286-736-2
Keywords:
sustainability,
green
consumption,
sentiment analysis,
class-wise analysis,
social media
JEL:
Q56, C38
58
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RESILIENCE BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Introduction
In recent years, the public has become increasingly aware of the negative
environmental effects of modern civilization. As a result, there has been a growing
interest in sustainable practices, with an emphasis on environmentally friendly
consumption. Green or sustainable consumption means using goods and services
that are produced in an eco-friendly and sustainable way (Kong et al., 2002). This
includes using products made from recycled or renewable materials, which are made
ethically and have a low carbon footprint. Sustainable consumption also involves
reducing waste, preserving resources, and choosing options that have minimal
impact on the environment. This shift towards green consumerism requires a change
in public opinion. A transition to a sustainable civilization can be aided by promoting
attitudes and values that support sustainability (Akenji, 2014). This would involve
education and awareness-raising campaigns, as well as training programs for leaders
in various sectors. Moving towards sustainable lifestyles is a gradual process that
requires changes in the way we live our lives, including the way we shop and behave
(Gilg et al., 2015).
In order to contribute to the relevant literature, this research conducted sentiment
analysis on social media data, specifically YouTube, to provide an example of how
to explore the current status and popularity of sustainability related topics with
YouTube commentators. The study's focus on text mining and deep learning
algorithms to understand public attitudes and identify significant points of attitude
shift presents a valuable resource for understanding consumer behavior and the
public's view on sustainability. This study tries to show how deep learning methods
and social media data can play a valuable role in promoting sustainable consumption
among the general population. The results of this study provide significant insights
for both scholars and businesses working towards a more sustainable economy.
2
Literature Review
Most of the research in literature related to sustainability have used questionnaires
on various factors and a group of participants. For example, Ahamad and Ariffin
(2018), investigated the knowledge, attitudes and practices of students towards
sustainable consumption with the data obtained through a questionnaire. As a result
of the research, it was revealed that although the students' knowledge about
C. Cubukcu Cerasi et al.: The Role of Social Media in Sustainable Consumption: A Class-wise
Analysis
59.
sustainable consumption was at a high level, they were at a moderate level in attitudes
and practices.
Jalali and Khalid (2019) conducted a study on the green product purchasing
behaviors, values and precautions of influencers with the survey data they conducted
with Instagram users. The Theory of Reasoned Action (TRA) and the Uses and
Gratifications Theory (UGT) were used in their studies.
Sajeewanie et al. (2019) proposed a model for predicting consumer purchase
intentions and behavior towards green products. Their model took perceived
consumer behavior, habit, subjective norms, environmental attitude, environmental
knowledge and awareness, price, brand image, and marketing information into
account.
Wang (2021) collected data with a questionnaire survey, to investigate the effect of
consumers' green cognition on green consumption behavior. The outcome of the
research shows that, green consumption knowledge of consumers and their views
on environmental problems can primarily enable the development of green
consumption awareness of consumers. The methodology will be described in the
section after this. Results and an analysis of that data will then be presented, followed
by conclusions.
3
Methodology
The 6489 comments that were obtained from Youtube are notably relevant to the
three major green keywords, which we will refer to as T0, T1, and T2. You may find
the relevant comments by doing a search on Youtube for usernames, their acronyms,
and the names of the most common keywords that each user used, such as #Balance
of trade, #Sustainability, and #Green items. For the sake of this research and
analysis, the analysis has been carried out in a collective fashion. As a result, the
hypothesis that the distribution of emotions that are represented in comments that
are relevant toward a single remark is indicative of the emotions associated with that
term is not accepted. In order to accommodate this, the class of attitudes that is
taken into consideration includes those that also reflect T0 and T1, T0 and T2, T1
and T2, none, and unrelated. It is important to note that the mining of comments
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING
RESILIENCE BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
from Youtube took place from January 2020 all the way through December 2020,
as this year was the year of the Covid-19 pandemic, the most data was obtained.
The purpose of using classification methods such as Long Short Term Memory
(LSTM), Support Vector Machines (SVM), and Random Forest was to analyze and
quantify public attitudes towards sustainable consumption as expressed through
YouTube comments. By adhering to these selection criteria, we aimed to create a
diverse and comprehensive dataset of YouTube videos and their corresponding
comments, allowing for an in-depth analysis of public attitudes towards sustainable
consumption.
In the end, the following fields were chosen; firstly, ID: An individual ID will be
assigned to each remark. In order to maintain the users' anonymity while yet
identifying them, it is recommended that a numerical ID be used as an identifier
rather than the username. Secondly, text: Displays the user's first remark that was
uploaded to the site. Thirdly, class: There are three columns, with two of them being
designated for each of the three keywords. The binary data that may be entered into
these columns is determined by whether the comment is oriented towards any one,
two, or all of them, or even none of them at all. After combining the three columns,
the resulting binary number is then transformed to decimal so that it may be used as
an easy-to-understand indicator. It might be anywhere between 0 and 6, inclusive.
3.1
Preprocessing
As compared to other online social media platforms for text and video, YouTube
has its own unique traditions, which is one of the reasons why extra caution is used
during the cleaning and pre-processing of unprocessed comments. The following
procedures are included in the pre-processing stage: first, Non-standard lexical
tokens, such as, emotions, and anomaly punctuation, are filtered out just after the
tokenization process; second, duplicate comments are excluded to maintain the
uniqueness of each comment; third, standard stop words are removed; and finally,
case folding is performed in order to convert all of the tokens into lower case letters.
There are a considerable number of terms that are out of vocabulary, however these
words are not removed from the data.
C. Cubukcu Cerasi et al.: The Role of Social Media in Sustainable Consumption: A Class-wise
Analysis
3.2
61.
Annotation
There are three annotators who are possibly aware of the green keywords and
intelligently aware of the keywords that are utilized either in favor of or against a
user for annotation. Instead of assigning a definitive positive or negative feeling to
each comment, annotators were tasked with determining if the statement in question
was an opinion or hypothesis. Annotation categories included the following six
subcategories: T0, T1, T2, (T0 and T1), (T1 and T2), and none. T0 = green products,
T1 = sustainability, T2 = balance of trade, shown in Table 1. A suitable class was
given to the collection of superfluous annotations so that the distribution of
comments could be identified, rather than the group being thrown out as
unnecessary.
Table 1: Classes and Corresponding keywords
Classes
None
T0
T1
T2
T0 and T1
T0 and T2
T1 and T2
3.3
Corresponding keyword
None
Green products
Sustainability
Balance of trade
“Green products” and “Sustainability”
“Green products” and “Balance of trade”
“Sustainability” and “Balance of trade”
Feature Extraction
There are three distinct kinds of feature vectors that are based on term-frequency,
and they are as follows: Term Frequency – contrary document density for unigrams,
bigrams, and trigrams. The Term density – contrary document density is a major
statistical method that is used to transform a collection of unprocessed documents
into a matrix in the form of term density vs. contrary document density. In other
means, it gives a term more weight if it appears less often in the material being
analyzed.
3.4
Long Short-Term Memory
Recurrent neural network (RNN) units that can learn long-term dependencies are
referred to as long short-term memory (LSTM) units. A recurrent neural network
(RNN) made of LSTM units is essentially what an LSTM network is. A cell, an input
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RESILIENCE BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
gate, an output gate, and a forget gate are the component parts that make up a typical
LSTM unit (Gao et al., 2020). The cell can remember values for arbitrarily long
periods of time, and its three gates are responsible for controlling the flow of
information into and out of the cell. The analysis of sequential data is where the
LSTM model (Saini, 2021), which belongs to the category of deep learning, shines
the brightest. It is used in the processing of jobs like language translation, music
production, and voice recognition, amongst others.
3.5
Support Vector Machines (SVM)
A method for machine learning that is drawn from analytical learning theory and is
based on the notion of structural uncertainty reduction is referred to as a
discriminative classifier. This approach is also known as the Support Vector Machine
(SVM) (Pisner & Schnyer, 2020). A separation hyper-plane that has optimality
between the two classes of a training dataset is found using the support vector
machine (SVM). The hyperplane with the greatest distance from the training dataset
that is located closest to it is used to calculate this optimal separation.
Conventionally, supervised learning approaches like support vector machines (SVM)
are used for classification, regression, and the identification of outliers (Abdullah &
Abdulazeez, 2021).
3.6
Random Forest
A random forest (RF) is a model that is made up of a collection of tree-structured
models with the formula h(x, k), where k = 1,..., where the k are independent random
vectors that are distributed equally and where each tree casts a unit vote for the class
that has the most users given the input x. The bagging algorithm serves as the
foundation for the RF, which also makes use of the Ensemble learning approach.
Using the given subset of data (Breiman, 2001), it generates many random trees and
then aggregates the results of all of those trees. One benefit of using a RF is that, in
comparison to using basic Decision Tree models, it can produce more accurate
predictions because of its reduction of overfitting and variance (Schonlau & Zou,
2020).
C. Cubukcu Cerasi et al.: The Role of Social Media in Sustainable Consumption: A Class-wise
Analysis
4
63.
Results and Discussion
The data that are shown in Table 2 are the result of the study of annotations. The
bulk of the 6489 comments that were gathered exhibit a feeling toward the term T0.
This represents 30.1% of the total comments. In contrast to this, the proportion of
comments that reflect attitudes toward T1 is just 19.05%, while the percentage of
comments that show sentiments for T2 is even a much lower percentage, at only
19.09%. This demonstrates that there are a significant number of people on Youtube
that prefer the green keyword T1. It's interesting to note that out of all the
comments, there are 1097 that indicate a preference for a combination of the terms
T 0 and T1. This accounts for 16.7% of the total comments. Yet, the favor seen for
T0 and T2 is 8.9%, and the favor observed for T1 and T2 is 9.4%, both of which
are very low.
In addition to LSTM, several other machine learning techniques, such as Support
Vector Machines and Random Forest, are used in order to do a comparative analysis
of the comment data which can be seen in Table 3. Cross-validation using stratified
6-folds is performed on the whole data set for the purpose of validation. The LSTM
and the SVM had the greatest precision out of all the classifiers, coming in at 0.76
and 0.73 respectively. The LSTM model has the greatest recall at 0.77, which is
equivalent to the model's term-frequency representations. The LSTM and SVM
models exhibit the greatest F1-Scores, which are respectively 0.74 and 0.7. By
looking at everything together, the performance of RF is the worst of all of them.
The LSTM classifier has the capability of achieving maximum accuracy.
Table 2: Comments statistics
Sentiment Classes
None
T0
T1
T2
T0 and T1
T0 and T2
T1 and T2
Total
No. of comments in each class
126
1947
1249
894
1097
573
603
6489
% of comments in each class
1.95
30.1
19.05
13.9
16.7
8.9
9.4
100
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING
RESILIENCE BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Table 3: Evaluation of classifiers regarding a variety of characteristics
Classification method
LSTM
SVM
RF
Precision
0.76
0.73
0.68
Recall
0.74
0.71
0.72
F1-Score
0.7498
0.7198
0.6994
In Table 4, each of the seven classes' precision, recall, and F1-Score are shown
according to their respective class. The relevant classes with the greatest precision,
0.81, is the class T0, whereas the relevant classes with the lowest precision are T0
and T1 together. Surprisingly, the class T0 results in the greatest recall, and the class
T0 results also provide the highest F1-Score. The fact that the “None” class obtained
substantial values of achievement measures may be attributed to the fact that it is
clearly differentiated from all of the other classes since all of the other classes have
feelings, however the “None” class does not contain any emotion at all.
Table 4: Class-wise performance of LSTM
Classes
None
T0
T1
T2
T0 and T1
T0 and T2
T1 and T2
5
Precision
0.81
0.79
0.75
0.76
0.65
0.71
0.73
Recall
0.72
0.81
0.74
0.73
0.69
0.74
0.75
F1- Score
0.758
0.793
0.744
0.738
0.664
0.724
0.736
Conclusion
In order to investigate the many different learning models, some key characteristics
are retrieved from the comments based on the inverse document frequency of
phrase frequency. The examination of the gathered data reveals the existence of a
green behavior on Youtube, which accounts for more than thirty percent of all the
green keywords-driven comments that were retrieved. The assessment of the
annotated dataset itself was performed using LSTM in addition to numerous
machine learning models, and encouraging results were found using LSTM and
SVM.
C. Cubukcu Cerasi et al.: The Role of Social Media in Sustainable Consumption: A Class-wise
Analysis
65.
This study only focuses on sentiment analysis of social media data from YouTube,
which may not be representative of the entire population's attitudes towards green
consumption. Also, this study only uses three different algorithms, and there may be
other algorithms that could provide better results for sentiment analysis. The
practical value of this article is that it provides insights into public attitudes towards
green consumption and sustainability, which can be helpful for businesses and
policymakers in developing strategies to promote sustainable practices.
In conclusion, the findings of this study have the potential to provide important
findings to raise awareness of sustainable consumption in businesses and encourage
end consumers. Encouraging sustainability and sustainable consumption by
businesses can be very beneficial for them, as academic studies in this field have
shown that companies trying to protect the environment and prevent pollution can
benefit from improved operational efficiency, lower costs, better brand image and
better profits (Chen, 2015; Stål and Jansson, 2017). In this way, companies will be
able to strengthen both their own and their countries' resilience with a sustainable
economy.
Acknowledgment
This study is one of the preliminary outputs of the project numbered 2022-A-113-07 funded by
Research Fund of Gebze Technical University.
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classification a review. Qubahan Academic Journal, 1(2), 81-90. doi:10.48161/qaj.v1n2a50
Ahamad, N. R., & Ariffin, M. (2018). Assessment of knowledge, attitude and practice towards
sustainable consumption among university students in Selangor, Malaysia. Sustainable Production
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Akenji, L. (2014). Consumer scapegoatism and limits to green consumerism. Journal of Cleaner Production,
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Breiman, L. (2001). Random forests. Machine learning, 45, 5-32. doi:10.1023/A:1010933404324
Chen, L. (2015). Sustainability and company performance: Evidence from the manufacturing industry (Vol. 1698).
Linköping University Electronic Press.
Gao, Z., Yuan, T., Zhou, X., Ma, C., Ma, K., & Hui, P. (2020). A deep learning method for improving
the classification accuracy of SSMVEP-based BCI. IEEE Transactions on Circuits and Systems II:
Express Briefs, 67(12), 3447-3451. doi:10.1109/TCSII.2020.2983389
Gilg, A., Barr, S., & Ford, N. (2005). Green consumption or sustainable lifestyles? Identifying the
sustainable consumer. Futures, 37(6), 481-504. doi:10.1016/j.futures.2004.10.016
Jalali, S. S., & Khalid, H. (2019). Understanding Instagram Influencers Values in Green Consumption
Behaviour: A Review Paper. Open International Journal of Informatics, 7(Special Issue 1), 47-58.
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Kong, N., Salzmann, O., Steger, U., & Ionescu-Somers, A. (2002). Moving Business/Industry towards
sustainable consumption: The role of NGOs. European Management Journal, 20(2), 109-127.
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doi:10.1109/ICMSSE53595.2021.00044
THE IMPACT OF THE COVID-19
PANDEMIC ON FINANCIAL
MARKETS: A META-ANALYSIS FROM
A GLOBAL PERSPECTIVE
MORINA FISNIK, GAJRAKU QLIRIM
University “Haxhi Zeka”, Faculty of Business, Peja, Kosovo
fisnik.morina@unhz.eu, qlirimgajraku1999@gmail.com
Abstract This study aims to examine the impact of the COVID19 pandemic on international financial markets in developed and
developing countries. We have applied the approach of metaanalysis, meta-regression, critical analysis and the case study
analysis. The empirical results of the meta-analysis show that the
COVID-19 pandemic has affected the financial markets of
developed countries through reduced supply, reduced demand,
and economic instability. On the other hand, in developing
countries, three indicators impact the international financial
markets during the COVID-19 pandemic, such as confidence,
expectations and changes in the consumption model. According
to the results of the meta-regression, it is concluded that new
daily cases of COVID-19 and deaths have negatively affected the
daily returns of financial markets globally. The case study
answers the research question of whether gold is a good hedge
for stock portfolios during the COVID-19 pandemic. The
findings of this study present several policy implications for
governments around the world to adopt early proactive strategies
and measures to control and protect international financial
markets from a negative downturn in future economic recessions
that pandemics may cause and to increase investor confidence.
DOI https://doi.org/10.18690/um.epf.3.2023.10
ISBN 978-961-286-736-2
Keywords:
COVID-19,
financial markets,
recession,
stocks,
gold
JEL:
E44, G01, G15
68
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING
RESILIENCE BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Introduction
This paper aims to analyze the impact of the COVID-19 pandemic on financial
markets from a global perspective. In 2020, The breakout and spread of COVID-19
substantially impacted the macroeconomic conditions in every nation and the state
of the world's financial markets. The stock market, one of the most significant
financial markets, takes the burden of severe emergencies first and is the primary
carrier of multidimensional risk spreading. In March 2020, there were four stock
market crashes in the U.S. More than 20% of the drop has been accumulated on
China's Shanghai and Shenzhen stock exchanges. The economy of Brazil, Japan, and
other countries have also experienced significant declines. The performance of the
world's stock markets is delicate, and there is extensive market contact. The spread
and contagion of systemic financial risk in international markets present short-term,
fast, and time-varying characteristics. The research question of this study is as
follows: How has the COVID-19 pandemic affected the performance of
international financial markets? This study's hypothesis is that the COVID-19
pandemic has negatively affected the financial markets through a decrease in supply,
a decrease in demand and economic instability.
2
Literature Review and Meta-analysis
The rapid spread of the COVID-19 outbreaks and its declaration as a pandemic by
the World Health Organization has led to fear and interest in other historic
pandemics. In the last 300 years (Hong et al., 2021), reported about 10 pandemics
and argued that because of the recurring pattern of irregular periodicity, the
possibility of new medical disasters in the future could not be ignored. Among them,
pandemics such as the Black Death or bubonic plague in the fourteenth century and
the influenza of 1918, known as the Spanish flu during 1918-1919, were the most
severe, causing the death of approximately 30 to 60 million people (Jonung &
Roeger, 2006). In recent years, many authors in their studies have analyzed how the
COVID-19 pandemic has affected the performance of international financial
markets and the investments of global corporations. Table 1 presents, through the
meta-analysis method, the empirical findings of studies by different authors
regarding the effects caused by the COVID-19 pandemic on the performance of
different financial markets.
M. Fisnik, G. Qlirim: The Impact of the COVID-19 Pandemic on Financial Markets:
A Meta-analysis From a Global Perspective
69.
Table 1: Meta-Analysis of existing studies related to the effects of the COVID-19 pandemic
on financial markets
Authors
(Estrada,
Koutronas, &
Lee, 2021)
(Adekoya &
Oliyide, 2022)
(Shear &
Ashraf, 2022)
(Aslam, Aziz,
Nguyen,
Mughal, &
Khan, 2020)
(Merkoulova
& Veld, 2022)
Year
Variables
Methods
2020
The number of
new cases of
COVID-19, the
performance of
financial markets
Spatially
interconnected
multidimensional
coordinate
model
2021
Eurocurrency
(EVZ), Equity
(VIX and EMVID)
Fractional
Integration
Tests, GrangerCausality Test
2020
Islamic stock
market returns,
conventional
stock market
returns, increase
in confirmed
cases of
COVID-19
Paired T-tests
and OLS
regression
techniques
2020
Exchange rate,
return from six
international
currencies
Multifractal
Detrended
Fluctuation
Analysis
2022
Personal equity
risk premium
(PERP),
expectation of
returns, cost of
capital
Questionnaire
Method - PERP
Empirical Findings
Analysis of ten major stock
markets around the world
shows that the effects of
Covid-19 could generate
damage similar to the financial
crisis of 1929.
The findings show that
COVID-19 has a significant
causal
effect
on
the
relationship between assets.
Notably, the effect of the
pandemic on the correlation
between markets is stronger
mainly in the low and middle
quantiles, while only in a very
few cases is significance
found.
Overall, the findings show
that Islamic stock markets
perform better before and
during COVID-19 than
conventional ones, and the
negative impact of the
pandemic on stock markets is
relatively less for Islamic
indices.
The findings of this study
show different degrees of
forex market efficiency before
and during the outbreak of
COVID-19. Investors in the
Forex market can structure
their investment and risk
management strategies to
exploit market inefficiencies.
The results show that the
traditional
equity
risk
premium is not relevant to
individuals for two reasons.
The first reason is that the
expectations of individuals in
the stock market are very
heterogeneous. The second
reason is that the risk-free rate
is not the real opportunity
cost of capital for individuals.
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Authors
Year
(Corbet, Hou,
Hu, & Oxley,
2022)
2022
Stock market,
variables of the
COVID - 19
pandemic
Joint Contagion
and Structural
Break Test
(Sulaiman,
2020)
2021
Economic
growth, market
return.
Multiple
Regression
Model
(Utomo, 2021)
2021
Stock return,
stock price, firm's
market
capitalization.
Analysis of panel
data - multiple
regression
2021
Demographics,
personality traits,
locus of control,
self-esteem,
attitude towards
debt, financial
literacy
(Chaudhary,
Bakhshi, &
Gupta, 2020)
2021
Stock market
returns, market
factors
ARCH –
GARCH Model
(Zhao,
Rasoulinezhad,
Sarker, &
TaghizadehHesary, 2022)
2021
Interest Rate,
GDP
Qualitative
Method - AHP
(Rendall,
Brooks, &
Hillenbrand,
2021)
Variables
Methods
Content Analysis
Empirical Findings
The results presented strongly
suggest that the optimal
hedging strategy will vary over
time and among hedged
assets, especially when an
economy faced a significant
shock as evidenced by the
recent COVID-19 pandemic.
In terms of market speed, the
results showed that the pace
of
declining
returns
accelerated following the
announcement by the World
Health Organization that
declared
Covid-19
a
pandemic.
This study suggests that the
COVID-19 pandemic and
lockdown policies have a
mixed impact on Indonesia's
stock market returns.
Our findings have potentially
important implications for
lenders, regulators and debt
counseling services about the
types of people who are most
likely to get into debt trouble.
The study finds that stock
returns are integrated with
market factors and generally
have little stock-specific
volatility.
The results show that
developed nations need
policies to support under the
consequences
of
the
pandemic, while the pandemic
has caused many threats to
social life in developing
countries.
Source: Data processing by authors (2023)
According to the results of the meta-analysis, we can conclude that the COVID-19
pandemic has negatively affected the performance of international financial markets,
and the results of other authors' studies show that the effects of the COVID-19
pandemic can generate consequences similar to the Great Depression Crisis of 1929
and the financial crisis of 2007-2009. In terms of market velocity, the results showed
M. Fisnik, G. Qlirim: The Impact of the COVID-19 Pandemic on Financial Markets:
A Meta-analysis From a Global Perspective
71.
that the pace of declining returns accelerated after the World Health Organization
announcement declaring COVID–19 a global pandemic. According to the results of
the meta-analysis, we can conclude that stock returns are integrated with market
factors and generally have small stock-specific volatility.
3
Scientific Research Methodology
This paper applied the qualitative and quantitative methods of scientific research.
The meta-analysis method was applied using the qualitative approach, while the
meta-regression method was applied through the quantitative approach. These
quantitative methods have been applied based on the studies of various authors who
have analyzed the impact of the COVID-19 pandemic on global financial markets.
Through the method of meta-analysis, the statistically synthesized results from a
series of studies collected through a qualitative methodological procedure are
discussed. The main purpose of applying the meta-analysis method is to aggregate
and compare the separate empirical results of different studies after converting them
into a common metric called effect size. The data of the meta-analysis are based on
the various scientific studies of different authors that have been published in
scientific journals with an impact factor by publishers such as Elsevier, Emerald,
Springer, Wiley, Frontiers, Jstor, etc. Approximately 25 scientific papers were
analyzed within the meta-analysis, and only 11 of these studies were presented. The
selection criteria for these scientific papers were as follows: the quality of the
scientific journal, the scientific arguments of the authors regarding the empirical
findings of the study, the time involved in the study, the practical contribution of
the paper, etc. To support the empirical results of this research, this study applied
meta-regression analysis, a quantitative and statistical approach that examines in
more detail the exogenous variables that may affect the strength of the correlation
between COVID-19 and the performance of global financial markets. Six studies by
other authors were included in the meta-regression analysis, where the econometric
findings of these studies are presented in this part of our study, and the statistical
results are discussed through comparative analysis.
72
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Results of Meta – Regression Analysis
In continuation of this paper, a summary of the econometric results of studies by
other authors who have analyzed the impact of the COVID-19 pandemic on the
performance of global financial markets will be presented through meta-regression
analysis. The impact of the COVID-19 pandemic on market returns is consistent
with existing studies predicting a negative impact of new cases of COVID-19 on
market returns. The OECD (2020) finding that expanding daily COVID-19 testing
capacity can help the economy and improve workforce health is consistent with the
favourable effects of expanded daily COVID-19 testing on market returns. Similarly,
a greater number of COVID-19 tests will aid in a decrease in new COVID-19 cases.
This leads to reduced volatility in investor response to the COVID-19 pandemic
and, as a result, causes upward movement in the market.
In the U.S. and other sophisticated capital markets, many researchers have
uncovered crucial truths about the effects of the COVID-19 pandemic. Emerging
markets, where the COVID-19 pandemic has caused record declines and significant
uncertainty, have realized much less scientific research on the consequences of the
COVID-19 pandemic. In particular, this study, through meta-regression, examines
the effect of COVID-19 on these markets before and during the pandemic.
Measuring the true impact of COVID-19 can be done using the empirical process
of this paper. There are several things that investors, governments and other
institutions need to remember when it comes to the impact of COVID-19 on the
stock market.
According to the meta-regression results, we can conclude that the COVID-19
pandemic has negatively affected the financial performance of various financial
markets globally. The increase in the number of new cases and deaths caused by the
COVID-19 pandemic has negatively affected the volatility of returns from
investments and the decrease in the level of these returns. Furthermore, the positive
rate of new cases of COVID-19 has also negatively affected market returns. In other
words, the COVID-19 pandemic has unexpectedly negatively impacted global
markets. Furthermore, the number of new daily tests for COVID-19 performed has
a positive impact on market returns. Likewise, the study also found similar impacts
for both developed and emerging markets, except news announcements of new daily
deaths from COVID-19 positively impact emerging market returns. According to
M. Fisnik, G. Qlirim: The Impact of the COVID-19 Pandemic on Financial Markets:
A Meta-analysis From a Global Perspective
73.
the econometric results of the meta-regression analysis, we can conclude that the
increase in the number of new cases of COVID-19 is the increase in volatility in the
various global financial markets and the returns of various indices.
Findings are summarized in Table 2.
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TOWARDS THE SDGS.
Table 2: Meta-Regression of existing studies related to the effects of the COVID-19 pandemic on financial markets
Authors
(Tuna & Tuna, 2022)
(Tan, Ma, Wang, Feng, &
Xiang, 2022)
(Sansa, 2020)
(Ali, Alam, & Rizvi, 2020)
(Klona, 2021)
Variables*
The number of new cases of
Covid-19 (I.V)
IDEMV- Infectious Disease
Equity Market Volatility Index
(D.V)
DJI- Dow Jones Islamic Stock
Index (D.V)
DJC- Dow Jones Convertible
Stock Indices (D.V)
The price of oil (I.V)
The price of gold (I.V)
Chinese financial market returns
(D.V)
Indian market returns (D.V)
Russian market returns (D.V)
Brazilian market returns (D.V)
Confirmed cases of COVID-19
in China and Shanghai (D.V)
Confirmed cases in New York
(I.V)
Regional indices respectively
World – WRLD (D.V)
The benchmark US Treasury
bond index (I.V)
Bitcoin, Oil WTI (I.V)
Gold – GLD (I.V)
GDP per cap. (D.V)
No. of
observations
Regression
Coefficients
Std.Error
T - Test
P-Value
R²
2148
0.540
388.265
11.473
0.000
0.892
1646
0.550
47.283
10.706
0.018
0.893
2107
(- 0.537)
104.362
5.627
0.000
0.889
1412
(- 0.714)
20.267
12.704
0.040
0.481
1937
3642
0.529
0.714
16.557
64.887
9.296
7.588
0.009
0.000
0.888
0.481
560
(- 0.543)
0.0027
7.198
0.034
0.819
560
560
560
(- 0.401)
(- 0.473)
( - 0.694)
0,00697
0.01506
0.00841
6.127
6.724
6.194
0.037
0.036
0.031
0.951
0.630
0.540
25
0.277
5.6
4.973
0.000
0.518
2982
0.264
1.0736
2.458
0.000
0.174
58
0.0017
147.81
5.19
0.000
0.614
58
0.0077
14.00
3.69
0.03
0.694
58
58
327
0.0011
0.0011
0.0654
2203.501
2203.501
12.80
4.45
1.18
1.15
0.000
0.000
0.002
0.313
0.852
0.364
M. Fisnik, G. Qlirim: The Impact of the COVID-19 Pandemic on Financial Markets:
A Meta-analysis from a Global Perspective
Authors
(Çelik, Yilmaz, Emir, &
Sak, 2020)
Variables*
GDP (D.V)
Covid-19 (I.V)
Hiv / AIDS (I.V)
H1N1 (I.V)
Italian stock market – FTSE
MIB (D.V)
French stock market – CAC 40
(D.V)
Total verified verified number
of cases TVNC (I.V)
Total number of verified deaths
TVND (I.V)
Number of daily cases NDC
(I.V)
75.
No. of
observations
327
327
327
327
Regression
Coefficients
0.0913
0.0023
0.0041
0.0043
973
Std.Error
T - Test
P-Value
R²
0.31
-6.99
15.46
5.63
0.41
14.74
-1.22
7.66
0.029
0.05
0.05
0.05
0.336
0.412
0.579
0.422
0.0028
3.998
27.27
0.030
0.347
973
0.30
4.141
36.16
0.032
0.308
973
0.60
6.609
10.72
0.018
0.603
973
0.64
5.577
9.701
0.034
0.648
973
0.47
6.609
13.590
0.060
0.475
76
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BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Discussion and Conclusion
We can infer from the findings of this study that the COVID-19 pandemic has had
a detrimental impact on the performance of international financial markets. Several
policy implications are presented in this study for both investors and governments.
First, the government should take early proactive responses and control measures to
prevent financial markets from a negative downside in the event of the next
pandemic. This is because the daily new COVID-19 cases and deaths negatively
influence market returns. Second, the increasing market returns that COVID-19 test
runs have positively impacted show that investors are confident in the government's
reaction to the COVID-19 epidemic. Governments should thus boost investor
confidence by expanding the capacity for COVID-19 testing, which can help contain
and slow the spread of the pandemic and draw more investors to the stock markets.
Instead of an unforeseen rise, it is argued that well-designed algorithms can achieve
this increase in a testing capacity. Third, both developed and emerging market
returns are roughly equally affected by the COVID-19 epidemic. Because such steps
and information will assist governments in reassuring the populace, nations and
global communities must cooperate in disseminating accurate information and
carrying out mutually reinforcing actions to prevent the COVID-19 pandemic. The
greatest course of action to lessen the effects of COVID-19 on the financial markets
of developed nations is to announce and support a stimulus plan that can foster
advancement in infrastructure, innovation, and industry, as well as promote fair
labour conditions and economic growth.
On the other hand, aiding needy families and announcing a stimulus package is the
ideal course of action in developing nations when the COVID-19 epidemic has more
significant effects on financial markets due to social considerations. It is important
to stress that the detrimental consequences of COVID-19 on different facets of the
economy, particularly financial markets, call for swift and effective policy responses
from nations. Effective cooperation between the public and commercial sectors and
financial institutions is essential to make the most of all available resources and
decrease the negative consequences of this epidemic on financial markets. There
should also be a plan for short-, medium-, and long-term strategies to maintain the
financial market's stability. Governments and central banks should assist struggling
individuals, families, and organizations (i.e., micro and small companies). All of these
measures could improve the environment for global advancement. The findings
M. Fisnik, G. Qlirim: The Impact of the COVID-19 Pandemic on Financial Markets:
A Meta-analysis from a Global Perspective
77.
demonstrate the need for policies relating to fulfilment in poor countries while the
pandemic has increased dangers to social life in rich countries, stressing the necessity
for policies to help financial institutions under the epidemic's impact.
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PUBLIC POLICY OPPORTUNITIES
FOR THE TRANSITION TO A
CIRCULAR ECONOMY: HIGHLIGHTS
OF SCIENTIFIC RESEARCH
NINO PAPACHASHVILI,1 TAMTA MIKABERIDZE,1
VASJA ROBLEK2
Sulkhan-Saba Orbeliani University, Institute for Development Studies, Tbilisi, Georgia
n.papachashvili@sabauni.edu.ge, t.mikaberidze@sabauni.edu.ge
2 University of Novo Mesto, Faculty of Organisation Studies, Novo Mesto, Slovenia
vasja.roblek@gmx.com
1
Abstract The paper aims to reveal the highlights of scientific
research dedicated to public policy opportunities for the
transition to a circular economy. It reflects the findings of the
literature review based on 119 scientific articles. Research accents
tend to be systematized according to compliance with the
universal goals of public policy: Stimulate a design for the circular
economy, manage resources to preserve value, make the
economics work, invest in innovation, infrastructure, and skills,
and collaborate for system change. Our research may prove
useful to economic policy makers working toward the transition
to a circular economy. Along with identifying current scholarly
highlights, the article suggests opportunities for future research
and thus offers interesting conclusions for researchers interested
in the intersection of circular economy and public policy. This
paper will be useful for the further development and
systematization of conceptual tools to accelerate the transition to
a circular economy.
DOI https://doi.org/10.18690/um.epf.3.2023.11
ISBN 978-961-286-736-2
Keywords:
transition,
SDGs,
circular economy,
public policy,
sustainable
development
JEL:
H11, Q01, Q58
80
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Introduction
There are many reasons to move from a linear economy to a circular economy (CE).
According to various estimations, the use of resources has tripled over the past 50
years, and is expected to double by 2050 unless production approaches change.
Population growth and, as a result, consumption growth, creates additional threats
and dictates the need to change approaches to consumption. The circular economy
presents a multi-trillion-dollar economic opportunity. Shifting towards a circular
economy model will not only deliver climate and other environmental and social
benefits, but will also provide significant new and better growth opportunities
(Prasek, 2022).
The future of the planet has become an objective concern of academic and political
circles. One of the solutions is an immediate transition to a circular economy, which
is not an easy process. The transition to a circular economy will not happen
automatically (Schröder, 2020). Many recent studies point to the importance of the
circular economy in achieving the Sustainable Development Goals (SDGs)
(Valverde & Avilés-Palacios, 2021; Gubeladze & Pavliashvili, 2020; Gagnidze, 2018).
This gives a broad scope for many areas of public policy (Lekashvili, 2022;
Mikaberidze & Papahashvili, 2020). Although the circular economy is not directly
mentioned in the SDGs or other relevant documents, it can contribute greatly to the
achievement of these goals. National governments can support the transition to a
circular economy by providing an overarching policy framework for all levels of
government (OECD, 2020).
Even though several scientific studies are dedicated to the specific results of public
policy for the transition to a circular economy, there is a gap in the systematic studies
of the possibilities of the same policy. In this respect, analysis of the relevant
scientific studies is most valuable. Our interest is how scientific research responds
to these large-scale goals, though in this paper, we have limited ourselves to the issue
of activation and thematic scalability of public policy opportunities for transition to
a circular economy.
Policymakers usually make decisions based on wide-ranging information. We share
the opinion that there is a great risk of information asymmetry in developing green
policies, such as specific difficulties associated with the existence of big data and the
N. Papachashvili, T. Mikaberidze, V. Roblek: Public Policy Opportunities for the Transition to a
Circular Economy: Highlights of Scientific Research
81.
systemic perception of problems (Papachashvili et al., 2018). Considering the
turbulent environment, review papers are also thought to have a timesaving purpose.
As such, the given analysis of the scientific literature, and the summary analytical
conclusions, in addition to defining the area of interest for further scientific research,
will bring practical benefits to the relevant policy-making process.
The research question of our paper is: Which main goals are more reflected in the
scientific research of the last two decades, and in the direction of which goals will it
be useful to activate relevant research in this topic in the future?
2
Theoretical Background
The circular economy is wide-ranging and is of interest to academic circles. At the
initial stage of this research, it was revealed that there are different understandings
of what a circular economy is. Researchers point to ambiguity in the definition of
“circular economy,” and the challenges in measuring it, which in turn leads to
difficulty in setting goals for the transition to circularity. Scientific studies are
intended to help us understand ways to ensure circular economy policies are related
to the conceptual understanding of the issue. In some countries, these policies are
integrated into environmental, pollution, waste management and resource issues.
While some scholarly work has been carried out on barriers to the development of
a circular economy strategy (Talens Peiró et al., 2017), there are relatively few
academic studies on policies that may accelerate the transition toward a circular
economy (Hartley et al., 2020). Our analysis of circular economy articles showed us
that researchers rely more on the definition established by the Ellen MacArthur
Foundation (EMF). Policy-related scientific studies are more country-specific (The
Circular Economy in Ireland, 2022), or sector-specific, and most of them share the
same Foundation's proposed universal framework for transitioning to a circular
economy. Considering critical analysis of the relevant works, we defined five
universal public policy goals for the transition to a circular economy elaborated by
the EMF as a theoretical guide for our scientific literature review. Naturally, the
starting points for each country and each sector will be different, and local
specificities will need to be considered, but the essence of the five goals and the need
to establish coherence between policy efforts are universally important.
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The mentioned objectives are: Stimulate a design for the circular economy; Manage
resources to preserve value; make the economics work; invest in innovation,
infrastructure, and skills; and collaborate for system change.
For an inclusive transition from a linear to a circular economy, the goals cover a
wide range of activities (see the source EMF (2021), “Universal Circular Economy
Policy Goals”), and an area of integrated actions is envisaged. In addition, it provides
a framework for the implementation of common tasks for governments and
businesses to achieve the goals of the transition to a circular economy through
effective coexistence.
3
Methodology
A literature review was defined as the type of research. Descriptive qualitative
research was conducted based on the scientific literature review, dedicated to the
public policy opportunities for the transition to a circular economy. Among the
systematic review studies developed on this topic, noteworthy is the work of
researchers (Thiago et al., 2022) covering the years 2017-2021, with articles searched
in the ScienceDirect and WoS databases, using the descriptors “Circular Economy
and Policies.” The sample consisted of 29 articles.
Our study was carried out based on the scientific database of EBSCO. "Academic
Search Elite" was defined as a core resource for receiving the scholarly information.
Peer-reviewed articles published in English-language academic journals were
selected. "Transition to a circular economy" and "public policy, or government
policy, or policy" were taken as search words. In the first stage, 2001-2023 was
indicated as the search period, but as most of the works published in the given search
direction come from 2015 and later, works published in 2015-2023 were determined
for analysis. After automatic filtering, the initial number was 271. After matching the
titles, abstracts, and keywords with the search thesaurus, 119 papers were selected
for study. Analysis and synthesis of the main results/conclusions of the works was
carried out. The results were grouped according to the Ellen MacArthur
Foundation's five (1-5) universal areas of public policy, noted above. In addition,
two groups were added: (6) articles that were not identified for only one purpose
and included general policy recommendations, development of a general/unified
framework, and circular economy action plans (including in the context of SDGs),
N. Papachashvili, T. Mikaberidze, V. Roblek: Public Policy Opportunities for the Transition to a
Circular Economy: Highlights of Scientific Research
83.
and (7) articles that reflected a results-comparative analysis, modeling, literature
reviews, bibliometric studies, or meta-analysis - multiple interdisciplinary scientific
studies addressing the transition to a circular economy.
The content of the articles, which dealt with various areas, was recorded in more
than one public policy objective. A total of 149 entries were made 1.
4
Results
The thematic distribution of the selected papers according to the entries is given in
Figure 1. The share of the individual thematic group is as follows: 24% (36) of entries
cover the development of a general/unified framework for the transition to a circular
economy, among which there are works that cover the mentioned issues in the
context of sustainable development; about 23% (34) of entries reflect managing
resources to preserve value, 14% (21) of entries cover stimulating circular economy
design, 13.4% (20) of entries are dedicated to regulatory mechanisms for the
economy, 10% (15) of entries refer to collaborative systemic change, around 7.4%
(11) of entries cover issues such as investment in innovation, infrastructure and
skills, and 8% (12) of the records of analyzed papers are of a literature review or
bibliometric research type, which at the same time reflect the results of either a metaanalysis or a comparative study.
The second figure shows the distribution of emphases of scientific research articles
according to the universal goals of public policy on the transition to a circular
economy. The shares of analysis records are as follows: Stimulate a design for the
circular economy – 20.8 %; Manage resources to preserve value – 33.7%; Make the
economics work – 19.8%; Invest in innovation, infrastructure, and skills – 10.9%;
Collaborate for system change – 14.9%.
1
Due to the limitation of the scope of the article, the other relevant references are not presented in this work.
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TOWARDS THE SDGS.
Comarative analysis, modeling, literature reviews, bibliometric studies, meta-analysis - multiple scientific
studies addressing the transition to a circular economy
Development of general/unified framework, circular economy action plan (including in the context of
Development of general/unified framework, circular economy action plan (including in the context of SDGs)
12
36
15
Collaborate for system change
11
Invest in innovation, infrastructure, and skills
20
Make the economics work
34
Manage resources to preserve value
21
Stimulate a design for the circular economy
0
5
10
15
20
25
30
35
40
Figure 1: Quantitative distribution of scientific papers on public policy for the transition to a circular economy, EBSCO databases,
2015 - March 2023.
Source: Authors’ illustration.
14,9
20,8
10,9
33,7
19,8
A. Stimulate design for the circular economy
B. Manage resources to preserve value
C. Make the economics work
D. Invest in innovation, infrastructure, and skills
E. Collaborate for system change
Figure 2. Emphases of scientific research according to the universal goals of public policy on the transition to a circular economy, %, 2015 March 2023.
Source: Authors’ illustration.
N. Papachashvili, T. Mikaberidze, V. Roblek: Public Policy Opportunities for the Transition to a
Circular Economy: Highlights of Scientific Research
5
85.
Discussion and Conclusion
The first stage of the study issue showed us that circular economy policies require a
more adequate knowledge base and that science-based policies are needed to
increase the efficiency of the transition to circularity. Public policy can encourage
companies, remove barriers, and offer incentives for high material value reuse,
efficient waste management, etc. Intensive integration of research results at the
macro level will support systemic approaches. Public policy has ample scope to
accelerate the transition to a circular economy.
From the beginning of the 21st century to 2015, the term "transition to a circular
economy" was rarely used in our determined scientific base (EBSCO, journals in
Academic Search Elite, peer-reviewed articles), although the content of the articles
reflects this process and is mostly related to waste recycling.
Research in this direction became more active after 2015, presumably connected to
the UN General Assembly resolution 70/1 – Transforming Our World: The 2030
Agenda for Sustainable Development.
The special emphasis of scientific studies (24%) on an action plan and unified
framework for the transition to a circular economy is related to the period after the
adoption of the mentioned resolution. These studies contain many useful
recommendations for policymakers, especially as almost all studies are aligned with
one or another goal of sustainable development.
Comparative studies of the transition to a circular economy in different countries
provide unique opportunities to share the achieved progress for effective public
policy, while literature reviews and bibliometric studies provide a unique opportunity
for both policymakers and researchers to quickly familiarize themselves with the
results achieved in this field. This focus on such studies was seen in 8% of the studied
papers, indicating the need for further academic research.
Outcomes of reviewing the literature on the transition to a circular economy,
according to the universal objectives of public policy, clearly highlight a special
scientific interest in research into business models related to the management of
resources to preserve value (33.7%). There is approximately equal research interest
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in circular economy stimulation and promotion systems (20.8%) and proper
regulation of the economy (19.8%).
Issues of effective multi-stakeholder collaboration (14.5%) and issues of investment
in innovation, infrastructure, and skills in the context of public policy (10.9%) have
been relatively less in the focus of scientific research, and, as such, these future
scientific research directions are promising.
Six of eleven articles related to innovations were related to digital transformation.
Roblek and co-authors (2020) proposed interesting conclusions for expanding this
research area, emphasizing the importance of scientific innovation with the
conceptual, technological, and contextual frameworks of the Internet and Internet
technology usage, and its impact on sustainable development and the emergence of
Society 5.0.
The intensive use of digitization advances for the transition to circularity is
important for both the public and private sectors, and obviously provides a wide
arena for scientific research. Within the framework of this study, the direct research
focus was not the correlation of raising the level of knowledge about the field of
education and circularity, although observation of this direction during the review
process also revealed the scarcity of scientific studies in this regard. Only two papers
of those studied focused on the role of education, which is also worth noting for
future research.
The contribution of this paper to scientific novelties lies in the systematization of
scientific research emphases, according to the universal public policy goals, for the
transition to a circular economy in the last two decades. In addition, a study of
bibliometric and literature review scientific articles related to the issue was carried
out. The results of this research offer new findings for the academic community.
The limitation of the work is the determination of the study area to the scientific
research papers found in the EBSCO database, sought in the direction of academic
research. The conclusions are derived from analysis of the studied scientific works.
N. Papachashvili, T. Mikaberidze, V. Roblek: Public Policy Opportunities for the Transition to a
Circular Economy: Highlights of Scientific Research
87.
References
EMF (2021). Ellen MacArthur Foundation. Universal Circular Economy Policy Goals. Retrieved from
https://ellenmacarthurfoundation.org
Gagnidze, I. (2018). The Role of International Educational and Science Programs for Sustainable
Development (Systemic Approach). Kybernetes, Vol. 47, No. 2, 409-424.
https://doi.org/10.1108/K-03-2017-0114
Gubeladze, D., & Pavliashvili, S. (2020). Linear Eeconomy and Circular Economy - Current State
Assessment and Future Vision. International Journal of Innovative Technologies in Economy, 5(32).
https://doi.org/10.31435/rsglobal_ijite/30122020/7286
Hartley, K., van Santen, R., & Kirchherr, J. (2020). Policies for transitioning towards a circular
economy: Expectations from the European Union (EU). Resources, Conservation and Recycling,
155, 104634. https://doi.org/10.1016/j.resconrec.2019.104634
Lekashvili, E. (2022). The Challenges of Georgia’s Economic Policy in Achieving Sustainable
Development Goal 9 in the Covid-19 Pandemic Period. 6th FEB International Scientific Conference
Challenges
in
Economics
and
Business
in
the
Post-Covid
Times,
doi:
https://doi.org/10.18690/um.epf.5.2022.3
Mikaberidze, T., Papachashvili, N. (2020). Innovation development in the context of the global value
chains. In "Business Management Insights and Society Transformation Process", Lithuania. Klaipeda
University of Applied Sciences. ISBN 978-609-454-476-7; ISBN 978-609-454-477-4. Retrieved
from: http://ebooks.kvk.lt/einfo/2448/business-management-insights-and-society-transfor
mation-process/
OECD (2020). The circular economy in cities and regions: synthesis report, OECD Urban Studies, OECD
Publishing, Paris. https://dx.doi.org/10.1787/10ac6ae4-en
Papachashvili, T., Papachashvili, N., & Gagnidze, (2018). Possibilities of Improvement of Green Economy
Policymaking. Business Systems Laboratory International Symposium “Cocreating Responsible
Futures in the Digital Age”, University of Naples "Federico II"; Naples; Italy, Volume 5, pp.
246-251.
Retrieved
from
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Prasek, D. (2022). Circular Economy Handbook for Universities, p. 48. ISBN 978-9941-498-60-2.
Roblek, V., Meško, M., Pejić Bach, M., Thorpe, O., Šprajc, P. (2020). The Interaction between Internet,
Sustainable
Development,
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5.0,
5(3),
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https://doi.org/10.3390/data5030080
Schröder, P. (2020). Promoting a Just Transition to an Inclusive Circular Economy, Energy, Environment and
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ISBN 9781784133924
Talens Peiró, L., Ardente, F., & Mathieux, F. (2017). Design for Disassembly Criteria in EU Product
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Thiago, A. C. de Melo, Marcelo, A. de Oliveira, Sara, R.G. de Sousa, Raimundo, K. Vieira & Thayane,
S. Amaral (2022). Circular Economy Public Policies: A Systematic Literature Review. Procedia
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Sustainable Development Goals: A Positive Relationship between Two Self-Sufficient
Variables. Sustainability 2021, 13, 12652, p. 11. https://doi.org/10.3390/su132212652
88
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
INDIVIDUAL DIFFERENCES AND
JOB ATTITUDES IN THE FUNCTION
OF INCREASING ORGANIZATIONAL
CITIZENSHIP BEHAVIOR (OCB):
A CASE STUDY
NIKOLINA KIŠIĆ, IVAN MALBAŠIĆ
University of Zagreb, Faculty of Organization and Informatics, Varaždin, Croatia
nina.kisic2@gmail.com, ivan.malbasic@foi.unizg.hr
Abstract This paper analyzes the link between individual
differences and job attitudes with organizational citizenship
behavior (OCB) that contributes to the increasing success of the
organization. Employees who have more experience helping new
employees contribute to increasing their productivity, thus
increasing the overall efficiency of the workgroup. The paper
also presents research results from Croatia's selected company
that deals with the hospitality industry, where semi-structured
interviews consisting of 16 questions were conducted with the
respondents. The questions were thematically related to
respondents' knowledge and attitudes about OCB in general,
then to respondents' experiences and attitudes about the impact
of individual characteristics and attitudes towards work on OCB
practice and employees' attitudes about the impact of OCB on
business performance. Research results indicate that employees
practice the concept of OCB to a much greater extent than they
theoretically understand it. In addition, the research results
showed that not all individual differences and job attitudes are
equally associated with OCB. Knowing how to increase the level
of OCB in the company implies the increased business
performance of the organization, which is why this paper has
theoretical and practical importance in business.
DOI https://doi.org/10.18690/um.epf.3.2023.12
ISBN 978-961-286-736-2
Keywords:
individual
differences,
job attitudes,
organizational
citizenship
behavior, business
success,
case study
JEL:
J24, M14
90
1
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Introduction
Today's competitive work environment is increasingly demanding due to significant
changes in technology and customer habits, substantial changes in the environment
caused by global changes and relations between countries, and other disturbances
such as the recent COVID-19 pandemic. In modern organizations, it is necessary to
pay close attention to organizational members' spontaneous and cooperative
behavior, particularly organizational citizenship behavior (OCB), as this can be the
critical factor in gaining a competitive advantage (Mackenzie et al., 2011). Coldwell
and Callaghan (2014) found that OCB plays a vital role in the development and
success of organizations by initiating various workplace dynamics, promoting social
connections in organizations, and influencing behaviors related to organizational
functions and outcomes.
2
Theoretical Background
2.1
OCB model and its implications in business systems
Organ (1997:91) defined OCB as behavior that contributes "to the maintenance and
enhancement of the social and psychological context that supports task
performance". The three-dimensional OCB model proposed by Coleman and
Borman (2000) consists of 27 dimensions shaped into an integrated OCB model.
The model encompasses three broad dimensions that differ concerning which entity
benefits from responsible employee behavior (Coleman and Borman, 2000):
1. Interpersonal citizenship performance refers to interpersonal
conscientiousness in helping organizational members (suggestions, study,
direct execution of tasks, providing emotional support, etc.).
2. Organizational citizenship performance contains the concepts of loyalty
and satisfaction of the organization by accepting, supporting, and protecting
the organization's goals, as well as following organizational rules and
procedures.
3. Job/task citizenship performance refers to investing additional efforts
to perform work tasks as successfully as possible, maximize employees'
work performance, and develop personal knowledge and skills to increase
personal productivity and commitment to work.
N. Kišić, I. Malbašić: Individual Differences and Job Attitudes in the Function of Increasing
Organizational Citizenship Behavior (OCB): A Case Study
91.
According to the theory of social exchange proposed by Blau (1964), employees
reciprocate to the organization with OCB when they perceive that the organization
treats them correctly (Cardona et al., 2004). Through the process of social exchange,
employees spontaneously express OCB patterns due to job satisfaction, loyalty, trust
in the organization, and perceptions of organizational fairness (Cho and Johanson
2008).
The basic definition of OCB suggests a positive correlation between OCB and
organizational performance (Organ, 1988) by increasing employee and managerial
productivity, which leads to increasing the overall efficiency of the workgroup,
additional time for strategic planning, improving business processes, and freeing up
organization resources for more productive purposes. Furthermore, coordination of
activities between employees increases team spirit, morale, and cohesion, thus
reducing the need to spend team members' time and energy on maintaining group
functionality (Organ et al., 2005), but also by contributing to a comfortable work
environment that raises morale, group cohesion, and a sense of belonging to a group
(George & Bettenhausen, 1990). OCB also improves the organization's ability to
adapt to environmental changes when employees actively monitor market trends
(loyalty) and participate in meetings (civic virtue). Also, employees willing to take on
new responsibilities or learn new skills show elements of cordiality, thereby
increasing an organization's ability to adapt to changes in the market (Organ et al.,
2005). Finally, employee OCB can improve organizational performance by creating
different forms of organizational social capital by improving information transfer
and performance (structural form), gaining useful knowledge by attending business
meetings (cognitive form), and building mutual trust (relational form) (Bolino et al.,
2002).
2.2
The impact of selected individual differences on OCB
Research has shown that biographical characteristics play a significant role in
understanding workplace behavior (Wanxian & Weiwu, 2007). Age is the most
apparent variable by which individuals differ, with older employees more likely to
perceive OCB as behavior within a work role (Stroshine and Brandy, 2011). Seniority
also has a positive effect on OCB, with the Hunt (2002) study finding that the
relevant skills and competencies needed to do job growth with a longer stay of
employees in the same organization. Some of the basic behaviors in the workplace
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
are proper business communication, self-awareness, and self-control of employees,
which are influenced by emotions and moods or the emotional state of employees
(Ekman, 1992). Organizations encourage organizational behavior aimed at helping
and cooperating among employees as a determinant of OCB (Hudrea, 2006).
2.3
The impact of attitudes towards work on OCB
Job satisfaction affects employee productivity, absenteeism, employee turnover, and
responsible organizational behavior (Coomber and Barriball, 2007). Research has
shown that less satisfied workers are more likely to seek other jobs or reduce
workplace engagement (Mirković, 2016).
Preoccupation with work can lead to positive outcomes such as commitment, care,
attention, immersion, enthusiasm, self-image and self-esteem (Sharma et.al., 2012).
However, the cause-and-effect relationship between preoccupation and activities
and behaviors is unclear.
Organizational commitment is based on three factors: firm belief and acceptance of
organizational goals and values, willingness to make significant efforts on behalf of
the organization, and a strong desire to remain a member for as long as possible
(Mowday et al., 1974). A 1977 study showed that commitment to an organization
results in employee behavior not conditioned by penalties or rewards (Wiener, 1982).
Organizations provide employees with emotional and economic benefits to create a
positive perception of support and respect, encouraging them to reciprocate by
increasing their effort and commitment in the workplace and tasks not formally
given job descriptions (Baran et.al., 2012).
Employee involvement is emotional and intellectual devotion to the organization or
effort a person puts into work (Saks, 2006). Erickson (2008) found that engaged
individuals have a high propensity for behaviors as defined in the literature by OCB.
N. Kišić, I. Malbašić: Individual Differences and Job Attitudes in the Function of Increasing
Organizational Citizenship Behavior (OCB): A Case Study
3
93.
Methodology
A survey was conducted to gather employees' experiences and attitudes about OCB
in an organization that deals with the hospitality industry. The research aims to
examine and analyze the construct of OCB on a deliberate sample and based on the
elaboration of the relationship between the selected variables to determine the
relationship between employee preferences of OCB with business performance.
The research is planned to answer the basic research questions:
−
−
−
−
Are the employees of the selected business entity at all familiar with the
concept of OCB?
Do individual differences affect the employee's preference for OCB in the
selected business entity?
Does the attitude towards work affect the employee's preference for OCB
in the selected business entity?
Does the concept of OCB affect the performance of the chosen business
system?
The research was conducted in a medium-sized catering facility from Varaždin
County in Croatia on an illustrative sample of five employees who differ in their
characteristics, job positions, and other characteristics. A semi-structured interview
consisting of 16 questions was conducted with the respondents. The qualitative data
analysis was conducted without computer software and identified open codes and
categories that follow basic research questions using initial, focused, and axial coding
and the method of grounded theory.
4
Results
Detailed analysis of respondents’ answers regarding the concentration of knowledge
versus the tendency to practice OCB revealed a higher tendency toward OCB in
practice, as shown in Table 1.
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Table 1: Results of the study of the difference in knowledge and practice of OCB
Examined area
Concentration of
knowledge
Main findings
Low concentration of knowledge
Helping behavior, cordiality
Loyalty, adjustment to the
organization
Individual initiative, civic
virtue, personal development
High tendency to practice OCB
Helping behavior
Tendency to
practice OCB
Loyalty
Adjustment to the organization
Personal development
Individual initiative
Cordiality
Civic virtue
Explanation
OCB → is not behavior within the
work role
Quality and timely performance of
work tasks
Pride, gladly sharing successes
Compliance with rules at all times
Non-formal learning → improving
skills and business processes
Enthusiasm in doing work, voluntary
acceptance of responsibilities
Approaching problems calmly when
being respected
Attending ineffective organizational
meetings
Source: Authors' research
By analyzing the research results on the impact of individual differences on OCB,
we identified three levels of impact: significant, medium, and low, which are shown
in Table 2.
Table 2: Research results on the relationship between individual differences and OCB
Variable
Biographical
characteristics
Age
Length of service
Sex
Personality
Emotions and moods
Learning
Source: Authors' research
OCB indicator
Implication
Reciprocity mechanism, decreased
ability
Number of years in the same job
Gender characteristics
Helping behavior
Comfort, conscientiousness,
emotional stability
Informal level
Organizational commitment
Stronger tendency of women to
OCP
Helping behavior, kindness
No implication
Helping behavior, cooperation
N. Kišić, I. Malbašić: Individual Differences and Job Attitudes in the Function of Increasing
Organizational Citizenship Behavior (OCB): A Case Study
95.
The analysis of the research results on the impact of attitudes toward work on OCB
found that job satisfaction affects work behavior, obsession with work affects OCB,
commitment to the organization benefits OCB, employee engagement infuriates
OCBs, and perceived organizational support has no impact on OCB.
From the collected answers from the respondents, we can conclude that OCB has
numerous positive implications for business success, shown in Figure 1.
Figure 1: Research results on the relationship between OCB and business success
Source: Authors' research
5
Discussion and Conclusion
Although there are many types of research related to OCB, business practice shows
that the application of OCB is still insufficiently applied. Therefore, the primary
motive for this work was to promote the concept of OCB further and explore the
extent to which this concept is recognized and used in concrete business practice.
There are some limitations regarding this research, primarily referring to a small
research sample and the fact that research is conducted within one specific kind of
company within a specific industry. Therefore, in future research, it would be
reasonable to expand the sample to several organizations within culturally different
regions to compare results and determine if there are significant differences.
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The results of this article have scientific and practical applications. Given the
growing demand for employees in service industries, especially in the hospitality
industry, the results can be a guideline for conducting individual surveys of
hospitality facilities to identify potential difficulties among current staff. Also,
research results are helpful for managers because they indicate the diversity of
employees concerning age, experience, personality, and attitudes towards work and
can be guidelines for choosing educational programs or programs to strengthen team
spirit in order to finally improve the behavior of their employees, and enhance
effectiveness in general. Managers need to be aware of the diversity of employees to
be able to affect behavior by implementing modern leadership strategies, while
effective leadership can contribute to the development of greater OCB.
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
ENERGY SALES FORECASTING IN A
SUSTAINABLE DEVELOPMENT
CONTEXT: BIBLIOMETRIC REVIEW
TOMASZ ZEMA,1 ADAM SULICH,1 LUMIR KULHANEK2
Wroclaw University of Economics and Business, Faculty of Business Management,
Wroclaw, Poland
tomasz.zema@ue.wroc.pl, adam.sulich@ue.wroc.pl
2 Technical University of Ostrava, Faculty of Economics, VŠB, Ostrava, Czechia
lumir.kulhanek@vsb.cz
1
Abstract This paper aims to present different patterns of
keyword evolution and their co-occurrences in publications
dedicated to energy sales forecasting in a sustainable
development context, and indexed in the Scopus and Web of
Science Core Collection (WoS) databases. The adopted method
is the Structured Literature Review (SLR) variation method with
queries supported by the Bibliometrix software as the analytical
and visualisation tool. The number of publications has evolved
in the context of indexed keywords, which are related. Research
on energy sales forecasting and sustainability has earned
considerable attention in multiple academic fields. Proposed
queries syntaxes and searching procedures in Scopus and Web of
Science databases present limitations related to the subscription
of these databases and the interchangeability of syntaxes. The
novelty of this study is based on the results and their presentation
with the usage of Bibliometrix as a tool for the exploration of
two independent scientific areas, namely energy sales forecasting
and sustainability, and the presentation of connections between
them. This paper can inspire researchers to develop the subject
of energy sales forecasting evolution in a sustainable
development context, as well as business practitioners interested
in energy sector adaptation visible in keyword changes in their
decision-making processes.
DOI https://doi.org/10.18690/um.epf.3.2023.13
ISBN 978-961-286-736-2
Keywords:
bibliometric
analysis,
energy carriers,
sales volume,
sustainability,
thematic evolution
JEL:
C53, O13, Q001
100
1
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Introduction
In a dynamically changing economy, there is growing interest in the issues of
Sustainable Development (SD). SD has become a well-known idea in the scientific
literature influencing the activities of all economic sectors, and in particular the
energy sector which fuels the economy of each country. The development of
modern economies and society as a whole depends on electricity and requires its
supply. The issue of energy security, on which its functioning and development
depend, is also strategic for every country. Therefore, there is scientific literature,
business reports and publications oriented not only on economic aspects, but also
on social and environmental matters of interest. The energy industry, however, is
also a sector of the economy with one of the most harmful impacts on the
environment.
The aim of this paper is to explore the scientific literature, indexed in the Scopus
and Web of Science databases, dedicated to the energy carriers and resources sales
forecasting, which is anchored in the SD perspective. Analysis of the scientific
literature can reveal the patterns and methods of the energy carriers sales forecasting.
Therefore, the adopted method in this research is a bibliometric study (Nazari et al.,
2021) as a variation of the Systematic Literature Review (SLR) based on the
databases’ research queries, developed in bibliometric maps with the use of the
Bibliometrix program, version 4.0.1 (Aria & Cuccurullo, 2017).
This scientific paper has a classic structure, and presents the theoretical introduction
and then materials and methods. In the same section, research gaps are highlighted
along with the research approach and assumptions. Then, the results and their
interpretation are presented in the third section. Discussion of the results and a
conclusion constitute the fourth and fifth sections respectively. In this study, the
limitations of the conducted research were discussed and presented alongside
possible new research avenues for future studies.
2
Theoretical Background
Countries are taking steps to reduce the damaging effect of the energy sector on the
environment by integrating energy policy with environmental policy. Therefore, the
industry is slowly shifting from electricity generation from traditional sources to
T. Zema, A. Sulich, L. Kulhanek: Energy Sales Forecasting in a Sustainable Development
Context: Bibliometric Review
101
.
renewable energy sources. Until recently, the majority of companies carried out their
activities in order to achieve competitive advantage (Niemczyk et al., 2021).
Changing social expectations have challenged the current model of business thinking
about the management of natural resources. Their usage reduction, recycling, reuse
and redesign became important parts of decision-making processes in modern
business (Moreno-Mondéjar et al., 2021). More enterprises have begun to perceive
and implement social and ecological activities, treating the environment as a kind of
stakeholder in implementing the concept of SD. All organisational processes are
influenced by the energy carriers sales forecasting, and relations between supply and
demand, whose understanding is crucial for achieving Sustainable Development
Goals (SDGs) (Bohanec et al., 2017; Kaleta et al., 2018). Therefore, the bibliometric
review results presented in this paper can be valuable for researchers, managers and
policy-makers interested in the energy sector and energy carriers sales forecasting.
The presented method can be useful for all those interested in the subject evolution
represented by the analysed keywords and scientific areas. Also, the energy sector
itself has to address a challenge of transformation to achieve the 7th SDG, namely
to ‘ensure access to affordable, reliable, sustainable and modern energy for all’
(United Nations, 2022). This specific SDG is a common point for the subjects of
energy sales forecasting and sustainability, which concern this paper.
3
Methodology
The Scopus and WoS multidisciplinary scientific databases were examined. These
databases contain peer-reviewed books, journal articles, conference proceedings etc.
This research uses the SLR variation method with queries (Table 1). Publications are
listed by query syntax. Scientists using bibliometric software analyse those
publications. This study used Bibliometrix, a less popular research software, in order
to analyse SLR results. Bibliometrix has more features for bibliometric and in-depth
scientific literature analysis. Bibliometrix is preferred over other bibliometric
programs because it supports original query syntaxes with keywords to improve
query results and has developed the option of graphical presentation of analyses.
This paper uses bibliometric SLR to study energy sales forecasting in (Visser et al.,
2021). This paper does not detail the SLR procedure. The SLR method used the
original set of queries to create a comprehensive and similar query syntax for each
database. Query syntaxes affect the quantity and quality of results (Table 1), which
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Bibliometrix analyses. The query order shows the database exploration steps with
the accuracy of Bibliometrix’s autocorrection. The popularity and trust placed on
those databases among researchers were primarily the reasons behind their choice.
The literature collected in those databases consists of peer-reviewed publications
organised as digital collections of books, journal articles, conference proceedings etc.
Table 1: Queries used in the Scopus and Web of Science exploration on 27 December 2022
No.
1
2
Query syntax
TITLE-ABS-KEY (("renewable energy" OR "natural resources" OR
"energy carriers") AND (sales OR volume OR quantity) AND (forecast*
OR predict*) AND sustainab*)
TITLE-ABS-KEY (("renewable energy" OR "natural resources" OR
"energy carriers") AND (sales OR volume OR quantity) AND (forecast*
OR predict*) AND sustainab*) 1
Number of
analysed files
WoS
Scopus
421
306
181
235
Source: Authors' elaboration.
Table 1 shows quantitative differences between the WoS and Scopus databases on
27 December 2022. The query syntax and keywords of these two scientific literature
collections affect the results. No rule indicates that one database is a subset of
another based on result numbers. Thirty-five Scopus and WoS publications
overlapped (Visser et al., 2021). Scopus and WoS cover documents differently. WoS
has 181 documents relevant to query 2 and Scopus 235. In query 2 (Table 1),
scientific interest areas were chosen to explore only relevant publications on energy
sales forecasting in SD.
3
Results
Each set of query results for the two databases (Table 1) were merged, analysed in
the Bibliometrix software and presented in graphical format. There is a visible
evolution of the energy sales forecasting in the SD perspective visible throughout
the main periods (Figure 1). Despite the query syntax and structure, among the
1 Query 2 was limited by selected “categories” in WoS (Energy Fuels; Green Sustainable Science Technology;
Materials Science Multidisciplinary; Engineering Environmental; Engineering Multidisciplinary; Management;
Business; Mathematics Applied; Business Finance; Computer Science Artificial Intelligence; Computer Science
Information Systems; Economics) and selected “subject areas” in Scopus (Environmental Science; Social Sciences;
Business; Management and Accounting; Computer Science; Mathematics; Economics, Econometrics and Finance;
Multidisciplinary).
T. Zema, A. Sulich, L. Kulhanek: Energy Sales Forecasting in a Sustainable Development
Context: Bibliometric Review
103
.
results in Figure 1 there are no “forecasting” or “modelling” keywords. The first
period covers years 1992–2008 and contains four keywords: “sustainability”,
“computer simulation”, “sustainable development” and “eurasia”, in the original
form generated by Bibliometrix automatically. Those keywords influence another
period of the subject of energy sales in the sustainability context covering the years
2009–2013. In these years, new keywords, such as “power”, “generation”,
“agriculture” and “photovoltaic” joined the previous keyword collection (Figure 1).
Another stage of evolution in the researched subject is characterised by period 2014–
2023, where new keyword merges constituted another set of keywords, for example
the new “performance” keyword. The “renewable energy” keyword merged in this
evolution on the basis of “sustainable development”, “agriculture”, “land use”, “life
cycle” and “forestry” with “empirical research”. Figure 1 presents the analysis of
query 2 results, related to the energy sales forecasting in the sustainability context,
the subject of the bibliometric review. Keyword evolution in this context is
characterised by the snowball effect, in which both new keywords are added to the
previous period, and new keywords are proposed by the Bibliometrix software (Bran
et al., 2021). The program displays results in accordance with existing and future
directions of scientific interests presented in the publications.
Figure 1: Thematic evolution of merged Scopus and WoS databases for query 2 results
Source: Authors’ elaboration in Bibliometrix Software version 4.0.1.
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Figure 1 shows most keywords in 2009–2013. The Bibliometrix software divided the
time span into periods. As shown, SD and related topics are crucial to keyword
evolution. "Performance" and "Optimization" are management science keywords.
Bibliometrix created Figure 1. Thematic evolution parameters: 250 words minimum,
6. weight index was 0.1, inclusion index weighted by word-occurrences, clustering
algorithm was Walktrap, which is important for Bibliometrix. Time slices: 2 cutting
points, 2008 start year, 2013 stop year.
Figure 2 shows another Bibliometrix evolution analysis. The authors excluded two
keywords from the analysis of Bibliometrix results as shown in Figure 2, in order to
focus on the most related keywords to improve readability. “Sustainable
development” and “article” were those keywords (grey colour in the legend of the
chart). Figure 2 shows the similar phases (temporal parallelism of curves) of interest
in energy sales forecasting since 1992. Figure 2 shows cumulative characteristics in
each coloured keyword in the figure legend. Field was Keyword Plus, occurrences
were cumulate, and words were 10. Clarivate's Keywords Plus algorithm uses words
or phrases that frequently appear in an article's references but not in its title.
Figure 2: Thematic evolution of merged Scopus and WoS databases for query 2 results
Source: Authors’ elaboration in Bibliometrix Software version 4.0.1.
T. Zema, A. Sulich, L. Kulhanek: Energy Sales Forecasting in a Sustainable Development
Context: Bibliometric Review
105
.
As shown in Figure 2, keywords overlap in the subject evolution, demonstrating the
interrelationships between energy sales forecasting and SD.
Figure 3 shows the keyword co-occurrence map of Bibliometrix's Keyword Plus
algorithm. The bibliometric map's nodes (coloured dots) are keywords co-occurring
in scientific publications represented by the edges (lines). Keyword clusters are
coloured automatically by scientific field (Figure 3). Bibliometrix found "forecasting"
in the red econometrics cluster. "Sustainable development" in the second largest red
network is crucial. The blue cluster in Figure 3 contains keyword group studies on
"conservation of natural resources" in nature. The green cluster is agriculture and
bioresources. The fourth, violet cluster keywords contain mathematical operations.
Thus, sustainable energy sales forecasting requires business, mathematics and
agriculture. In the keyword co-occurrences bibliometric map (Figure 3), network
layout was automatic and clustering algorithm was Louvain, normalisation in
association procedure, repulsion force was 0.2, number of nodes was 31, minimum
number of edges was equal to 4, remove isolated nodes field was "yes," and node
colour by year was deselected. There are 31 nodes and 4 edges, isolated nodes field
were deselected, node colour by year was deselected.
Figure 3: The bibliometric map of keyword co-occurrences based on merged query 2 results
Source: Authors’ elaboration in Bibliometrix Software version 4.0.1.
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
The three keywords were removed from the bibliometric map in Figure 3 to enhance
the quality and readability of the results (Aria & Cuccurullo, 2017). This is standard
procedure. The first keyword to be removed was “energy efficiency”. It was deleted
from the red cluster due to its exceedingly long distance from the other nodes. The
second keyword to be removed was “article” from the blue cluster. The third was
the “china” (original form proposed by Bibliometrix) keyword located also in the
blue cluster. This keyword was removed because country comparison is not within
the aims of this paper. It is also good practice in bibliometric research to remove all
names of countries, organisations or geographical objects.
3
Discussion
Despite the query used, there were no nodes in Figure 3 representing energy sales
forecasting. There were some identified, however, among the specific results
presented in bibliometric maps and similar analysis related to energy sales
forecasting. Those keywords were searched in raw results to generate Figure 2 and
were transformed into a tabular form in Bibliometrix. The occurrences of keywords
“sales” and “forecasting” were identified 8 and 24 times respectively. “Sales” and
“forecasting”, however, are not among the most frequent words.
The problem of searched keyword identification is either caused by the query syntax
or the rarity of those words in the examined databases. These results should be
checked against another popular bibliometric software, i.e. VOSviewer. Technical
problems, however, can be encountered while importing the data in a compatible
format for the VOSviewer software. Although the field of sales forecasting was
identified, there is no investigation of forecasting methods or prognosis models. The
aim of this article to explore and present keyword evolution in the subject of energy
sales forecasting in the SD context was achieved.
5
Conclusions
The energy carriers sales forecasting (including fuels) in the context of SD is
important for understanding the processes of energy transition (shift from fossil
fuels to renewable and green fuels) and achieving SDGs in the energy sector. The
bibliometric analysis illustrates the evolution of this process in the scientific
literature, by the presentation of the most significant keywords. The scientific
T. Zema, A. Sulich, L. Kulhanek: Energy Sales Forecasting in a Sustainable Development
Context: Bibliometric Review
107
.
contribution of this article lies in its provision of a general pattern in the form of a
diagram of the evolution of keywords (Figure 2). In the future, in-depth bibliometric
research combined with SLR can consider the general pattern of the sales forecasting
method, which can be specific to renewable and non-renewable energy sources.
Further research will focus on selected types of energy carriers: liquid fuels, gas and
coal.
Predicting energy sales can be useful for the management processes of a company.
It can help managers plan inventory, set prices and make decisions about staffing
and marketing. Additionally, accurate energy sales predictions can help managers
identify trends and respond to changes in the market, which can ultimately improve
the overall performance of the business. Energy sales forecasting is important for
businesses in the SD context because it allows them to plan for future energy
demand and make informed decisions about investments in renewable energy
sources and energy efficiency measures. This can help businesses to reduce their
environmental impact and become more sustainable, while also potentially reducing
costs and increasing profits. Additionally, accurate energy sales forecasts can help
businesses to comply with regulations and policies related to energy use and
emissions.
Acknowledgment
The project is financed by the Ministry of Education and Science in Poland under the programme
"Regional Initiative of Excellence" 2019–2023 project number 015/RID/2018/19. Total funding
amount 10,721,040.00 PLN.
References
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Nazari, M.T., Mazutti, J., Basso, L.G., Colla, L.M. & Brandli, L. (2021). Biofuels and their connections
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https://doi.org/10.3390/SU132111570
United Nations (2022). Goal 7 – Ensure access to affordable, reliable, sustainable and modern energy for all.
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https://sdgs.un.org/goals/goal7
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Studies, 2(1), 20–41. https://doi.org/10.1162/qss_a_00112
OVERVIEW OF EMISSION
CALCULATORS TO SUPPORT
TRANSPORT SUSTAINABILITY
STANISLAV MACHALÍK
University of Pardubice, Technical Faculty of Engineering, Pardubic, Czechia
stanislav.machalik@upce.cz
Abstract The increase in both passenger and freight transport
has been enormous during last years and the situation will not
change in the near future. This growth can be attributed to many
factors, such as the increase in global trade or the rise of ecommerce which led to more goods and cargo movement and
the amount of passenger traffic in all modes of transport. The
consequence is increasing emissions, resulting in massive
environmental degradation. Emission calculators are used to
estimate the amount of greenhouse gases that are emitted into
the atmosphere from various sources. They help better
understanding of the process of emission formation to take steps
to reduce them. This article's aim lies in comparing available free
emission calculators in transport. The comparison is oriented on
various transport modes, input and output parameters, and
methodologies used to calculate emissions. On the basis of this
research review own emission calculator has been designed.
DOI https://doi.org/10.18690/um.epf.3.2023.14
ISBN 978-961-286-736-2
Keywords:
greenhouse gas
emissions,
emission
calculator,
freight transport,
sustainability in
transport,
SDGs
JEL:
Q56, L86
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE.
110
1
Introduction
Everybody knows that global warming and the increase of greenhouse gas emissions
(GHGE) aspires to one of major problems facing global society. Several scientific
studies describe and analyze relationships among various emission sources, air
pollutant concentrations and human health (Rahman et al., 2022). One of the most
significant sources of pollution is the transport sector. It is considered to be the
second largest contributor to global pollution after industry (Rungskunroch et al.,
2021) which produces almost the half of all GHGE. And its share is still growing
(Saboori et al., 2014). The negative influence on environment which comes from the
transport sector has two basic reasons – the improperly designed infrastructure and
the harmful impact of traffic itself (Danish et al., 2018). Nowadays, there is a growing
inclination towards improving the effectiveness of traffic while simultaneously
minimizing its adverse effects. Among the concerns pertaining to the environment,
the emission of greenhouse gases, particularly carbon dioxide, is the most widely
debated issue.
In this paper, the comparation of available free emission calculators is described.
The emphasis lies on using of various transport modes, the data entered and
produced, and the approaches utilized for determining emissions. Based on this
research analysis, a customized emissions calculator has been developed.
2
Theoretical Background
Most developed countries have prioritized reducing greenhouse gas emissions, with
a focus on carbon dioxide, as a key environmental goal (Wadud et al., 2019). Carbon
dioxide is the most detrimental greenhouse gas, and even a small increase in its
concentration can cause breathing problems for humans (Natr, 2006). Over time,
exposure to high levels of CO2 can lead to severe health problems and even death.
In order to be able to reduce GHGE, we must first have and use detailed monitoring
and evaluation of their quantity. In 2012, the European Committee for
Standardisation has set the standard EN 16285 – Methodology for the calculation
and declaration of energy consumption and greenhouse gas emissions of transport
services (freight and passengers) (Petro & Konecny, 2017).
S. Machalík: Overview of Emission Calculators to Support Transport Sustainability
111.
There are three main approaches defined how to measure energy consumption and
produced CHGE. Well-to-Tank (WtT), Tank-to-Wheel (TtW) and Well-to-Wheel
(WtW) (CSN EN 16258, 2012):
−
−
−
3
Well-to-Tank – indicates the amount of consumed energy and produced
CHGE during all activities from the extraction of raw materials through the
production of energy or fuel, up to the delivery to the distribution network,
from which the transport means takes their fuel or energy.
Tank-to-Wheel – energy consumption and GHGE production associated
with the operation of the transport means.
Well-to-Wheel (the sum of Well-to-Tank and Tank-to-Wheel): An approach
monitoring the energy consumption and GHGE production which covers
the whole lifecycle from the retrieving and production of electricity or fuel,
through its way over the distribution network, to the consumption
associated with the operation of the transport means.
Methodology
These approaches, together with a systematic literature review and qualitative
content analysis, were the basis for developing the review of available emission
calculators. At the beginning of the research aimed at creating a review of freight
transport emission calculators, the method of systematic literature search was used.
This method is a well-structured and rigorous approach that consists of steps to
identify, evaluate, and synthesize the findings of various research studies, academic
papers, and practitioner reports. These steps typically include selecting the relevant
research areas, identifying appropriate sources of information, defining specific
search terms and criteria, conducting a thorough and systematic review of the
selected literature, synthesizing the results using a pre-defined methodology, and
producing a descriptive review of the findings (Fink, 2014). Then the method of
content analysis is used as a research technique for making valid conclusions from
expert articles or other meaningful sources in the context of their use (Krippendorff,
2003).
The method of qualitative comparative analysis is used to compare the freight
transport emissions calculators obtained using the method of a systematic review.
This method explores causal relationships between observed parameters by
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE.
112
systematically comparing them in order to find combinations of conditions that lead
to the desired outcome, the minimization of which can explain the phenomenon
under study (Fang-Yi et al., 2020). In this case, the inputs, outputs and emissions
calculator’s methodologies were compared and significant parameters were found.
The key questions that formed the basis of the literature review were: What are the
most common parameters of transport emission calculators? Is the methodology
used by emission calculators sufficiently described? Does the methodology use
standardized WtT, TtW and WtW metrics?
4
Results
Most of the emissions calculators analyzed in this study shared a similar set of basic
input data, such as the starting and ending points of the transport, distance or way
of transport (one-way / reverse two-way). Additional input data, when available, are
typically dependent on the weight or volume of the cargo. Some calculators offer
the option to input more specific data like orientation or fragility of the cargo, gross
/ net weight, option of special containers etc. In terms of output data, all the
calculators provide information about CO2 emissions, though the units used by each
calculator varied. Some calculators also offered additional output data such as energy
consumption, the amount of other pollutants such as CO, HC, NOx, SOx, NMHC
or particles emitted during the transport, or even the possibility of offsetting
emissions through carbon credits or similar mechanisms.
The final selection included five emission calculators:
1)
2)
3)
4)
5)
EECA Business – CO2 emission calculator (EECA Business, 2023)
ClimateCare – Business CO2 emission calculator (Climatecare, 2023)
EA Logistics – Freight Emissions Calculator (EA Logistics, 2023)
EcoTransIT World – Calculation (EcoTransIT, 2023)
Canadian National Railway company – Carbon Calculator (Canadian
National Railway company, 2023).
When selecting the features of the calculators, the requirements of a significant car
manufacturer in the Czech Republic were also considered.
Table 1 presents the overview of emission calculators with specified parameters.
S. Machalík: Overview of Emission Calculators to Support Transport Sustainability
113.
NA
2
Y
NA
NA
3
Y
NA
NA
4
Y
NA
Y
5
Y
NA
NA
One-way
only
One-way
only
One-way
only
Y
One-way
only
Monetization of
Produced
Emissions
NA
WtW, WtT and
TtW Approach
Own
Vehicle
Y
Total and Average
Emissions
Transport
of FMPC and/or
Material
1
No.
One-Way /
Round Trip
Transport
Road Transport
Table 1: The overview of emission calculators with specified parameters
Total only
NA
NA
Total only
NA
Y
Total only
NA
NA
Total only
Y
NA
Total only
NA
NA
Notes: FMPC – finished manufactured passenger cars, WtW Well-to-Wheel, Wt T Well-to-Tank, TtW
Tank-to-Wheel, Y Yes, N No, NA not available
Source: Author’s research.
A comprehensive tool capable of calculating emissions for multimodal transport was
not identified. If necessary, the transportation must be divided into different sections
based on the various modes of transport and the emissions calculation must be
counted for each individual section separately. Then, total emissions are obtained as
a sum of section emissions. This can be a time-consuming and complex process, but
it may be necessary for accurate emissions calculations for multimodal transport.
5
Discussion
After evaluation of selected freight transport emission calculators, the EcoTransIT
World calculator (No. 4) was recommended for extensive usage. It is the most
comprehensive of followed tools. It can be used to calculate emissions not only from
road freight transport, but also from rail, air and sea transport. The EcoTransIT
World calculator also allows a significant number of input parameters and generates
a large amount of output information. The calculator uses a distribution of output
emissions into WtW, WtT and TtW. The methodology used is also transparent
(EcoTransit, 2023)
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE.
Most of the other analyzed freight transport emissions calculators are available only
for one mode of transport (usually road or air); some calculators do not have a
transparently specified methodology for calculating emissions. Calculators often
don't allow the specification of more than trivial input parameters and/or don't
distinguish between WtT, WtW, TtW approaches, which is also a disqualifying
restriction for them.
A common problem lies in the lack of support for multimodal transport. Emissions
have to be calculated separately for each mode of transport (road, rail, air, sea, etc.).
Figure 1: KALOGEMIS GHGE calculator, actually used in India
Source: Machalík (2023).
The limitation of this research is constrained by the quantity of analyzed emission
calculator, given that solely eighteen such calculators (identified through Google)
were scrutinized. Nonetheless, it is reasonable to speculate that a greater number of
these calculators will be developed and made available in the upcoming period.
Additionally, one such calculator is the outcome of this study (Machalík, 2023).
On the basis of the conducted research, a new emission calculator was designed and
implemented to meet the needs of the research patron (Figure 1). Compared to the
observed calculators, it allows a more flexible choice of input parameters and offers
S. Machalík: Overview of Emission Calculators to Support Transport Sustainability
115.
a detailed overview of GHGe produced by selected transport. This calculator is
available online (Machalík, 2023) and can be viewed/used with permission of the
author and patron.
6
Conclusion
The issue of GHGE from freight transport is relevant for the whole global society.
Far from being just a theoretical scientific study, the issue is also being addressed by
companies themselves in their logistics planning. Some companies are profiling
themselves as socially responsible and taking environmental and social aspects of
their activities, products and services into account in their business activities. The
use of emission calculators thus contributes to reducing the negative environmental
impacts of production and reduction of goods. The best-known logistics companies
possess their proprietary emission calculators, whereas the majority of others use
free ones.
The goal of the article, which lies in the analysis of freely available freight transport
emission calculators, has been realized as a review and comparison of specified input
and output parameters, modes of transport and methodologies used. The results of
the analysis could contribute to the improvement or development of new types of
emission calculators. There is currently no freight emissions calculator that includes
all the specifics.
References
Canadian National Railway company: Carbon Calculator. Retrieved from:
https://www.cn.ca/en/delivering-responsibly/environment/emissions/carbon-calculator/
(accessed on 31 March 2023)
Climatecare: Business CO2 Emissions Calculator. Retrieved from: https://climatecare.org/calculator/
(accessed on 31 March 2023)
CSN EN 16258. Methodology for calculation and declaration of energy consumption and GHG emissions of transport
services (freight and passengers). 2012.
Danish, B. M. A. & S. Suad. (2018). Modelling the impact of transport energy consumption on CO2
emission in Pakistan: evidence from ARDL approach. Environmental Science and Pollution Research,
25(10), 9461-9473. doi: https://doi.org/10.1007/s11356-018-1230-0.
EA Logistics: Freight Emissions Calculator. Retrieved from: http://www.freightemissionscalculator.com/
(accessed on 31 March 2023).
EcoTransit: Calculation. Retrieved from: https://www.ecotransit.org/calculation.en.html (accessed on
31 March 2023).
EECA Business: CO2 Emission Calculator. Retrieved from:
https://www.eecabusiness.govt.nz/tools/wood-energy-calculators/co2-emission-calculator/
(accessed on 31 March 2023).
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE.
Fang-Yi, L. & A. Rey-Martí & D. Botella-Carrubi. (2020). Research methods in business: Quantitative
and qualitative comparative analysis. Journal of Business Research, 115, 221-224, doi:
https://doi.org/10.1016/j.jbusres.2020.05.003.
Fink, A. (2014). Conducting research literature reviews: from the internet to paper. Los Angeles: Sage, 2014. doi:
10.1016/j.lisr.2010.07.003.
Krippendorff, K. (2003). Content analysis: an introduction to its methodology. Thousand Oaks: Sage
Publications. doi https://doi.org/10.4135/9781071878781.
Machalík,
S.
Calculator
of
logistic
emissions
(CALOGEMIS).
Retrieved
from:
https://kalogemis.upce.cz/india/ (accessed on 31 March 2023).
Natr, L. (2006). Earth like a glass: why are you afraid of CO2? (In Czech). Praha: Academia, 2006.
Rahman, A. & O. Farrok & M. M. Haque. (2022). Environmental impact of renewable energy source
based electrical power plants: Solar, wind, hydroelectric, biomass, geothermal, tidal, ocean, and
osmotic. Renewable Sustainable Energy Reviews, 161, 112279. doi
https://doi.org/10.1021/acscatal.2c05587.
Rungskunroch, P. & Z.J. Shen & S. Kaewunruen. (2021). Getting it right on the policy prioritization
for rail decarbonization: Evidence from whole-life CO2e emissions of railway systems. Front.
Built Environ, 7, 638507. doi:10.3389/fbuil.2021.638507.
Saboori, B. & M. Sapri & M. Bin Baba. (2014). Economic growth, energy consumption and CO2
emissions in OECD (Organization for Economic Co-operation and Development)’s transport
sector: A fully modified bi-directional relationship approach. Energy, 66, 150–161.
doi:10.1016/j.energy.2013.12.048.
Wadud, Z. & P. K. Chintakayala. (2019). Personal carbon trading: trade-off and complementarity
between in-home and transport related emissions reduction. Ecological Economics, 156, 397-408.
doi: https://doi.org/10.1016/j.ecolecon.2018.10.016.
EXPLORING THE VALUE
OF THE SEA: A STUDY OF THE
BLUE ECONOMY IN THE EU
AND PORTUGAL
SARA SOUSA,1 CARLA HENRIQUES,2 JOANA LEITE3
Coimbra Business School|ISCAC & CERNAS, Polytechnic Institute of Coimbra,
Coimbra, Portugal
ssousa@iscac.pt
2 Coimbra Business School|ISCAC & INESC, Polytechnic Institute of Coimbra,
Coimbra, Portugal
chenriques@iscac.pt
3 Coimbra Business School|ISCAC & CMUC, Polytechnic Institute of Coimbra,
Coimbra, Portugal
jleite@iscac.pt
1
Abstract This paper examines the concept of the "blue
economy" in the context of the European Union (EU) and
Portugal, exploring the economic importance of the sea and its
resources. First, it provides an overview of the EU blue economy
and its contribution to the overall EU economy over the last
decade. Data from the European Commission shows that coastal
tourism is the most important sector both in terms of Gross
Value Added (GVA) and employment, with the four largest EU
countries (Spain, Germany, Italy, and France) being the largest
contributors to the EU blue economy. In this context, this study
aimed to investigate the performance of Portuguese coastal
tourism in comparison to other European coastal countries,
particularly in relation to the 2008 financial crisis and the
COVID-19 pandemic. The findings show that Portugal's GVA
generated by the coastal tourism sector was consistently lower
than the respective mean of all other European coastal countries
in several years. The statistical tests confirm these results and
suggest that Portugal's coastal tourism sector may need more
attention and efforts to improve its economic performance.
DOI https://doi.org/10.18690/um.epf.3.2023.15
ISBN 978-961-286-736-2
Keywords:
sea resources,
coastal toursm,
blue economy,
European Union,
Portugal
JEL:
Q01, Q20, R11
118
1
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Introduction
The concept of the "blue economy" has become increasingly prominent in recent
years due to its potential for providing economic benefits while protecting and
preserving the world's oceans and seas. It refers to any type of economic activity that
takes place at sea or is dependent on it, including marine natural capital and nontradable services from marine ecosystems. It is expected that this economy will
maintain its relevance due to increasing demands from growing populations and
their standards of living (demand side), as well as developments in technology,
economics, and logistics that have opened new possibilities for exploration (supply
side) (EY-AM&A, 2019).
Although it is gaining traction internationally and regionally (Mulazzani & Malorgio,
2017; Bennett et al., 2019), there remains no single definition accepted by all on what
exactly constitutes a "blue economy". The European Commission defines it as "all
activities related to water bodies such as oceans, seas and lakes" which includes
traditional uses like fishing but also other sustainable economic endeavors for
Member States` (MSs`) coastal communities (European Commission, 2022).
According to the OECD's take on this matter, any description would be inadequate
if it did not include non-quantifiable natural stocks or non-market goods and
services. Thus, they suggest that "the ocean economy should be understood as
encompassing economic activities based around marine industries plus assets, goods,
and services offered through marine ecosystems" (OECD 2016, 22).
There is a great complexity of maritime activities exercising one or more functions,
and it is particularly difficult to establish a consensual delimitation of all sectors that
integrate the so-called "hyper cluster" of the blue economy (SaeR and ACL, 2009).
Despite the difficulty, it is possible to identify a set of maritime activities that fit into
three types of industries: established, emerging, and potential. The established
sectors are the major contributors to the blue economy. According to the European
Commission (2022), seven sectors stand out due to their economic importance, each
further divided into subsectors. These include marine living resources (primary
production, processing and distribution of fish products); marine non-living
resources (oil and gas, other minerals, support activities); marine renewable energy
(offshore wind energy); port activities (cargo and warehousing, port and water
projects); shipbuilding and repair services (shipbuilding, equipment and machinery),
S. Sousa, C. Henriques, J. Leite: Exploring the Value of the Sea: A Study of the Blue
Economy in the EU and Portugal
119
maritime transport services (passenger transport, freight transport, transportation
services); coastal tourism related activities such as accommodation and
transportation; as well as other expenditures.
Portugal, an oceanic country with a coastline extending over 2,500 km, is one of the
countries that recognizes the economic value of the sea; 48% of all maritime waters
in areas adjacent to Europe under MS jurisdiction are part of Portuguese territory
(DGPM, 2020a). It is therefore of utmost importance to analyze the importance of
the blue economy in this country and compare it with the other EU MSs.
This research paper presents a description of the blue economy in the European and
Portuguese contexts. Besides, since coastal tourism is the most important sector,
both in terms of Gross Value Added (GVA) and employment, this study proposes
to investigate whether Portuguese coastal tourism was more affected by the 2008
financial crisis and the COVID-19 pandemic than other European coastal countries.
After introducing some key features about the blue economy, section 2 focuses on
the particularities of the EU context, while section 3 presents a national view of the
evolution of the blue GVA and employment. Section 4 presents the adopted
methodology, followed by the discussion and analysis of the achieved results. The
paper ends with the main conclusions.
2
Theoretical Background
2.1
The EU Context
The EU’s Directorate-General for Maritime Affairs and Fisheries is responsible for
centralized maritime and fisheries policy. They are guided by two main policies, the
Integrated Maritime Policy (IMP) and the Common Fisheries Policy (CFP). The
IMP aims to coordinate policies that affect the oceans, seas, islands, coastal and
outermost regions, and maritime sectors, to foster sustainable development in these
areas. This policy has several objectives, including maximizing sustainable use of the
oceans, building a knowledge base for maritime policy, improving the quality of life
in coastal regions, promoting EU leadership in international maritime affairs, and
raising the visibility of maritime Europe through various initiatives.
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
The Common Fisheries Policy (CFP) is a set of rules for sustainably managing
European fishing fleets and conserving fish stocks. This policy was reformed in 2013
and now features attention to the environmental, economic, and social dimensions
of fisheries, fish stock management at maximum sustainable yield, a landing
obligation, continued application of multiannual plans, regionalization, fleet capacity
ceilings, and the EU Marine Strategy Framework Directive (MSFD) to protect the
marine ecosystem and biodiversity. The MSFD sets out 11 illustrative qualitative
descriptors to achieve good environmental status (GES), but more concrete
measures at the international level are proposed to address environmental, fisheries,
and climate issues.
Furthermore, the EU's 2013-2020 Atlantic Action Plan (COM (2013) 279 Final)
aims to boost the sustainable blue economy in the four MSs (Ireland, France,
Portugal, and Spain) with Atlantic coasts and their outermost regions. The plan
prioritizes promoting entrepreneurship and innovation, protecting, and enhancing
the marine and coastal environment, improving accessibility and connectivity, and
creating a socially inclusive and sustainable model of regional development
(European Commission, 2023).
All in all, the contribution of established blue economy sectors in the EU varied
greatly among MSs in 2020. In terms of employment, Spain had the highest share at
19%, while Luxembourg had the lowest at 0.1%. Germany had the highest share of
GVA at 18%, while Luxembourg had less than 0.1%. Generally, the blue economy
had a significant contribution to national GVA or employment in insular MSs or
those with archipelagos, such as Greece, Malta, Cyprus, Croatia, and Portugal.
However, Estonia was an exception, with a 6% employment share. Other MSs with
relatively large blue economy sectors were Spain, Denmark, Latvia, Ireland, and
Bulgaria, while landlocked MSs had limited contributions. Among the four largest
EU economies, only Spain exceeded the EU average. Some MSs, such as Greece,
Malta, Portugal, Latvia, and Denmark, saw a significant increase in blue jobs, while
Bulgaria and Estonia experienced a decrease. The largest contributors to the EU
blue economy in terms of both employment and GVA were the four largest MSs
(Spain, Germany, Italy, and France), with Greece ranking second in employment
contribution. Portugal, the Netherlands, and Denmark also made significant
contributions. Most MSs saw an increase in GVA generated by established blue
economy sectors between 2009 and 2020, with the most significant expansion
S. Sousa, C. Henriques, J. Leite: Exploring the Value of the Sea: A Study of the Blue
Economy in the EU and Portugal
121
recorded in Ireland, Portugal, and Malta. However, GVA in Bulgaria and Greece
had not yet recovered to 2009 levels in 2020. Some MSs, including Bulgaria, Croatia,
Estonia, France, Italy, Romania, and Sweden, had not yet recovered 2009
employment levels.
2.2
The Portuguese context
From 2009 to 2020, the number of people employed in Portugal's blue economy
sectors increased by 43.7%, from 167,615 to 240,875, despite some fluctuations due
to the 2008 crisis and the COVID-19 pandemic (European Commission, 2023) –
see Figure 1. Coastal tourism was the most significant sector, while ocean energy
employed zero people throughout the analyzed period.
300.000
Persons employed by sectors
250.000
Coastal tourism
200.000
Maritime transport
150.000
Shipbuilding and
repair
Ports activities
100.000
Ocean energy
50.000
0
Non-living
resources
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Figure 1: Persons employed in the sectors of the blue economy
Source: Adapted from European Commission (2023).
From 2009 to 2020, the contribution of blue economy sectors to Portugal's GVA at
factor cost (GVAfc) increased significantly, with coastal tourism being the most
significant sector. The blue sectors generated a GVAfc of €153,812.5 million in 2009,
which increased to €181,820.1 million in 2020, representing an 18.2% increase – see
Figure 2. However, there were periods of retraction during the economic crisis and
the COVID-19 pandemic.
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BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
GVA
7000
6000
Coastal tourism
5000
Maritime transport
4000
Shipbuilding and
repair
Ports activities
3000
Ocean energy
2000
Non-living
resources
Living resources
1000
0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Figure 2: GVA in the sectors of the blue economy
Source: Adapted from European Commission (2023)
4
Methodology
This research study proposes to test the following hypothesis:
H1: Since 2010, Portugal’s coastal tourism suffered more when compared with the
group of all other European coastal countries from the impacts of the 2008 financial
crises and its aftermath and the COVID-19 pandemic.
To test this hypothesis, the data used was the annual GVA at factor cost (GVAfc)
generated by the coastal tourism sector of all European coastal countries between
2009 and 2020, provided by the EU Blue Economy Observatory (European
Commission, 2023). The hypothesis was operationalized in terms of the annual
variation rate of the GVAfc, comparing, for each year, the one for Portugal against
the average of all other European coastal countries (amounting to 22 countries, the
UK included). The statistical tests used were the one-sample Student’s t-test or the
Wilcoxon test, depending on the normality result provided by the Shapiro-Wilk (SW)
test. Student’s t-test and the Wilcoxon test were formulated with one-sided
alternative hypotheses, and Cohen’s d (d) and Common Language Effect Size
(CLES) were computed to respectively assess the effect size.
S. Sousa, C. Henriques, J. Leite: Exploring the Value of the Sea: A Study of the Blue
Economy in the EU and Portugal
5
123
Results and Discussion
Considering the observed values, reported in Table 1 and represented in Figure 3,
the years effectively tested were 2010, 2011, 2012, 2015, 2016, 2019, 2020, as in those
years the Portugal’s GVAfc is lower than the respective mean of all other European
coastal countries.
Table 1: Annual variation rate of GVAfc for Portugal and other European coastal countries
Statistics
Portugal
(Mean)
Other
(Mean)
2010
2011
2012
2013
2014
2015
2016
2017
2018
-0.027 -0.259
0.040
0.272
0.086
0.007
0.116
0.345
0.310
-0.007 -0.065
0.037
0.047
0.090
-0.018
0.022
0.158
0.080
0.224
0.008
0.035
0.086
0.203
0.127
0.241
0.032
0.175
-0.004
Other
(Standard
0.193 0.128 0.516 0.270 0.116
Deviation)
Note: Values in bold indicate the lowest value for each year.
2019
2020
250%
200%
150%
100%
50%
0%
-50%
-100%
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Figure 3: Annual variation rate of GVAfc generated by the coastal tourism sector for Portugal
(red line), other European coastal countries (light blue lines) and the respective mean (dark
blue line).
Table 2 presents the statistical tests. The results obtained show that out of the seven
years tested, only for 2010, 2011, 2019, and 2020, the null hypothesis, according to
which the average GVAfc in Portugal is equal to that of other European coastal
countries, is rejected at a 5% level. Only on those four years does the alternative
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
124
hypothesis that Portugal’s GVA was significantly lower than the respective average
for all other European coastal countries prevail.
Table 2: Results of the statistical tests
year
2010
2011
2012
2015
2016
2019
2020
Shapiro-Wilk
stat
p-value
0.854
0.004
0.953
0.355
0.590
0.000
0.969
0.686
0.887
0.016
0.960
0.496
0.898
0.028
t-stat
1.502
9.085
0.064
0.788
0.944
2.101
2.623
Student’s t-test
p-value
d
0.074
0.320
0.000
1.937
0.475
0.014
0.220
0.168
0.178
0.201
0.024
0.448
0.008
0.559
w-stat
187
251
75
152
144
194
200
Wilcoxon test
p-value
0.025
0.000
0.954
0.212
0.294
0.014
0.008
CLES
0.727
0.955
0.273
0.591
0.500
0.682
0.773
Notes: Italics in the SW p-value indicates normality rejection at a 5% level (thus pointing to Wilcoxon test). Values
in grey indicate that the test was not considered due to the result of the SW test. Values in bold correspond to
rejection of the null hypothesis at a 5% level, either in Student’s t-test or in Wilcoxon test.
Looking at the effect size in Table 2, it is medium in 2010, 2019, and 2020, and large
in 2011 (Fritz et al., 2012). Thus, the impact was more noticeable in 2011. As to the
impact in 2019, even though the effect size is medium, it is relevant to notice that,
on that year, the annual variation rate was very small in magnitude in all countries
(0.008, thus 0.8%, in mean and with a standard deviation of 0.032).
6
Conclusions
The blue economy is becoming increasingly important in the global economy due to
population growth, demand for resources, and advances in technology and logistics.
The blue economy comprises three types of industries, namely established,
emerging, and potential sectors. Coastal tourism is the most significant sector in
terms of GVA and employment. This study investigates whether Portuguese coastal
tourism was more affected by the 2008 financial crisis and the COVID-19 pandemic
than other European coastal countries. Portugal's GVAfc generated by the coastal
tourism sector was consistently lower than the respective mean of all other European
coastal countries in the years 2010, 2011, 2019, and 2020. The statistical tests
conducted confirm these findings, as the null hypothesis that the average GVAfc in
Portugal is equal to that of other European coastal countries is rejected at a 5% level
only for those four years. The effect size analysis indicates that the impact was more
noticeable in 2011, although in 2019, the effect size was medium but with a very
S. Sousa, C. Henriques, J. Leite: Exploring the Value of the Sea: A Study of the Blue
Economy in the EU and Portugal
125
small annual variation rate in all countries. These results suggest that Portugal's
coastal tourism sector may need further attention and efforts to improve its
economic performance compared to other European coastal countries.
References
Bennett, N. J., Cisneros-Montemayor, A. M., Blythe, J., Silver, J. J., Singh, G., Anews, N., et al. (2019).
Towards a sustainable and equitable blue economy. Nat. sustainability 2(11), 991–993. doi:
10.1038/s41893-019-0404-1
European Commission (2022). The EU Blue Economy Report. Publications Office of the European Union.
Luxembourg.
European Commission (2023). Blue indicators online dashboard. Retrieved from
https://blueindicators.ec.europa.eu/access-online-dashboard (Accessed on 15 January
2023)
EY-AM&A (2019). Economia do Mar em Portugal (The Economy of the Sea in Portugal). Ernst & Young
- Augusto Mateus & Associados, Millennium BCP, April, 2019.
Fritz, C. O., Morris, P. E., and Richler, J. J. (2012). Effect size estimates: Current use, calculations, and
interpretation. Journal of Experimental Psychology: General, 141(1), 2–18.
https://doi.org/10.1037/a0024338
Mulazzani, L., and Malorgio, G. (2017). Blue growth and ecosystem services. Marine Policy, 50 (5), 17–
24. doi: 10.1016/j.marpol.2017.08.006
OECD (2016). The Ocean Economy in 2030. OECD Publishing, Paris.
http://dx.doi.org/10.1787/9789264251724-en
SaeR and ACL (2009). O Hypercluster da Economia do Mar. Um domínio de potencial estratégico para o
desenvolvimento da economia portuguesa. Relatório final. Sociedade de Avaliação Estratégica e Risco
(SaeR) & Associação Comercial de Lisboa (ACL), 17 de fevereiro de 2009, Lisboa.
126
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
SLOW FASHION AND
SUSTAINABLE DEVELOPMENT
LENKA ŠVAJDOVÁ, JANA MIKOLAŠOVA
VSB-TUO, Department of Business Administration, Ostrava, Czechia
lenka.svajdova@vsb.cz, jana.mikolasova@vsb.cz
Abstract The garment industry is the second largest polluter of
the environment. This sector is characterized by high
consumption of water, chemicals, and greenhouse gas emissions.
In addition, textiles make up a significant part of municipal
production. In this context, the sector of so-called fast fashion,
or fast fashion, producing much trend-based clothing, can be
particularly problematic. This leads to frequent changes in
clothing and the formation of large amounts of textile waste.
Therefore, it seems crucial to increase consumer interest in
sustainability issues and identify their attitudes to sustainable
fashion, thus strengthening the trend of slow fashion. When
buying clothes, factors such as quality, brand, price, whether the
garment corresponds to current trends, and whether the clothing
is made with respect for the environment can be considered. This
article aims to identify the importance of the sustainable fashion
factor in the consumer's purchasing decisions. The set goal will
be achieved using questionnaire survey methods and secondary
data analysis. The benefit of this article will be a well-arranged
analysis of consumer attitudes towards sustainable fashion with
a particular focus on fashion made from recycled materials.
DOI https://doi.org/10.18690/um.epf.3.2023.16
ISBN 978-961-286-736-2
Keywords:
consumer
behaviour,
recycled materials,
slow fashion,
sustainable
development,
SDGs
JEL:
M31, P46, Q01
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE.
128
1
Introduction
The fashion and garment industries are important sectors of many national
economies, and evidence of the production of textiles and clothing goes back to the
distant past. Mainly in the second half of the 20th century, there was a massification
of this sector, which was caused by the growing demand for textiles in general and
the emergence of several fashion brands that established themselves on the market
mainly because they offered relatively high-quality, affordable and trendy fashion
(Mandarić, Hunjet et al., 2022). The problem is that the garment industry is the
second largest polluter of the environment. This sector is characterized by high
consumption of water, chemicals, and also greenhouse gas emissions (Bailey et al.,
2022). In addition, textiles account for a significant part of the municipal waste
generated (De Oliveira et al., 2022; Filho et al., 2019). The sector of so-called fast
fashion, which produces a large number of trend-based clothing, can be particularly
problematic in this context. This leads to frequent changes in clothing and the
creation of large amounts of textile waste (de Oliveira et al., 2022).
The situation described above is becoming increasingly unsustainable, and
prominent fashion chains with so-called fast fashion are looking for ways to fulfil
their economic goals and, at the same time, behave socially responsibly, especially
regarding environmental protection (Bick et al., 2018). This is probably the reason
why these chains are trying to focus their attention on so-called slow fashion. Slow
fashion is an aspect of sustainable fashion and a concept describing the opposite of
fast fashion, part of the "slow movement" advocating for clothing and apparel
manufacturing concerning people, the natural environment and animals (Solino et
al., 2020). One of the possibilities of so-called sustainable fashion is using recycled
materials, e.g. ET bottles or other suitable materials, to produce textiles (Harmsen
et al., 2021). The will on the part of these companies to bring about a positive change
in their business is obvious, the question remains how consumers themselves react
to these products, and it is precisely the determination of partial attitudes of
consumers towards sustainable fashion that is the subject of this article.
L. Švajdová, J. Mikolašova: Slow Fashion and Sustainable Development
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129
Literature Review
Surveys show consumer interest in sustainability issues is growing, and engagement
in this area has increased during the pandemic. This means that the trend of socalled slow fashion is gradually strengthening. As the leading representatives of fast
fashion, fashion chains have also had to react to this fact and adopt sustainability
aspects to the demand for less environmentally friendly clothing (Dangelico et al.,
2022; De Oliveira et al., 2022). One way to make the fast fashion sector more
sustainable is using recycled textiles for clothing. Therefore, fashion chains have
started to use these materials to produce (Filho et al., 2019).
When buying clothes, factors such as quality, brand, price, whether the garment
corresponds to current trends, and whether the clothing is made with respect for the
environment can be considered (Colasante & D'Adamo, 2021). However, the
question remains about how important this factor is in purchasing decisions because
even a consumer's concern about the state of the environment is not necessarily
reflected in his purchasing behaviour (Mason et al., 2022).
The stumbling block in this market may be whether consumers believe in the fashion
chain's positive environmental impacts made from recycled materials. This is also
related to whether they are sufficiently informed about this issue to make informed
decisions without requiring lengthy searches for information.
Based on the literature review and set goals of the article, a research hypothesis has
been established, i.e., an unverified claim that can be statistically tested. An
alternative hypothesis to the null hypothesis was verified. If the null hypothesis is
rejected, an alternative hypothesis is accepted. For hypothesis testing, the research
chose a significance level of α = 0.05, representing the risk of erroneous rejection of
the null hypothesis. The following hypotheses were set:
H0: Searching for (purchasing) clothing from recycled materials does not depend on
environmental attitudes.
H1: Searching for (purchasing) clothing from recycled materials depends on the
attitude to the environment.
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3
Methodology
The research was carried out as part of the research project Determinants of
Consumer Behavior and their Influence on Typology, registered under the number
SP2023/052 at VSB-Technical University Ostrava. The main objective of the
submitted article the research was to identify consumers’ attitudes to the fashion
offered by large clothing chains (fast fashion) made using recycled materials. “fast
fashion” is defined as “ inexpensive clothing products produced by mass-market
retailers in response to the latest trends.” This makes it easy to see why fast fashion
appeals to a large market, and its low prices and trendy styles tempt people to buy
large amounts of clothing simultaneously (Wu, 2020). Another sub-goal was to find
out the relationship of fast fashion consumers to the environment.
The following research questions follow the defined objectives and further develop
them:
−
−
3.1
What is the attitude of fast fashion consumers to the chain of clothes
offered from recycled materials, and do they believe in their environmental
friendliness?
Is there a link between the search for these products and a positive attitude
toward the environment?
Research method
Primary data was collected using the CAWI (Computer Assisted Web Interviewing)
method. It is a quantitative research method where the interviewing is carried out
using an online questionnaire. The questionnaire was conducted from 11/22 to
02/2023. This method brings several advantages but also disadvantages. Benefits
include speed, cost savings, and the ability to use supporting visual or audio
materials. Conversely, areas for improvement can be seen in the need to access the
Internet or the problem with the credibility of respondents' answers (Malhotra et al.,
2017; Tahal et al., 2017).
L. Švajdová, J. Mikolašova: Slow Fashion and Sustainable Development
3.2
131
Sample
The method was chosen to ensure a sample of respondents of sufficient size. It also
considers that fashion chains often have e-shops linked to brick-and-mortar stores.
It can therefore be assumed that their customers move in an online environment.
The core set consisted of women and men aged 15 to 64 (residents of the Czech
Republic) who visit fashion chains and, at the same time, notice clothing made from
recycled materials. Included in this set were both consumers who search for and buy
these products but also consumers who have noticed these garments but do not cool
them. Both respondents are suitable because they have at least an essential awareness
of fashion made from recycled materials and can express their views on it. The age
restriction for respondents aged 15 to 64 was due to the chosen method – online
interviewing. This age group can be assumed to be in the Internet environment.
The sample size was planned at 385 respondents, and the quota sampling method
was chosen for selecting respondents. This method makes achieving the sample’s
representativeness possible by setting quotas for desired traits (e.g., age or sex). This
ensures that the sample will be similar to the primary sample and thus bear the
characteristics of the basic model (Tahal et al., 2017).
The gender and age of the respondents were determined as quota variables. Data
from the Czech Statistical Office for 2021 determined the quotas. Gender was
defined as the first quota variable. In the age range of 15–64 years, there is a slight
predominance of men over women, namely by 2% (CZSO, 2022). The second quota
variable was age. According to him, five age categories were formed.
4
Results
As mentioned above, the marketing research was supposed to answer two
fundamental questions, namely, what is the attitude of fast fashion consumers to the
chain of clothing offered from recycled materials and do the consumers believe in
the environmental friendliness of fashion chain furthermore, whether there is a
connection between the search for these products and a positive relationship to the
natural environment. Based on the data from the survey hence, the null hypothesis is
rejected and alternative hypothesis is accepted.
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To obtain a general overview, one of the questions was set to get information on
which factors consumers consider when buying clothes, where one of the factors
was the factor of environmentally friendly production. Another research issue
presented in this article is the question about attitudes toward recycled clothing. The
last question that will be given space within the report will be on the attitude to the
environment so that one of the research questions can be answered and the
established hypothesis confirmed or refuted.
4.1
Factors considered when buying clothes
Respondents were asked what factors they consider when buying clothes. Based on
the data obtained, it can be stated that the most important for respondents when
buying clothes are quality (83.1%), price (76.1%), and relatively more closely
followed by current trends with 34.7%. "Production with respect for the
environment" is a factor 21.2% of respondents consider. The answers "look,”
"fits/fits," and "comfort" were added after processing the respondents' answers.
The test carried out, in this case, did not reveal any dependence of selected factors
on identification questions. Quality and price are the most critical factors for both
women and men. However, current trends are in third place for women (32.9%) and
brand (38.6%) for men, considered by 10.3% of respondents. Depending on age,
the factors of quality, price, and trends are also considered the most. Regarding
differences in answers by education, while respondents with primary and secondary
education mainly considered price (almost 95%), quality proved to be the dominant
factor among respondents with university and tertiary professional education
(82.6%). For respondents with an income of CZK 50,000 or more, the most
important brand is the most important after quality (55.3%). According to the
answers received, this factor is the least important for the income group of CZK 4049 thousand and CZK 10,000 and less (Mikolášová, 2023).
4.2
Attitudes towards recycled clothing
Attitudes towards recycled clothing were analyzed based on ten claims. Respondents
reported agreement with the claim on a scale where one meant utterly agree and a
value of 5 completely disagreed. Respondents most agreed with the statement,
“Wearing clothes made from recycled materials is trendy," and the average approval
rating was 2.3. On the other hand, the least respondents agreed with the statement
that "Clothing made from recycled materials is timeless (not subject to trends)." In
L. Švajdová, J. Mikolašova: Slow Fashion and Sustainable Development
133
this case, the average consent value was 3.4. Furthermore, respondents agreed more
that the production of recycled garments is environmentally friendly (average value
2.4) than that its disposal is environmentally friendly (average value 2.6). It is also
clear that, on average, respondents tended to agree with all statements, or their
position approached the neutral point (Mikolášová, 2023).
The T-test verified whether men and women agreed with these statements on
average equally. For some claims, there are more significant differences in the
average rating. The test also confirmed this fact carried out for a total of 6 shares.
That clothing from recycled material is of good quality, easier to maintain,
unaffordable, timeless, environmentally friendly, and has a small selection. It can be
seen that the average rating of men, except for the statement "Clothing made from
recycled materials is unaffordable (expensive).", is always higher. This means that
they expressed a lower level of approval than women. Both male and female
respondents most strongly agreed that wearing clothes made from recycled materials
is trendy (average value 2.1 for women and 2.36 for men). Men disagreed the most
with the statement that clothing made from recycled materials is not subject to
trends (average value 3.6), and women that recycled dress is easy to maintain, with
an average value of 3.21 (Mikolášová, 2023).
4.3
Attitudes towards the natural environment
In this question, respondents reported on a scale how often they do a given activity
related to the relationship to ecology, with the value 1=very often and 5=never.
Table 1 shows how often respondents perform a given activity on average. It can be
seen that respondents recycle waste most often (average value 1.5) and contribute
least often to organizations dealing with nature conservation (average value 3.74).
Respondents are more likely to buy natural cosmetics (average value of 2.59) than
organic food (average weight of 2.8) or other products made from recycled materials
average value of 2.93 (Mikolášová, 2023).
To find out whether the answers of men and women differ, a T-test was performed,
which showed the difference in two activities "I buy natural cosmetics" and "I
consider environmental problems to be serious, and I take them into account when
making purchasing decisions.” On average, women buy natural cosmetics more
often than men and consider environmental issues more often.
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Table 1: Attitudes towards the natural environment
Source: Mikolášová (2023).
5
Discussion and Conclusion
Slow fashion as an aspect of sustainable fashion is becoming a trend and necessary
for the future sustainable development of society and states’ economies. Sustainable
fashion describes the opposite of fast fashion, part of the "slow movement"
advocating for clothing and apparel manufacturing concerning people, environment,
and animals (Staniforth, 2010). Sustainable fashion is becoming a trend and
necessary for the future sustainable development of society and states’ economies.
Sustainable fashion is gaining ground in the Czech market with increasing intensity.
The authors consider it necessary to remind that their positive attitude towards
concern for the environment is not only manifested when buying fashion, but as the
green thinking survey showed, it is also evident in daily activities.
Based on the survey, it follows that the impact of fashion production on the
environment is not one of the most important from the consumer's point of view.
Still, it is essential in decision-making regardless of the consumer's gender, age, and
income. Respondents perceive clothing made of recycled material as trendy as the
most significant advantage, and the least favorable response was the claim that dress
is timeless. As for the first research question, we can declare that consumers have a
positive attitude to fashion made from recycled materials. As for the second research
question, the link between attitudes towards fashion made from recycled materials
L. Švajdová, J. Mikolašova: Slow Fashion and Sustainable Development
135
and perspectives towards the environment, women have shown a more significant
link between 'green behaviour' and preference for style made from recycled
materials. Marketing research was carried out within the Czech Republic, so in the
future, there is an opportunity to conduct the same analysis with the consumers of
another country and compare the results achieved. The alternative hypothesis
“Searching (buying) clothing from recycled materials depends on the attitude to the
environment” was verified.
Marketing research was conducted within the Czech Republic. The results of the
conducted research can bring interesting information for fashion chains about who
is a specific segment of sustainable fashion products. Due to the relevance of the
topic and its growing importance in the future, it is possible to use the prepared
research questions and the results of marketing research to implement marketing
research in other countries and thus compare consumers’ attitudes in different
countries. This step would lead to a more comprehensive view of the issue of
sustainable fashion and its future in the eyes of consumers.
References
Bick, R., Halsey, E. & Ekenga, C.C. (2018). The global environmental injustice of fast fashion. Environ
Health,17, 92. https://doi.org/10.1186/s12940-018-0433-7.
Colasante, A., D´Adamo, I. (2006). The circular economy and bioeconomy in the fashion sector:
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1MP12DP31#w=
Dangelico, R. M., Alvino, L., and Fraccascia, L. (2022). Investigating the antecedents of consumer
behavioural intention for sustainable fashion products: Evidence from a large survey of Italian
consumers. Technological Forecasting & Social Change, 185.
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De Oliviera, L. G., Miranda, F. G., and De Paula Dias, M. A.(2022). Sustainable practices in slow and
fast fashion stores: What does the customer perceive? Cleaner Engineering and Technology, 6.
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Filho, W.L. et al. (2019). A review of the socio-economic advantages of textile recycling: Experiential
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Production. 218(24), p. 10-20. https://doi.org/10.1016/j.jclepro.2019.01.210
Govorek, H. (2011). Social and Environmental sustainability in the clothing industry: A case study of
a fair trade retailer. Social Responsibility Journal, 74–86. DOI:10.1108/17471111111114558
Harmsen, P., Scheffer, M., &Bos, H.(2021). Textiles for Circular Fashion: The Logic behind Recycling
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Malhotra, N.K., Nunan, D., & Birks, D. F. ( 2017). Marketing research: an applied approach. Fifth edition.
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Mandarić, D., Hunjet, A., & Vuković, D. (2022). The Impact of Fashion Brand Sustainability on
Consumer Purchasing Decisions. Journal of Risk and Financial Management, 15(4), 176.
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Solino, Lívia & Teixeira, Breno & José de Medeiros Dantas, Ítalo. (2020). The sustainability in fashion:
a systematic literature review on slow fashion. International Journal for Innovation Education and
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https://scholarcommons.scu.edu/engl_176/45
SECTORAL DIFFERENTIATION OF
THE INTERVAL EFFECT IN THE
TIME OF THE COVID-19
PANDEMIC: THE CASE OF WSE
BARTŁOMIEJ LISICKI
University of Economics in Katowice, Katowice, Poland
bartlomiej.lisicki@ue.katowice.pl
Abstract The occurrence of differences in the values of the β
depends on the adopted returns. In the literature this has been
called the interval effect. The main objective of this paper is to
verify the existence of the differentiation of the beta coefficient
(β) interval effect of shares of companies listed on the Warsaw
Stock Exchange (WSE) during the COVID-19 pandemic due to
their macro sectoral affiliation. The β is calculated using the
ordinary least squares method (OLS) on the sample of issuers
grouped in the following indices: WIG20, mWIG40 and
sWIG80. By analyzing the β values estimated on the different
time horizons of returns has been observed the occurrence of
the β interval effect in the years of the COVID-19 pandemic.
Finance and Industrial Production did not indicate statistically
significant differences between the β values calculated for
different time horizons of returns in the pre-pandemic years.
However, in these years, the interval effect has been recorded in
the case of Healthcare and Trade and Services. Based on the
research results obtained, the impact of the COVID-19
pandemic on the sectoral differentiation of the interval effect can
be observed.
DOI https://doi.org/10.18690/um.epf.3.2023.17
ISBN 978-961-286-736-2
Keywords:
interval effect,
beta coefficient,
COVID-19,
Warsaw Stock
Exchange,
shares.
JEL:
C20, G11, G17
138
1
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
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Introduction
One of the parameters of the Sharpe model is the beta coefficient (β). It reflects the
non-diversifiable part of the volatility of returns. The process of its estimation is
associated with numerous difficulties (Feder-Sempach, 2017, 20-21). One of them is
indication of the returns’ interval used to calculate it. When using different time
intervals (from daily to several years) to calculate β, significant differences in
estimates were noticed. The occurrence of these differences in the values of the β
depends on the adopted period of the used share quotations of companies, which
has been called the interval effect.
The main purpose of this article is to verify the occurrence of differentiation of the
interval effect in the time of the COVID-19 pandemic (2020-2021). It will be
conducted from the point of view of the affiliation of issuers to selected macro
sectors listed on the Warsaw Stock Exchange (WSE). Moreover, the β values
calculated for 2020-2021 (using daily, weekly, biweekly and monthly returns) for
issuers from individual macro sectors will be compared with those recorded in 20182019.
The research will allow to deepen the knowledge of Polish capital market
participants in the scope of the possibility of using β to measure the systematic risk
of shares listed on the WSE in times of instability on capital markets.
2
Literature Review
Choosing the right timeframe to measure returns was of interest to researchers as
early as the 1970s. The first empirical study showing the differences in β was carried
out by Pogue and Solnik (1974). They analyzed the aforementioned coefficients on
the American and seven European capital markets and diagnosed the occurrence of
a range effect (measured by the quotient of the monthly and daily β value) for the
above-mentioned markets.
The authors of next studies noticed interesting conclusions. Hawawini (1983) and
Handa et al. (1989) noticed the differentiation of the β interval effect depending on
the capitalization of companies. The interval effect was also tested in European
capital markets. When examining companies listed on the Brussels Stock Exchange,
B. Lisicki: Sectoral Differentiation of the Interval Effect in the Time of the COVID-19
Pandemic: The Case of WSE
139
it was noticed that the values of β depend on the day adopted for the first day of
verification of the interval effect (Corhay, 1992). The observations relating to the
occurrence of the interval effect have been confirmed also in the Australian market
(Brailsford & Josev, 1997).
In terms of the WSE, there have been some really interesting publications on the
interval effect also. Among the first papers were the studies by Brzeszczyński et al.
(2010). The authors estimated the effect of the interval for 1-, 5-, 10-, and 21-day
returns on stocks. The comparative analysis of the interval effect on the example of
shares of companies from the WIG20 index and the German DAX (Feder-Sempach,
2017) or a study of the impact of the COVID-19 pandemic on stock market risk
measured by the β (Lisicki, 2023).
In recent years, one can also find research on sectoral differences in the value of β
depending on the time horizon of the returns (Dadakas et al., 2016), which is
thematically closest to this paper. The authors also pointed out that the prediction
of returns depends on the sector (Westerlund & Narayan, 2015). Also, in the times
of the COVID-19 pandemic it is possible to observe the attempts to quantify β of
securities listed on many global capital markets in the era of increased uncertainty
that accompanies years 2020-2021 (Neslihanoglu, 2021). Similarly to the β analysis
in previous crisis periods, the values of this coefficients increased during the
COVID-19 pandemic, especially in its first phase (Jain, 2021). Moreover, it was
possible to indicate industries in which their values increased higher than in others
(e.g. IT, insurance, consumer goods). In another study, the authors have been
observed decreases in β values during the pandemic years for small and mediumsized companies (Hua Cao et al., 2021).
3
Methodology
The interval effect has been verified by calculating the β for shares of selected issuers
from the WIG index. Research sample has been narrowed to the 140 largest
companies grouped in the three main WSE indices: WIG20 (which groups 20 the
biggest issuers in the WSE), mWIG40 (40 medium-size issuers) and sWIG80 (80
small issuers). Author decided to use the historical portfolios of these indices as of
the first quarter of 2020 (WSE, 2020). β has been calculated using the OLS (Ordinary
Least Squares) method for the daily, weekly, biweekly and monthly returns. The WIG
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
index (broad market index of WSE) has been used to indicate the market return.
The period of analysis covers years of the outbreak and duration of the COVID-19
pandemic (2020-2021) and years immediately preceding it (2018-2019). The
quotations (used to calculate the β) of shares of the indicated issuers have been
downloaded from the stooq.com (2022) quotation database.
In the paper the industry of issuers from the point of view of 8 macro sectors
distinguished with the WSE Sector Classification Regulations of July 24, 2019 has
been considered.
4
Results and Discussion
The average values of the β calculated for four-time horizons of returns (daily,
weekly, biweekly and monthly) in connection to macro sectors are presented in Table
1. The numbers of issuers qualified for the study are also presented in brackets. Due
to the fact that shares of selected issuers were not listed on the Warsaw Stock
Exchange throughout the whole period of the study (2018-2021) finally qualified
115 issuers to the research sample.
Analyzing the data contained in Table 1, it is possible to indicate that the average
values of β for the two analyzed periods increase along with the lengthening of the
time horizon of the return for major part of the indicated macro sectors. This result
is similar with the discoveries made by researchers in this area (Diacogiannis et al.,
2008; Brzeszczyński et al., 2011).
The highest average β values in 2020-2021 can be observed for issuers from the
FINANCE macrosector (weekly, biweekly and monthly returns) and CHEMICALS
AND RAW MATERIALS (daily returns). Especially for FINANCE macro sector,
the research results are similar with the results conducted in other capital markets.
Shares of financial companies that were characterized by higher than average
volatility β in times of crisis (Haroon et al. 2021). The lowest β values can be observed
in 2020-2021 (for all time horizons) in the case of issuers from the
TECHNOLOGIES macro sector. These issuers have been indicated usually on the
Polish market as having lower β values (Feder-Sempach & Szczepocki, 2022). In
2018-2019, the highest averaged value of β occurred for issuers in the macro sectors:
CHEMICALS AND RAW MATERIALS (weekly and monthly returns), TRADE
AND SERVICES (biweekly returns) and FUELS AND ENERGY (daily returns).
B. Lisicki: Sectoral Differentiation of the Interval Effect in the Time of the COVID-19
Pandemic: The Case of WSE
141
The lowest value can be observed for issuers grouped in the macro sectors:
CONSUMER GOODS (biweekly and monthly returns), INDUSTRIAL
PRODUCTION (weekly returns) and HEALTHCARE (daily returns).
Table 1. Average values of β coefficients for selected issuers listed on the WSE in 2020-2021
and 2018-2019
2020-2021
β/Macrosector
Beta daily
Beta weekly
Beta biweekly
FINANCE (22)
FUEL AND ENERGY (13)
CHEMISTRY AND RAW
MATERIALS (11)
INDUSTRIAL
PRODUCTION (20)
CONSUMER GOODS (14)
TRADE AND SERVICE (17)
HEALTHCARE (8)
TECHNOLOGIES (10)
AVERAGE FOR ALL
0.969
0.890
1.023
0.957
1.192
0.988
Beta
monthly
1.239
0.917
0.991
0.996
1.048
1.038
0.853
0.954
1.120
1.216
0.894
0.835
0.937
0.687
0.882
2018-2019
0.671
0.781
1.001
0.979
0.954
0.641
0.938
1.190
0.987
0.683
0.576
0.973
1.138
0.949
0.740
0.564
0.975
0.710
0.828
0.808
0.672
0.778
0.752
0.712
0.945
0.876
0.923
0.392
0.519
0.696
0.696
0.511
0.557
0.195
0.463
0.535
0.603
0.811
0.565
0.594
0.697
0.668
0.898
0.718
0.699
0.754
0.529
0.724
0.708
0.705
0.727
FINANCE (22)
FUEL AND ENERGY (13)
CHEMISTRY AND RAW
MATERIALS (11)
INDUSTRIAL
PRODUCTION (20)
CONSUMER GOODS (14)
TRADE AND SERVICE (17)
HEALTHCARE (8)
TECHNOLOGIES (10)
AVERAGE FOR ALL
Source: Author’s calculations based on stooq.com (accessed: 20.07-22.08.2022).
Consequently, it is possible to indicate that the COVID-19 pandemic affected the
levels of β in macrosectors. It caused a different (usually stronger, positively
correlated) average reaction of stock quotations of issuers from individual sectors
(as a result of a change in the market index by one percentage point). These research
results somehow confirm the previous results indicating the differentiation of the β
value due to sectors (Liu, 2004).
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BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Table 2. Values of the t-Stat statistics for differences between the β for shares of issuers from
WSE macrosectors in 2018-2021
Pair of β/
Macrosector
2020-2021
β daily
β daily
β daily
β weekly β biweekly
β
FINANCE
FUEL AND
ENERGY
CHEMISTRY
AND RAW
MATERIALS
INDUSTRIAL
PRODUCTION
CONSUMER
GOODS
TRADE AND
SERVICE
HEALTHCARE
TECHNOLOGI
ES
-0.49
-1.91**
monthly
-2.27*
-0.38
-0.56
0.02
FINANCE
CHEMISTRY
AND RAW
MATERIALS
INDUSTRIAL
PRODUCTION
CONSUMER
GOODS
TRADE AND
SERVICE
HEALTHCARE
TECHNOLOGI
ES
β weekly
β biweekly
β weekly
β biweekly
β
β monthly
-1.46
monthly
-1.82**
-0.38
-0.12
-0.16
0.18
0.31
0.36
0.39
0.38
-0.24
0.07
-0.71
-1.69**
-2.3*
-0.97
-1.73**
-0.52
-0.72
-1.64
-1.1
-0.97
-0.59
0.21
-0.81
-0.75
-0.43
-0.04
0.1
0.13
-0.09
1.58
0.84
1.45
0.85
-0.26
0.39
0.94
0.92
0.51
0.55
0.09
-0.33
-1.2
2018-2019
-0.75
-0.91
-0.5
0.22
-1.14
-0.79
-0.83
0.31
0.07
-0.18
-1.05
-2.04**
-1.37
-1.06
-0.76
0.01
-0.71
-1.17
-0.13
-0.45
0.5
0.91
-1.7**
-1.89**
-0.85
-0.41
0.39
0.74
-2.2*
-3.02*
-1.86**
-0.83
-0.5
0.03
-1.03
-1.78**
-1.2
-0.76
-0.54
-0.03
** p<0.1
* p<0.05
Source: Author’s calculations based on stooq.com (accessed: 20.07.-22.08.2022).
After evaluating the averaged β next part of the paper cover a verification of
statistical significance their differences. For this purpose, a test will be used to check
the significance of differences between two dependent groups. Suitable statistical
test to this case should be a parametric t-test for dependent groups (Kyun, 2015, p. 52)
for each 6 pairs of β calculated for a different time horizon of returns (separately for
each macro sector and period). For its implementation, it is required to meet the
assumption of the normality of variable distribution. For the adopted research
B. Lisicki: Sectoral Differentiation of the Interval Effect in the Time of the COVID-19
Pandemic: The Case of WSE
143
sample it has been positively verified for each macro sector using the D'AgostinoPearson normality test (D'Agostino et al., 1990, 320). The results of the statistical
verification have been presented in Table 2, which includes the values of the t-test
statistic (t-Stat) and their significance level (two-tailed p-value-if it was lower than
p<0.10).
Analyzing the results of the statistical verification presented in Table 2, it can be
observed a significant differentiation of the β values. It concerns especially in 20202021 issuers grouped in the macro sectors: FINANCE and INDUSTRIAL
PRODUCTION. Therefore, it indicates the possibility of the occurrence of the β
interval effect. It is also important that for the FINANCE macro sector in 20182019 no statistical significance of differences β was demonstrated for any of the
analyzed pairs of coefficients and for the INDUSTRIAL PRODUCTION macro
sector the significance was observed only for one of the pairs of coefficients. It is
probably to conclude that the occurrence of the β-interval effect in the case of these
two sectors could be related with the occurrence of the COVID-19 pandemic,
because in the pre-pandemic years these relationships were not similar. This result
is also justified by previous studies, in which researchers indicated increased β
volatility of industrial Asian companies during the Asian crisis in 1997-1998
(Choudhry et al., 2010) and companies from the broadly understood financial sector
during the pandemic COVID-19 in the Indian market (Jain, 2021).
4
Conclusions
The pandemic realities created incentives to verify the dependencies noticed on the
capital markets in previous years (Ruiz Estrada, Koutronas, Minsoo, 2021). This is
undoubtedly an attempt to verify the sectoral differentiation of the interval effect on
the example of the macro sectors of companies listed on the WSE.
Verification of the sectoral differentiation of the interval effect has been taken place
on a sample of 115 issuers listed on WSE. For each of them, based on the OLS
method, the β were calculated each time for daily, weekly, biweekly and monthly
returns. The presented β values show significant differences when comparing
periods 2020-2021 and 2018-2019, which is especially noticeable for the macro
sectors CONSUMER GOODS, INDUSTRIAL PRODUCTION and FINANCE.
In addition, the statistical verification of differences in the β estimated using four-
144
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
time horizons of returns, showed that for two of these sectors (INDUSTRIAL
PRODUCTION and FINANCE) during the COVID-19 pandemic years an interval
effect has been observed. Moreover, in the pre-pandemic years, a similar relationship
did not exist, but it could be observed for issuers from other macro sectors. Based
on these research results, it can be concluded that the COVID-19 pandemic
influenced the sectoral differentiation of the occurrence of the β interval effect,
which in 2020-2021 applies to other industries than in 2018-2019.
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146
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
THE PERFORMANCE OF
EU CEE UNIVERSITIES AGAINST
THE UN SUSTAINABLE
DEVELOPMENT GOALS
TAMÁS SZEMLÉR
Budapest Business School, Faculty of Commerce, Hospitality and Tourism, Budapest,
Hungary
szemler.tamas@uni-bge.hu
Abstract The Sustainable Development Goals (SDGs) of the
United Nations (UN) play an important role in raising societies’
consciousness regarding the sustainability of our planet – a key
issue for everyone. The purpose of this paper is to present and
assess the performance of universities in EU CEE-11 countries
(the 11 Central and Eastern European Member States of the
European Union) against the UN SDGs. For this, we analyse the
results of EU CEE-11 universities in the Times Higher
Education Impact Rankings that are available in four editions
(for the period 2019-2022). The results of the analysis reflect the
still quite modest level of SDG awareness in higher education in
the region, but also the progress in this respect (the increasing
number of universities participating in the ranking), as well as the
differences between the individual countries. Based on these
findings, we identify and describe specific proposals for raising
SDG awareness and strengthening SDG-related actions in EU
CEE universities, contributing also to the strengthening of their
reputation in the international higher education community.
DOI https://doi.org/10.18690/um.epf.3.2023.18
ISBN 978-961-286-736-2
Keywords:
UN SDGs,
Central and
Eastern Europe,
higher education,
Times Higher
Education,
rakings
JEL:
A13, I23, Q01
148
1
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Introduction
Sustainable development is a widely known expression today, reflecting the multiple
challenges humanity realized during the last few decades it faces. Sustainability has
several aspects other than environmental. After 2000 these have also been
recognized as features of sustainability; now they are part of the Sustainable
Development Goals (SDGs) of the United Nations (UN). Today, all individuals and
organizations have their roles to play regarding all these aspects.
This paper discusses the performance of higher education institutions in the 11
Central and Eastern European member states of the European Union (EU CEE11), universities in the Times Higher Education (THE) Impact Rankings. After a
brief outline of the theoretical and historical background of sustainable
development, the methodology will be presented. That part is followed by the
presentation of the results and their interpretation, including future-oriented
concluding remarks.
2
Theoretical Background
Sustainable development has become one of the most discussed multidisciplinary
issues in the last half-century. The starting point of reflection was in most aspects
the United Nations Conference on Human Environment in Stockholm in 1972,
where the participants set up an action plan based on 26 principles and 109
recommendations outlined in the Report of the Conference (United Nations, 1973).
The definition of the notion of “sustainable development” came 15 years later, with
the Brundtland Report (Brundtland, 1987). After some important steps following
the Brundtland Report (the Montreal Protocol on Substances that Deplete the
Ozone Layer, the establishment of the Intergovernmental Panel on Climate Change,
Basel Convention on the Control of Transboundary Movements of Hazardous
Wastes and their Disposal), it was the Rio Earth Summit in 1992 that has put
sustainability again into the focus of attention of masses of people.
In 1995, the Marrakesh Agreement Establishing the World Trade Organization
(World Trade Organization, 1995) has already explicitly referred to the objective of
sustainable development. The adoption of the Kyoto Protocol (United Nations
Framework Convention on Climate Change, 1997) was an important milestone.
T. Szemlér: The Performance of EU CEE Universities Against the UN Sustainable
Development Goals
149
However, the difficulties arising around its ratification (the fact that the document
could enter into force only in 2005, and that the United States have not ratified it)
have shown the difficulty of the issue, even with the pragmatic approach
emphasizing the “common but differentiated responsibilities and capabilities” of the
countries of the world.
The multidimensional nature of the issue of sustainable development was made clear
to everyone with the definition of the 8 UN Millennium Development Goals in
2000, defined in the Millennium Declaration (United Nations, 2000). Even though
most objectives had not been fulfilled by the target date (2015), the multidimensional
reflection had developed further. In 2015 the UN Member States have adopted the
2030 Agenda including the 17 SDGs (United Nations, 2015) which, since then,
constitute a cornerstone of the analyses on sustainability.
Among recent scientific analyses on higher education and sustainable development,
Owens (2017), discusses SDG 4 and the buildup of university strategies for reaching
it. Chankseliani – McCowan (2021) discuss the role of SDG 4 and mention the THE
rankings. Boeve-de Pauw – Gericke – Olsson – Berglund (2015) and Crespo –
Míguez-Álvarez – Arce – Cuevas – Míguez (2017) provide empirical examples for
potential actions in higher education for reaching the SDGs. In Hungary (the
country of the author), Lányi – Kajner (eds.) (2019) provide a panorama on
sustainability in higher education.
3
Methodology
This paper presents the performance of EU CEE-11 universities in the Times
Higher Education Impact Rankings, considering the results of the overall ranking.
These rankings are available for four years, for the period of 2019-2022, concentrate
on four broad areas (research, stewardship, outreach and teaching) and consider all
17 SDGs.
Any university providing data on SDG 17 (briefly defined as partnerships for the
goals) plus at least three other SDGs can be included in the overall ranking. The final
overall score of the university is the combined score in SDG 17 (with a 22% weight
in the final score) and of the scores in the top (from the point of view of the given
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
university) three scores of the other 16 SDGs (with a 26% weight each in the final
score). 1
For this paper, we have selected and analyzed the overall results of the EU CEE-11
universities from all four editions of the THE Impact Rankings. The method used
in the paper is descriptive statistical analysis providing a basis for further research
along the paths described in section 5.
4
Results
The THE Impact Rankings are quite new; this is reflected in the increase in the
number of participating countries and universities every year (see Table 1). The
development of the participation of EU CEE-11 universities is in line with the
general trend; as for the 2022 THE Impact Rankings, 106 universities from 10 of
the EU CEE-11 have been included.
Table 1: World and EU CEE-11 countries and universities in the THE Impact Rankings
Year
Number of
universities
participating
Number of
countries/regions
represented
2019
2020
2021
2022
467
768
1118
1406
76
85
94
106
Number of
EU CEE-11
universities
participating
17
33
47
61
Source: Author’s compilation based on THE Impact Rankings data (2021).
Number of
EU CEE-11
countries
represented
7
8
9
10
The country distribution of the participating EU CEE-11 universities is presented
in Table 2. The figures reflect several factors: the differences in country size (and the
roughly corresponding differences in the number of universities in the countries), as
well as eventual differences in realizing the possibility of participation. Of course –
as is also the case with overall data – the universities included still represent a
relatively small (but increasing) part of higher education institutions in the region.
The more the present trend of broadening participation continues in the years to
1 Further details on the methodology of the THE Impact Rankings can be found at
https://www.timeshighereducation.com/world-university-rankings/impact-rankings-2022-methodology (which is
also the source of the overview of the present paragraph). The full information on the latest methodology is available
at https://the-impact-report.s3.eu-west-1.amazonaws.com/Impact+2022/THE.ImpactRankings.METHODOLO
GY.2022_v1.3.pdf.
T. Szemlér: The Performance of EU CEE Universities Against the UN Sustainable
Development Goals
151
come, the more relevant the Impact Rankings and the participation in them, and the
positions of the participating higher education institutions will become.
Table 2: The country distribution of EU CEE universities in the THE Impact Rankings
Year
2019
2020
2021
2022
BG
1
1
1
2
CR
1
2
CZ
4
5
7
6
EE
-
HU
2
6
6
8
LT
3
LV
2
4
5
5
Source: author’s compilation based on THE Impact Rankings data (2021).
PL
1
5
12
15
RO
5
7
10
13
SI
1
1
2
SK
2
4
4
5
Table 3: Positions and country distribution of EU CEE universities in the THE Impact
Rankings
Range
1-100
101-200
2019
2
LV 1, SK 1
5
CZ 2, HU 2, RO
1
2020
2021
2
HU 1, LV 1
2022
1
LV 1
201-300
4
LV 1, PL 1, RO 2
6
CZ 1, HU 1, LV
1, RO 2, SK 1
3
HU 1, LV 2
3
CZ 2, LV 1
301-400
(Category: 301+)
6
BG 1, CZ 2, RO
2, SK 1
6
HU 1, LV 1, PL
2, RO 1, SK 1
5
HU 2, LV 1,
RO 1, SK 1
6
CR 1, CZ 2, LV
1, RO 2
401-600
13
BG 1, CZ 2, HU
2, LV 1, PL 3,
RO 3, SI 1
9
CZ 4, HU 1,
RO 3, SK 1
6
CR 1, CZ 1,
HU 3, RO 1
601-800
(Category: 601+)
6
CZ 2, HU 1, RO
1, SK 2
15
BG 1, CZ 1,
HU 2, LV 1, PL
3, RO 4, SI 1,
SK 2
10
BG 1, HU 2,
LV 1, PL 4, RO
1, SK 1
14
CR 1, CZ 2, LV
1, PL 8, RO 2
801-1000
1
PL 1
1001+
Total
17
33
Source: Author’s compilation based on THE Impact Rankings data (2021).
47
15
HU 1, LT 1, LV
1, PL 6, RO 3,
SI 2, SK 1
20
BG 1, CZ 1,
HU 2, LT 2, PL
5, RO 6, SK 3
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
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152
Table 3 presents the position of EU CEE-11 universities in the THE Impact
Rankings in all four years. Due to the steady increase in the number of participating
institutions worldwide, results are not directly comparable: a certain (e.g., top 200)
position in 2022 (with 1406 universities participating worldwide) can be considered
more valuable than the same position in 2019 (with 467 universities participating
worldwide). The broadening of the circle of participating institutions also explains
some seemingly ‘deteriorating’ positions; participation itself, however – especially
regarding the novelty of the ranking – is a positive thing.
5
Discussion and Conclusion
Very basic analysis of the overall performance of the EU CEE-11 countries’
universities shows a few characteristics that are in line with the general trend
observable in the THE Impact Rankings:
−
−
−
Every year, more and more higher education institutions use the
opportunity to participate.
The universities that have already been listed (with very rare exceptions)
continue their participation in the rankings.
In line with the increasing participation, it becomes more difficult – but as
the data show, by far not impossible – to get into the upper categories of
the rankings.
Of course, there is much room for more activity in higher education – in general and
in the EU CEE-11 countries – in the field of sustainable development. The THE
Impact Rankings can contribute to enhance the visibility of the universities which is
crucial for them in the competition that characterizes the higher education market.
There are also other possibilities to show an institution’s commitment to sustainable
development 2, but the visibility gains from the ranking with the relatively small
efforts that are needed for it can make it attractive for more and more universities.
An important example of that is the UN Principles for Responsible Management Education (PRME) Programme
with over 800 signatories from all over the world. For 2023, 47 higher education institutions have been selected as
’PRME Champions’, with 2 of them from the EU CEE-11 (one from Hungary and one from Slovenia). For details,
see https://www.unprme.org/prme-champions.
2
T. Szemlér: The Performance of EU CEE Universities Against the UN Sustainable
Development Goals
153
Despite the short history (but at the same time: due to the high future potential) of
the THE Impact Rankings, a more detailed analysis of their results provides
interesting research opportunities. During further research, special attention should
be paid to the following aspects:
−
−
−
The performance of the participating universities against the individual
SDGs – which of them are the most/least ‘popular’ (present in most/least
cases in the top 3 SDGs of the institutions)?
The performance of EU CEE-11 universities regarding the individual SDGs
– are there some specific ‘CEE patterns’, special approaches, or do these
institutions follow paths that are similar to the general approach of
universities worldwide to the issue of sustainable development?
With the stabilization of the number of participants expected in the future,
the deeper analysis of the positions in the rankings – how can the
participating universities maintain or improve their positions in the
rankings?
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SUSTAINABILITY EVALUATION
OF THE SUPPLY CHAIN UNDER
THE GREENPACT: A FRAMEWORK
PROPOSAL FOR THE
TEXTILE SECTOR
JOSÉ SANTOS,1 JOANA LEITE,2 EVA RODRIGUES,3
PAULO SANCHES,1 SARA SOUSA,4 ANTÓNIO TRIGO,1
ELISABETE CORREIA4
Polytechnic of Coimbra, Coimbra Business School|ISCAC, Coimbra, Portugal
iscac15051@alumni.iscac.pt, psanches@iscac.pt, aribeiro@iscac.pt
2 Polytechnic of Coimbra, Coimbra Business School|ISCAC & CMUC, Coimbra,
Portugal
jleite@iscac.pt
3 Zenithwings, São João Da Madeira, Portugal
erodrigues@zenithwings.com
4 Polytechnic of Coimbra, Coimbra Business School|ISCAC & CERNAS, Coimbra,
Portugal
ssousa@iscac.pt, ecorreia@iscac.pt
1
Abstract Sustainable development is a very broad and rich concept that
refers to a global development model that presupposes the satisfaction
of humanity's current needs without compromising its future. With the
growing globalization, there has been a greater concern with promoting
sustainable economic activities internally and in supply chains. Aligned
with these concerns, this research study proposes to develop a
framework for the analysis and classification of the companies` socioenvironmental impacts to be integrated in the GreenPact. This is a
digital sustainable supply-chain-as-a-service platform that promotes the
creation and availability of sustainable products through the
relationship between brands and manufacturers, thus fostering the
development of more sustainable value chains. The project supporting
this study is the result of a research partnership with Zenithwings, a
high-tech company focused on providing services related to Research
& Innovation in the areas of Precision Agriculture and Industry 4.0. It
is intended that this research contributes to a greater awareness of the
considerable socio-environmental impacts of the supply chains in the
textile sector. It is also expected to highlight the importance of using
performance indicators as key tools to verify whether companies adopt
good practices for mitigating socio-environmental impacts.
DOI https://doi.org/10.18690/um.epf.3.2023.19
ISBN 978-961-286-736-2
Keywords:
sustainable
development,
sustainability,
textile,
supply chains,
socioenvironmental
impacts,
business
assessment and
classification
JEL:
L67, Q55, Q56
156
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Introduction
The concept of sustainable development (SD) has distinct interpretations according
to the researchers’ addopted approaches. In this research it is considered that SD
refers to a global development model, characterized by the use of scarce natural
resources to satisfy people’s current needs without compromising the ability of
future generations to meet their own needs (World Commission on Environment
and Development, 1987). Hák et al. (2016) have argued that transforming global
society, environment and economy to a sustainable one is one of the most uphill
tasks confronting humanity today. Since supply chains (SCs) are networks of
companies and people, directing efforts towards the common good is extremely
important (Egels-Zandén & Hansson, 2016). The management of material,
information, and capital flow as well as cooperation among companies throughout
the supply chain (SC), considering the Triple Bottom Line (TBL), is crucial (Seuring
& Muller, 2008). TBL addresses the required balance between the economic, social,
and environmental dimensions of Sustainability (Seuring & Muller, 2008).
Organizations have sought to integrate sustainability goals into their internal
operations and SCs to respond to pressure from various stakeholders, to ensure
compliance with legal requirements established by government and/or to improve
their performance and/or gaining competitive advantage (Khan et al., 2021).
The globalization of the textile industry has leveraged the complexity of SCs. The
SCs of textile companies are globally dispersed and characterized by a strong social
and environmental impact. This has put these companies under the spotlight when
it comes to their involvement in social and environmental issues (Fraise & Seuring,
2015; Oelze, 2017). Many companies have made efforts to make their activities more
sustainable. However, as pointed out by Oelze (2017), due to the characteristics of
this sector “enhancing sustainability along the supply chain is often difficult”.
Although there is a lot of research on sustainability in the textile sector, the focus
has been on the environmental dimension. Furthermore, there seems to be a lack of
research focusing on the whole SC and sustainability (Gbolarumi et al., 2021; Li &
Leonas, 2022). Studies addressing the performance assessment have been also
privileged the environmental dimension and focused on some parts of the SC
(Gbolarumi et al., 2021). Therefore, a research question is defined: what are the main
indicators to evaluating the sustainability of companies in the textile sector in a SC
perspective?
J. Santos et al.: Sustainability Evaluation of the Supply Chain Under the Greenpact:
A Framework Proposal for the Textile Sector
157
This research study proposes an experimental framework to evaluate the
sustainability of companies’ SCs in the textile sector, using performance indicators,
allowing to verify if companies adopt good practices for minimizing socioenvironmental impacts. This framework emerges as an output of part of project with
Zenithwings, a Portuguese company that focuses on developing solutions for the
Precision Agriculture and Industry 4.0 sector, to develop a digital sustainable supplychain-as-a-service platform to the textile industry: the GreenPact. Information
sharing facilitated by the use of information and communication technologies is an
important enabler for the sustainability of SCs. These technologies play an important
role in addressing supply and demand and in decision-making to configure and plan
the SCs (Oelze, 2017). GreenPact mixes technology with sustainability, to improve
the sustainability of production processes, which can be through the exchange of
information in a SC, such as the assessment of socio-environmental factors of
companies, to support decision-making.
The reminder of this study is organized as follows: after an introducing, section 2
presents a literature review. In section 3 it is presented the methodology. Following,
section 4 describes the proposed framework for the assessment of organizations`
socio-environmental impacts. Finally, the paper ends with a brief discussion and the
mains conclusions.
2
Literature Review
Worldwide, countries are expected to promote an economic growth, by respecting
the social and environmental concerns defended in the UN approach of SD. This
concept is already an integral part of many businesses in different economic sectors
and is involved in all stages of the manufacturing process, from the raw material
supplier to the customer (Hassan et al., 2023).
The textile industry has become an extremely important sector, valued at three
trillion dollars, and employing, directly or indirectly, one in six people in the world.
It is estimated that the textile and fashion sector represent around 8% of global
emissions of CO2 (Accenture, 2022). The process of globalization of the textile
sector affected SCs in different ways. Firstly, the relocation of manufacturing sites
entailed a heavy environmental burden due to the great distances covered by
transport to deliver products that respond to the new consumption behavior:
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demand for greater variety and affordability of products. Secondly, many of the
suppliers are in developing countries that have not only environmental regulations,
but also less strict social ones (Köksal et al., 2017). On the other hand, textile firms
offer products that have a significant social and environmental impact during their
lifecycle (Oelze, 2017). Each stage of the SC is linked to specific considerations
regarding sustainability. Clancy et al. (2015) highlight the impact of activities that
take place in the upstream SC such as raw material sourcing, yarn or fabric
production, or the manufacturing of the final product. For example, in the
production processes, particularly in the dyeing, drying, and finishing phases,
chemical products and non-renewable natural resources are intensively used, which
harm the environment (De Brito et al., 2008). In addition, the use of some raw
materials (e.g., fibres such as cotton, wool, or synthetic fibres) have a very significant
environmental impact since they require a lot of water, pesticides, or energy in their
transformation (Caniato et al., 2012). Therefore, it is essential to consider
sustainability not only internally but from a SC perspective. Incorporating
sustainability into the SC is becoming a key priority to many textile companies (Shen
et al., 2017). In this line, Pichlak and Szromek (2022) argue that it is crucial that
companies develop efforts to implement a sustainable system between production
and the consumers, which requires the creation of eco-innovative products.
However, the sector that lacks innovation to increase the efficiency of the SC, and
solutions for end-of-life products.
Several instruments have emerged to guide organizations in the sustainability
integration process (e.g., GRI Guidelines, Dow Jones Sustainability Index, ESG
criteria, ISO 14001) with different approaches varying, among other aspects, in their
purpose (reporting, monitoring, rating, management or performance assessment)
(Neri et al., 2021) For example, the “environmental, social and governance” (ESG)
Criteria represent three relevant areas in companies throughout the production
processes, and, as such, they feel the need to communicate the efforts they have
made to minimize the socio-environmental impacts of their activity. he sustainability
of a SC depends on the commitment of all those involved in a social and
environmental responsibility strategy (Klimkiewicz, 2017). Several studies have
sought to analyze how sustainability can be assessed in the textile sector, focusing
on indicators, but without a perspective of the entire SC (Gbolarumi et al., 2021).
J. Santos et al.: Sustainability Evaluation of the Supply Chain Under the Greenpact:
A Framework Proposal for the Textile Sector
3
159
Methodology
The methodology used is Design Science Research (DSR), which is a six-phase
approach that aims at devising a relevant solution (called an artefact) for a real-life
field problem, bridging theory and practice (Naik et al., 2023). In Figure 1, a
schematic view of the DSR process is shown duly adapted to this project. The
project is currently entering phase 4. Thus, the focus of this paper are the first three
phases.
Figure 1: Project’s customized DSR process
Source: Adapted from Naik et al. (2023).
Regarding the first phase, it is recognizable in the literature review. The second phase
also incorporated the requirements: collect, segment and organize socialenvironmental indicators applicable to organizations in the textile sector, so that an
assessment of related good practices can be produced and ranked based on gathered
information.
For the third phase, inspiration was drawn from literature review and rating agencies,
such as MSCI Inc., S&P Global Inc., FTSE Russell, Refinitiv, ISSInc., and ECPI
S.r.l. These agencies are specialized in collecting and processing data, with the aim
of providing relevant information to stakeholders, whether investors, managers or
the final consumer. For this purpose, they develop systems for evaluating and
classifying companies, in part based on non-financial information, like the one linked
to sustainability. In this context, the framework was designed in three stages: i) the
first was the unfolding of ESG criteria; ii) the second was the selection of the
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performance indicators; and iii) the third was subsequent integration into the textile
product SC.
4
Results: Framework Proposal
The proposed framework for this project has the final goal of structuring
Zenithwing’s GreenPact technological platform regarding the textile sector.
Figure 2: Framework to Sustainability Evaluation of the Supply Chain in the Textile Sector
Source: Authors’ research
The unfolding of ESG criteria is the theoretical cornerstone of the framework (see
Figure 2). It provides structure, transparency and simplicity to the system. It was the
result of a detailed analysis of the sub-criteria used by the rating agencies listed above.
For the “Environment” criterion, the rating agencies under study tend to present a
sub-criterion related to energy consumption, including CO2 emissions; another subcriterion is related to water consumption; a third criterion is related to pollution and
J. Santos et al.: Sustainability Evaluation of the Supply Chain Under the Greenpact:
A Framework Proposal for the Textile Sector
161
waste; and another broader topic is considered which be related to companies’
investment in the environment, environmental opportunities, actions to combat
climate change or even biodiversity. For the “Social” criterion, rating agencies
commonly distinguish respect for human rights, human capital, occupational health
and safety, and product liability. This criterion also highlights the relationships with
the companies’ surroundings, whether suppliers, stakeholders or the community. As
for the “Governance” criterion, the two sub-criteria stand out, namely corporate
governance and fiscal and ethical transparency. Figure 2 presents the proposed
framework.
5
Discussion and Conclusion
SCs as organizational ecosystems must be managed with conscience to reduce socioenvironmental impacts. In the specific case of the textile sector, the wide range of
agents in the SCs make it difficult to objectively assess all the productive processes
and companies involved and exacerbates the difficulty of specifying indicators for
this sector. The GreenPact platform aims to facilitate communication between
companies and contemplate the possibility of their rating. Considering the diversity
of existing assessment instruments, the proposed framework, grounded on ESG
criteria, summarizes the main indicators to assess the impacts on the different stages
of the textile SC. This framework intends to be comprehensive enough to integrate
the most important evaluation criteria, requirements of the GreenPact project. One
of the main challenges in expanding the platform is approaching in detail the
indicators to evaluate the companies. This may constitute a limitation of our study,
as the framework may ignore some important indicators for these companies. Future
research should validate this proposal with companies in the textile sector.
References
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chains: An exploratory case based research. International Journal of Production Economics, 135(2),
659-670. https://doi.org/10.1016/j.ijpe.2011.06.001
Clancy, G.; Fröling, M., &Peters, G. (2015). Ecolabels as drivers of textile design. Journal of Cleaner
Production, 99, 345–353. https://doi.org/10.1016/j.jclepro.2015.02.086
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De Brito, M., Carbone, V., and Blanquart, C. (2008). Towards a sustainable fashion retail supply chain
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Press.
EXAMINING SUCCESS FACTORS OF
HUNGARIAN SMES DURING
MULTIPLE CRISES
JUDIT CSÁKNÉ FILEP,1 ÁRON SZENNAY,1
LÁSZLÓ RADÁCSI2
Budapest Business School, Budapest LAB, Budapest, Hungary
csaknefilep.judit@uni-bge.hu, szennay.aron@uni-bge.hu
2 Budapest Business School, Faculty of Finance and Accountancy, Department of
Management, Budapest, Hungary
radacsi.laszlo@uni-bge.hu
1
Abstract The aim of this paper is to shed light on the effects of
the crises on the SMEs and to identify the strategies that have
proved resilient. The analyses are based on two representative
surveys on Hungarian SMEs – the first conducted just after the
first wave of COVID-19 pandemic in May of 2020, while second
during the energy crisis and the Ukrainian war in 2022. The
results show that although almost half of the SMEs’ operation
were affected by COVID-19 after the first wave in 2020, they
focused on retaining their employees. In addition, companies
that were better prepared (e.g. with a contingency plan) and those
that were in a better situation before the pandemic were able to
react more smoothly to the new situation or even benefit from
it. Nonetheless, firms did not have enough capacity to engage in
digitalisation projects. In the case of the war in Ukraine, the
logistic regression model shows that the effect on firms are
affected by (1) the previous situation of the business, (2) the
available business opportunities, (3) the respondent’s opinion on
the significance of luck in business success, and (4) the change in
the amount of bank loans.
DOI https://doi.org/10.18690/um.epf.3.2023.20
ISBN 978-961-286-736-2
Keywords:
crisis management,
SMEs,
COVID-19,
success factors,
Ukrainian war
JEL:
L26, C12
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Introduction
Crises such as shutdowns and supply chain disruptions related to the COVID-19
pandemic, inflation, extreme volatility in energy prices, or even uncertainty related
to the war in Ukraine will challenge the resilience of the whole economy in the 2020s.
While corporations generally have established formal processes, expertise, and
financial capacity to deal with abnormal situations, small businesses may find it
difficult to cope. Nevertheless, small and medium-sized enterprises (SMEs) can be
considered the backbone of the economy of the European Union employing almost
two-thirds of the non-financial sector's workforce and generating more than half of
the total value added (Eurostat, 2022). This means that understanding the success
factors in this sector is crucial for effective policy making. Thus, our aim is to shed
light on the effects of the crises on the SMEs and to identify the strategies that
proved as resilient. Accordingly, our research questions are the following:
Q1: How the SMEs were affected by the recent crises (COVID-19 pandemic,
inflation, Ukrainian war)?
Q2: What characteristics could ensure SMEs to be more resilient?
COVID-19 and the ensuing lockdowns forced the reinvention of business models.
While demand in some sectors (i.e. in tourism or personal services) virtually
evaporated, others achieved massive growth (Alicke et al., 2021). Furthermore, the
lockdowns showed the true sensitivity of supply chains which means that
maintaining competitiveness requires becoming more resilient (Hamel & Välikangas,
2003). To support corporate resilience, Bughin et al. (2021) highlight agility, the
importance of innovation, the transformation of the investment twins (digitalization
and sustainability), and active play in business ecosystems.
Agenda 2030, a 15-year United Nations framework, was launched in 2015 and signed
by 193 member states with the aim of promoting sustainable development around
the world. The Agenda has developed a system of specific goals (Sustainable
Development Goals, SDGs), targets and indicators, thus it can be considered the
most comprehensive program for both developed and developing countries (United
Nations, 2015). As the SDGs are the result of a political process, the framework has
some shortcomings: (1) there are overlaps and correlation between goals and targets
J. Csákné Filep, Á. Szennay, L. Radácsi: Examining Success Factors of Hungarian SMEs
During Multiple Crises
165
(Guijarro & Poyatos, 2018; Szennay et al., 2019); (2) developed countries have
already met 70 percent of the criteria at the beginning of the Agenda (Muff et al.,
2017); (3) due to the number, complexity and interconnectedness of the SDGs it is
not easy for companies, especially SMEs to explore which SDGs they are affected
by and to which SDGs they can contribute to; (4) although the SDGs cover social,
environmental and economic domains of sustainability; Ritala et al. (2021) suggest
that economic domains are generally over-emphasized in value creation processes
due to institutionalized asymmetries.
However, another aspect economic sustainability (see SDG 8 Decent work and
economic growth) could mean saving workplaces, which contributes to the wellbeing and financial security of households, in other words, societal sustainability (see
SDGs 1-5).
2
Methodology
Our analysis is based on the Budapest Business School SME Surveys of 2020 and
2022. Both surveys done by a professional market research company and consisted
of 500 items and were representative of the Hungarian SMEs with between
3 and 99 employees. In other words, the population, on which the samples are
based, is similar, but samples are cross sectional, so longitudinal analyses cannot be
conducted in an easy way. The original aim of the survey was to provide a statistically
based estimate of the number of Hungarian family businesses, but also included
questions on some additional topics, such as financial literacy, innovation, family
business governance and succession or even sustainability activities. As the 2020
survey was conducted immediately after the first wave of the COVID-19 lockdown,
while the second one was conducted during the energy crisis and the Ukrainian war
in 2022, some other questions were added to the questionnaire to better understand
the reactions of the businesses to the ongoing crises. In case of the pandemic, the
new questions concerned the impact on the business (what kind of measures was
done to cope the pandemic, how was the firm affected, etc.) and its possible positive
outcomes (e.g., new products or services, new processes, digitalization, etc.).
Similarly, the questionnaire comprises of question on the general effect of the war
on businesses measured on a five-point Likert-scale and detailed questions to analyze
on what channel (e.g., rising input prices, volatility of foreign exchange rates,
uncertainty concerning energy prices, etc.) were they affected. Our findings are based
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on statistical analysis which was conducted using the SPSS 27 software. Descriptive
statistics such as frequencies, cross-tabulations between variables and correlation
analyses were used to gain a better understanding of the survey data. Furthermore,
a multinomial logistic regression model was calculated to explore the factors that
could influence the impact of the COVID-19 crisis in 2020, while a bivariate logistic
regression model was calculated in the case of the dual crisis of war and pandemic.
A multinomial logistic regression model was considered the most appropriate
method as it allowed the effects of more variables to be tested in one model and the
survey included variables on a nominal scale. The use of a bivariate logistic model
can be explained by the fact, that only a subsample of impacted firms was used with
a relatively small number of observations (n=95) and the independent variable is
bivariate, namely whether the crisis had a positive or negative impact on the firm.
3
Results
The results show that almost half (49.1%) of Hungarian SMEs’ were affected by
COVID-19 after the first wave in 2020, while 5.7 percent reported a positive impact
on their business activities. Nonetheless, a significant number of them had to
partially close down (35.0%) or completely cease operation (8.8%). Not surprisingly,
the impacts are sector specific – there is a significant (p<0.001) correlation between
sector and the impact of the pandemic on business operations, with two sectors
(tourism and hospitality, other consumer services) being the most affected. The
survey examined expected annual turnover, but only in the case of those
respondents, who reported that the pandemic had affected their business operations
(48.7%). In this case, however, there is no significant difference among sectors
(p=0.371), these SMEs expected on average 76.78 percent of their annual turnover.
This could be explained by the market situation of the firms just before the
pandemic, but there is no significant correlation (p=0.870) between this situation
and the impact of the pandemic.
An important finding is that despite all the uncertainties regarding the future, only a
small proportion (14.5%) of SMEs reported layoffs, while the others made attempts
to maintain employment in some form, for example with mandatory holidays, wage
or working hour reduction. In our opinion, it is the direct consequence of the labor
shortage in the second half of 2010s, thus we suggest that the vast majority of SMEs
are planning for the long-term and consider the pandemic as a temporary situation.
J. Csákné Filep, Á. Szennay, L. Radácsi: Examining Success Factors of Hungarian SMEs
During Multiple Crises
167
Although extensive use of remote working / home office is considered to be one of
the main consequences of the pandemic, only 16.5% of SMEs reported introducing
such measures, and these are regionally concentrated in the Central Hungarian
region, including Budapest.
On a more negative note, 40.9 per cent of SMEs did not react at all to the pandemic,
42.5 per cent introduced stricter health rules, while less than 10 percent developed
digital consumer service or online marketing channels (8.9%), introduced new
payment methods (5.5%) or launched a special, pandemic-related marketing
campaign (5.1%). Thus, although digitalization boomed during the lockdowns, the
vast majority of Hungarian SMEs do not even attempt to keep up with global trends.
Table 1: Independent variables of the multinomial logistic regression model – how the
COVID-19 pandemic affected the operation of the firms
Effect
Intercept
Situation of the firm just prior the
pandemic
Export activity
Existence of a crisis management
plan
Existing portfolio of products
and/or services is a good basis for
long-term operation
Sector
Annual turnover (2019)
Source: Own elaboration
Model Fitting
Criteria
-2 Log
Likelihood of
Reduced Model
836.421
Likelihood Ratio Tests
Chi-Square
df
Sig.
.000
0
.
848.135
11.714
20
.926
840.836
4.415
8
.818
841.953
5.532
4
.237
900.784
64.363
40
.009
922.656
858.241
86.235
21.820
36
16
<.001
.149
According to our multinomial logistic regression model (see Table 1), the impact of
the pandemic situation on SMEs, as the dependent variable was determined by the
sector and whether the existing portfolio of products and/or services was a good
basis for long-term operation, while other predictor variables, namely (1) export
activity (p=0.818), (2) situation of the firm just prior the pandemic (p=0.926), (3)
existence of a crisis management plan (p=0.237) and (4) annual turnover of 2019
(p=0.149) proved to be insignificant as independent variables. Accordingly, we
suggest that although COVID-19 could affect the whole economy, there was a
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severe impact only in the tourism and hospitality sector, so this crisis can be
considered a single-sector crisis.
The subsample analyzed in the case of the 2022 survey was constructed as follows.
All enterprises were excluded from the analysis if neither the war, nor COVID-19
had any impact on their activities. If a firm reported a positive impact related to the
war or COVID-19 in the survey, it was considered as positively affected, all other
cases were categorized negatively affected. Thus, the subsample consisted of
95 cases, of which 79 (83.2%) were negatively and 16 (16.8%) positively affected.
The constructed bivariate logistic regression model is appropriate, as all independent
variables have a significant effect and pseudo-R-square measures show rather high
values (Cox and Snell R square=0.453, Nagelkerke R square=0.754). The results
show that four variables determine how the firms were affected by the two crises:
(1) the situation of the firm 2 years ago; (2) the available opportunities on the market;
(3) the opinion of the respondents on the extent to which luck influences business
success in Hungary and (4) the variation of bank debts in the last 5 years.
Firms in a more negative situation in 2020 were negatively affected, while growing
ones reported positive impacts. Similarly, firms with new market opportunities
correlate positively with the impact of the crises. An interesting finding is that the
perceived extent of luck in business success is also positively correlated with the
impacts. A decreasing trend of bank debt in the last 5 years could also positively
influence the perceived effect of the war and the pandemic, which could be
explained by the fact, that the National Bank of Hungary started a new monetary
tightening regime in the summer of 2021, thus interest rates of non-subsidized loans
were much higher than in the 2010s.
4
Discussion and Conclusion
Our paper examined the success factors of Hungarian SMEs during COVID-19 and
the Ukrainian war. This approach is rather original, since – as we know – there has
not been made a comprehensive study on the effects of the two recent crises on
SMEs yet. The results show that COVID-19 could be considered a one-sector crisis
as the effects were concentrated in the tourism and hospitality sector, while all other
sectors were less intensely affected. Nonetheless, firms with more sustainable
J. Csákné Filep, Á. Szennay, L. Radácsi: Examining Success Factors of Hungarian SMEs
During Multiple Crises
169
product / service portfolios reported more positive effects on their business
operations. In contrast, the effects of the Ukrainian war were more widespread.
According to our model, the crisis had rather positive effects on the firms, if (1) the
firm was in a better situation in 2020, (2) the firm saw available market opportunities,
(3) the firm reduced its bank debts in the last 5 years and (4) the respondent
perceived a high influence of luck on business success in Hungary. Therefore, our
policy implications are twofold. First, in case of sectoral crises, countries should
focus on saving workplaces in the affected sectors, while aid to other sectors could
be limited. Second, successful SMEs may find business opportunities in more
widespread crises, so they can be considered as future-proof. Therefore, policy
should focus on supporting them.
Our paper has three major limitations. First, both surveys were conducted at the
beginning of the crises, namely at the end of the first wave of COVID-19 and just a
few months following the Russian intervention, so respondents may only have
expectations about the real economic consequences of the crises. Second, national
protectionism and related expectations may change the behavior of SMEs. Third,
although energetic transformation was promoted by the various programs (e.g.,
subsidies for energetic retrofitting of buildings or for installation of photovoltaic
panels), the survey does not reflect this issue. Nevertheless, it would be
methodologically impossible to obtain a representative sample in this respect.
Acknowledgment
Project no. TKP2021-NKTA-44 has been implemented with the support provided by the Ministry of
Innovation and Technology of Hungary from the National Research, Development and Innovation
Fund, financed under the TKP2021-NKTA funding scheme.
References
Alicke, K., Barriball, E., & Trautwein, V. (2021). How COVID-19 is reshaping supply chains. McKinsey.
Retrieved from https://www.mckinsey.com/capabilities/operations/our-insights/howcovid-19-is-reshaping-supply-chains
Bughin, J., Berjoan, S., Hintermann, F., & Xiong, Y. (2021). Corporate Resilience Out of the Covid-19
Pandemic. Journal of Business Research. https://papers.ssrn.com/abstract=3872434
Eurostat. (2022). EU small and medium-sized enterprises: An overview. Retrieved from
https://ec.europa.eu/eurostat/web/products-eurostat-news/-/edn-20220627-1
Guijarro, F., & Poyatos, J. A. (2018). Designing a Sustainable Development Goal Index through a Goal
Programming Model: The Case of EU-28 Countries. Sustainability, 10(9), Article 9.
https://doi.org/10.3390/su10093167
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BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Hamel, G., & Välikangas, L. (2003, September 1). The Quest for Resilience. Harvard Business Review.
Retrieved from https://hbr.org/2003/09/the-quest-for-resilience
Muff, K., Kapalka, A., & Dyllick, T. (2017). The Gap Frame—Translating the SDGs into relevant
national grand challenges for strategic business opportunities. The International Journal of
Management Education, 15(2, Part B), 363–383. https://doi.org/10.1016/j.ijme.2017.03.004
Ritala, P., Albareda, L., & Bocken, N. (2021). Value creation and appropriation in economic, social,
and environmental domains: Recognizing and resolving the institutionalized asymmetries.
Journal of Cleaner Production, 290, 125796. https://doi.org/10.1016/j.jclepro.2021.125796
Szennay, Á., Szigeti, C., Kovács, N., & Szabó, D. R. (2019). Through the Blurry Looking Glass—SDGs
in the GRI Reports. Resources, 8(2), Article 2. https://doi.org/10.3390/resources8020101
United Nations. (2015). Transforming our world: The 2030 Agenda for Sustainable Development. Retrieved from
https://www.un.org/ga/search/view_doc.asp?symbol=A/RES/70/1&Lang=E
FACTORS INFLUENCING
ENTREPRENEURS’ DECISIONMAKING CONCERNING SDGS
JUDIT CSÁKNÉ FILEP, ÁRON SZENNAY
Budapest Business School, Budapest LAB, Budapest, Hungary
csaknefilep.judit@uni-bge.hu, szennay.aron@uni-bge.hu
Abstract Many studies highlight the importance of
entrepreneurs in achieving SDGs. While their role is undeniable,
mapping their motivations to act according to SDG principles is
still in its infancy. The aim of this study is to examine whether
the
environment
surrounding
entrepreneurs,
their
characteristics, and their motivation for starting a business are
related to whether SDGs are considered in business decisions.
Following a review of the relevant literature, the paper provides
empirical evidence for the existence of the hypothesized
relationships. The 215-item database of the Hungarian Global
Entrepreneurship Monitor Adult Population Survey 2022,
restricted to business owner-managers, was used. Chi-Square test
and correlation analysis were applied to analyse the relationship
between sustainability decisions and the environment, personal
characteristics, and start-up motivations of owner-managers. The
research shows a relationship between entrepreneurial decisions
made with sustainability in mind and the entrepreneur's
environment, personality, and motivation to start a business.
DOI https://doi.org/10.18690/um.epf.3.2023.21
ISBN 978-961-286-736-2
Keywords:
entrepreneurship,
SDGs,
Global
Entrepreneurship
Monitor,
GEM,
Hungary
JEL:
L26, L31, Q56
172
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Introduction
Scientists have proposed the term 'Anthropocene' for the current geological epoch,
given the increasing impact of human activities on the Earth and its atmosphere
(Crutzen & Stoemer, 2000). The Anthropocene marks a fundamental shift in the
relationship between humans and the Earth system as humans are not passive
observers of Earth’s functioning (Lewis & Maslin, 2015). Rockström et al. (2009)
defined nine planetary boundaries: (1) climate change, (2) ocean acidification, (3)
stratospheric ozone depletion, (4) interference with the global phosphorus and
nitrogen cycles, (5) rate of biodiversity loss, (6) global freshwater use, (7) land-system
change, (8) aerosol loading, and (9) chemical pollution, at least three of which
humanity has already transgressed (rate of biodiversity loss, interference with the
global phosphorus and nitrogen cycles, climate change). The challenge for humanity
is to meet the needs of all people within the means of the planet (Raworth, 2017).
To achieve this goal, the United Nations (2015) is leading the transformation to put
the world on a sustainable and resilient path. The 2030 Agenda for Sustainable
Development, published in 2015, defines 17 Sustainable Development Goals
(SDGs). The 17 SDGs were adopted form a global framework covering the social,
economic, and environmental dimensions of sustainable development. The
Agenda 2030 explicitly calls on businesses, including micro-enterprises and
multinationals, to contribute to sustainable development (United Nations, 2016).
Pomar (2018) highlights the importance of SMEs in achieving the SDGs, citing their
significant number, role in employment and contribution to GDP. Schaltegger and
co-authors (2018) emphasize that entrepreneurship is very important for
sustainability because the transformation to a sustainable future urgently requires the
creative destruction of unsustainable patterns of production, consumption and
living. Venancio and Pinto (2020) come to the opposite conclusion, finding that
entrepreneurship contributes negatively to the achievement of the SDGs in the case
of necessity and non-innovative entrepreneurship. Dhahri and co-authors (2021)
further explore the issue and conclude that opportunity entrepreneurship has a
positive impact on the three dimensions of sustainable development, while necessity
entrepreneurship has a negative impact on the environmental sustainability
dimension.
J. Csákné Filep, Á. Szennay: Factors Influencing Entrepreneurs’ Decision-making Concerning
SDGs
173.
Table 1 summarizes the role of entrepreneurship in achieving sustainable
development (SD).
Table 1: Role of entrepreneurship in achieving sustainable development.
SD Dimension
Economic
Social
Environmental
Entrepreneurship contribution
“( . . . ) entrepreneurship drives economic growth by creating jobs, promoting
decent work and sustainable agriculture and fostering innovation”
Entrepreneurship can make a positive contribution to “promoting social
cohesion, reducing inequalities and expanding opportunities for all, including
women, young people, persons with disabilities and the most vulnerable
people”
“( . . . ) entrepreneurship can help to address environmental challenges
through the introduction of new climate change mitigation and adaptation
technologies and resilience measures, as well as by promoting
environmentally sustainable practices and consumption patterns”
Source: Filser et al. (2019, 2).
Scholars suggest that adoption of a sustainable strategy in entrepreneurship leads to
greater resilience and long-term performance (Avery & Bergsteiner, 2011; MoyaClemente et al., 2019; DiVito & Bohnsack, 2017; Johnsen et al., 2018).
Sustainability-oriented entrepreneurs may be motivated primarily by a desire to
contribute to sustainable development, rather than by conventional profit
maximisation. This motivation is often closely linked to the entrepreneur's personal
values and passion for sustainable business (Schaltegger et al., 2018). Nevertheless,
the pursuit of environmental protection does not mean a reduction in profitability,
according to the model of Schaltegger and Synnestvedt (2002) environmental
protection can support economic success.
Our research seeks to answer the question of what factors influence the decisions of
micro and small enterprises in relation to the SDGs.
The rest of our paper presents the data, methods used, the hypotheses formulated
and the analysis. After highlighting the results of the research, in the conclusion the
main findings, limitations of the research and future research directions are
presented.
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Methodology
The aim of our paper is to contribute to the topic of entrepreneurs achieving the
SDGs by analyzing data from the Hungarian Global Entrepreneurship Monitor
(GEM) Adult Population Survey (APS) 2022. GEM conducts survey-based research
on entrepreneurship and entrepreneurship ecosystems around the world by
collecting data on entrepreneurship directly from individual entrepreneurs. The APS
examines the role of the individual in the life cycle of the entrepreneurial process.
The APS is administered to a nationally representative sample of at least 2000 adults
in each economy. Data collection for the APS is coordinated centrally, thus all
surveys are subject to several quality assurance checks before data collection begins.
The
resulting
data
are
repeatedly
checked
before
publication
(https://www.gemconsortium.org/).
Data from the 2022 GEM Hungary APS have been used in the course of our work.
The initial sample size of the database was 2014, from which business ownermanagers (n=215; owner-managers are respondents who, alone or with others, own
a business that they help to manage or are self-employed, regardless of its nascent,
new or established status.) were selected for analysis and to test the following five
hypotheses:
H1a: Business owners who are aware of the UN’s SDGs are more likely to take steps
to minimize the environmental impact of their business.
H1b: Business owners who are aware of the UN’s SDGs are more likely to take steps
to maximize the social impact of their business.
H2: There is a positive correlation between the consideration of the social
implications of decisions and the motivation to start a business – “to make a
difference in the world”.
H3: There is a positive correlation between the consideration of the environmental
implications of decisions and the innovativeness of owner-managers.
H4: There is a positive correlation between the prioritization of the social and/or
environmental impact of the business above profitability or growth and the
motivation to start a business – “to make a difference in the world”.
J. Csákné Filep, Á. Szennay: Factors Influencing Entrepreneurs’ Decision-making Concerning
SDGs
175.
The non-representative subsample contains small and medium-sized enterprises,
where the average number of employees is 2.75 and the maximum number of
employees is 45.
A quantitative approach was used for the analysis. All variables included in the
analysis (see Table 2) were measured on a five-point Likert scale. Descriptive
statistics, chi-square test and Spearman's correlation analysis were used to analyze
the relationship between entrepreneurial motivation, personal characteristics,
environment and owner-managers' decisions on sustainability dimensions.
Table 2: Descriptions of variables
Variable
Variable name
Description
How many people do you know personally who have
started a business or become self-employed in the
Entrepreneurial networks
KNOWENT
past 2 years? Would it be none, one, few or many
people?
Innovativeness
CREATIV
Other people think you are highly innovative.
Every decision you make is part of your long-term
Long term thinking
VISION
career plan.
Please indicate to what extent the following
To make a difference in the
SUMOTIV1 statements reflect the reasons why you are involved
world
in this business. To make a difference in the world.
Please indicate to what extent the following
To build great wealth or a
statements reflect the reasons why you are involved
SUMOTIV2
very high income
in this business. To build great wealth or a very high
income
When making decisions about the future of your
business, you always consider social implications such
Social implications
SUSDG_SOC
as access to education, health, safety, inclusive work,
housing, transportation, quality of life at work, etc.
When making decisions about the future of your
business, you always consider environmental
implications such as the preservation of green areas,
Environmental implications SUSDG_ENV
reduction of the emission of pollutants and toxic
gases, selective garbage collection, conscious
consumption of water, electricity and fuels, etc.
Social and/or
environmental impact
You prioritize the social and/or environmental
SUSDG_PRI
outweigh profitability or
impact of your business over profitability or growth
growth
Source: Authors’ research.
176
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Results
Only 24.3% of the Hungarian entrepreneurs surveyed are aware of the 17 United
Nations Sustainable Development Goals, while 67.7% of those who are familiar with
the SDGs claim that they are a priority for their company. 60.1% of the
entrepreneurs in the sample took steps to minimize the environmental impact of
their business in the past year, however, increasing the social impact of their business
is considerably lower (38.4%).
Using the Chi-Square test, we examined whether awareness of the SDGs had a
positive effect on minimizing the environmental impacts and maximizing the social
impacts of the companies surveyed. The relationship between SDG awareness and
steps taken to minimize the business’ environmental impact was significant (X2(1,
N=208) =5.031, p=0.025). Entrepreneurs, who are aware of the SDGs are more
likely to take steps to minimize the environmental impact of their business. The
relationship between SDG awareness and steps taken to maximize the business’
social impact was not found to be significant (X2(1, N=206)=3.791, p=0.52).
Correlation coefficients were calculated to assess the linear relationship between
social implications, environmental implications, social and/or environmental impact
over profitability or growth and entrepreneurial networks, innovativeness, long-term
thinking, “To make a difference in the world” motivation, „To build great wealth or
a very high income” motivation (see Table 3).
Social implications showed a positive correlation with entrepreneurial networks,
long-term thinking, and “To make a difference in the world” motivation. There was
a positive correlation between environmental implications and “To make a
difference in the world” motivation. Social and/or environmental impact over
profitability or growth showed a positive correlation with innovativeness and the
“To build great wealth or a very high income” motivation.
J. Csákné Filep, Á. Szennay: Factors Influencing Entrepreneurs’ Decision-making Concerning
SDGs
177.
Table 3: Results of the correlation analysis
Social
implications
Environmental
implications
Social and/or
environmental
impact
outweigh
profitability or
growth
Entrepreneurial
networks
Innovativeness
Long
term
thinking
To make a
difference
in the
world
To build
great wealth
or a very high
income
Correlation
Coefficient
.239**
0.016
.161*
.349**
0.086
Sig.
(2-tailed)
0.000
0.822
0.014
0.000
0.191
Correlation
Coefficient
0.105
0.050
0.063
.223**
0.068
Sig.
(2-tailed)
0.109
0.475
0.339
0.001
0.297
Correlation
Coefficient
0.052
.173*
0.102
0.122
.140*
Sig.
(2-tailed)
0.435
0.014
0.124
0.065
0.034
** Correlation is significant at the 0.01 level (2-tailed).
* Correlation is significant at the 0.05 level (2-tailed).
4
Conclusions
The research findings confirmed that business owners who are aware of the UN
SDGs are more likely to take steps to minimize the environmental impact of their
business, but at the same time did not substantiate the claim that business owners
who are aware of the UN SDGs are more likely to take steps to maximize the social
impact of their business.
The results of our research reveal that entrepreneurs who consider social impact in
their decision-making process are more embedded in the entrepreneurial
community, their decisions are part of their long-term career plan and their strong
motivation for starting a business is to make a difference in the world. Entrepreneurs
who consider environmental impacts are also characterized by a desire to make a
difference in the world.
Entrepreneurs who prioritize the social and/or environmental impact of their
business over profitability or growth consider themselves to be innovative and
building great wealth or a very high income is their strong motivation for starting a
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
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business. The results are consistent with those found by Schaltegger et al. (2018) and
Schaltegger and Synnestvedt (2002).
The originality of the paper lies in that it sheds light on the little-studied relationship
between entrepreneurs' decisions on sustainable development and their
environment, personality and motivation to start a business.
The study’s main limitation is that only one economy was examined, and the data
used for the analysis were not representative, which reduces the reliability and
generalizability of the results.
A comparative analysis of more countries and the creation of a sophisticated model
describing the relationship between entrepreneurs' SDG decisions and their
environment, personality, and motivation to start a business are promising future
research directions.
Acknowledgment
Project no. TKP2021-NKTA-44 has been implemented with the support provided by the Ministry of
Innovation and Technology of Hungary from the National Research, Development and Innovation
Fund, financed under the TKP2021-NKTA funding scheme.
References
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resilience and performance. Strategy & Leadership, 39(3), 5–15.
https://doi.org/10.1108/10878571111128766
Crutzen, P. J., & Stoemer, E. F. (2000). The “Anthropocene”, 41(17–18), 17–18.
http://www.igbp.net/download/18.316f18321323470177580001401/1376383088452/NL41
.pdf
Dhahri, S., Slimani, S., & Omri, A. (2021). Behavioral entrepreneurship for achieving the sustainable
development goals. Technological Forecasting and Social Change, 165, 120561.
https://doi.org/10.1016/j.techfore.2020.120561
DiVito, L., & Bohnsack, R. (2017). Entrepreneurial orientation and its effect on sustainability decision
tradeoffs: The case of sustainable fashion firms. Journal of Business Venturing, 32(5), 569–587.
https://doi.org/ 10.1016/j.jbusvent.2017.05.002
Filser, M., Kraus, S., Roig-Tierno, N., Kailer, N., & Fischer, U. (2019). Entrepreneurship as Catalyst
for Sustainable Development: Opening the Black Box. Sustainability, 11(16), 4503.
https://doi.org/10.3390/su11164503
Johnsen, C. G., Olaison, L., & Sørensen, B. M. (2018). Put your style at stake: A new use of sustainable
entrepreneurship. Organization Studies, 39(2–3), 397–415.
https://doi.org/10.1177/0170840617717551
Lewis, S. L., & Maslin, M. A. (2015). Defining the Anthropocene. Nature, 519(7542), Article 7542.
https://doi.org/10.1038/nature14258
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SDGs
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Moya‐Clemente, I., Ribes‐Giner, G., & Pantoja‐Díaz, O. (2019). Configurations of sustainable
development goals that promote sustainable entrepreneurship over time. Sustainable
Development, 28(4), 572–584. Portico. https://doi.org/10.1002/sd.2009
Pomare, C. (2018). A Multiple Framework Approach to Sustainable Development Goals (SDGs) and
Entrepreneurship. Contemporary Issues in Entrepreneurship Research, 8, 11–31.
https://doi.org/10.1108/s2040-724620180000008006
Raworth, K. (2017). Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist. Chelsea Green
Publishing.
Rockström, J., Steffen, W., Noone, K., Persson, Å., Chapin, F. S. I., Lambin, E., Lenton, T., Scheffer,
M., Folke, C., Schellnhuber, H. J., Nykvist, B., de Wit, C., Hughes, T., van der Leeuw, S.,
Rodhe, H., Sörlin, S., Snyder, P., Costanza, R., Svedin, U., … Foley, J. (2009). Planetary
Boundaries: Exploring the Safe Operating Space for Humanity. Ecology and Society, 14(2).
https://doi.org/10.5751/ES-03180-140232
Schaltegger, S., & Synnestvedt, T. (2002). The link between ‘green’ and economic success:
Environmental management as the crucial trigger between environmental and economic
performance. Journal of Environmental Management, 65(4), 339–346.
https://doi.org/10.1006/jema.2002.0555
Schaltegger, S., & Synnestvedt, T. (2002). The link between ‘green’ and economic success:
environmental management as the crucial trigger between environmental and economic
performance. Journal of Environmental Management, 65(4), 339–346.
https://doi.org/10.1006/jema.2002.0555
Schaltegger, S., Beckmann, M., & Hockerts, K. (2018). Collaborative entrepreneurship for
sustainability. Creating solutions in light of the UN sustainable development goals. International
Journal of Entrepreneurial Venturing, 10(2), 131. https://doi.org/10.1504/ijev.2018.092709
United Nations. (2015). Transforming our world: The 2030 Agenda for Sustainable Development.
https://sdgs.un.org/sites/default/files/publications/21252030%20Agenda%20for%20Sustai
nable%20Development%20web.pdf
Venâncio, A., & Pinto, I. (2020). Type of Entrepreneurial Activity and Sustainable Development Goals.
Sustainability, 12(22), 9368. https://doi.org/10.3390/su12229368. Retrieved from:
https://www.gemconsortium.org/
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GREEN ECONOMY AND
UNCERTAINTY AVOIDANCE
AS A DIMENSION OF
NATIONAL CULTURE
ALONA SOVA, MAJA ROŽMAN, ROMANA KOREZ VIDE
University of Maribor, Faculty of Economics and Business, Maribor, Slovenia
alona.sova@student.um.si, maja.rozman1@um.si, romana.korez@um.si
Abstract The key objective of a green economy, as an
environmentally sound, low-carbon economy, is promoting
sustainable development. The latter should consider national
culture, which comprises the values, beliefs, and actions of a
society. The main purpose of this paper is to explore the
interconnectedness of uncertainty avoidance as a national
cultural dimension and the levels of green economy
development. In the research, we gathered secondary data from
60 countries from different parts of the world. The data for
national cultural orientations were collected from the Hofstede
insights website, whereas the values for the green economy
indicators were gathered from the Green Growth Index. Our
research shows that countries with a high degree of uncertainty
avoidance perform better in green trade, green employment, and
green innovation indicators than countries with a low degree of
uncertainty avoidance. The research is based on descriptive
statistical analysis. Its findings show that for some green
economy indicators, there are statistical differences between
different groups of countries with different levels of uncertainty
avoidance, which brings important implications for policymakers
and businesses.
DOI https://doi.org/10.18690/um.epf.3.2023.22
ISBN 978-961-286-736-2
Keywords:
green economy,
national culture,
intercultural
differences,
uncertainty
avoidance,
Green Growth
Index,
Hofstede Insights
JEL:
Q1, Q56, Z13
182
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Introduction
Over the last decade, the concept of the green economy has become a strategic
priority for national governments. By transforming their economies into so-called
green systems, economies should be able to meet the key challenges of the 21st
century – from excessive urbanization and scarcity of natural resources to climate
change and economic instability (UNEP, 2020).
A green economy requires particular skills, capabilities, and cultural characteristics
of individuals. House et al. (2004) argue that the greater the desire to avoid
uncertainty, the more people seek orderliness, consistency, structure, formal
procedures, or tangible laws as they help lessen the need to make one's own decisions
and be responsible for uncertain outcomes. People in uncertainty-avoiding cultures
solve pressing problems rather than develop long-run strategies. Firms located in
countries with high levels of uncertainty avoidance are expected to be less effective
innovators compared to firms located in countries with low levels of uncertainty
avoidance (Holmstrom, 1989). They are likely to invest less in research projects to
reduce the level of uncertainty. Even if the expenditure towards R&D is the same
between high and low-uncertainty-avoiding countries, firms in high-uncertaintyavoiding countries are likely to dedicate most of these funds towards low-risk
endeavors, which by definition are of lower impact (Chen et al., 2017).
Despite the importance of a green economy for the sustainable development of
societies, there is a research gap in identifying the links between green economy
development stages and countries' particular national cultural orientations. The main
purpose of our paper is to explore the interconnectedness between uncertainty
avoidance as a national cultural orientation and the level of green economy
development.
2
Theoretical Background
The key objectives of the green economy, as an ecologically sound, low-carbon
economy (UNEP, 2020), are to reduce environmental problems and risks and to
promote sustainable development. Studies on the green economy cite a fundamental
shift towards more efficient, innovative, environmentally friendly technologies that
can reduce harmful emissions and the effects of climate change, while coping well
A. Sova, M. Rožman, R. Korez Vide: Green Economy and Uncertainty Avoidance as a
Dimension of National Culture
183.
with the challenges of resource depletion and degradation of the natural
environment (Janicke, 2012). Key pillars of green economy development include the
need to reduce carbon emissions to minimize the risks of climate change due to the
overexploitation of natural resources and large-scale degradation of the natural
environment which reduce the natural capital on which humanity depends.
The shift towards a green economy requires a new mindset and an innovative way
of doing business. It also requires new potential in the skills of individuals who can
work competently at a cross-sectoral level in interdisciplinary teams. The acquisition
and use of knowledge and skills, values, ways of thinking, and acting are elements of
the cultural environment of countries.
Most of the Sustainable Development Goals (SDGs) adopted by the United Nations
in 2015 (UN, 2015) emphasize the role of culture at its core. It is recognized as an
important factor in the economic, social, and environmental dimensions of
sustainable development. Culture represents the values, beliefs, and behavior of a
society. Tylor (1870) defined culture, as "a complex whole comprising the values,
beliefs, norms, customs, and habits, which the individual acquires as a member of a
social group". According to Hofstede (1994), culture is "the collective programming
of the mind that separates members of one group of people from another". Culture
plays a direct and crucial role in achieving the strategic pillars of a country's
development vision (Alwakid et al., 2020). Various authors (e.g. Ratan, 2017) have
attributed economic growth to the dominant characteristics of particular national
cultures.
Uncertainty avoidance, as a cultural dimension, can be explained by the level of
society's tolerance to ambiguity and uncertainty (Wennekers, et al., 2007; Hancioglu
et al., 2014). Countries with a high level of uncertainty avoidance refuse to face
novelties, try to balance optimal stability with minimal risk, and have numerous
legislations, regulations, and laws to lower uncertainty. A national culture with a high
degree of uncertainty avoidance enforces codes of conduct, guidelines, regulations,
and laws to reduce or manage uncertainty and unstructured situations (Hofstede,
2001). On the other hand, individuals in low uncertainty avoidance countries don't
like extensive regulation. They believe that rules are not necessary to solve problems
and feel bound by them (Frijns et al., 2013; Matusitz & Musambira, 2013; Hancioglu
et al., 2014). A low uncertainty avoidance culture is less fearful of an unknown future
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and does not rely as heavily on rule-oriented uncertainty mitigation mechanisms
(Hofstede, 2001). Although low levels of uncertainty avoidance in society are often
associated with unethical actions (Rallapalli et al., 1994; Song et al., 2018), which can
also be manifested in companies' neglect of activities to reduce their impacts on the
natural environment, societies with low levels of uncertainty avoidance are
predominantly oriented towards risk-taking activities. Our hypothesis is the
following:
H1: There are differences in average values in higher/lower levels of uncertainty
avoidance as a national cultural orientation across countries at different stages of
green economy development.
3
Methodology
Our research is based on secondary data from 60 countries on six continents. Data
on the dimensions of the green economy were collected from the Global Green
Growth Index (GGGI) 2020 (Zabrocki et al., 2020). The GGGI comprises four
dimensions: sustainable and efficient use of resources, protection of natural capital,
green economic opportunities, and social inclusion. We focus on the area of green
economic opportunities which comprises green investment, green trade, green jobs,
and green innovation. Green investment refers to public and private investments
that directly or indirectly promote the sustainable use of resources, including
materials, water, energy, and land, as well as the protection of natural capital, such
as environmental protection and climate change mitigation and the promotion of
sustainable development. Green trade refers to the competitiveness of a country to
produce and export environmental products that can contribute to the protection of
the natural environment, climate change mitigation measures, green growth, and
sustainable development. Green employment refers to green jobs, created and
sustained by economic activities that are environmentally friendly and offer decent
working conditions. Green innovation refers to product, process, and service
innovations, such as energy saving, pollution prevention, waste recycling, and green
product design, as well as to firms' activities that bring environmental benefits. Data
on uncertainty avoidance as a cultural dimension was gathered from Hofstede's
Insights (2021). The descriptive statistical analysis was carried out using SPSS.
A. Sova, M. Rožman, R. Korez Vide: Green Economy and Uncertainty Avoidance as a
Dimension of National Culture
4
185.
Results
Our research shows that 43 countries have high levels of uncertainty avoidance,
while 17 countries record low levels in this cultural dimension (Table 1). The average
value/mean of green investment in countries with high levels of uncertainty
avoidance is 66.06, in the countries with a low level of uncertainty avoidance,
however, 70.48. Countries with high levels of uncertainty avoidance achieve on
average lower minimum levels of green investment (50.9) than countries with low
levels of uncertainty avoidance (55.1). On the other hand, countries with low levels
of uncertainty avoidance achieve on average higher maximum levels of green
investment (80.4) than countries with high levels of uncertainty avoidance (78.7).
The minimum (55.1) and maximum (80.4) values of green investment are also higher
in countries with low levels of uncertainty avoidance. Therefore, the countries with
a high degree of uncertainty avoidance perform worse on green investment in
comparison to countries with a low degree of uncertainty avoidance. This could be
explained by the example of Denmark, which records low uncertainty avoidance
(23), however, it scores relatively high on green investment (78.3).
Table 1: Descriptive statistics on high/low levels of uncertainty avoidance at different
development stages of the green economy
N
Mean
Median
Std.
Deviation
Variance
Range
Minimum
Maximum
Green
investment
High
Low
43
17
66.06
70.48
66.88
71.52
High
43
26.4
25.74
Low
17
23.74
22.54
Green
employment
High
Low
43
17
49.47
46.14
48.88
47.42
Green trade
Green
innovation
High
Low
43
17
42.05
32.34
40.63
24.6
7.25
8.21
17.25
13.99
20.36
18.39
22.19
25.97
52.5
27.8
50.9
78.7
67.40
25.3
55.1
80.4
297.55
66
3
69
195.91
39
6
44
414.56
85.37
14.63
100
338.36
69.65
13.9
83.55
492.46
99
1
100
674.34
99
1
100
Source: Authors’ research.
Notes: GGGI: Green investment - adjusted net savings, including particulate emission damage (% of Gross National
Income (GNI)); Green trade - share of export of environmental goods to total export; Green employment - share
of green employment in total manufacturing employment; Green innovation - share of patent publications in
environmental technology to total patents; Green investment, green trade, green employment, and green innovation:
(1) 1-20 very low - require significant actions to improve the situation; (2) 20-40 low - identify the right policies to
coordinate development; (3) 40-60 moderate - finding the right balance for development progress; (4) 60-80 high take a strategic position for full development; (5) 80-100 very high - achieve or nearly achieve the maximum result.
Hofstede's cultural dimensions: (1) 1-50 low uncertainty avoidance, (2) 51-100 high uncertainty avoidance.
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The average value of green trade, measured by the share of exports of environmental
goods, is higher in countries with a high degree of uncertainty avoidance (26.4). The
minimum value that appears for this indicator is 3 for countries with a high degree
of uncertainty avoidance and 6 for countries with a low degree of uncertainty
avoidance. This shows that the minimum value of green trade is higher in countries
with a low degree of uncertainty avoidance, and the maximum value (69), however,
in countries with a high degree of uncertainty avoidance. The research shows that
countries with high degrees of uncertainty avoidance outperform countries with low
degrees of uncertainty avoidance in green trade. For this indicator, we can cite again
the example of Denmark which records a low level of uncertainty avoidance,
however, its green trade is on a high level (44.2). Iceland is a similar example since it
is ranked in the group of low uncertainty avoidance countries (score 50), however,
it records a very low score on the green trade (5.7).
The average value of green employment, measured by the share of green
employment in total manufacturing employment, is higher in countries with a high
degree of uncertainty avoidance (49.47) than in countries with low uncertainty
avoidance (46.14). The minimum (14.63) and maximum (100) values of green
employment are also higher in countries with high levels of uncertainty avoidance.
Countries with high levels of uncertainty avoidance outperform countries with low
levels of uncertainty avoidance also in green employment. For this indicator, we
could look at the example of Switzerland, which records a score of 58 on uncertainty
avoidance, however, it achieves the highest score on green employment (100).
The average value of green innovation, measured by the share of patent publications
in environmental technology, is higher in countries with a high degree of uncertainty
avoidance (42.05) than in countries with a low degree of uncertainty avoidance
(32.34). The minimum (1) and maximum values of green investment (100) are the
same in both groups of countries. We can conclude that countries with a high degree
of uncertainty avoidance outperform countries with a low degree of uncertainty
avoidance on the green innovation indicator. For this indicator, we can take a look
at the example of Belgium which records a very high degree of uncertainty avoidance
(94), however, it records also the highest score in the green investment indicator
(100).
A. Sova, M. Rožman, R. Korez Vide: Green Economy and Uncertainty Avoidance as a
Dimension of National Culture
5
187.
Discussion and Conclusion
Our research shows that countries with a high degree of uncertainty avoidance
perform better in green trade, green employment, and green innovation indicators
than countries with a low degree of uncertainty avoidance. Regardless of this,
however, countries with low degrees of uncertainty avoidance perform better in
green trade. Based on the results of descriptive statistics, we confirmed the
hypothesis that there are statistically significant differences in higher/lower levels of
uncertainty avoidance across countries at different stages of green economy
development. Countries at different levels of development fall into different groups
according to their national cultural orientation. For example, Denmark, a highly
developed country, falls into the group of countries with low uncertainty avoidance,
however, it scores poorly on the green trade indicator, which is unexpected. On the
other hand, Denmark records high green investment. Belgium, as a highly developed
country, falls in the group of countries with a high degree of uncertainty avoidance
but scores the best on the green innovation indicator, which is also unexpected.
To support the development of the green economy, it is important to put in place
requisite national policies. The circumstances in which a company is operating will
determine its performance and decisions; if uncertainty avoidance is high, a company
will be concerned about its future. The study of Hou and co-authors (2022) implies
that minimizing economic policy uncertainty is supportive of companies' green
activities. Their findings show that a stable economic policy plays an essential role
in a firm's green activities. Our research shows that China, for example, is doing very
well on green investment, with a score of 80.4 on this indicator, while on the other
three green economy indicators, it scores low or medium, which tells us that it still
needs to make progress in this regard.
Due to data availability, our research was limited to a certain set of indicators, and a
certain number of countries and we focused on the country's macro level. We didn't
explore the factors influencing the observed cultural dimension and other factors
influencing the level of green economy development. For further research, it would
be useful to modify the green economy indicators or add some additional ones. It
would be also worthwhile to explore companies' levels of cultural orientations and
their impact on particular green economy indicators. To achieve higher robustness
of the research it would be also useful to observe a longer period.
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References
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Arabia: An Institutional Approach. Sustainability 12(9), 1-20. DOI:
https://doi.org/10.3390/su12093673
Chen, Y., Podolski, E.J., & Veeraraghavan, M. (2017). National culture and corporate innovation.
Pacific-Basin Finance Journal, 43, 173-187. DOI: https://doi.org/10.1016/j.pacfin.2017.04.006
Frijns, B., Gilbert, A.B., Lehnert, T., & Tourani-Rad, A. (2013). Uncertainty avoidance, risk tolerance,
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Hancioglu, Y., Bike Dogan, U., & Sirkintioglu Yildirim, S. (2014). Relationship between Uncertainty
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Institute.
CHALLENGES OF UKRAINE ON THE
WAY TO CLIMATE NEUTRALITY
TETIANA SOBOLIEVA1, 2
Kyiv National Economic University named after Vadym Hetman, Kyiv, Ukraine
sobolieva_tetiana@kneu.edu.ua
2 Corvinus University of Budapest, Corvinus Institute for Advanced Studies (CIAS),
Budapest, Hungary
tetiana.sobolieva@uni-corvinus.hu
1
Abstract The current ecological situation in Ukraine determines
the need to overcome obstacles to decreasing greenhouse gas
emissions. The aims of this research are to identify the main
current challenges for mitigating the impact on climate
conditions, measures to reduce greenhouse gas emissions, and
possible actions by the government and businesses to attain
climate neutrality. Ukraine has many challenges related to CO2
emissions due to both the sectoral structure of the economy and
the high energy intensity of outdated technologies. Air pollution
is significantly increasing as a result of military aggression on
Ukrainian territory. The decrease in CO2 emissions is partly
explained by the reduction of economic activities during the
pandemic restrictions. Despite the government's implementation
of measures to create favorable conditions to reducing
environmental pollution, it is necessary to develop measures to
increase energy efficiency and stimulate the transition of business
to a circular economy.
DOI https://doi.org/10.18690/um.epf.3.2023.23
ISBN 978-961-286-736-2
Keywords:
climate neutrality,
carbon emissions,
Ukraine,
circular economy,
transition
JEL:
O13, P48, Q57
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE.
190
1
Introduction
Global warming has become a critical issue worldwide, leading to changes in human
living conditions that will make impossible or significantly limit the livability and
workability of many geographical areas. As a result of drought or floods, agricultural
crops can be significantly damaged, as well as buildings and infrastructure
(McKinsey, 2020). Reducing greenhouse gas emissions is the main prerequisite for
slowing down global warming. To this end, national economies must move towards
climate neutrality. Climate neutrality is supposed to reduce greenhouse gas emissions
to the level forests and oceans will be able to absorb. This entailed achieving a net
balance between the generation and removal of greenhouse gases, in other words,
zero emissions.
Despite the fact that most environmental pollution metrics in Ukraine are falling,
the process requires additional monitoring and correction. This determines the
relevance of our research and offers ways to mitigate the impact of climate change.
2
Theoretical Background
More and more countries are uniting with the aim to decarbonize and mitigate the
impact of human activities on climate change. Under the terms of the Paris
Agreement, countries have developed and implemented a wide range of emission
reduction policies. As of January 2023, net zero carbon goals are agreed upon by 133
countries, which are responsible for almost 91% of global GDP and about 83% of
global emissions. An important step for coordinated action to reduce emissions is
the launch of the Inclusive Forum on Carbon Mitigation Approaches (IFCMA). The
first meeting in early February 2023 gathered more than 600 representatives from
104 participating countries (OECD, 2023).
A powerful tool for the improvement of the environmental situation is the transition
to a circular economy. The transition to a circular economy requires the
development of infrastructure for the collection and processing of waste, which
allows the use of secondary raw materials. Government support is needed through
the implementation of environmental industry standards and green procurement,
promotion of the circular economy concept and inclusive development model
(Kraveishvili & Gogorishvili, 2022) at the state level and through the education
system (Gagnidze, 2018; Lekashvili, 2019).
T. Sobolieva: Challenges of Ukraine on the Way to Climate Neutrality
191.
New technologies are an important source for the development of circular economy.
The activities of startups and accelerator companies in the field of circular economy
make it possible to identify the innovation trends in 2023 of the industries’
development (StartUsInsights, 2023). The most influential circular economy trends
& innovations are shown in Figure 1. Evidence of innovative breakthroughs in
technologies for the circular economy outlines the challenge of the availability of
such technologies for the economy of Ukraine, both from the point of view of
investment and personnel support for implementation.
Remanufacture
8%
Blockchain
8%
Bio-Based
Materials
8%
Repair
4%
Waste-toResource
35%
Artificial
Intelligence
9%
Internet of Waste
11%
Reuse
17%
Figure 1: The most influential circular economy trends & innovations in 2023
Source: StartUsInsights (2023, January).
The UN Climate Summit COP27, which took place in November 2022 in Egypt,
demonstrated the emphasis on the diversification of energy sources in the policies
of countries and companies. Special attention is now focusing on renewable energy.
The additional result is a reduction of the influence of energy monopolies. There is
also an intensification of the development of technologies aimed at decarbonizing
the economy.
The transition of the energy sector is particularly relevant for Ukraine. For the energy
transition, it is necessary to increase the use of renewables. Ukraine has significant
potential for the use of renewable energy sources such as solar and wind energy.
Hydrogen also has great potential for Ukraine. On the way to climate neutrality,
Ukraine must accelerate the transformation of the energy generation and
consumption system. In order to achieve this goal, efforts should be made to
simplify the procedures for obtaining access to land for the use of alternative energy
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE.
192
sources and clean technologies, modernizing the grid and other infrastructure,
decarbonizing transport and industry, strengthening emission controls, and applying
instruments that stimulate green investments (Tai et al., 2022).
3
Methodology
The research was conducted using statistical data of Ukrainian (MEPR, State
Statistics Service of Ukraine, data is available until 2021) and international
organizations (Our World in Data, UNECE, data is available until 2019). The
current state and dynamics of the next indicators in the energy and industrial sector
of Ukraine, which affect changes in climate neutrality due to greenhouse gas
emissions were determined: these are Ukraine's contribution of total global
greenhouse gas emissions, emissions of carbon dioxide from stationary sources,
carbon intensity of energy production, and carbon emissions per unit of GDP.
Operational information of state bodies of Ukraine and international organizations
was used to analyze factors influencing the environmental situation and formulate
conclusions.
4
Results
Analysing the impact of Ukraine's economy on environmental pollution before the
war, it can be observed that the dynamics of greenhouse gas emissions show a
reassuring declining trend. With a population of around 42 million (as of 2019),
Ukraine contributes 0.61% of total global greenhouse gas (GHG) emissions. Air
emissions of carbon dioxide from stationary pollution sources are shown in Figure
2. More than half of greenhouse gas emissions come from the electricity and heat
sectors. The carbon intensity of energy production, which indicates the amount of
CO2 emitted per unit of energy, was one of the highest in Europe in 2021 (Figure
3). Despite the high intensity of emissions from Ukraine's energy sector, the growing
trend of GDP till 2021 and declining GHG emissions confirmed the dynamics to
reduce carbon emissions per unit of GDP. That is, this indicator in 2019 was 0.32
kg of CO2 per constant 2010 USD, which is 8.5% less than in 2018 (UNECE, 2020).
T. Sobolieva: Challenges of Ukraine on the Way to Climate Neutrality
193.
165041,8
180000
160000
138932,1
140000
121282,9
120000
109079,4
111854,2
2020
2021
100000
80000
60000
40000
20000
0
2015
2010
2019
Figure 2: Carbon dioxide emissions from stationary sources, thsd.t.
Source: State Statistics Service of Ukraine (2022)
Germany
0.19
Hungary
0.17
Poland
0.27
Slovenia
0.17
Ukraine
0.22
0
0,05
0,1
0,15
0,2
0,25
0,3
Figure 3: Carbon intensity of energy production in 2021, kilograms of CO₂ per kilowatt-hour
Source: Our World in Data (2021).
The Annual National Inventory Report for Submission under the United Nations
Framework Convention on Climate Change and the Kyoto Protocol for 2021 both
confirm that the energy sector is the most significant contributor to GHG emissions
in Ukraine (MEPR, 2021). In 2020, the share of this sector accounted 65 % excluding
LULUCF. The next most influential sector is the 'Industrial processes and product
use,' which contributes about 18%, and the agriculture sector which contributes
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE.
about 13%. A big challenge for the environment is represented by outdated
technologies and equipment in mature sectors of the Ukrainian economy. In 2020,
the degree of depreciation of fixed assets was 55% in basic metals manufacturing,
70% in enterprises supplying electricity, gas, steam, and air conditioning (State
Statistics Service of Ukraine, 2021).
4.1
Impact of the war in Ukraine
By the end of 2022, the Ministry of Environmental Protection and Natural
Resources of Ukraine (MEPR) estimated the additional emissions of greenhouse
gases caused by military actions on the territory of Ukraine, which amounted to
about 33 million tons of CO2eq. Emissions into the atmosphere due to forest fires,
burning of oil products and the burning of industrial facilities due to attacks by
Russian troops have already exceeded 67 million tons (Ukrinform, 2022). Potential
indirect emissions of greenhouse gases due to the need for post-war reconstruction
are estimated at about 48.7 million tons of CO2eq (EcoBusinessGroup [EBG],
2022). The Minister of MEPR reported: "The amount of destruction waste in
Ukraine due to military aggression can already be compared with the amount of solid
household waste generated in the country per year on average. And this is about 1012 million tons" (MEPR, 2023, February 10).
Despite the military operations on the territory of Ukraine, the country's government
is making significant efforts to implement European legislation, comply with the
requirements and recommendations of the European Green Deal and fulfill
obligations under the Paris Agreement. Over the past year, changes to laws in the
areas of waste management, forestry, water policy, strengthening of chemical safety,
environmental monitoring, etc. were put into effect. Ukraine persistently adheres to
the principles of the European Green Deal. The emphasis in their implementation
is on private investments in renewable energy, mining, transport infrastructure,
construction, and other sectors of the economy (Cabinet of Ministers of Ukraine
(CMU), 2023).
The Cabinet of Ministers of Ukraine approved the Water Strategy of Ukraine until
2050 and the operational plan for its implementation until 2024. Such an initiative is
an important step towards the fulfillment of Ukraine's international obligations in
the field of "water" security, the Association Agreement between Ukraine and the
T. Sobolieva: Challenges of Ukraine on the Way to Climate Neutrality
195.
EU, and the Resolution of the UN General Assembly named Global Sustainable
Development Goals by 2030.
In June 2021, the President of Ukraine signed the Law "On limiting the circulation
of plastic bags in the territory of Ukraine". The Committee of the Verkhovna Rada
on Environmental Policy and Nature Management considered the revised law 6077
"On measures to prevent and reduce the negative impact of plastic products on the
environment", which prohibits the circulation and distribution of single-use plastic
products (EBG, 2023, February 3).
The Verkhovna Rada of Ukraine made amendments to the Law of Ukraine “On
Alternative Fuels.” In January 2023, a biomethane register was launched, allowing
producers and consumers of this renewable gas to obtain guarantees and certificates
of biomethane origin (EBG, 2023, January 23). Quick submission of a waste
declaration is possible through the Unified Environmental Platform "EcoSystem”.
There were changes in the procedure for environmental impact assessment during
martial law.
An important step towards climate neutrality is the opening of the Ukrainian Climate
Office in 2022, which will provide support to the government of Ukraine, cities, and
regions, as well as businesses to overcome challenges on the way to the climate goals
implementation. Financing will be provided by the European Union and the
International Climate Initiative of the Federal Ministry of Economy and Climate
Protection of Germany (Ukrinform, 2022).
5
Discussion and Conclusion
Ukraine, just like most countries of the world, faces the urgent task of reducing
greenhouse gas emissions in order to slow down global warming. Ukraine's official
position is to accept and adhere to the principles of the Paris Agreement. However,
implementing such a policy requires overcoming a significant number of challenges.
An important vector is the development of renewable energy
(Sobolieva & Harashchenko, 2020), the share of which has increased significantly
over the past 10 years but is insufficient for the needs of the transition to climate
neutrality. In addition to the energy sector, modernization and renewal of the
Ukrainian industries require significant investment.
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Considerable potential on the way to climate neutrality can be realized by increasing
the energy efficiency. The energy sector is the most carbon-intensive part of
Ukraine's economy, therefore more attention should be paid to reducing emissions
in the energy sector. An important prerequisite for this is the transition to a circular
economy. This approach provides an opportunity to realize the inclusive model of
economic growth.
Ukraine needs significant efforts to decarbonize the economy, as it has to overcome
significant barriers on this path. It is necessary to jointly intensify the efforts of the
government and businesses on the way to climate neutrality. The Ukrainian
government constantly implements measures to improve legal and regulatory norms
and mechanisms to support the circular economy and invest in infrastructure
development.
Effective tools for encouraging enterprises to introduce new environmental
technologies, increase energy efficiency, and assess the environmental footprint of
products and services require further research. Another issue for discussion is about
finding ways to increase the awareness of the Ukrainian population regarding the
consequences of climate change, and the need to comply with the norms of
ecological consumption and the use of resources.
References
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EcoBusinessGroup. (2022, November 28). The President signed the European integration law on strengthening
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198
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE.
SOCIAL PROTECTION
INTERVENTION TO ATTAIN
SUSTAINABLE DEVELOPMENT
GOAL ONE IN ALBANIA
FATMIRA QEMA
University of Tirana, Faculty of Economics, Tirana, Albania
fatmiraqema@outlook.com
Abstract One of the principles of the United Nations 2030
Agenda, is progress towards the Sustainable Development
Goals. In line with the first strategic goal, poverty reduction is
one of the main priorities of the new strategy. The objective of
this study is to assess social protection interventions in Albania
to determine the extent to which they contribute to the
achievement of the first Sustainable Development Goal, which
aims to reduce poverty. The methodology used in this study
consists in the examination of policy and legal documents related
to social protection and, in particular, to economic support, as
well as in the quantitative analysis of data available in databases.
The results show that social protection requires government
intervention to improve the welfare of citizens and that the
methodology for calculating the subsistence minimum in the
Republic of Albania should be developed and approved to serve
as a guide and official reference for determining economic
support.
DOI https://doi.org/10.18690/um.epf.3.2023.24
ISBN 978-961-286-736-2
Keywords:
poverty reduction,
sustainable
development,
SDGs,
social protection,
economic support
JEL:
Q01, D6, D63
200
1
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Introduction
No poverty is the main priority among the 17 Sustainable Development Goals
(SDGs) Sustainable global development is the common goal of human society, but
Covid 19 and the price crisis caused by the war in Ukraine has affected the slowdown
poverty eradication process. According to the World Bank, extreme poverty will
increase in 2020 for the first time in more than 20 years (World Bank, 2021).Social
protection is critical to achieving the first Sustainable Development Goal (SDGs 1),
which aims to end poverty in all its forms everywhere by 2030 (ILO, 2019). Over
the past two decades, policymakers have recognised social protection as a key
strategy to address poverty. Based on the review of the literature, there are very few
studies that demonstrate the impact of social protection on the achievement of the
first SDGs in Albania, and this fact served as a motive to address this issue. As the
focus of this study is on poverty reduction and SDGs 1, we will exclusively
concentrate on the cash assistance or 'Ndihma Ekonomike' (NE), which represents
a direct measure in tackling poverty The purpose of this study is to find out whether
the existing social assistance programmes aimed at poverty reduction, are consistent
with the achievement of the first SDGs. NE is a cash benefit that targets needy
families and individuals with special status. According to Law No. 57 (2019) on
Social Assistance in the Republic of Albania, families and individuals living in
extreme poverty or with insufficient income are eligible.
2
Literature Review
Over the past decade, cash transfers have gained importance in academic and
practitioner circles as a preferred method of making social transfers to leave no one
behind. This is because they are seen as cost-efficient, adaptable to the most urgent
needs of recipients, able to maintain the dignity of recipients and are generators of
multiplier effects in local markets (ICRC, 2018). A range of countries have
implemented successful cash transfer programs including Brazil, Indonesia, Kenya,
Mexico, Pakistan, the Philippines, South Africa and Yemen (Fiszbein & Schady,
2009; Garcia & Moore, 2012) The literature on cash transfers, and social protection
in general, has highlighted that their effectiveness and sustainability relies on a wellfunctioning administrative system and a strong and continuing political will
(Farringdon & Slater, 2006).
F. Qema: Social Protection Intervention to Attain Sustainable Development Goal One in
Albania
201.
Many studies have attempted to evaluate whether transfers have the effect of
reducing poverty or, more generally, a redistributive impact (Garfinkel, 1990;
Atkinson, 2000; Heady et al., 2001; Prasad, 2008; Nolan & Marx, 2009; Caminada et
al., 2010). Most of these studies focus on the effect of public transfer programs by
comparing countries in terms of their social protection expenditures and measures
of poverty.
In Albania, social assistance programme or Ndihma Ekonomike (NE) is designed as
a temporary measure aimed at supporting individuals in need, with the ultimate
objective of facilitating their social reintegration and re-entry into the labor market.
NE aims to provide financial security for needy people who are unable to provide
an adequate standard of living (see also Table 1).
Table 1: Social Protection Intervention (NE scheme) 1992-2021
1992-1996
1996-2005
2005-2018
2018-2021
Establish the legal foundations and the corresponding instances for the
development of the market economy, guarantee survival.
decentralisation to improve the applicability of aid procedures. The average
amount of NE 3,900 ALL (33 €) per month
The responsibilities of local government units for assessing poverty levels have
been expanded, to be enriched with new elements so that – NE is targeted and
directed at the poorest sections of the population. the maximum amount of NE
8,000 ALL (69.5€) per month and the average amount NE 4,100 ALL (35.6€) per
month
Increase the electronic register at national level, increase transparency; reduce
abuse and corruption; calculate the amount of benefit according to the family
structure. Remain in the scheme for a maximum of 5 years
Sources: State Social Service, Annual Reports (2014, 2018, 2020, 2021).
The reform of the NE scheme has helped alleviate poverty and improve the quality
of life of beneficiaries. As the cash payment of economic assistance is the only
income of the beneficiary families, it is still not sufficient to cover the minimum
living needs. For this reason, this reform provides a 5-year exit period for workingage persons whose families benefit from NE in order to reintegrate them into
normal social life. For all persons claiming economic assistance, this strategy
stipulated that they must be registered as unemployed every month. This practice
seems to have produced results in the employment of working-age family members
participating in the NE programme. The reform of NE scheme aims at better
targeting the neediest individuals and families, as well as revising the financial
measures to facilitate the livelihood of families in general. It has helped to alleviate
202
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
poverty and improve the quality of life of beneficiaries. Nevertheless, some issues
remain open and unresolved, such as the calculation of the subsistence minimum,
which would increase the effectiveness of economic assistance if we were to use
subsistence minimum indexation to calculate its monthly amount. The historical
context and challenges related to the economic transition in Albania have caused
economic and social instability, leading to increased inequality. The subsistence
minimum is the main social indicator used to assess poverty and to calculate
economic assistance. Currently in Albania, there is no official data on the subsistence
minimum indicator, which means that the basic level of poverty measurement is
missing, which makes the impact of social protection, or NE, on the achievement
of SDGs 1 even more challenging.
3
Methodology
The study was prepared using available quantitative data, statistics, and information
from secondary sources. The secondary search for materials includes the
compilation of available data and reports from various public sources published by
governmental institutions such as the Annual Reports of the State Social Service for
the period 2014-2021 and non-governmental from the Institute of Statistics Albania
(INSTAT), Open Data Albania (ODA), and reports from international
organizations such as the International Labor Organization 2021 and UNDP 2022.
The Subsistence minimum in Albania is the so-called absolute poverty method
adobted from (Bradshaw et al., 2000; ILO, 2012; Libanova, 2020), which involves
calculating the limit of food poverty and non-food poverty. The sum of the
monetary values of these two poverty lines is the subsistence minimum.
4
Results
According to the absolute poverty method, the subsistence minimum is determined
in two steps: first, the cost of food is calculated, and then the cost of non-food items
is calculated based on the cost of food requirements. The food basket on Table 2 is
constructed based on the recommendations of ILO 2021 and UNDP 2022. It is
determined which food groups are included in the model diet and the corresponding
quantity for each of them. The cost of each food is determined by multiplying the
quantity by the unit price based on the 2021 Household Budget Survey data,
F. Qema: Social Protection Intervention to Attain Sustainable Development Goal One in
Albania
203.
INSTAT, and adding the cost of each product in the model diet to calculate the total
cost of the basket, which is ALL 8709 (75.7 €) per month based on this data.
Table 2. Subsistence minimum per capita, 2021
Product
Bread
Cereals
Meat
Fish
Milk/by prod
Oil
Fruit
Vegetable
Sugar,sweets
Non-alcoholic drinks
Other foods
Total
(Food poverty line)
The non-food poverty
line
Subsistence minimum
per capita
Monthly rate
(kg)
Average unit
price
3.5
8
0.61
0.08
3.04
1.19
0.56
21.53
1.32
0.84
0
123.2
125
715
819
395
395
147
187
687
108.1
Monthly
Value
(ALL)
431.2
1000
436.15
65.52
1200.8
470.05
82.32
4026.11
906.84
90.804
0
Monthly
Value
(Euro)
3.75
8.69
3.79
0.56
10.44
4.03
0.71
35
7.88
0.78
8709 ALL
75.7
10,982 ALL
95.49
19,691 ALL
171
Source: INSTAT, Household Budget Survey and author’s calculations
The costs that cover only the food needs calculated above cannot represent the
poverty line because they ignore other important basic needs: To be healthy and
participate in society, expenses for housing, clothing, and health are necessary. The
table above defines the non-food costs that must be added to the food minimum to
calculate the full minimum. The types of these expenses and their share of total
monthly expenses are from the 2021 INSTAT Household Budget Survey. For 2021,
based on the 2021 Household Budget Survey, the weight of expenditures on food is
41.3% and the weight of expenditures on non-food items considered essential to
ensure a minimum standard of living is 58.7%. From the compilation of poverty
lines for food and non-food items, the subsistence minimum is 19,691 ALL or 171
euros 1Based on the data from ODA 2021, the average NE per family is 5079 lek or
44 euros. Thus, compared to the subsistence minimum calculated above, it is three
times smaller.
1
Bank of Albania, exchange rate 1 euro = 115 ALL
204
5
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Discussion and Conclusion
Based on the results of this paper regarding the level of the subsistence minimum
the payment of NE must be increased to meet the needs of individuals and families
not only in the area of nutrition, but also in other areas of human development. It is
recommended that the subsistence minimum be used as a benchmark for
formulating social policies for those in need. The subsistence minimum should be
recognised as a reference point for setting minimum urban and rural pensions,
minimum wages, and financial assistance programmes for the unemployed, and NE
should be improved to a subsistence minimum as an important measure to better
align with the SDGs one targets. In order to have a real subsistence minimum over
the years, its indexation is essential. Factors that affect the indexation of the
minimum wage include inflation, remittances, or the various measures taken by the
government to combat informality. By linking the subsistence minimum to various
social policies, the government can ensure that its citizens are guaranteed a decent
standard of living and equal access to basic social services, regardless of their income
and status. First limitation of our research is lack of and difficulty in accessing the
official data needed to calculate the subsistence minimum, and the second one was
the difficulty to assess its effectiveness, which will only be completed after a few
years.
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BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
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EMPIRICAL EVIDENCE OF THE
RELATIONSHIP BETWEEN THE
SDGS AND ECONOMIC
GROWTH IN ALBANIA:
THE ROLE OF EDUCATION
DESANTILA MUJA1, 2
Ministry of Finance and Economy, Tirana, Albania
desantila.muja@yahoo.com
2 University of Tirana, Faculty of Economic, Tirana, Albania
desantila.muja@yahoo.com
1
Abstract Education is considered as a catalyst for change and
sustainable development. While, the Sustainable Development
Goals are a universal call to action to face global challenges,
especially in developing economies. In this regard, the research
intends to empirically investigate the relationship between
selected UN SDGs and GDP per capita growth rate as a proxy
for economic well-being in Albania, focusing more on the role
of education, which places emphasis on the knowledge economy.
This study employed the Ordinary Least Square regression
model as a statistical technique where GDP per capita growth
rate is taken as the dependent variable. The data for the period
2007-2020 were sourced from the World Bank, International
Labour Organization, Food and Agriculture Organization and
INSTAT. The results show that total government expenditure
on education (% of GDP), decent employment and hunger are
positively related to the GDP per capita growth. However,
decent employment appears to be insignificantly related, while
gender equity/women’s empowerment appears to be negatively
insignificantly related to the GDP per capita growth rate. The
research indicates that education can promote economic and
socioeconomic goals, consequently, the Albanian government
should invest more in education and training.
DOI https://doi.org/10.18690/um.epf.3.2023.25
ISBN 978-961-286-736-2
Keywords:
SDGs,
education,
GDP per capita
growth,
empirical evidence,
hunger
JEL:
H52, I25, J21
208
1
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Introduction
The fulfilment of the Sustainable Development Goals (SDG) is on top of the agenda
of every member country of the United Nations, including Albania. The 2030
Agenda for Sustainable Development was adopted by all United Nations Member
States in 2015. The 17 SDGs recognize that ending poverty and other deprivations
must go hand-in-hand with strategies that improve health and education, reduce
inequality, and spur economic growth. The agenda’s 17 SDGs and their 169 targets,
aim at eradicating poverty in all forms and “seek to realize the human rights of all
and achieve gender equality”.
In order to achieve these goals, the Albanian Government has followed the
approach of integrating the SDGs targets in the national systems and instruments of
the processes, such as the incorporation/integration of the 2030 Agenda global
objectives in the National Integrated Planning System and the refraction and
harmonization of the SDGs with the strategic framework of the country (National
Strategy for Development and European Integration and sectoral and intersectoral
strategies. As well, a manual has been drafted in 2021 to provide support to
municipalities that are willing to prepare Voluntary Local Assessments of the SDGs.
In this context, special importance is given to the SDG4 ‘Ensure inclusive and
equitable quality education and promote lifelong learning opportunities for all’ which
emphasizes the importance of equality, inclusiveness and gender equality, effective
learning and the practical and life value of what is learned. The objective of this study
is to empirically investigate the relationship between the selected UN SDGs and
GDP growth as a proxy for the economic well-being of Albania from 2007 to 2020.
The research questions of this paper are:
RQ1: What is the impact of progress in selected SDGs on the economic growth in
Albania?
RQ2: What is the role of education in influencing the GDP per capita growth rate
in Albania?
D. Muja: Empirical Evidence of the Relationship Between the SDGs and Economic Growth in
Albania: The Role of Education
209.
This study employed the Ordinary Least Square (OLS) regression model as a
statistical technique. Data were sourced from the World Bank, Ministry of Finance
and Economy of Albania, Food and Agriculture Organization, International Labor
Organization.
The rest of the paper is structured as follows. The Section 2 consists of the literature
review, the Section 3 refers to the data and methodology presentation, while the
Section 4 gives the empirical results. Lastly, in the Section 5 the main conclusions
are summarized.
2
Literature Review
Education and training (SDG 4: educational quality and lifelong learning) also
positively influences most of the UN SDGs by reducing trade-offs and maximizing
their synergies (e.g., SDG 1: no poverty (Radchenko, 2019; Diwakar & Shepherd,
2022), SDG 2: no hunger (Shepherd, 2022), SDG 5: gender equality (Gebre, 2020),
SDG 8: decent jobs and economic growth (Alwi et al., 2019). As a result, SDG 4 is
regarded as a foundational SDG because it influences the achievement of most of
the other SDGs (Lawrence et al., 2020).
Based on empirical studies, there are strong evidences of a positive relationship
between education and GDP growth. Marquez-Ramos and Mourelle (2019)
concluded that both secondary and tertiary education present a positive and
significant relation with economic growth in the case of Spain, while government
expenditure on education is not relevant for explaining economic growth in the
linear specification. According to Adeniyi et al. (2021), the short-run results revealed
that education quality played a significant role in enhancing inclusive growth in some
of the countries of West Africa. Analyses of human capital across 14 OECD
economies – based on literacy scores – also suggest significant positive effects on
growth (OECD (2006), as well as Mercana and Sezer (2013) found a positive
relationship between education expenses and economic growth in the Turkish
economy. There are also evidences that there is no correlation between public
expenditure for education and economic growth (Karaçor et. al., 2017; Villela &
Paredes, 2022). While Frank (2017) revealed that in non-oil countries education
expenditure increases economic growth, in developing countries education
expenditure has a negative impact and in OECD countries the impact is non-
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significant. Many studies have noted that gender equality in education contributes to
economic growth (Morrison et al., 2007; Altuzarra et al., 2021), which is a common
feature in developing countries. In addition, they found that equality in education
positively contributes to economic growth, which means that higher GPI for the
gross enrolment rate is an efficient economic option for all developing countries.
According to Kabeer and Natali (2013), the evidence that gender equality,
particularly in education and employment, contributes to economic growth is far
more consistent and robust than the relationship that economic growth contributes
to gender equality in terms of health, wellbeing and rights.
Empirical results reported in the paper of Arcand (2001) suggest that eliminating, or
at least significantly reducing, poverty, will have an important quantitative impact on
the growth rate of GDP per capita. Furthermore, according to Nafti (2021), the
results of the estimates clearly show a negative relationship between economic
growth rate and under nutrition prevalence; however, the economic growth of
developing countries seems to be a key factor in reducing poverty and the proportion
of the undernourished population.
Empirical studies highlight that economic growth tends to be positively associated
with job creation. Coscieme et al. (2020) investigated the relationship between the
GDP and the SDGs in European Union countries. They pointed out that in the
European Union (EU), GDP growth is uncorrelated with indicators of
environmental sustainability and well-being (such as employment rates) and was
inversely correlated with the indicators of economic performance (such as GDP).
Liu and Bi (2019) found that the better educated the labor force, the greater total
capital productivity. This is because educated employees are more inclined to
innovate, hence raising everybody’s productivity.
3
Methodology
In this section, the data sources and the method adopted in the analysis will be
explained. Data from 2007 to 2020 were collected from multiple sources to
maximize the data and multiple regression was employed to explore the association
between GDP growth per capita rate and selected SDGs variables.
D. Muja: Empirical Evidence of the Relationship Between the SDGs and Economic Growth in
Albania: The Role of Education
3.1
211.
Data and measurement
This study aims to examine the relationship between selected SDGs indicators and
Albania economic growth represented by the GDP per capita growth rate. The
dependent variable is the GDP per capita growth rate. The independent variables
consist of quantifiable and accessible time series data related to 4 selected SDGs
targets for Albania. The choice of these targets and their respective indicators is
based on their significance to Albanian’s NSDEI 2030. Data were sourced from the
World Bank, Ministry of Finance and Economy of Albania, Food and Agriculture
Organization, International Labor Organization. Table 1 shows the independent
variables, their description, source, measurement, and relevant SDG.
Table 1: Variables Description and Measurement
Explanatory
Variable
GDP per capita
growth rate
(GDPC)
Variable
Description
Measurement
Annual GDP per
capita growth rate
Annual percentage growth rate of GDP
per capita based on constant local
currency
8
Education
(EDU)
Total government
expenditure on
education as % of
GDP
Government expenditure on education,
total (% of GDP)
4
Gender
Equity/Female
Empowerment
(GEFE)
Gender parity index
(GPI)
Hunger
(HGR)
The prevalence of
undernourishment
(Hunger rate as a
percentage of the
population)
Decent
employment
(DEMP)
Decent employment
for all males and
females
Gender parity index for gross enrolment
ratio in tertiary education is the ratio of
women to men enrolled at tertiary level
in public and private schools.
The proportion of the population
whose habitual food consumption is
insufficient to provide the dietary
energy levels that are required to
maintain a normal active and healthy
life.
Employment-to-population ratio by sex
and age (%)
Relevant
SDG
5
2
8
Source: Author research
3.2
Empirical model and method
The following empirical model in Equation (1) will be estimated to determine which
sustainable development goals variables significantly affect the GDP per capita
growth rate in Albania.
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GDPCt = β0 + β1 EDUt + β2 GEFEt + β3 HGRt + β4 DEMPt + εt
(1)
The variables are defined in the table no. 1, while εt is the error term.
This study employed the OLS regression model as a statistical technique to analyze
the relationship between the selected SDGs and the GDP per capita growth rate in
Albania. The model has several limitations such as: (a) small number of selected
SDGs targets due to the lack of data for the period 2007-2020; (b) small number of
observed time series data (14 observations) due to the lack of data before 2007 for
some of the variables included in the analysis; (c) Lack of data for Western Balkan
countries (WBCs) in order to see where does Albania stand in achieving the SDGs
as compared to WBCs.
4
Results
This section presents the results of the multiple regression analysis of the identified
UN SDG variables on Albania’s GDP per capita growth as shown in the Table 2.
Table 2: Multiple Regression Results of SDG Variables on GDP per capita growth rate.
Variables
Constant
EDU
GEFE
HGR
DEMP
R2
F
Coefficient
-0.220
2.549*
-0.020
2.078***
0.165
0.717
5.695
Standard Error
0.256
1.552
0.181
0.655
0.174
T−Statistic
-0.857
1.643
-0.108
3.172
0.949
Notes: The symbols *, **, and *** indicate statistical significance at the 15%, 10%, and 5% levels, respectively.
Table 2 shows that the model has satisfactory explanatory power with R2 = 0.717.
The education variable has the highest coefficient and reveals a positive and
statistically significant relationship with the GDP per capita growth rate in Albania,
which is of interest in this study. Gender equity/women’s empowerment appear to
be negatively insignificantly related which is not in line with literature review. This
because tertiary education does not have an immediate impact as compared with
literacy/primary and secondary education in lower income countries.
D. Muja: Empirical Evidence of the Relationship Between the SDGs and Economic Growth in
Albania: The Role of Education
213.
The relationship between hunger and the GDPC is negative which is not in line with
literature review. This may be attributable to problems such as food waste, which
can be addressed by educating and training the population. Decent employment is
positively, but insignificantly related with GDPC.
5
Discussion and Conclusion
In this paper it was investigated the impact of selected SDGs in GDP per capita
growth rate in Albania, where two research questions were raised. The focus was on
the impact of education as one of the important components of opportunities and
empowerment. In accordance with the examined literature, education and training
plays a vital role in developing a country’s human capital and boosting economic
growth. It resulted a positive and statistically significant between education and GDP
per capita growth rate, so 1 percentage point increase on EDU leads to 2.549
percentage point increase on the GDP per capita growth rate.
According to Singh and Alhulail (2022), in the developing economies, education is
perceived as the effective way to attain gender equity through which people can
enhance their economic and social welfare. In this context, Government of Albania
needs to invest more on education and training in order to encourage gender equity,
as it encourages women’s participation in the workforce and contributes to
economic activities. Furthermore, the Government of Albania should further
develop multi-sectoral early childhood education policies; improve the school
infrastructure; ensure full inclusion in the preparatory class and in compulsory
education, where as a result access to preschool and higher secondary education
could be increased.
Considering the high importance of the education, as well as the importance of
achieving UN SDGs, this analysis could be further extended on investigating the
impact of education on SDGs attainment not only in Albania, but as well for WBCs.
References
Adeniyi, O., Ajayi, P.I. and Adedeji, A.A. (2021). Education and inclusive growth in West Africa. Journal
of Economics and Development, 23(2), 163-183. https://doi.org/10.1108/JED-04-2020-0036
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BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Altuzarra, A., Gálvez-Gálvez, C., González-Flores, A. (2021). Is Gender Inequality a Barrier to
Economic Growth? A Panel Data Analysis of Developing Countries. Sustainability 2021, 13,
367. https://doi.org/10.3390/su13010367
Alwi, S.K.H., Rauf, M.B., Saleem, S., (2019). Role of Education in Economic Development of Pakistan.
J. Econ. Sustain. Dev, 10, 1–6. http://doi.org/10.7176/JESD/10-10-18
Arcand, J. L., (2001). Undernourishment and Economic Growth. The Efficiency Cost of Hunger. FAO Economic
and Social Development. Retrieved from
https://www.fao.org/3/x9280e/x9280e00.htm#TopOfPage
Coscieme, L., Mortensen, L.F., Anderson, S., Ward, J., Donohue, I., Sutton, P.C., (2020). Going beyond
Gross Domestic Product as an Indicator to Bring Coherence to the Sustainable Development
Goals. Journal of Cleaner Production, 248, 119232. Doi:
https://doi.org/10.1016/j.jclepro.2019.119232
Diwakar, V., Shepherd, A., (2022). Sustaining Escapes from Poverty. World Dev. 2022, 151, 105611.
http://doi.org/10.1016/j.worlddev.2021.105611
Frank, N., (2017). Making the Grade: The Contribution of Education Expenditure to Economic
Growth. Undergraduate Economic Review, 14(1), Article 11.
Gebre, G.G., (2020). The Role of Female Education on Economic Development: Cross Sectional Data.
Dev. Ctry. Stud., 10, 1–6. http://doi.org/10.7176/DCS/10-4-01
Haxhimali, A., Cacaj, A., (2021). Manual, Lokalizimi i Axhendës 2030. Shoqata e Bashkive. Retrieved
from
https://aam.org.al/wp-content/uploads/2022/01/Manual-Lokalizimi-AgjendesFinal.pdf
Kabeer, n., Natali, L., (2013). Gender Equality and Economic Growth: Is there a Win-Win? IDS Working
Paper. Volume 2013 No 417.
https://www.repositorio.ciem.ucr.ac.cr/bitstream/123456789/293/1/RCIEM258.pdf
Karaçor, Z., Güvenek. B., Ekinci. E., Konya. S., (2017). Relationship with Education Expenditure and
Economic Growth in OECD Countries: A Panel Data Analysis Original. Macroeconomics, pp.
255-269. https://hrcak.srce.hr/file/276274
Lawrence, A.W., Ihebuzor, N., Lawrence, D.O., (2020). Macro-Level Studies of Direct and Indirect
Relationships between SDG 4 and the 16 SDGS. Mod. Econ., 11, 1176–1194.
http://doi.org/10.4236/me.2020.116085
Marquez-Ramos, L. & Mourelle, E. (2019). Education and economic growth: an empirical analysis of
nonlinearities. Applied Economic Analysis, 27(79), 21-45. https://doi.org/10.1108/AEA-062019-0005
Mercana. M., & Sezer. S., (2013). The effect of education expenditure on economic growth: The case
of Turkey. Social and Behavioral Sciences, 109, 925 – 930. doi: 10.1016/j.sbspro.2013.12.565
Morrison, A., Raju, D., Sinha, N., (2007). Gender Equality, Poverty and Economic Growth. World Bank.
Policy Research Working Paper 4349.
https://openknowledge.worldbank.org/bitstream/handle/10986/7321/wps4349.pdf?sequen
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Nafti, S., (2021). Malnutrition and Economic growth, Dynamic panel data analysis of developing
countries. Technium Social Sciences Journal, 26, 455-465.
https://www.researchgate.net/publication/356935827_Malnutrition_and_Economic_growth
_Dynamic_panel_data_analysis_of_developing_countries
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Capital and Economic Growth: Evidence from Honduras. Economies, 10, 241.
https://doi.org/10.3390/economies 10100241
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RELATIONSHIP FACTORS BETWEEN
SUPPLY CHAIN ACTORS
TÍMEA KOZMA,1 KATALIN FARAGÓNÉ LEPP,1
RITA SZABÓ-GELETÓCZKI2
Budapest Business School, Budapest, Hungary
kozma.timea@uni-bge.hu, faragonelepp.katalin@uni-bge.hu
2 Hungarian University of Agricultural and Life Sciences, Gödöllő, Hungary
rita.geletoczki@gmail.com
1
Abstract The competition between companies is now in fact
competition between value chains and supply chains. Nowadays,
companies that participate in an efficiently managed supply chain
based on partnerships are leading the increasingly competitive
market. The companies must have recognising that the
development of close strategic relationships and network
cooperation between chain members is an essential part of
market competition. The problem is that few company realise
this yet. In the framework of the Budapest Business School
Supply Chain and Value Chain Research Group, we are trying to
explore the supply chain and logistics practices of Hungarian
companies and institutions. Our research aims to identify the
most important factors for successful business relationships. Our
results show that long-term strategie business connections lead
to success. Based on our research, we can say, a business point
of view, trust, communication and cooperation become
competitive factors.
DOI https://doi.org/10.18690/um.epf.3.2023.26
ISBN 978-961-286-736-2
Keywords:
supply chain,
relationship,
trust,
long-term
cooperation,
network
JEL:
D21, M21
218
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
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Introduction
In the current globalised and increasingly networked world economy, a whole new
social and economic challenges for the businesses that drive the economy.
Confronted with a rapidly changing environment, companies must seek ways to
survive, grow and compete (Michna, et al., 2020). All this is supported by wellfunctioning inter-business relationships. In the supply chain, companies need to be
both upstream and downstream focused, collaborating with their chain members
(Pulcini et al., 2018). Many companies are able to prosper through effective
coordination first of all, and collaboration with supply chain partners (Yang et al.,
2008; Surachman et al., 2019). Collaborations between supply chain partners provide
members with the benefits and competitive advantages of the relationship, thereby
enhancing the performance of supply chain partners (Shin et al., 2019). The aim of
our research is to understand the corporate value chains and the supply chain link
networks chains, and to see to what extent partnership and the techniques based on
it are present in domestic corporate practice principles formulated in the research.
The practical application of the principles developed in the research can contribute
to the adaptation of companies to international trends to international markets, and
to the maintenance of competitiveness.
2
Literature Review
The aim of supply chain management is to increase competitiveness and improve
cooperation between partners (Hattayer & Gál, 2022). The relationship between
partners facilitates the delivery of the best products and services to the market and
the efficient and effective creation of value for the end user of the supply chain
(Oluyomi et al., 2021). The supply chain is a cross-company series of value-creating
processes that can create products and services suitable for satisfying customer
needs, the characteristics of which include cooperation, a strategic approach and
customer focus (Kozma et al., 2021). Efforts should be made to develop effective
partner relationships with suppliers and buyers (Kumar et al., 2017). Nowadays,
companies that participate in an efficiently managed supply chain based on
partnerships are leading the increasingly competitive market (Szegedi et al., 2019).
More and more companies are recognising that the development of close strategic
relationships and network cooperation between chain members is an essential part
of market competition (Wheelen et al., 2017). Trust is very important for strategic
T. Kozma, K. Faragóné Lepp, R. Szabó-Geletóczki: Relationship Factors Between Supply
Chain Actors
219.
cooperation (Haakansson, 2009; Mandják et al., 2010). Without trust none of the
partners will take the risk of committing to the relationship (Barroso et al., 2016).
Trust also has a positive impact on collaboration between supply chain members
and positively affects company performance (Dubey et al., 2017; 2018; Uca et al.,
2017) Research by Cullen et al.’s (2000) and Nyaga et al.’s (2010), also report on the
positive impact of trust on firm performance and commitment to the partner
relationship.
The economic environment has a significant impact on supply chains, where
uncertainty and unpredictability are a threat. In the event of demand uncertainty,
which is currently a characteristic of the markets, supply chain partners may face
overproduction or stock shortages. It is difficult in this situation to predict what is
likely to happen. In order to improve this situation, supply chain partners tend to
integrate with suppliers and buyers, and a good long-term information sharing
between the two parties can help to obtain more useful information that will help
them to make the right decisions (Yeh et al., 2020). In an uncertain economic
environment, close and long-term cooperation between chain members is of
paramount importance and can lead to success. The longer the duration of a
relationship and the more flexible it is, the closer the degree of cooperation will be.
Resilience is an important element of relationships (Zomorrodi & Sajad, 2010).
Resilience is important in the relationship with its supply chain partners (Stevenson
& Spring, 2007).
3
Methodology
The subjects of the research are mainly businesses operating in Hungary. The
following criteria are taken into account when selecting a company: 1. the selected
company must be based in Hungary (in the case of a subsidiary, the parent company
the parent company may be foreign) 2. have at least 5 years of operation. The
research is primarily based on primary research, using a questionnaire survey and
structured in-depth interviews to investigate the role and activities of domestic
enterprises in the supply chain. Data was collected using the snowball method. Our
survey was conducted in the 2021/2022 scool year period. In the course of the
research, we aim to achieve representativeness in the classical sense, but not as a
goal, because we are trying to find correlations and explain causal relationships. The
data will be analysed and simple and deeper statistical correlations will be explored,
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using the SPSS mathematical-statistical software package software package. The
demographic profile of the sample is presented in Table 1.
Table 1: The demographic profile of the sample (N = 329)
Variables
company size by employees
the place of the company in the supply chain
Sample
micro-enterprise
small business
medium enterprise
supplier
manufacturer
wholesaler
retailer
Number of
samples
78
110
72
34
131
72
92
%
23.7
33.4
21.9
10.3
39.8
21.9
28
The population includes small, medium and large companies operating in Hungary,
in terms of proportions, micro-enterprise 23.7%, small business 33.4 %, medium
enterprise 21.9%. The proportion of manufacturers in the sample was close to 40%.
Suppliers accounted for the smallest share, 10.3 %. The share of retailers was 28%
and the wholesaler accounted for 21.9%.
4
Results
The starting point for the analysis of business relationships between companies and
their partners was to ask which factors are strategically important to the members of
the chain in terms of their business relationships. The results are illustrated in the
following figure (Figure 1).
The results of the Fiedman test (p<0.001) (Figure 1) show that there is a significant
difference in the factors that are considered important in the business relationship
between the company and its partners. The average ranks show that long-term sales
relationships (9.34) and long-term supplier relationship (9.32) are the most
important in business terms. Strategic alliance with suppliers (8.51) and customers
(8) ranks second.
We looked at whether we found significant differences between the views of
suppliers, manufacturers, wholesalers and retailers on what they consider important
in their business relationships (Table 2).
T. Kozma, K. Faragóné Lepp, R. Szabó-Geletóczki: Relationship Factors Between Supply
Chain Actors
221.
.
Figure 1: Key factors in business relationships
Source: Authors’ research.
Note: Friedman Test: Chi2=2028.655; p=<0.001
Table 2: Partnership factors
KruskalWallis H
df
Asymp. Sig.
One-off
sales with
customers
Long-term
sales
relationship
Strategic
alliance with
customers
Strategic
alliance with
suppliers
Outsourcing
21.957
8.805
12.733
8.716
8.025
3
0.000*
3
0.032*
3
0.005*
3
0.033*
3
0.045*
*p < 0,05
Source: Authors’ research.
There is a significant difference of opinion between the different groups on the
following: One-off sales with customers, Long-term sales relationship, Strategic
alliance with customers, Strategic alliance with suppliers, Outsourcing.
Kendall’s rank order correlation was we used the rank the success factors of the
companies' business relationships. The result of the test is highly significant,
*p<0.001. (W=0.459) agreement is found (Table 3).
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Table 3: Success factors of business relationships
Kendall’s
N
Kendall's
Wa
Chi-Square
df
Asymp.
Sig.
Relationship success factors
329
An open, committed relationship
Mean
Rank
7.33
0.459
Smooth cooperation, fast, flexible response
8.63
1660
11
Interdependence
Winner-winner, mutually beneficial relationship
4.31
7.45
Trust
8.65
Activity sharing
The agreement provides a framework for cooperation
Information sharing
Quality of communication
Joint problem solving
Meeting their own strategic objectives
Other
4.01
6.76
6.81
8.26
7.28
6.93
1.6
0.000*
Source: Author’s research.
The most important success factors are trust (8.65), smooth cooperation, fast,
flexible response (8.63) and quality of communication (8.26).
Redondo and Fierro's research has shown that trust is stronger and plays a bigger
role in micro enterprises than in small and medium enterprises. (Redondo & Fierro,
2007) We sought to answer the question of whether there is a difference between
the perceptions of different sizes of companies on the importance of trust as a
relationship success factor.
Table 4: The role of trust in certain corporate groups
group
N
Mean Rank
Kruskal-Wallis
H
Asymp. Sig.
micro-enterprise
small business
medium enterprise
large company
78
110
72
69
177.64
152.40
173.73
161.68
6.203
0.102*
*p=0.102 >0.05
agreement is not found
Source: Author’s research.
In terms of ranks, micro enterprises show the highest scores (177.64), but no
significant difference was found between the different groups of enterprises.
T. Kozma, K. Faragóné Lepp, R. Szabó-Geletóczki: Relationship Factors Between Supply
Chain Actors
223.
In addition to the success factors, we examined the failure factors and looked for
correlations.
Table 5: Factors of partnership failures
Kendall’s
N
Kendall's
Wa
Chi-Square
df
Asymp.
Sig.
Relationship failure factors
329
0.260
769.4
9
0.000*
Lack of commitment from the partner
Lack of their own commitment
Lack of compliance with strategic objectives
Lack of smooth cooperation
Winner-loser attitude in the relationship. excessive
subordination
Lack of trust
Lack of activity sharing
Poor information sharing, inadequate communication
Lack of joint problem solving
Other
Mean
Rank
6.25
5.40
5.74
6.15
5.74
6.23
4.48
6.89
5.91
2.2
*p<0.001, the result is highly significant. (W=0.260)
Source: Authors’ research
A parallel can be drawn between the success and failure factors. Factors of
partnership failures: lack of commitment from the partner (6.24), lack of smooth
cooperation (6.15), poor information sharing (6.89), lack of trust (6.23).
5
Discussion and Conclusion
The added value of the supply chain is generated by the efficient functioning of the
supply chain (Kozma & Tóth, 2017). The main objective of this study was to
investigate What types of relationships (one-off sales, long-term collaboration,
strategic alliances, etc.) are of high strategic importance in the life of a company in
relation to its business partners? What are the factors behind the success or failure
of a company's business partner relationships? What role does trust play? Long-term
collaboration with both customers and suppliers stands out as one of the most
important factors in supply chain relationships. The suppliers, manufacturers and
wholesalers they emphasise long-term cooperation most. We found that trust is a
success factor in business relationships. If there is no trust between partners, it will
lead to the failure of the business. Cooperation between chain members is important
for the efficiency of supply chains. Communication and its quality can move the
success of a business in a positive or negative direction. In conclusion, companies
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need to recognise the importance of building and maintaining good business
relationships. It is important to formulate that it is impossible to operate alone in a
market without relationships. Companies need to take a long-term view of their
partnerships and then they will be able to succeed. Trust is important as a foundation
stone. It is worth developing communication skills to work more effectively. It is
advisable to work with business partners who have a similar mentality. Companies
can learn from each other in these processes. Companies have individual corporate
cultures, it is not possible to generalise, but our study can give a good starting point.
By expanding the sample, we can address the limitations of the study by including
more firms of different sizes, cultures and ownership.
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
ASSESSMENT OF ORGANIZATIONAL
ASPECTS AFFECTING KNOWLEDGE
MANAGEMENT IN AUDITING AND
CONSULTING FIRMS
JURGITA RAUDELIŪNIENĖ, MIRNA KORDAB
Vilnius Gediminas Technical University, Dynamic Management Institute,Vilnius,
Lithuania
jurgita.raudeliuniene@vilniustech.lt, mirna.kordab@vilniustech.lt
Abstract Globalization, rapid information technology
development, and COVID-19 restrictions created challenges for
organizations globally to use knowledge management practices
to identify proper strategies and find solutions to satisfy
changeable customer needs and develop uniqueness leading to
leadership and mutual value creation. Knowledge management is
an effective and efficient organization's management direction
and practice that became necessary to improve organizational
performance in a dynamic environment. Prior research showed
that various organizational factors have different plaid roles in
the knowledge management cycle and influence knowledge
management processes differently. The main goal of this study is
to explore the influence of specific organizational factors,
flexible organizational culture and balanced organizational
structure on the efficient implementation of five knowledge
management processes, including knowledge application,
creation, acquisition, sharing, and storage. The research was
conducted in the unstudied context of Mideast countries and the
knowledge-intensive auditing and consulting firms’ sector.
Following the scientific literature analysis, the research model
was developed, and the research hypotheses were proposed and
then quantitatively tested through the structural equation
modeling (SEM) technique. This study's results supported the
hypotheses that the identified organizational factors were
significantly associated with the knowledge management cycle.
DOI https://doi.org/10.18690/um.epf.3.2023.27
ISBN 978-961-286-736-2
Keywords:
knowledge
management,
knowledge
management
processes,
organizational
culture,
organizational
structure,
auditing and
consulting firms
JEL:
M10, M14, M42
228
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Introduction
Knowledge management is one of the essential directions corporate leaders address
(Pandey et al., 2018), recognizing the crucial role of employees' commitment in
maintaining their continuation and professional development (Fernandes, 2018).
Committed employees show higher motivation and job satisfaction, increasing
corporate strategy achievement and leading to sustainable organizational
performance, better productivity, or process efficiency (Schmitt, 2021).
Previous scientific studies outlined the leading role of organizational factors in
shaping an effective and efficient knowledge cycle, including the significance of
organizational culture and organizational structure (Low et al., 2020). However,
these factors differently affect employees' motivation and implementation of
knowledge management strategies through processes until sustainable organizational
outcomes. The reluctance of organizations in the Mideast, especially in developing
countries, to use knowledge management practices to maintain employee
commitment is due to several factors, including a lack of technological infrastructure
and expensive collaborations caused by geopolitical conflicts, social and economic
barriers (Kassab, 2016). However, knowledge management has recently been
introduced as a potential way for Mideastern countries to shift into knowledge-based
economies and sustainable outcomes (Alayoubi et al., 2020). To effectively
implement knowledge management, companies need to build corporate strategies
that integrate knowledge strategies and support sustainable organizational
performance and innovation. However, limited research exists on the effective
appliance of organizational factors in this context.
This study focuses on auditing and consulting firms in the Mideast region, aiming to
explore the influence of a flexible organizational culture and a balanced
organizational structure on the efficient implementation of the five processes of
knowledge management in these firms. The research hypotheses were tested using
the structural equation modeling (SEM) technique in an empirical study.
J. Raudeliūnienė, M. Kordab: Assessment of Organizational Aspects Affecting Knowledge
Management in Auditing and Consulting Firms
2
Theoretical Background
2.1
Organizational culture and knowledge management
229.
Organizational culture refers to the shared values, norms, and beliefs that guide the
behavior of members within an organization toward achieving desired outcomes
(Fernandes, 2018). The vision of an organization's leaders shapes the corporate
culture, which is unique to each organization and reflects its identity, history, and
experiences (Low et al., 2020). Previous research has identified various dimensions
of organizational culture, including flexibility, creativity, efficacy, risk-taking, an
external focus, and an internal core that supports efficient business operations and
integration (Soltani et al., 2019). The organizational culture influences the social
interaction pattern within the organization, affecting how individuals communicate
and exchange knowledge, which can lead to new corporate knowledge creation and
distribution (Fernandes, 2018). Scientists verified that organizational culture could
advocate the knowledge-sharing process in Indonesian healthcare organizations
(Sensuse et al., 2014), positively affected knowledge donating and collecting
(Cavaliere & Lombardi, 2015), knowledge creation, storage, transfer, and application
in the IT companies in Taiwan (Chang & Lin, 2015), knowledge transfer in Chinese
construction firms (Wei & Miraglia, 2017) and the Foreign Direct Investment
enterprises in Vietnam (Pham & Dinh, 2020), knowledge sharing in Ecuador's food
and beverage sector (Chión & Charles, 2020) or knowledge sharing in private
universities in Singapore (Ng, 2022). However, all these studies did not explore
organizational culture's influence on the knowledge management cycle in the
knowledge-intensive sector. To test the effect of organizational culture on the
knowledge management cycle in the Mideast auditing and consulting firms, the
following hypotheses were proposed (Figure 1):
H1a: A flexible organizational culture influences the knowledge application process positively;
H1b: A flexible organizational culture influences the knowledge creation process positively;
H1c: A flexible organizational culture influences the knowledge acquisition process positively;
H1d: A flexible organizational culture influences the knowledge sharing process positively;
H1e: A flexible organizational culture influences the knowledge storage process positively.
230
2.2
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Organizational structure and knowledge management
The way an organization is structured determines how tasks are distributed among
different units, how responsibilities and authorities are divided among individuals,
and how activities flow within the organization (Chión & Charles, 2020). The
organizational structure should align with the organization's strategy to achieve
sustainable performance. It is based on the design of different units, reporting
processes between departments, and coordination of various divisions (Acharya &
Mishra, 2017). The structure can be physical, such as size and hierarchy, or nonphysical, such as centralization, specialization, and formalization, and affects
members' behavior and performance (Akbar et al., 2019). A balanced and flexible
organizational structure can increase the efficiency and effectiveness of activities and
promote knowledge management practices, such as knowledge sharing, by
maintaining social interaction and communication channels between employees
(Acharya & Mishra, 2017). The organizational structure impacts the flow of
knowledge and the efficiency of business processes by determining the hierarchy
and division of work within departments. Previous several studies highlighted
organizational structure's positive impact on the knowledge circulation process in
Taiwan-based enterprises (Ho et al., 2014), knowledge retention in the Indian
infrastructure consulting sector (Acharya & Mishra, 2017), and knowledge sharing
in Ecuador's food and beverage sector (Chión & Charles, 2020). In order to test the
effect of organizational structure on the knowledge management cycle in the Mideast
auditing and consulting firms, the following hypotheses were proposed (Figure 1):
H2a: A balanced organizational structure influences the knowledge application process
positively;
H2b: A balanced organizational structure influences the knowledge creation process positively;
H2c: A balanced organizational structure influences the knowledge acquisition process
positively;
H2d: A balanced organizational structure influences the knowledge sharing process positively;
H2e: A balanced organizational structure influences the knowledge storage process positively.
The following research model was created based on previous studies' limitations on
organizational factors affecting the overall knowledge management cycle in the
knowledge-intensive sector of auditing and consulting in the developing economies
Mideast area (Figure 1).
J. Raudeliūnienė, M. Kordab: Assessment of Organizational Aspects Affecting Knowledge
Management in Auditing and Consulting Firms
231.
Figure 1: Research model
Source: own.
3
Methodology
An empirical study was conducted to analyze the relationship of a flexible
organizational culture and a balanced organizational structure with the five
knowledge management processes (application, creation, acquisition, sharing, and
storage). To collect the data for testing the research hypotheses, a structured
questionnaire was distributed among the certified public accountants, members of
the auditors' association in Lebanon, Syria, and Jordan who became licensed experts
after fulfilling the requirements of their associations' domestic auditing and
consulting firms or work in international firms located in the region.
The sample size involved 374 experts, 72.46% males and 27.54% females; 45.72%
aged between 25 and 35 years, 28.61% aged above 45 years, 21.12% aged between
35 and 45 years, and 4.55% aged below 25 years; 38.77% master holders, 31.28%
CPAs, 29.68% bachelor holders, and 0.27% other degrees; 30.48% in upper
management positions, 26.47% in senior level, 21.93% in the middle level, and
21.12% in junior level; 73.00% operating in domestic and 27.00% in international
firms.
232
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Results and Discussion
The reliability of the variables was tested through Cronbach's Alpha, resulting in
significant coefficients greater than the threshold of 0.7 (Table 1).
Table 1: Cronbach's Alpha Coefficient
Variable
Knowledge application
Knowledge creation
Knowledge acquisition
Knowledge sharing
Knowledge storage
Flexible organizational culture
Balanced organizational structure
Cronbach's alpha
0.858
0.833
0.890
0.869
0.757
0.965
0.963
SEM technique was employed through the SPSS software to test the research
hypotheses, analyze the relationships among the identified variables, and
quantitatively test the theoretically hypothesized research model (Table 2).
Table 2: Structural equation modeling with the proposed research hypotheses
Research hypotheses
Flexible organizational culture
H1a
H1b
H1c
H1d
H1e
Balanced organizational
structure
H2a
H2b
H2c
H2d
H2e
Standardized
coefficient
t-value
p-value
Empirical
evidence
0.127
0.295
0.399
0.396
0.174
3.44
8.62
9.63
12.15
5.26
0.001
0.026
0.016
<0.001
0.049
Supported
Supported
Supported
Supported
Supported
0.377
0.381
0.448
0.458
0.382
13.89
15.18
14.76
17.72
15.26
0.005
0.009
0.025
<0.001
<0.001
Supported
Supported
Supported
Supported
Supported
A flexible organizational culture had a significant positive association with
knowledge application, creation, acquisition, sharing, and storage, with p-values
below 0.05. Therefore, H1a, H1b, H1c, H1d, and H1e were supported. The results
demonstrated that human resource practices and leaders' tendency to encourage
employees to participate in the knowledge management cycle would lead to fruitful
J. Raudeliūnienė, M. Kordab: Assessment of Organizational Aspects Affecting Knowledge
Management in Auditing and Consulting Firms
233.
results in implementing the knowledge management processes in the Mideast audit
and consulting firms.
A balanced organizational structure had a significant positive association with
knowledge application, creation, acquisition, sharing, and storage, with p-values
below 0.05. As a result, H2a, H2b, H2c, H2d, and H2e were supported. The results
demonstrated that an organizational structure allowed an efficient flow of
knowledge across the boundaries of the audit and consulting firms contributing to
the efficient implementation of the knowledge management cycle.
The study results indicated that a flexible organizational culture and a balanced
organizational structure in Mideast's auditing and consulting firms positively
impacted the efficient implementation of knowledge application, creation,
acquisition, sharing, and storage. Based on the experts' evaluation conducted using
the survey method, the operations of the auditing and consulting companies depend
mostly on the knowledge acquired from legal authorities rather than the new
knowledge being generated. These companies were mostly tailored to specific
projects and, thus, were not systematized.
Unlike previous studies focusing on knowledge sharing as a specific knowledge
management process, this study focused on the overall knowledge management
cycle and analyzed two main organizational factors. This study has practical
implications for how organizations can enhance employees' engagement in the
knowledge processes by supporting best practices that lead to new developments,
facilitating interdepartmental collaboration, and promoting knowledge sharing
across departmental boundaries, leading to sustainable organizational performance.
5
Conclusion
Implementing knowledge management has been demonstrated to be a useful way to
achieve goals and improve sustainable organizational performance. This study
examined the impact of organizational factors such as a flexible organizational
culture and a balanced organizational structure on employees' ability to participate
in knowledge management. An empirical study was conducted on Mideastern
auditing and consulting firms, using a structured survey to collect data and the SEM
technique to analyze it. The study recommends that organizations operating in
234
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
knowledge-intensive sectors should integrate the organizational factors supporting
knowledge management to improve sustainable organizational performance.
However, the research had limitations as the study focused on a specific context,
which could impact the findings' generalizability. Additionally, the data collection
method was limited to a structured questionnaire, creating opportunities to test the
model in other geographical areas impacting knowledge management practices.
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236
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
PUBLIC URBAN GREEN SPACES:
COMBINING GOALS FOR
SUSTAINABILITY, URBAN HEALTH
AND WELL-BEING
HERTA CZÉDLI,1 ZSOLT VARGA,1 CECÍLIA SZIGETI2
University of Debrecen, Faculty of Engineering, Debrecen, Hungary
herta.czedli@eng.unideb.hu, vzs@eng.unideb.hu
2 Budapest Business School, CESIBUS, Budapest, Hungary
szigeti.cecilia@uni-bge.hu
1
Abstract Urban green public spaces offer healthy and
environmentally friendly solutions to the effects of rapid,
unsustainable urbanization on health and well-being. Public
green spaces available for walking, running, cycling, scootering,
walking, informal play and other outdoor activities can improve
the safe mobility and access to basic ecosystem, improving the
health equity. Understanding the relationship between public
urban green space characteristic and sustainability components
can help the planning of these spaces. Nowadays, quantifying the
impact of green spaces on health is receiving more and more
attention in various interdisciplinary research activities. In this
paper, we analysed the impact of proximity to urban green areas
on health and well-being of the people in two Hungarian cities
Debrecen and Szeged. In the first, descriptive phase of our
research, we examined the amount of green space in two cities
of the same relative status, the satisfaction of their inhabitants
with green space and life expectancy. One of the targets of SDG
11 is to provide universal access to safe, inclusive and accessible,
green and public spaces, in particular for women and children,
older persons and persons with disabilities. Our research focuses
on SDG 11.
DOI https://doi.org/10.18690/um.epf.3.2023.28
ISBN 978-961-286-736-2
Keywords:
green and public
spaces,
SDGs,
recreation,
health,
sustainability
JEL:
Q57, R11, R58
238
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
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Introduction
In connection with climate change and with the strengthening of the urbanization
trend, the role of green areas in settlements is increasingly important. Several types
of economic benefits associated with urban green spaces are identified by Zhao and
Chen (2018). It has been verified that the production of urban green spaces (UGS)
has gradually become a profitable method of investment in macroeconomic capital
flows and accumulation. Despite this, nowadays, the area and population density of
cities are increasing, with the continuous growth of the built-in and the paved areas.
Urban green spaces get a marginal role, their appearance is fragmented and they are
distributed unevenly. Increase in urbanization and in the density of cities have
growing health risk for the inhabitants. Several studies publish data about the health
effects and benefits of time spent in nature. The thought that green spaces have
beneficial effect on the health of inhabitants has been accepted as a general principle
since as early as the 1800’s: e.g. London organizations such as the commons
preservation society and the national health society urged the preservation and
accessibility of open green spaces, and they mentioned the squares and parks within
the crowded inhabited areas as ‘the lung of the city’ (Hickman, 2013). According to
the definition of the most recent healthy cities initiative of the who, “a healthy city
is one that continually creates and improves its physical and social environments and
expands the community resources that enable people to mutually support each other
in performing all the functions of life and developing to their maximum potential”
(World Health Organisation, 2016a). The amount and distribution of green space
has not only environmental but also social impacts (Sax et al., 2022). In the previous
decades, significant number of studies reported the positive effects of green space
exposure on human health and well-being, with a special view to the correlation
between the accessibility of the green spaces in the inhabited areas and the better
health condition (Nielsen & Hansen, 2007; Van den Berg et al., 2010). Ecological
degradation leads to environmental health and public health issues, therefore, the
restoration of these affected areas supports the health of the environment and the
inhabitants as well. More intense ecological degradation can be observed in the periurban and the rural areas due to various industries, therefore, the health condition
of the inhabitants in this region is often worse (Marsch et al., 2003). Human health
includes well-being and subsistence as well, which are determined by various social,
cultural, economic and environmental factors. It is a demonstrated fact that
ecological restoration and the restorations in various sample areas significantly
H. Czédli, Z. Varga, C. Szigeti: Public Urban Green Spaces: Combining Goals for
Sustainability, Urban Health and Well-being
239.
contribute to human health. In the practice of environmental management and
during ecological restoration it is important to clarify and understand how the given
restoration effort and process is related to human well-being and how it supports it
(Bradby et al., 2021). Thus, the purpose is to redirect settlements into ecosystem and
to create more livable and sustainable cities to provide an efficient response to
environmental challenges because of the integrated and interdisciplinary
development of the UGS. The increase in the population of cities, the ratio of the
area of the available green spaces and the modern lifestyle in the 21st century result
in lower and lower contact of people with nature. In our study, the beneficial effects
of access to nature on health and general well-being are assessed in two Hungarian
cities, Debrecen and Szeged, both cities are among the largest regional centers in
Hungary. The study of minor cities, considered as potential growth poles, is a highly
relevant issue in Hungary's unicentral spatial structure. The economic performance
and relative economic position of Debrecen and Szeged are very similar (Molnár et
al., 2018), both being major knowledge centers. Other research also confirms in
terms of the well-being of city dwellers, it is not enough to look at GDP per capita,
but all the other softer factors (e.g. UGS) must also be considered to ensure that the
municipality projects the image of a livable city, to retain its population and to attract
new ones (Michalkó, 2015).
2
Theoretical Background
Until 2050, the two-thirds of people - almost 6.5 billion people - will live in cities,
predictions say. High-rate urbanization is accompanied with the decrease of UGS
and related to the deterioration of quality of life (Dewan & Yamaguchi, 2009). In
the level of cities, sustainable development cannot be ensured without rethinking
and redesigning the urban environment that provides long-term benefits and
opportunities. UGS play a distinguished role in the sustainable development of cities.
Green space interventions nurture the existing character of the city, improve
environmental conditions, promote outdoor recreation places and active lifestyle,
and they protect biodiversity by establishing a habitat for wild animals. They also
highly decrease heat island effect and surface run-off. Recently, the role of these
interventions in the decrease of carbon-dioxide emission and the improvement of
the health of citizens appeared in literature and practical life as well (Haq, 2011). By
2030, it is a priority goal to be able to provide universal access to safe, inclusive and
accessible green and public spaces, especially for women, children, the elderly and
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the disabled (Goal 11). The development and support of economic, social and
environmental relations can ensure sustainability between the urban, peri-urban and
rural areas. In the previous decades, the design of cities was characterized mainly by
the establishments of building, contiguous housing estates and new city parts,
therefore, insufficient attention was paid to green spaces, which affected social and
societal sustainability relations. In the previous decades, the design of cities was
characterized by the construction of buildings paying little attention to green spaces,
which affected the social sustainability of urban areas (Teimouri, 2019). Green
spaces play a key role in the support or urban ecological, social and societal systems
(Barbosa et al., 2007). UGS are important for human well-being, contribute to quality
of life and promote social interaction and inclusion (Pinto et al., 2022). Healthy
people, the environment and the healthy people - environment interactions create
synergetic relationships which influence the sustainability of cities (Liu et al., 2007).
According to a WHO report “there is no universally accepted definition of UGS.
Generally, green spaces in urban areas are public parks; other definitions may also
include private gardens, woodlands, children’s play areas, non-amenity areas (such
as roadside verges), riverside footpaths, beaches, and so on” (World Health
Organization, 2016; Teimouri,2019). There is a difference between UGS and open
areas: open areas are urban areas currently not subject to development/construction,
and they are freely accessible for inhabitants. Open areas include green areas covered
by vegetation, kindergarten or school yards, vacant lots, public amenities - seating
areas, playgrounds and the community green spaces of living estates (Teimouri,
2019). UGS can be interpreted as an urban area covered by natural or non-natural
vegetation, and by its use, it has social and ecological significance (Bahram, 2008).
3
Methodology
Our research question is to investigate whether there is likely to be a positive
relationship between health, satisfaction and the amount of green space. In two
selected cities (Debrecen and Szeged, Hungary) 1000-1000, i.e. altogether 2000
people were asked via phone. Their responses were immediately recorded online.
Data collection required 3 months. The sample size was 1000 for both cities. In this
case, the margin of error was +/- 3.1 percent in case of 95 percent probability. By
considering the whole sample of 2000 people, the margin of error was +/- 2.2
percent in case of 95 percent probability. These margins of error are valid for a result
of 50 percent. In case of an incremental sample and lower percentage ratio, margin
H. Czédli, Z. Varga, C. Szigeti: Public Urban Green Spaces: Combining Goals for
Sustainability, Urban Health and Well-being
241.
of error can be lower. The sample is representative for the inhabitants of Szeged and
Debrecen based on sex and age. During the research, people aged 15 or more were
interviewed. The questionnaire had 16 questions: sex and age of the respondent;
purpose and frequency of visitation green spaces (parks); satisfaction with the
number of green spaces in the city; satisfaction with the area of green spaces in the
city; tidiness/cleanliness of green spaces; way of travel to a green space; time of
getting to a green space on foot; time spent in green space; number of green spaces
used by the respondent in the city; characteristics of the preferred green spaces;
infrastructural aspects of the selection of the green space; satisfaction with the
infrastructure of green spaces; type of the real estate the respondent lives in. The
questionnaire survey was carried out with the involvement of the staff of the
Partiszkon Social Research Nonprofit Organization, and the research was subsidized
by the Ecopolis Foundation. In the questionnaire survey, quantitative and qualitative
data were collected, and it asked questions about the habits, ways and frequencies of
green space use in a broad range. Due to the exploratory nature of the research, we
used the relationships and trends revealed based on the questionnaire responses
during the analysis. First the sociodemographic and other background variables, and
the basic distribution was assessed for each question. Afterwards, the responses to
the questions were compared to the background variables. In the first phase of our
research, we publish a descriptive statistical analysis of the questionnaire. During
the analysis, mostly the differences between the cities were focused on. The results
obtained were compared with the databases of the KSH (Central Statistical Office
of Hungary), which includes the area of the cities (KSH, 2019) and the area of the
green spaces managed by the local governments (KSH, 2021). We have also
compared life expectancy at birth based on the KSH (2022) census database (this
dataset is available at the county level).
4
Results
In terms of demography and background variables it can be stated that the ratio of
sexes in the full sample (N = 2000) is balanced, practically 50-50, however, women
are slightly overrepresented (52.4%). Broken down by cities, the ratios more or less
accurately depict the real distributions, showing a slight majority of women in case
of both settlements, similar to the national data. The age groups of the inhabitants
of the two cities have a similar distribution in the sample. In Szeged, the ratio of
people living in a flat with a balcony or a common yard is about twice as high as
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people living in flats without a balcony or a common yard. In Debrecen, however,
this ratio is highly shifted towards people living in a house who make up more than
half of the city's population, far ahead of people living in flats with free space, which
make up a third of the inhabitants. One in three people visits parks at least once a
week for recreation. The inhabitants of Debrecen visit green spaces more frequently
to rest, read or just sit there than those of Szeged. In case of park visitation to meet
friends or to spend time together with the family, the Szeged respondents show
higher ratio for higher frequency categories, while the Debrecen respondents had
higher ratio for the lower frequency categories. Based on this it can be stated that
people in Szeged select green spaces to nurture family and friend relationships more
often than people in Debrecen. In terms of the frequency of green space visitation
purpose, the motivation behind park visitations were aligned, the responses were
simplified, and the alternatives showing any non-zero visitation frequency were
contracted. In this way, a dichotomous variable was determined, which shows
whether people visit parks for a given purpose or they do not visit parks, however,
it does not analyze the frequency of visitation of the green space. The individual
relaxation is the most popular purpose of visitation, followed by the spending of
time with friends, family, children and grandchildren. The ratio of satisfaction with
the number of green spaces was 36.4% in Szeged and 23.4% in Debrecen. One third
of the Szeged inhabitants and one fourth of the Debrecen ones were fully satisfied
with the area of green spaces in their cities. People living in a house with own yard
are more satisfied with the cleanliness of green spaces than the inhabitants of flats.
Distribution of the accessibility of the visited green space on foot in the whole
sample: 61.3% within 10 minutes or less, 15.4% within 15 minutes and 23.3% over
15 minutes. Distribution of the means of travel to the green space in the full sample:
78.6% on foot, 25.9% by bike, 15.5% by public transport and 21% by car. As regards
the time spent in green spaces, the ratio of respondents spending less than an hour
(44.8%) or 1-2 hours (44%) is practically identical. The visitation time for people
over 65 is typically lower, while people under 20 typically spend more time in green
spaces. The primary purpose of using several green spaces is the demand for
variability; this was mentioned by almost three-fourth of the respondents. The
reasons ‘different functions’ or ‘similarly accessible multiple parks’ were mentioned
similar times, by every fourth respondent. The reason ‘same function but different
equipment’ was mentioned only by the eighth of the respondents. As regards the
low distance from home, there is a significant difference between the inhabitants of
the two cities. For Debrecen respondents, the lower distance from the green space
H. Czédli, Z. Varga, C. Szigeti: Public Urban Green Spaces: Combining Goals for
Sustainability, Urban Health and Well-being
243.
is more important than for the Szeged respondents. Based on the Public
Administration Name Book of the Central Statistical Office of Hungary (2019), the
area of Debrecen was 46166 ha and that of Szeged was 28099 ha. Based on the 2021
database of the Central Statistical Office of Hungary, the area of green spaces owned
by the local government of Debrecen is 177 ha, out of which 162 ha is public park;
in Szeged, the area of green spaces owned by the local government is 338 ha, out of
which 312 ha is public park (KSH, 2021). This means that the area of green spaces
compared to the whole area of the city is 0.4% in Debrecen and 1.2% in Szeged.
The green space for a single inhabitant is 9 m2 in Debrecen and 21 m2 in Szeged.
The health status of the population can be inferred from the fact that the average
life expectancy at birth is higher in Szeged than in Debrecen, both for men and
women (KSH, 2022).
5
Discussion and Conclusion
In our research, the effect of the vicinity of UGS on human health and well-being
in two Hungarian cities, Debrecen and Szeged was analyzed. The results of the first
phase of the survey were in accordance with expectations, with Szeged's
characteristics being clearly more favorable. In the current phase of the research, no
causality can be confirmed. One of the purposes of the SDG 11 is to provide
universal access to safe, inclusive and accessible green and public spaces, especially
for women, children, the elderly and the disabled. The different satisfaction of the
inhabitants of the two cities can be explained by that the area of green spaces in
Szeged is double in absolute terms, two and a half times in terms of population, and
three times in terms of area compared to Debrecen. This result is in line with the
results of an earlier survey, according to which the population of Szeged is satisfied
with the state of the natural environment, while the people of Debrecen are among
the most dissatisfied (Berki & Halász, 2015). Based on the findings it can be stated
that the quantification of the effect of green spaces on physical and mental health
must receive higher and higher attention in the various interdisciplinary research
activities. The question of sustainability may be incorporated into city design practice
by the characteristics and the indicators of the urban green spaces serving public
purposes.
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
ESG SCORES AND FIRM`S
PERFORMANCE IN EASTERN AND
SOUTHERN EUROPE
LOREDANA PAMFILE
Bucharest Academy of Economic Studies, Bucharest, Romania
pamfileloredana21@stud.ase.ro
Abstract Sophisticated investment seems to no longer happen
without considering a firm’s ESG scores, ranking, or sustainable
initiatives, but is this narrative of companies having a positive
impact on society consistent with delivering alpha, does it
translate into better firm performance? Established markets
around the world benefit from numerous studies into the ESG
impact on firm performance - the aim of this paper is targeted at
investigating the effect of ESG scoring on a firm’s performance
in emerging capital markets in Eastern and Southern Europe. I
conducted research from a sample of companies reporting on
ESG from developing markets, with financial performance
measured through ROA, ROE, Debt-to-Equity Ratio, and P/E,
with panel data from 2018-2022, using STATA to run a
multivariate regression to test for correlations. The results show
that there is a positive statistical relationship between ESG and
firm performance, but financially meaningful ESG integration in
emerging markets requires more than the generalist approach to
ESG issues.
DOI https://doi.org/10.18690/um.epf.3.2023.29
ISBN 978-961-286-736-2
Keywords:
ESG,
emerging markets,
Eastern and
Southern Europe,
firm performance,
sustainability
impact
JEL:
???
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE.
248
1
Introduction
The origin of the ESG term can be traced back to the early 2000s, with the term first
coined in the landmark Who Cares Wins report, a collaborative initiative by 23 global
leading financial institutions at the invitation of the United Nations, which
highlighted the importance of sustainable business practices, thus becoming the
catalyst for the emergence of ESG investing (United Nations, 2004; Gillan, 2021).
Sustainable investment, or sustainable responsible investing (SRI), simply means
investing without causing harm to society, and has its roots in ancient times when
religious laws guided people's actions, urging them to avoid damaging and
illegitimate activities (Tripathi, 2020). In pre-modern times, the Quakers movement
shifted towards responsible investing by avoiding investments in armament or
tobacco companies (Tripathi). ESG investing later transitioned from negative to
positive screening, which involved identifying companies that have a positive impact
on society and the environment (Tian, 2021; Cappucci, 2018; Landi, 2019).
ESG investing considers these factors in addition to conventional financial analysis
to identify investments that align with investors' values and long-term sustainability
goals, and to fund companies that are working towards a more sustainable future.
In emerging and frontier markets however, investors are not as focused on
sustainability and ESG factors, in part due to operational difficulties stemming from
a lack of regulatory oversight and disproportionate governance (Odell, 2016), as well
as a focus on more traditional investment strategy.
Numerous studies have examined the relationship between ESG and firm
performance in established markets around the world, but little research has been
conducted in emerging capital markets in Eastern and Southern Europe.
This paper aims to answer the following research questions: is there a positive
relationship between higher ESG scores and firm performance in emerging markets?
Do higher ESG scores reflect that companies with sustainability practices are indeed
returning better profits? Or are traditional ESG scores in emerging markets
misleading, given the limited data available?
L. Pamfile: ESG Scores and Firm`s Performance in Eastern and Southern Europe
2
249.
Literature Review
Scholars around the world have explored the relationship between sustainable
investment and firm performance - the academic literature published over the last
four decades presents enough empirical data to support a strong link between ESG
factors and the positive impact they have on firm performance and a company‘s
bottom line (Brooks, 2018; Ding, 2022; Eliwa, 2021; Grote, 2022; Ting, 2019; Yu,
2021).
Friede’s (2015) study provides an extensive review of academic research on the
relationship between ESG criteria and corporate financial performance (CFP), with
a comprehensive analysis of over 2200 individual studies, amounting to the most
exhaustive overview of the topic to date. The results show that approximately 90%
of the studies find a non-negative relationship between ESG and CFP, stable over
time and across different regions and asset classes, thus reinforcing the idea that
higher ESG scores translate into better financial performance.
In their 2016 paper, Khan and Serafeim (2016) investigate how corporate
sustainability impacts financial performance by analyzing data from 2396 firms, and
discover that sustainability issues relevant to a company's operations, stakeholders,
and the environment can significantly affect financial performance. The Khan study
suggests that companies prioritize such issues to create value for stakeholders and
improve financial performance, but the impact differs depending on the industry
and specific sustainability issues.
Cappucci (2018) insists that ESG inclusion into investment strategies is not for the
half-hearted, and that layering up a few sustainable principles on top of a traditional
investment approach is not only unsuccessful, but unnecessarily costly for a firm,
and instead presents evidence to show that a systematic and explicit framework for
ESG incorporation is what ultimately increases firm performance.
Odell (2016) argues that active ownership and investors using more than an ESG
quantitative scoring methodology and incorporating the more qualitative ESG
aspects into their valuation models and decision-making results in higher returns and
a better mitigation of risks. Odell (2016) also makes a vital distinction between CSR
and ESG factors, with CSR embodying a more charitable approach, autonomous
from the core commercial enterprise, whereas ESG factors translate into policies
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE.
and strategies that drive long-term value creation for the firm. Overall, Odell believes
that combining material ESG factors with conventional investment due diligence
can result in better investing strategies (Odell, 2016).
Kotsantonis (2019) expresses skepticism about just how precisely ESG data reflects
firm performance, claiming that data inconsistency in how different companies
report poses an incredible challenge in measuring ESG investment and performance.
For more context, Kotsantonis used a randomized selection of 50 Fortune 500
companies and manually collected information on how they report on a specific
sustainability issue (employee health and safety) and found over 20 different
reporting styles, with distinct terminology and units of measure. Given the
complicated reality of ESG data providers using different industry classifications,
building their individual models for scoring and applying different methodologies to
interpret the identical publicly available data, Kotsantonis encourages data providers
to establish best practices and become more transparent about their methodologies
and the trustworthiness of their data (Kotsantonis, 2019).
Mobius (2021) argues that in emerging markets, off-the-shelf ESG solutions such as
ESG ratings are no replacement for deep research and expertise in the company’s
industry and sector in which it operates, with ESG ratings seen as backward-looking
and failing to provide investors with that needed competitive edge.
Jain (2019) finds no significant differentiation in performance between financially
established and sustainable indices and advises investors on how to gain more insight
by considering both indices types when structuring their portfolios, with a hedging
and diversification strategy in mind.
3
Methodology
To investigate the relationship between ESG scores and firm performance, we posed
two main research questions to explore if sustainable business activities contribute
to better company performance and if the limited data available in European
emerging markets negatively impacts observed correlations.
Our study aimed to analyze the correlation between ESG scores and financial
metrics (ROA, ROE, P/E, Debt-to-Equity), with a focus on individual ESG pillars
to determine which factor drives financial performance. Using Refinitiv Eikon
L. Pamfile: ESG Scores and Firm`s Performance in Eastern and Southern Europe
251.
Screener database, I gathered data for 2706 listed companies from 18 emerging
markets in Eastern and Southern Europe for the period of 2018-2022. Out of the
2706, only 73 companies reported ESG scores, and we used the three separate ESG
pillars as independent variables to identify key drivers of financial performance.
We analyzed 5-year panel data from listed companies in emerging Eastern and
Southern European markets to assess the link between ESG factors and firm
performance. All the panel data was extracted from financial annual statements
downloaded from Refinitiv Eikon. We ran a STATA regression analysis, considering
winsorized independent variables (including ESG Score, E Pillar Score, S Pillar
Score, and G Pillar Score calculated by Refinitiv Eikon) and dependent variables
(ROA, ROE, P/E, and Debt-to-Equity) while controlling for Total Assets (natural
logarithm) and the time dimension. Companies without an ESG score or with
missing data were excluded from the sample, leaving firms from 8 countries: Cyprus,
Czech Republic, Gibraltar, Greece, Hungary, Malta, Romania, and Slovenia.
4
Results
Table 1 provides an overview of the variables ROA, ROE, P/E, ESG Score, E
Score, G Score, S Score, and Total Assets. We ran multiple regressions to test for
correlations between ROA, ROE and ESG Scores (consolidated and individually),
with Debt/Equity used as a control variable (Table 2).
Table 1: Descriptive statistics and data visualization
Variable
Return on Assets
Return on Equity
Price/Earnings
ESG Score
Env. Score
Social Score
Governance Score
Total Assets
Obs
182
182
182
182
182
182
182
182
Mean
.0599027
.1540089
14.82887
50.88476
41.87206
53.04013
57.80342
8.024446
Std. dev.
.0549828
.1053267
9.980482
18.9186
25.85827
23.69585
29.25279
1.771755
Min
.0008681
.0063114
1.867327
5.121528
0
2.711288
4.135611
4.519275
Max
.2486204
.4722753
37.01501
85.15359
90.9751
97.146
146.1973
11.33807
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE.
Table 2: Regression Results: Correlation test between Return on Assets & ESG
Source
SS
df
MS
Model
Residual
.157275042
.389906879
3
178
.052425014
.002190488
Total
.547181921
181
.003023105
Return on Assets
ESG Score
Total Assets
Debt/Equity
_cons
Coefficient
.0000135
-.015918
-.0156208
.1975541
Std. err.
.0002364
.0025285
.0049957
.016727
t
0.06
-6.30
-3.13
11.81
Number of
obs
F(3, 178)
Prob > F
R-squared
Adj R-squared
Root MSE
P>t
0.955
0.000
0.002
0.000
=
182
=
=
=
=
=
23.93
0.0000
0.2874
0.2754
.0468
[95% conf. interval]
-.000453
.0004799
-.0209078
-.0109283
-.0254792
-.0057623
.1645453
.2305629
The correlation coefficient (r) of 0.16 indicates a weak positive correlation between
the ESG Score and Total Assets. This means that as the ESG score increases, Total
Assets tend to increase slightly as well, but the relationship is not very strong. The tvalue of 0.06 also suggests that the relationship between ESG score and Total Assets
is not statistically significant.
Table 3: Regression Results: Correlation test between Return on Assets & Env. Score
Source
SS
df
MS
Model
Residual
.157322035
.389859886
3
178
.052440678
.002190224
Total
.547181921
181
.003023105
Return on Assets
Env. Score
Total Assets
Debt/Equity
_cons
Coefficient
.0000259
-.0160454
-.0156735
.198213
Std. err.
.0001647
.0024061
.0050071
.0173022
t
0.16
-6.67
-3.13
11.46
Number of obs
F(3, 178)
Prob > F
R-squared
Adj R-squared
Root MSE
P>t
0.875
0.000
0.002
0.000
=
=
=
=
=
=
182
23.94
0.0000
0.2875
0.2755
.0468
[95% conf. interval]
-.0002991
.0003509
-.0207936
-.0112972
-.0255543
-.0057926
.164069
.2323569
Table 4: Regression Results: Correlation test between Return on Assets & Social Score
Source
SS
df
MS
Model
Residual
.158012687
.389169234
3
178
.052670896
.002186344
Total
.547181921
181
.003023105
Number of obs
F(3, 178)
Prob > F
R-squared
Adj R-squared
Root MSE
=
=
=
=
=
=
182
24.09
0.0000
0.2888
0.2768
.04676
L. Pamfile: ESG Scores and Firm`s Performance in Eastern and Southern Europe
Return on Assets
Social Score
Total Assets
Debt/Equity
_cons
Coefficient
.0001083
-.0167045
-.0161186
.1991412
Std. err.
.0001856
.0024737
.005061
.0169215
t
0.58
-6.75
-3.18
11.77
P>t
0.560
0.000
0.002
0.000
253.
[95% conf. interval]
-.000258
.0004747
-.021586
-.011823
-.0261058
-.0061314
.1657486
.2325337
The t-value of 0.58 indicates that the coefficient for the Social Score variable is not
statistically significant. This means that the estimated relationship between the Social
Score and Total Assets is likely due to chance variation and is not strong enough to
be considered a true relationship. The R-squared value of 0.2888 suggests that only
about 29% of the variation in total assets can be explained by the variation in the
Social Score variable. The adjusted R-squared value of 0.2768 is slightly lower and
considers the number of variables in the model.
Table 5. Regression Results: Correlation test between Return on Assets & Governance Score
Source
SS
df
MS
Model
Residual
.158068473
.389113448
3
178
.052689491
.002186031
Total
.547181921
181
.003023105
Return on Assets
Governance Score
Total Assets
Debt/Equity
_cons
Coefficient
.0000727
-.0159889
-.015411
.1944609
Std. err.
.0001202
.001983
.0049941
.0174266
t
0.61
-8.06
-3.09
11.16
Number of obs
F(3, 178)
Prob > F
R-squared
Adj R-squared
Root MSE
P>t
0.546
0.000
0.002
0.000
=
=
=
=
=
=
182
24.10
0.0000
0.2889
0.2769
.04676
[95% conf. interval]
-.0001645
.0003099
-.0199021
-.0120758
-.0252664
-.0055557
.1600716
.2288502
The t-value of 0.61 indicates that the coefficient for the Governance Score variable
in a regression analysis is not statistically significant. This means that the estimated
relationship between the Governance score and Total Assets is likely due to chance
variation and is not strong enough to be considered a true relationship.
5
Discussion
The regression analysis suggests a weak and potentially insignificant positive
association between the ESG Score and ROA. This finding implies the possibility
of additional unaccounted factors that may exert a more substantial influence on
ROA. The t-value of 0.06 suggests that the coefficient estimate does not significantly
deviate from zero, indicating that the relationship between ESG Score and ROA
may not achieve statistical significance at the conventional 0.05 level. Additionally,
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE.
the R-squared value of 0.2874 denotes that approximately 28.74% of the variation
in ROA can be explained by the variation in ESG Score, revealing that the ESG
Score's impact on ROA is not markedly robust, and other determinants likely also
contribute to ROA.
The present study is subject to certain limitations, including a relatively low number
of companies reporting on ESG scores in Eastern and Southern Europe, which is
further compounded by the lack of available data over the selected 5-year period.
Despite these limitations, the study provides valuable insights that can inform future
research on the relationship between ESG and financial performance. As ESG
reporting becomes increasingly mandated by legislation and market participants
demand greater consistency and transparency in ESG data, new studies may emerge
that are better equipped to analyze the specific ESG pillars that are most relevant to
improved profitability. Policy makers can also leverage this knowledge to identify
gaps in ESG reporting and draft regulations that target these missing data.
Additionally, listed company decision-makers may be incentivized to incorporate
more sustainable practices into their performance strategies if such practices lead to
improved financial performance and greater investor preference.
6
Conclusion
This is a first attempt at drawing an impactful correlation between ESG factors and
firm performance, with a focus on emerging European markets. The promise of
ESG factors being the catalyst for a safer, more just world and a healthier planet
while stimulating capital markets around the world to reward sustainable
investments and enterprises is ever so appealing, but there is much work left to do.
At this inflection point in time, most studies show that there is a positive ESG
impact on capital markets, but emerging markets need to catch up, there is a dire
need for standardization of how ESG information is reported and interpreted, and
as Serafeim (2018) highlighted, it would be naïve of us to believe that the private
sector, at company level, is and will be able to solve all the common good troubles
we are facing.
L. Pamfile: ESG Scores and Firm`s Performance in Eastern and Southern Europe
255.
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United Nations. (2004). Who Cares Wins: The Strategic Value of Sustainable Business. Geneva, Switzerland:
United Nations.
CORRUPTION IN PUBLIC PRIVATE
PARTNERSHIPS AS A BARRIER TO
SUSTAINABLE DEVELOPMENT: THE
CASE OF ALBANIA
SOANA TEKA, SILVANA DOÇI
University of Tirana, Faculty of Economy, Tirana, Albania
soana.teka@unitir.edu.al, silvana.doci@unitir.edu.al
Abstract Public Private Partnerships (PPPs) are one of the forms
used by governments to provide a better service for the benefit
of the citizens. However, since these projects are of a large scale,
the practices of corruption between the state and the private
party undermine the value for money, influencing the economic
development of the country and the distribution of public funds.
In Albania, investments through Public Private Partnerships are
highly discussed due to high corruption during the tendering
phase, the selection of the winner, but also during the
implementation of the project. Almost all PPP investments have
been viewed as cases of corruption, and some have resulted in
investigations by state authorities. Therefore, this paper aims to
represent the potential scope and cost of corruption of PPPs in
Albania and how they affect the sustainable development goals.
The qualitative analysis reveals that PPPs and corruption have a
positive relationship in Albania, implying the urgent need for an
effective risk assessment and monitoring plan for PPPs to
combat corruption and promote sustainable development.
DOI https://doi.org/10.18690/um.epf.3.2023.30
ISBN 978-961-286-736-2
Keywords:
public private
partnerships,
corruption,
sustainable
development goals,
risk assessment,
Albania
JEL:
H4, H42, D7
258
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BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Introduction
The United Nations established 17 Sustainable Development Goals in 2015, one of
which is to improve infrastructure quality, sustainability, and accessibility for all (UN,
2015). But many developing countries still lack basic infrastructure and face financial
challenges. To solve this problem, governments are using public-private
partnerships (PPPs) to build and manage public infrastructure. PPPs involve a longterm agreement between a government entity and a private party, who bears
significant risk and management responsibility (World Bank, 2018).
PPPs can enhance public infrastructure and services and alleviate government
budget constraints through private investment. However, corruption in PPPs is a
potential risk due to weak governance and institutional frameworks. Corruption can
hinder sustainable development and weaken the effectiveness of PPPs in delivering
infrastructure projects, especially in countries such as Albania, where corruption is a
persistent problem and PPPs are seen as a solution. Therefore, it is important to
study the link between corruption and PPPs in Albania to identify effective measures
to minimize corruption risks and encourage sustainable development.
This paper aims to provide an overview of the existing literature on corruption in
PPPs, as well as a case study of Albania, highlighting the key challenges and
opportunities for promoting sustainable development in the context of PPPs.
This paper is organized as follows. Initially, a comprehensive review of the literature
on PPPs and corruption will be presented. Additionally, another section will
concentrate on corruption in PPP projects within Albania, treating some waste- toenergy PPP projects. It should be emphasized that the conclusions drawn in this
paper are intended only to provoke further investigation and discourse on this topic.
2
Literature Review
Corruption in PPPs has been identified as a significant challenge that hinders the
implementation of these arrangements and erodes trust in public institutions. The
literature has examined this issue from different perspectives, with authors
highlighting the causes and consequences of corruption, as well as strategies to
prevent it. There are some factors which causes the corruption in PPPs.
S. Teka, S. Doçi: Corruption in Public Private Partnerships as a Barrier to Sustainable
Development: The Case of Albania
259.
One of the major causes of corruption in PPPs is the lack of transparency and
accountability in the decision-making process. According to Schomaker (2020) the lack of
clarity and disclosure of information about project financing, procurement, and
operations creates opportunities for corruption. Similarly, Michele and Cabrera
(2018) argue that a lack of clear governance structures and legal frameworks
increases the likelihood of corruption in PPPs. Also, in a study of PPPs in Latin
America, Wiss and Faria (2007) found that corruption was a significant problem,
particularly in countries with weak governance and institutional frameworks. They
argue that improving transparency and accountability, as well as building local
capacity, can help address corruption in PPPs.
Another factor that contributes to corruption in PPPs is the complex nature of these
arrangements. As noted by Hodge and Greve (2007), the involvement of multiple
stakeholders with differing interests and incentives can create conflicts of interest
and opportunities for rent-seeking behavior. Moreover, the use of complex financial
instruments, such as public guarantees and tax breaks, can obscure the true cost of
PPP projects and create opportunities for manipulation.
PPP projects are susceptible to corruption at all stages of the project, including the
decision stage, tender stage, and contract execution. Dishonest transactions can
occur during the tender and negotiation stages, leading to an unfair advantage for
contractors. Quality monitoring is crucial during contract execution, and unforeseen
circumstances may require changes in pricing or service terms, which may also be
vulnerable to corruption. Corruption during contract execution may undermine the
enforcement of the agreement (Iossa & Mortimort, 2011).
Another cause of corruption in PPPs is the non-transparent procurement procedure. To
prevent this, measures like preparing feasibility studies beforehand, using open
procedures, and implementing deterrents like penalties need to be in place. For
instance, in Bulgaria, authorities investigated allegations of corruption in a PPP water
project through a judicial process, which serves as a deterrent to future individuals
who may attempt to bypass established procedures for their own gain (UNECE,
2004).
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
The consequences of corruption in PPPs are also significant. Apart from the
financial losses incurred by the public sector, corruption can lead to a loss of public
trust in government institutions and reduce the legitimacy of PPPs as a tool for
sustainable development.
Authors Michele and Cabrera (2018), Beatriz and Noemi (2022) show that
corruption is associated with lower project quality and higher costs, and can prevent
private sector investors. According to Iossa and Martimort (2014), corruption in
PPPs can have severe consequences on sustainability, as it can result in reduced
quality of services, higher costs for users, and loss of public trust in the partnership.
Corruption can also discourage future investment in PPPs and hinder economic
growth. To promote sustainability, the authors suggest implementing transparent
procurement procedures, ensuring fair competition, and enforcing strong anticorruption measures.
Furthermore, to prevent and combat corruption in PPPs, authors have suggested a
range of strategies, including the use of effective governance frameworks, greater
transparency and accountability and the involvement of civil society and the media.
For instance, Hodge and Greve (2007) recommend the establishment of
independent oversight bodies to monitor PPP projects and UNECE (2004) suggest
the adoption of legal frameworks that promote competition and prevent collusion
between public and private actors.
In conclusion, the literature has identified corruption in PPPs as a significant
challenge that hinders sustainable development. To address this issue, there is a need
for greater transparency and accountability in decision-making processes, the
establishment of effective governance frameworks, and the involvement of civil
society and the media in monitoring PPP projects.
3
Methodology
The methodology utilized for analyzing PPP and corruption involves a qualitative
research approach, which relies on a comprehensive analysis of relevant literature
from both national and international sources. The literature sources also include data
from government agencies such as the Ministry of Finance and Economy and
S. Teka, S. Doçi: Corruption in Public Private Partnerships as a Barrier to Sustainable
Development: The Case of Albania
261.
international organizations such as the World Bank and Transparency International.
The literature review allows the identification of concepts, theories and mechanisms
that have been used by different countries or should be used in the fight against
corruption in PPPs, in order to promote sustainable development.
4
Results
Albania has made progress in transitioning to a market-based economy with a focus
on infrastructure development, but corruption remains a persistent challenge, with
a poor ranking in global corruption indices, including a ranking of 101 out of 180
countries in 2022 (Transparency International, 2023).
The Albanian government has recognized the potential of PPPs as a means of
delivering infrastructure projects, and has implemented 228 PPPs, but 5 of them
have been resolved, as a result the current number of concession/PPP contracts is
223. These contracts are in different sectors such as transportation, energy, health,
waste managment and education, with a total contract value around 31% of GDP in
2021 (Ministry of Finance and Economy, 2022). Most of the projects in Albania are
in the field of energy and transport, followed by projects in the health and waste
management sectors, which often come with price or volume guarantees. These PPP
contracts were awarded mainly through unsolicited proposals, and sometimes the
lack of a competitive procurement procedure often prevented foreign investors
from participating. Despite attempts by the government to bring in private capital
through PPPs, the excessive use of these partnerships has led to significant
contingent liabilities due to limited transparency and weak institutional oversight
(IFC, 2022).
For 2021, a total of 14 PPP contracts with government budget support were
identified, accounting for about 6% of total PPP contracts (presented in Figure 1). The
total value of these PPP contract is around 1.95 billion Euro. These contract are
distributed across various sectors including transportation, health, waste
managment, education and fiscal sector.
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All the sectors related are identified with high risk due to the various challenges
related to inadequate infrastructure, the absence of competitive procurement
processes and fluctuations in demand (IFC, 2022). This paper will focus only on 3
projects with budgetary support, those in waste management sector.
Fiscal
Sector;
1
Transport Sector
( roads,
highways, ports)
;5
Education
Sector; 1
Waste
Management
Sector; 3
Health Sector; 4
Figure 1: Number of the PPPs contract with budgetary support by sectors
Source: Ministry of Finance and Economy (2022)
Recently, three PPP projects in the waste management sector have been found to be
linked to corruption. The government of Albania granted agreements to construct
three waste-to-energy incinerators using public-private partnership project schemes
in Elbasan (approved in 2014 with a total investment value about 21.7 million Euro),
Fier (approved in 2016 with a total investment value about 27.3 million Euro), and
Tirana (approved in 2017 with a total investment value about 124.2 million Euro).
The total investment value of the three incinerators is around 173.2 million Euro
(ATRAKO, 2022).
According to the Transparency International (2020), the companies that received
the contracts from the government were the only ones to bid in all three cases. The
case of the incinerator in Tirana is a prime example of how corruption can
undermine PPPs in Albania. The bidding process for the project was criticized for
being opaque and non-competitive, with allegations of government officials
S. Teka, S. Doçi: Corruption in Public Private Partnerships as a Barrier to Sustainable
Development: The Case of Albania
263.
receiving bribes to ensure that the contract was awarded. The private company has
not built yet the plant, so actually the total waste of Municipal of Tirana are
landfilling or burning for elimination.
Similarly, the Fier incineration PPP project has faced criticism from environmental
and community groups, who argue that the incinerator poses a risk to public health
and the environment. There have also been concerns raised about the lack of
transparency in the bidding process and allegations of corruption involving
government officials and private companies involved in the project.
Furthermore, for the Elbasan incineration PPP project, Elbasan winner put forward
unsolicited proposals and obtained a contract without undergoing a tender process.
Additionally, key persons in the awarded companies share business partnerships,
raised concerns about favoritism and potential corruption. So, due to allegations of
links between politicians and high-ranking officials, including ministers and mayors,
with the incinerator scheme, there have been convictions handed down by the
judicial system for this three projects (Transparency International, 2020).
In addition, these projects with PPP have a very high budget cost as they all have
budget support for the amount of waste deposited by the municipalities, estimated
about 93 million Euro in total for 2015-2021 (Ministry of Finance and Economy,
2022).
As it is shown above, the impact of corruption on PPPs in Albania is significant
resulting in higher budget costs, lower quality results, and loss of public trust. Also,
corruption has undermine the potential benefits of PPPs for sustainable
development, such as improved infrastructure and enhanced service delivery.
However, there have been taken some measure to monitor the operation of these
PPPs contract as well as the risks derived from them. In 2018, the Ministry of
Finance and Economy in Albania established a Fiscal Risk Unit to manage fiscal
risks arising from PPPs implemented by line ministries during the restructuring
process. However, the unit still lacks capacity. Despite efforts to improve the system,
transparency around PPPs remains limited. To address the issue, additional capital
financing, clear frameworks for administrative tariffs, and improved institutional
planning and oversight capacities are required (IFC, 2022).
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Berisha et al. (2022) identify critical success factors for implementing PPPs in
Albania. Results showed that for Albania identifying the right project and financial
capacity are the most important critical sucess factor. Trust, openness, fairness,
negotiation, and a defined revenue stream were also identified as important factors
since the partnership between the private and public entities is perceived with
skepticism by the general public and mostly considered as based on corruption.
Overall, the relationship between corruption and PPPs in Albania is complex and
multifaceted. By examining the challenges and opportunities for promoting
sustainable development in this context, it is possible to identify effective measures
to mitigate corruption risks and promote the positive impact of PPPs on
infrastructure development and sustainable development in Albania.
5
Discussion and Conclusion
PPPs are increasingly being used to build and manage public infrastructure, with the
aim of improving infrastructure quality, sustainability, and accessibility but
corruption can hinder their ability to promote sustainable development. Corruption
can occur at various stages of PPPs, including project selection and execution.
Factors that contribute to corruption in PPPs include a lack of transparency,
complex arrangements, and inadequate institutional and governance frameworks in
certain countries. The negative effects of corruption in PPPs are severe and include
monetary losses, a decline in public confidence in government institutions, and
reduced credibility of PPPs as a tool for sustainable development.
The Albanian government has implemented in total 228 PPPs (with total contract
value equivalent to 31% of the country's GDP in 2021) in various sectors, including
transportation, health, energy, waste management, and education. A total of 14 PPP
projects are with budget support, accounting for about 6% of total PPP contracts,
with a total value around 1.95 billion Euro. But, despite the Albanian government's
efforts to use PPPs to improve infrastructure, limited transparency and weak
institutional oversight have led to significant contingent liabilities. Corruption has
been identified as a significant challenge, with recent cases involving waste
management projects leading to convictions. This projects have a very high budget
cost as they all have budget support for the amount of waste deposited by the
municipalities, estimated about 93 million Euro in total for 2015-2021.
S. Teka, S. Doçi: Corruption in Public Private Partnerships as a Barrier to Sustainable
Development: The Case of Albania
265.
Our qualitative analysis reveals that PPPs and corruption have a positive relationship
in Albania, implying the urgent need for an effective risk assessment and monitoring
plan for PPPs to combat corruption and promote sustainable development.
Strengthening governance and institutional frameworks, increasing transparency and
accountability, and promoting stakeholder engagement can help to mitigate
corruption risks and promote sustainable development outcomes.
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Wiss, M. A., & Faria, T. M. (2007). Public–Private Partnerships in Latin America: Governmental
Salvation or Deception? Business Law International, 8(2), 186-206 Retrieved from
https://www.hoganlovells.com/~/media/hogan-lovells/pdf/publication/bli_pdf.pdf
World Bank (2018). Benchmarking Public-Private Partnerships Procurement 2017: Assessing Government
Capability to Prepare, Procure, and Manage PPPs. World Bank, Washington, DC. World Bank.
Retrieved from https://openknowledge.worldbank.org/handle/10986/32501
AN OVERVIEW OF THE
ACTIVE LABOUR MARKET
PROGRAMS IN ALBANIA
EDA SPAHIU
University of Tirana, Faculty of Economy, Tirana ,Albania
spahiueda@gmail.com
Abstract Active labour market policies (ALMPs) are publicly
financed interventions intended to improve the functioning of
the labour market by inducing changes in labour demand and
labour supply, as well as their matching process. Among the most
common programs used are training courses, job search
assistance and monitoring, subsidized employment, and public
work programs. The purpose of this paper is to present some
theoretical concepts about the importance of ALMPs and
current ALMPs in Albania, and the budget funds allocated for
these programs in the past years. Albania is currently
implementing different ALMPs, foreseen and approved with
different Decisions of the Council of Ministers (DCM). In 2019,
there was a reform in the employment promotion programs in
Albania, by designing new ALMPs which would be standard in
frame but individualized in terms of addressing different
vulnerabilities. All programs rely on the principle of subsidizing
the employer. Labour market program is one of the budgetary
programs, according to the budget classification rules for state
budget in Albania. Funds allocated for ALMPs are part of this
program and are classified in the economic account "subsidies”.
DOI https://doi.org/10.18690/um.epf.3.2023.31
ISBN 978-961-286-736-2
Keywords:
labour market
policy,
active labour
market programs
(ALMPs),
budget allocation,
COVID-19,
subsidies
JEL:
E24, E62, H61
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE.
268
1
Introduction
Unemployment is one of the most challenging economic and social problems in
both developed and developing countries. The challenge is exacerbated by the fact
that across countries worldwide youth unemployment figures are typically twice the
overall unemployment rate. Policymakers worldwide therefore struggle to find
effective programs that can help the jobless find jobs and that increase workers’
productivity and labor income. Job training and other active labor market programs
(ALMPs) have been promoted as a remedy for cyclical and structural unemployment
(Kluve, 2016). ALMPs are needed to support the labor market integration of groups
with major employment obstacles. According to Caliendo and Schmidl (2016), most
European countries spend significant resources each year on active labor market
programs (ALMP) with the aim of improving the integration prospects of struggling
youths.
According to the European Centre for Social Welfare Policy and Research, Active
Labor Market Policies (ALMPs) describe measures to help individuals enter the
labor market or to prevent already employed individuals from losing their jobs.
ALMPs include various measures, from training to job search assistance, subsidies,
supported employment opportunities and programs to support entrepreneurial
activities. Among the most common programs used are training courses, job search
assistance and monitoring, subsidized employment, and public work programs.
Albania is currently implementing different ALMPs, foreseen and approved with
four different Decisions of the Council of Ministers (DCM). The programs are being
implemented by the Albanian National Agency for Employment and Skills. The
purpose of this paper is to present some theoretical concepts about the importance
of ALMPs and current ALMPs in Albania, and the budget funds allocated for these
programs in the past years. The funds allocated for ALMPs are compared to the
total funds allocated for the “labor market” budgetary program, to get some
conclusions whether the share of ALMPs on the total funds is appropriate. The idea
is to connect the expenditure with the importance that these programs have,
suggesting that there should be more funds allocated if these programs represent a
priority for the government.
E. Spahiu: An Overview of the Active Labour Market Programs in Albania
2
269.
Theoretical Background
Active labor market policies (ALMPs) are publicly financed interventions intended
to improve the functioning of the labor market by inducing changes in labor demand
and labor supply, as well as their matching process. Specifically, these policies aim
to preserve existing jobs and create new employment opportunities, encouraging
labor market attachment and the reintegration of long-term unemployed and
inactive individuals, and facilitating the job-search and job-matching process (Ernst
et al., 2022).
The evolution of active labor market policies dates back to the 1960s. In the early
phase, “active manpower policies” were designed to respond to the fast-growing
demand side of the economy. According to an OECD legal instrument of that time,
the idea was that employment and output could be expanded by removing labor
market bottlenecks. The changing economic and labor market conditions of the
1970s and 1980s brought new policy requirements. The focus shifted to addressing
the problems of slow growth and the rising trend in unemployment. With the
OECD economies facing continued labor market difficulties during the expansion
phase of the cycle in the 1980s, it became apparent that structural difficulties lay
behind high unemployment and other labor market problems (OECD, 1964).
ALMPs may be targeted at specific groups, e.g., youths, long-term unemployed,
displaced workers, welfare recipients etc. or not. They also vary widely across
countries. In some countries, programs are the responsibility of the Public
Employment Service (PES); others receive only referrals from it. Some programs
may be administered at the federal level, others at regional or local levels. Funding
may be centrally governed or jointly funded with various regions. Young individuals
entering the labor market are generally considered to be an at-risk population. They
face a higher risk of unemployment than older workers, are more likely to switch
between states of joblessness, training and working, and are more likely to enter
temporary or precarious types of employment (Caliendo & Schmidl, 2016).
The role of ALMPs is related to the broad economic situation. At times of rapid
expansion and labor shortage, like the 1950s and 1960s, their key objective was to
upskill the workforce. After the oil shocks of the 1970s, the raison d’être of ALMPs
shifted from economic to social policy, and since the mid-1990s, we see the
development of a new function, well captured by the notion of activation, which
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE.
270
refers to the strengthening of work incentives and the removal of obstacles to
employment, mostly for low-skilled people (Bonoli, 2011).
Active labor market programs (ALMPs) aim to keep workers employed, bring them
into employment, increase their productivity and earnings, and improve the
functioning of labor markets. ALMPs that improve labor market matching are highly
beneficial, but effective only in the short run. ALMPs in general might be more cost
effective over the long term (3-10 years) and some may even be self-financing,
suggesting that long-term evaluations are needed to better ascertain the impact of
individual policies (Brown & Koettl, 2012).
The chances of success of an ALMP depend on several factors, including the
characteristics of the labor markets in which they operate. Hence, it is important to
avoid assessing ALMPs in isolation (Fay, 1996). The most common outcome on
which evaluations focus is whether the individual gets a job and/or experiences
earnings gains following a program. But it is also important that evaluations consider
carefully the different possible outcomes from an ALMP, e.g. employment,
unemployment, participation in another labor market program, or non-participation.
An individual may experience stable or falling earnings following participation in a
program because of unemployment, enrolment in another program, or in the case
of training, enrolment in further education. The policy implications of each situation,
however, are quite different (Fay, 1996).
3
Methodology
The methodology used to present the current ALMPs in Albania and the share of
the budget funds for ALMPs compared to the total budget funds for “labor market”,
is based on qualitative and quantitative data. The first part, focusing on the literature
review, is based on the review of different authors and institution’s reports regarding
this topic. This part presents the theoretical concepts regarding the active labor
market programs, the definition, their importance in reducing unemployment and
evolution over time.
The information regarding ALMPs in Albania has been collected from national
statistics and institutions, namely National Employment and Skills Agency and
Ministry of Finance and Economy (MFE). The data regarding the financing figures
for ALMPs has been retrieved from the official site of MFE. Funds allocated for
E. Spahiu: An Overview of the Active Labour Market Programs in Albania
271.
ALMPs are part of “labor market” budgetary program and are classified in the
economic account "subsidies" in the national Albanian currency, the Albania Lek
(ALL). For the purpose of this paper, the funds have been converted to Euros with
the exchange rate for January for each respective year.
Since ALMPs funds comprise only current expenditures, in this article we will
compare the funds allocated for ALMPs to the total current expenditures for the
labor market program. All the budgetary figures that are presented in this paper refer
to the initial budget approved in parliament, not the revised budget during the year.
This is because the revisions during a budget year, that usually result in a reduction
of the initial allocated funds, can be due to several factors, like the earthquake,
pandemic, lack of revenues etc., which are not directly connected with government
priorities.
4
Results
In 2019, there was a reform in the employment promotion programs in Albania, by
designing new ALMPs. The main aim of the reform was to design active labor
market programs, standard in frame, but individualized in terms of addressing
different vulnerabilities. All the programs rely on the principle of subsidizing the
employer, different from the design prior to 2019, where the subsidy went directly
to the jobseeker/employee. In Albania the responsible institutions for the ALMPs
implementation is the National Employment and Skills Agency. The current
programs in Albania are Wage-Subsidy Program, On-the-Job Training Program,
Internship Program, COVID-19 Employment Recovery Program, Community
Employment Program and Self-Employment Program. Although the programs
differ from each other and target different groups, in general we can say that there
is a special focus on youth.
The wage subsidy program targets: all unemployed jobseekers registered and active,
for no less than 3 (three) months in the employment office, young people under 29
(twenty-nine) years old, long-term unemployed jobseekers, jobseekers over 45
(forty-five) years old, unskilled unemployed jobseekers, unemployed jobseekers,
who have returned for no more than 2 (two) years from emigration, jobseekers who
benefit from economic aid, treating with priority the beneficiaries of economic
assistance, who are expected to leave the economic aid scheme in the current year
and the following year, jobseekers who receive unemployment benefits for more
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE.
272
than 3 (three) months, persons with disabilities, victims of trafficking, gender-based
violence and victims of domestic violence, jobseekers from the Roma and Egyptian
community, persons who have completed the vocational training course or the
training program through work and are still unemployed 6 (six) months after
completion.
Internship Program, targets are all unemployed jobseekers who are newly graduated,
up to the last 24 (twenty-four) months after graduation, who are registered as
unemployed jobseekers.
Community Employment Program targets all unemployed jobseekers registered and
active, for no less than 12 months at the employment office, aged over 25.
The subsidy foreseen for the programs comprises:
−
−
−
−
social and health contributions, calculated based on the minimum wage,
offered throughout the duration of employment, compensated monthly.
salary financing in the amount of 100% of the national minimum wage, for
different periods depending on different beneficiaries. For the victims of
trafficking, gender-based violence, victims of domestic violence and for
persons with disabilities, the salary is compensated respectively for 6 and 12
months.
contributions for insurance against accidents at work
different additional costs like: bonuses for transport costs; single parents
with a child under 6 (six) years old receive a bonus attending kindergartens
and nurseries for dependent children; bonus for employers for the
reasonable adjustment of the workplace for disabled persons.
Labor market program is one of the budgetary programs, according to the budget
classification rules for state budget in Albania. Funds allocated for ALMPs are part
of this program and are classified in the economic account "subsidies". Like all the
budgetary programs, the public expenditures allocated for the “labor market”, are
divided into current and capital expenditures. The current expenditures comprise
wages, social contributions, subsidies, transfer etc. Since ALMP funds are part of
current expenditures, in this article we will compare the funds allocated for ALMPs
to the total current expenditures for the labor market program.
E. Spahiu: An Overview of the Active Labour Market Programs in Albania
273.
20.000,0
16.000,0
12.000,0
8.000,0
4.000,0
2016
2017
2018
2019
2020
2021
2022
2023
Figure 1: Current expenditures for labor market, in Euros, 2016-2023
Source: MFE (2023), Author’s calculations
According to the official data of the Ministry of Finance and Economy, over the
past few years, there has been an increase in budget expenditures, both current and
capital, for the labor market. This is particularly evident after 2020, where the total
amount of current expenditures increased by about 40% compared to 2019 (see
Figure 1).
Meanwhile, funding for employment promotion programs has been low, compared
to the total financing figures for the labor market. As it is clear from all the analyzed
data, the total funds for ALMPs represent on average 25% of the total funds
allocated for the labor market program through the analyzed years. In general, except
for 2019, the financing has been quite the same in terms of %, between 23.3% and
25.7% (see Figure 2).
29,4%
30,0%
28,0%
25,7%
25,5%
26,0%
23,9%
24,0%
22,0%
24,8%
23,4%
23,3%
23,4%
20,0%
2016
2017
2018
2019
2020
2021
2022
Figure 2: ALMPs funds compared to "labor market" funds, in %
Source: MFE (2023), Author’s calculations.
2023
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE.
274
One of the most successful programs has been the COVID-19 employment
recovery program. As a result of COVID-19, many businesses were closed for a
certain period, leaving many people without work. In addition to budgetary policies,
the government also used employment policies to cope with some of the
consequences. In this context, it was approved. The Decision of the Council of
Ministers No. 608, dated 29.07.2020 "On the procedures, criteria and rules for the
implementation of the employment promotion program through the employment
of persons who became unemployed as a result of COVID-19. The aim of this
employment program was to reintegrate into the labor market all unemployed job
seekers who have become unemployed as a result of COVID-19, identified by the
General Directorate of Taxes and registered in the employment office. The program
itself offered 4-month, 8-month and 12-month employment programs:
−
−
−
4-month employment program: Salary financing at the rate of 100% of the
national minimum wage for 2 (two) months and financing for 4 (four)
months of mandatory social and health contributions.
8-month employment program: Salary financing at the rate of 100% of the
national minimum wage for four months and financing for 8 (eight) months
of mandatory social and health contributions.
12-month employment program: Financing for 12 (twelve) months of
mandatory social and health contributions (employer and employee) in the
amount of 100% of the national minimum wage of (27.9%), compensated
for each month, throughout the duration of the program.
This program managed to employ a total of 220 people in its 3 components (4, 8
and 12 months) throughout Albania. Most of the employed persons were over 50
years old, this category which makes it more difficult to integrate into the labor
market.
5
Discussion and Conclusion
Policymakers worldwide struggle to find effective programs that can help the jobless
find jobs and that increase workers’ productivity and labor income. Job training and
other active labor market programs (ALMPs) have been promoted as a remedy for
cyclical and structural unemployment. Albania is currently implementing different
ALMPs, foreseen and approved with four different Decisions of the Council of
E. Spahiu: An Overview of the Active Labour Market Programs in Albania
275.
Ministers (DCM). All the programs rely on the principle of subsidizing the employer,
different from the design prior to 2019, where the subsidy went directly to the
jobseeker/employee. Over the past few years, there has been an increase in budget
expenditures, both current and capital, for the labor market. Meanwhile, funding for
employment promotion programs has been low, compared to the total financing
figures for the labor market, on average 25% of the total funds allocated for the
labor market program through the analyzed years. The Albanian government has
stated that these programs represent a very important tool to decrease
unemployment especially among the vulnerable groups (people with disabilities,
Roma and Egyptian communities, returned emigrants, victims of trafficking, etc.).
In this case, the budget funds allocated for these programs should increase to be in
line with the government priorities and create better incentives and opportunities
for the programs to address more unemployed jobseekers by having more funds
available.
References
Bonoli, G. (2011). Active labour market policy in a changing economic context. Oxford: Oxford
University Press. https://doi.org/10.1093/acprof:oso/9780199592296.003.0016
Brown, A. J., & Koettl, J. (2012). Active Labor Market Programs : How, Why, When, and To What Extent are
they Effective? Washington: Europe and Central Asia knowledge brief; World Bank. Retrieved
from https://openknowledge.worldbank.org/handle/10986/17053
Caliendo, M., & Schmidl, R. (2016). Youth unemployment and active labor market policies in Europe. IZA
Journal of Labor Policy. Retrieved from
https://izajolp.springeropen.com/articles/10.1186/s40173-016-0057-x
Ernst, E., Merola, R., & Reljic, J. (2022). Labour market policies for inclusiveness: A literature review with a gap
analysis. International Labor Organization. Retrieved from
https://www.ilo.org/global/publications/working-papers/WCMS_855080/lang-en/index.htm
Fay, R. G. (1996). Enhancing the Effectiveness of Active Labor Market Policies. Labor Market and Social
Policy Occasional Papers No. 18.
ILO. (2016). What works: Active labour market policies and their joint provision with income support in emerging and
developing economies. Geneva: International Labour Office. Retrieved from
https://www.ilo.org/global/research/projects/active-labour-market-policies/lang-en/index.htm
Kluve, J. (2016). A review of the effectiveness of active labour market programmes with a focus on Latin America.
Geneva: International Labour Office, Research Department. Retrieved from
https://labordoc.ilo.org/discovery/fulldisplay/alma994901193402676/41ILO_INST:41ILO
_V2
Ministria e Financave dhe Ekonomise. (2023, February 15). Retrieved from Buxheti ne Vite:
https://financa.gov.al/buxheti-ne-vite/
OECD (1964). Recommendation of the Council on Manpower Policy as a Means for the Promotion of Economic
Growth. Paris: OECD.
276
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PUBLIC AND PRIVATE FINANCING
INSTRUMENTS TO SUPPORT SDGS:
THE CASE OF ALBANIA
BLERINA GJACI
University of Tirana, Faculty of Economy, Tirana, Albania
blerina.lesi@unitir.edu.al
Abstract The purpose of this paper is to identify and promote
actions to finance the SDGs by bringing together governments,
the private sector and the civil society. Following the rule ‘it takes
money to make money’, the tight fiscal space of Albania is
analysed to present potential approaches that can boost private
financing leverage. Private finance is the main contributor to
support the SDGs, while public finance has a small financing
weight in the whole integrated financial framework, so this minor
financing weight can be used to leverage private finance sector.
This combination of finance instruments aims to provide
sustainable financing for SDGs. This paper presents the process
to reach a sustainable financing mechanism of SDGs in Albania.
Additionally, it presents the tools, like Development Finance
Assessment (DFA) and Integrated National Financing
Frameworks (INFFs) that lead the country to link finance with
results for delivering the SDGs. The paper provides a
methodological approach, among others, to support SDGs
sustainable financing in order to reach the SDGs targets. This
research might bring implications for other developing countries
in relation to financing SDGs.
DOI https://doi.org/10.18690/um.epf.3.2023.32
ISBN 978-961-286-736-2
Keywords:
SDGs,
DFA,
INFF,
financing
instruments,
sustainability
JEL:
E61, O11, O23
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE.
278
1
Introduction
The Government of Albania is committed to the 2030 Agenda for Sustainable
development, which corresponds to the fulfillment of 17 goals and 169 targets. Many
challenges are presented in the fulfillment of these goals, 9 out of 17 continues to be
significantly challenging. Figure 1 shows Albanian SDG Dashboards and Trends
2022.
Figure 1: Albanian SDG Dashboards and Trends 2022
Source: Sustainable Development Report (2022) and Author's illustration
This overview demonstrates the highest need to intervene for complying with
Agenda 2030, struggling with five critical dimensions: people, prosperity, planet,
partnership and peace, also known as the 5Ps. SDG 8 is one of the most challenging
goals, characterized by an economic growth with high volatility which is greatly
affected by any shock, such as the Covid 19 pandemic reflected by negative growth
in 2020 (see Figure 2).
10,0
8,5
5,0 2,5
1,4
1,0
2012
2013
1,8
2,2
2014
2015
3,3
3,8
4,0
2,1
0,0
2011
-5,0
2016
2017
2018
2019
2020
2021
-3,5
Figure 2: Albanian Real GDP growth in %
Source: Ministry of Finance and Economy (2022).
To achieve SDGs, their alignments with country’s social, economic and
environmental priorities is required. The accurate assessment and calculation of
B. Gjaci: Public and Private Financing Instruments to Support SDGs: The Case of Albania
279.
financial costs as well as the identification of financial options for the fulfillment of
development objectives continue to remain a challenge for the Albanian
government. Still in the budgeting process of national strategies, deficiencies in the
costing process continue, making it difficult to identify the necessary public financial
resources, while the contribution of private finances remains even more difficult to
calculate. The medium-and long-term national priorities according to a medium term
and long-term macroeconomic framework is materialized in the National Strategy
for Development and Integration (NSDI) document. 2021-2030 NSDI timeframe,
which is under preparation process, corresponds with the European Policy Cycle (7
years), the cycle of the Instrument for Pre-Accession- IPA and the SDGs (due in
2030). Successive crises, such as the November 2019 earthquake and the COVID19 pandemic, have exacerbated existing weaknesses and tightened the country's
fiscal space, making the Sustainable Development Agenda even more urgent. This
context demonstrates urgent need of institutions to intervene. The UN Joint
Program 'Strategic Policy Options for SDG Financing', which aims to support SDG
financing in Albania, has started to be implemented in 2020. It aims to bring
evidence on the costs of not investing in the SDGs, as well as identify and evaluate
options to catalyze financing to unfunded objectives in and identify innovative
approaches, tools and other financing mechanisms to pilot and evaluate the impact
of fiscal policies. This paper aims to analyze the potential sources of public and
private finance in Albania and to present a roadmap to integrate financial sources
for SDGs budgeting.
2
Literature Review
Success in achieving the SDGs is hampered by severe financial constraints facing
developing countries and not only, constraints that have been severely exacerbated
by the Covid-9 pandemic and the war in Ukraine. In addition to maintain peace and
reducing geopolitical tensions, the key to achieving the SDGs is to devise a plan for
financing them (UN, 2022).
As presented by Hege & Brimont (2018), a starting point for the integration of
Agenda 2030 and in national policies and to implement the Sustainable
Development Goals (SDGs), is the integration of SDGs into national budgeting
processes.
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE.
For developing countries, costing the SDGs is essential to secure the investment and
development assistance needed to achieve the SDGs. this process can help
governments, donors and international organizations develop strategies for
achieving specific SDG targets (Vorisek & Yu, 2020).
The implementation of the UN 2030 Agenda, according to a UN study, is estimated
to cost between USD 3.3–4.5 trillion per year to fund different projects,
development programs and various initiatives which help countries achieve these
ambitious goals. Developing countries face an average annual funding gap of USD
2.5 trillion.
Government-driven or multilateral aid institutions-led support needs to be
complemented by the private sector and the abundant funds that are available on
the markets. The task for policymakers and private sector investors is, therefore, to
coordinate and look for more innovative approaches. As far as the European region
is concerned, the adoption of the European Green Deal is a game changer which
sets the stage by introducing clear goals and investment needs to turn the economy
around by 2050 (Lukšić et al., 2022).
According to several international assessments, investment needs for the SDGs are
huge, with the bulk in developing countries and their infrastructure. The scale of
current financial flows is considered insufficient: as public finance is in scarce supply,
while private finance is constrained by risk and return requirements. If this resulting
financing gap remains unresolved, investment needs will grow over time because of
a cumulative effect. Several doubts could be raised: should we conclude that the
SDGs are beyond reach, or could business models be rethought in ways that would
increase SDG serving financial flows, but also make them less risky, and could the
cost of achieving the SDGs be brought down? Figure 3 shows SDG annual financing
gap - advanced vs. EMDEs (in trillion $).
In advanced countries, about 90% of investment needs can be met in advanced
countries under current conditions, and public sector could cover only a third of the
financing needs, with the private sector covering most of the rest. In developing and
emerging countries, only 48% of SDG investment needs are being met, while public
and private financial flows are of comparable size and the share of private finance
in these countries would need to double to approach that of advanced countries.
(UNEPFI, 2018,10-11,).
B. Gjaci: Public and Private Financing Instruments to Support SDGs: The Case of Albania
281.
4,5
5
2,5
1,5
0,9
0,4
1,2
1
0,1
0
Advanced Countries
Investment needs
EMDEs
Public flows
Private flows
Financing gap
Figure 3: SDG annual financing gap - advanced vs. EMDEs (in trillion $)
Source: UNEPFI (2018)
In Albania, there is no identification of what part of investment needs can be met.
All the findings presented above demonstrate as a starting point for achieving the
SDGs: assessing their costs, integrating them into the national budgeting process
and exploring innovative financing instruments, beyond traditional finance such as
public funds. The following sections briefly present: paper methodology, results
found and concluding remarks.
3
Methodology
A general quantitative and qualitative analysis of public and private finances has been
carried out to provide a methodological approach to the steps that a country like
Albania is following to finance the SDGs. The limitation of this work is the lack of
determining the amount of private finance funds needed to finance the SDGs, while
public finance goes all without exception to their financing. This task requires a later
stage, such as the drafting of a strategy for the integrated national financial
framework. Using secondary data on key indicators of public and private finances in
the country provided by official institutions such as: Bank of Albania, Ministry of
Finance and UN Albania, an overview of the financial resources that have the most
potential to support sustainable financing of the SDGs that a developing country
needs to undertake is provided.
4
Results
Considering above finding for developing countries, where Albania belongs, less
than half of financing needs for SDGs fulfilment are in place. Also, private finances,
which should cover the major investments needs, remains lower than public
findings. In order to follow advancing countries model, most effort should be
undertaken to leverage and mobilize private financing.
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE.
282
4.1
Public Finances
Governments and public finances have an important role in creating the conditions
and incentives that can unlock domestic and international private financing, and to
promote business strategies and operations that are aligned with priorities for
recovery and sustainable development. Unlocking and boosting private capital for
SDG related investments requires policy and regulatory shifts, better access to
information on investment opportunities, and clear standards on the criteria for
identifying SDG aligned investments. The development of an integrated approach
to public policies for private finance is at the heart of the innovation of the integrated
national financing framework.
700.000
Tot Rev mln ALL
Tot Exp mln ALL
600.000
Tot Exp
Tot Rev
70
Deficit (mln ALL)
60
500.000
50
400.000
300.000
40
200.000
30
100.000
0
-100.000
20
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
-200.000
00
Figure 4: Public Revenue and Expenditure (in% of GDP)
Source: Albanian MoFE (2022)
80
70
60
50
40
30
20
10
0
10
59
62
70
72
73
72
70
68
66
74
73
67
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Figure 5: Public Debt (stock) % of GDP
Source: Albanian MoFE (2022)
B. Gjaci: Public and Private Financing Instruments to Support SDGs: The Case of Albania
283.
As presented in Figure 4, public income does not exceed 30% of GDP, of which
about 80% is collected from tax revenues, which are dominated by indirect taxes,
namely 1/3 of the income is collected by Value added tax. If by 2013, public finances
were based on resources such as privatization income, after this year the exhaustion
of this source led to a higher attention of the government to mobilize internal future,
though as seen from the graph above, weight Public income to GDP does not
exhibit expected improvements, continues at about 27% of GDP, this is mainly
explained by the complicated tax system in our country. On the other hand, in
addition to the poor mobilization of income, there is also a budget of utilitarian
functions, as about 60% of budget expenditures go for functions such as: social
protection, education and health. While remains a very small portion of expenses to
allocate to support priority sectors that will impact the business climate in the
country. In summary, as reflected by the data above, Albania, as a developing
country, is characterized by narrow fiscal spaces. The only instrument remains the
debt for supporting public spending on the function of our spaces, which explains
more than 10% increase in a decade, as illustrated in Figure 5.
4.2
Private financing
Albania is among the countries with low development of the financial system. As illustrated in
Figure 6, its contribution to GDP has been below 3% over years and has marked a
decreasing trend after 2017 from 2.9% of total economy value added to 2.5% in
2019 and 2.1% in 2020.
3,5
3
2,5
2
1,5
1
0,5
0
2,8
3
2,8
2,6
2,9
3,1
2,8
2,9
2,6
2,5
2,1
2010
2011
2012
2013
2014
2015
2016
2017
2018
Figure 6: Contribution of financial sector % GDP
Source: INSTA and BoA (2022), author’s calculation
2019
2020
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400.000
20
18
17
17
18
19
20
21
22
22
24
23
30
20
200.000
10
-
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Money out banks (mln ALL)…
0
Ratio of money out banks in terms of 3
Figure 7: Ratio of Money outside Banks % of M3
Source: INSTA and BoA (2022), author’s calculation
This low contribution of the financial sector in GDP, which remain less than 3% in
2021, is highly explained also by high weight of money outside depositary banks,
which makes difficult to measure its effect on GDP. Considering, the ratio of money
outside depository corporations with general money M3 it is observed that 30% of
the money in Albania in 2021 results outside the banking system, an increasing trend
after 2012 (21% in 2012), as shown in Figure 7. This demonstrates the presence of
high financial resources for investment and support of economic developments.
Pension Funds
0.2%
Banking Sector
89%
Banking Sector
SLAs
Non bank institutions…
Saving Loans (SLAs
0.7%
Insurance companies
2%
Investment Funds
4.1%
Pension Funds
Insurance companies
NBFIs
Investment Funds
Figure 8: Share of financial system segments/ total assets of the financial system
Source: BoA (2022), Author’s calculation
This shows that in a similar fashion to other developing countries, the banking sector
in Albania has outpaced the growth of the equity and bond markets in the country.
However, capital markets have a high potential to play in the long run a key role in
the country’s economy, in the long term. The financial market is dominated by
B. Gjaci: Public and Private Financing Instruments to Support SDGs: The Case of Albania
285.
banks. Despite having several types of financial institutions, about 90% of assets are
possessed by banks, 4.1% by Investment Funds, 4% by non-bank financial
institutions, 2% by Insurance companies, and others. While the Albanian Capital
market is at an initial stage of development in terms of size of the market as measured
by market capitalization, the ratio of market capitalization to GDP, volume and value
traded of financial instruments. There is no public issuance of securities other than
government bonds and a limited (but increasing) volume of privately placed bonds.
The banking sector is a primary lending source for the economy. Banks remain the
main debt-holder in the country, more than 60% of the total burden of the sovereign
debt is held by them. Total credit to the economy (2021) is around 5.4 billion EUR
or 35% of GDP. Businesses are the economic agents which hold the higher share
of credits in the economy, 63% of credits is received by businesses sector, individuals
have received 33% of credit and the rest of 4% is held by public sector. The sector
with the largest weight of lending in the economy is in Private non-financial
corporations, accounting for about 50 percent or about 3.2 billion EUR, composed
by Wholesale and retail trade sector (17 percent or 1.1 billion EUR) followed by
"Construction" about 8 percent, "Manufacturing industry" by 7 percent, "Electricity,
gas supply, steam" by 4 percent, "Accommodation and food service" by 4 percent,
"Other service activities" by 2 percent, etc. The loan according to the sectors does
not match the priority government sectors, because the electricity or tourism
represent a minor weight of crediting, even being a governmental priority policy.
5
Discussion and Conclusion
Presence of major challenging SDGs invites us (and emerging countries) to
reformulate the approach followed until today and look not only at how to increase
financial flows, but also how to work out on how to reduce the cost of achieving the
SDGs. For this purpose, it should be considered not only how public funds can derisk private finance, but also look for other ways to reduce risk. Therefore, some
steps are suggested to achieve the following two objectives:
−
−
Development Finance Assessment (DFA), which is designed to support
countries to build a more integrated, public and private approach to
financing through an INFF.
To assist the process of achieving the SDGs, the Integrated National
Financing Framework (INFF) is offered as a tool to help map the landscape
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for financing sustainable development and design a strategy to increase and
use as effectively as possible the all types of finance for sustainable
development. Albania is still in the early stages, it has just started the process
supported by UN Program.
The complex agenda involving EU accession, infrastructure and SDG needs requires
innovation in the SDG financing. Although there is no proper study for Albania on
the amount of financial resources needed to fulfill the SDGs, international
assessments determine that a developing country faces an average annual financial
gap of 2.5 trillion dollars. It demonstrates that SDGs appear unattainable, and
countries should rely not only on new strategies for SDG budgeting, but also on
how to reduce SDG financing costs. Emerging and developing countries need to
focus more on developing and mobilizing private funding as the main potential to
finance existing gaps in their SDG investment needs, while public finances should
focus on policies that improve business environment, rather than directly to finance
SDGs, because as illustrated in case of Albania, most of the State Budget supports
a few SDGs, while most of them relies on private funding. The private financial
sector, besides being underdeveloped in Albania, demonstrates that lending
according to sectors does not correspond to priority government sectors, showing a
lack of reconciliation of public and private finances. Unprecedented shocks and
risks violate the achievement of SDGS at a limited time as defined on Agenda 2030,
so developing countries should follow a full and rigorous process, from determining
financing needs (DFA), SDG budgeting, design of a financing strategy (INF),
implementation and monitoring of the strategy, predicting in any step potential risks
that may violate the continuity of the process. To succeed in implementation of
Agenda 2030 need to establish a roadmap for the SDG, identifying roles and
responsibilities of the key institutions and other stakeholders in the process, and
include financial implications deriving from the national commitment to the SDGs
and ensure further mainstreaming of implementation alongside the national policies
and strategies, including monitoring and reporting mechanisms.
References
Albanian Ministry of Finance and Economy (MoFE). (2022). BULETINI STATISTIKOR I BORXHIT
Dhjetor 31, 2022. Retrieved from
https://financa.gov.al/wp-content/uploads/2023/02/Buletini-i-Borxhit-T4-2022.pdf
26.02.2023
B. Gjaci: Public and Private Financing Instruments to Support SDGs: The Case of Albania
287.
Albanian MoFE (2023). Statistika fiskale Vjetore. Retrieved from https://financa.gov.al/statistikafiskale-vjetore/
Bank of Albania (BoA, 2023). Retrieved from
https://www.bankofalbania.org/Stabiliteti_Financiar/Treguesit_e_stabilitetit_financiar/Stru
ktura_e_sektorit_financiar/
Hege, E., Brimont, L (2018). Integrating SDGs into national budgetary processes. Studies N°05/18, IDDRI,
Paris, France, 20 p. Retrieved from
https://www.researchgate.net/publication/331355080_Integrating_SDGs_into_national_bu
dgetary_processes/link/5c756722a6fdcc47159e57bb/download
Lukšić, I., Bošković, B., Novikova, A. et al. (2022). Innovative financing of the sustainable
development goals in the countries of the Western Balkans'. Energ Sustain Soc 12, 15.
https://doi.org/10.1186/s13705-022-00340-w)
Jeffrey D. S, Guillaume L., Christian K., Grayson F., & Finn W. (2022). SUSTAINABLE
DEVELOPMENT REPORT 2022, From Crisis to Sustainable Development: the SDGs as Roadmap
to
2030
and
Beyond,
Cambridge
University
press.
Retrieved
from
https://s3.amazonaws.com/sustainabledevelopment.report/2022/2022-sustainabledevelopment-report.pdf
Sustainable Development Report 2022 (2022). Albania, Eastern Europe and Central Asia. Retrieved from
https://dashboards.sdgindex.org/static/profiles/pdfs/SDR-2022-albania.pdf
UNEP FINANCE INITIATIVE (2018). Rethinking Impact to Finance the SDGs. A Position Paper and
Call to Action prepared by the Positive Impact Initiative November 2018. Retrieved from
https://www.unepfi.org/wordpress/wp-content/uploads/2018/11/Rethinking-Impact-toFinance-the-SDGs.pdf , 24.02.2023
Vorisek, D. L. & Yu, S. (2020). Understanding the Cost of Achieving the Sustainable Development Goals
(February 27, 2020). World Bank Policy Research Working Paper No. 9164, Retrieved from
https://ssrn.com/abstract=3545657.
288
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE.
INTERACTION MECHANISMS AND
THE PERFORMANCE OF
PRODUCTION ENTERPRISES AS
SOCIAL SYSTEMS: THE TRUTH OF
THE HUMAN SPIRIT
RAUL ESPEJO
World Organisation of Systems and Cybernetics, Lincoln, United Kingdom of Great
Britain and Northern Ireland
raul.espejo@btinternet.com
Abstract This contribution goes beyond viewing a system as a
black box receiving inputs and producing well defined outputs
to an external environment. Its purpose is to explain the
complementarity between first and second order cybernetics as
well as of economic and sustainable performance. It discusses a
black box using the notion of eigenform as developed by Heinz
von Foerster (2003) wherein a performing object is understood
changing overtime with apparent stability. It contemplates the
concepts of structural and linguistic recursions and highlights the
values of second-order and ontological cybernetics. The outputs
of a black box are fed back to its inputs, possibly in real time, in
order to manage its performance towards the often-economic
requirements of the system’s external environment, but showing
signs of change and adaptation. The transformations the social
systems perform are adaptive and change over time, making
them non-trivial machines. Beyond producing technological
transformations, the complexity of social systems emerges from
the operational, moment-to-moment- interactions of its
participants. Their outcomes are produced by changes in
structure and ethical values, necessary for social sustainability and
improved (policy) performance. These changes produce
adjustments to the system’s outcomes which are the observer
driven mechanism of second-order cybernetics.
DOI https://doi.org/10.18690/um.epf.3.2023.33
ISBN 978-961-286-736-2
Keywords:
organisational
performance,
sustainability,
complexity,
economics,
second order and
ontological
cybernetics
JEL:
E61, O11, O23
290
1
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Introduction
In this contribution I go beyond the usual view of a system as a black box receiving
inputs and producing outputs to an external environment. In the context of an
Enterprise Complexity Model the Viplan Method (Espejo, 2020), is offered as a
means to explain the management of the complexity of a black box system. The
outputs produced by this black box are fed back into the system’s inputs, which if
possible, are adjusted in real time to the requirements of the system’s external
environment (Beer, 1981). This is usually referred to as managing complexity from
the perspective of first order cybernetics, and is understood as managing trivial
machines (von Foerster, 2003), where inputs and their variations produce
predictable output changes, which are absorbed by the market (M in Figure 1 below)
of the black box through these feedback processes. However, it is apparent that
black boxes are more than trivial machines and what happens within them is more
that the mechanical transformation of inputs into outputs. Going beyond trivial
machines is the focus of this contribution.
2
Literature Review
Actors within the black box produce more than transformations: that is, are far more
than processes to transform inputs into elaborated products, which eventually
interact with the market (M). The units producing these transformations within the
BB, are far more than technological processes transforming inputs into finished
products. They produce a wide range of changes among themselves as they modify
each other and compute their mutual changes through different forms of adaptation.
Indeed, they produce more than technological transformations or models between
inputs and outputs; in fact, their network of interactions produces non-linear
transformations in what Wene (2007) has referred to as double closure and are
illustrated in Figure 1. As seen in this figure, beyond the input-output closure of
components in social systems, which is a first form of closure, participants
experience operational closure in their mutual interactions, which is a second form
of closure (Espejo & Reyes 2011) through processes of structural recursions (Beer,
1979; Maturana 2002). The black box adapts through computing relational changes of
participants in the system, which change its identity (‘Z’ in Figure 1) producing
organisational changes, which go beyond the idea of trivial machines and offer the
complementarity between the first order closure produced by the black box and its
R. Espejo: Interaction Mechanisms and the Performance of Production Enterprises as Social
Systems: The Truth of The Human Spirit
291.
second order operational closure (Espejo, 2021). They explain non-trivial machines,
that is, explain the cybernetics of the observer (von Foerster 2003; Maturana 2002).
This is second-order cybernetics. The outcomes of actors’ interactions, as outcomes
of closed network of operations in the black box, are observer dependent, following
Kauffman (2003) discussion of eigenforms, wherein an object is seen to be a token
for those forms that lend the object its apparent stability in a changing world.
Eigen behaviours are explained by Wene (2007; 2023) with the cybernetic closure
theorem: “Operationally closed systems develop Eigenbehaviour”. From this
theorem it follows an important clarification for social systems. Beyond the inputoutput closure of trivial machines; social systems offer the double closure of
participants interactions, affected by environmental changes, as they compute
productions within the black box. These are situations of non-trivial machines, in
which actors adjust their interactions as they modify each other following the need
for stability in eigen forms. These are situations of double closure, which affect
organisations of all sizes, from the very small to the very large, from those in need
of local sustainability to those requiring global sustainability.
Scholte (2012), with a focus on the performing arts, relates creative interactions
among actors and between them and audiences to the idea of eigen forms. Following
the works of Kauffman (2005) and von Foerster (2003) he discusses the notion of
eigenform. He uses eigenforms as the missing conceptual bridge to unite social
constructivists with embodied cognitivists in the field of theatre studies and beyond
in the cognate fields of film, literary and visual art theory, but also into more general
social constructions. My comments to Scholte’s paper in Constructivist Foundations
(Scholte, 2012) were constructed as the outcome of actors’ interactions with
audiences in processes of double closure. Actors compute, as an outcome of
transforming inputs into outputs to the environment (M), that is, as an outcome of
producing stable outcomes or eigenforms, through which they carry out double
closure in their interactions with collectives, their work of art. The argument is that
the parts’ interactions produce first order transformations of inputs into outputs,
but also through computing these interactions produce second order outcomes or
eigen forms. These two loops are related by self-reflecting loops (SRL) to evolving
identities (Z) for the I-O transformations; that is to the BB eigen-forms. These eigenforms may produce works of art, which are not objective representations of
situations external to them. Actors and audiences experience stable meanings
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through on-going processes of interactions, which make them changeable by an
stable truth emerging from the participants interactions, that is, by the “truth”, of their
emerging human spirit (i.e. the object with their values, principles, and so forth). Scholte
rejects the notion that “the collective actors”, as they perform, provide to the related
audiences with access to human truths (beyond their collective agreements or
“truths”); for as long as they provide a genuine and rigorous grasp of a situation they
are producing a “truth”, which in general is not a proven scientific truth. Measurable
performance does not necessarily drive these outcomes. The idea of measurable
performance as the ratio between inputs and outputs, which is traditionally used as
performance of commercially driven organisations, is now replaced by computations
of self-reflective loops (SRL) produced by relations among the participants in these
organisational systems, stretched by environmental avatars 1 triggered by ethical and
value considerations, beyond commercial aspects; these are the eigen behaviours
produced by double closure. Scholte’s views that he relates to art can be extended
to all kinds of systems; commercial and social.
3
Methodology
The interactions among the actors, and more generally of the participants producing
the meanings of a situation, whoever they happen to be, through shared computing
processes, possibly through shared models, experience meaning creation beyond the
actors creating and inventing them. I’m offering, from an organisational perspective,
an interpretation of capturing the “truth” of the human spirit from people’s interactions.
As already said, the outcome is not an objective truth, or productivity of inputs
versus outputs, which may be of value for commercial purposes, but expressions of
collective values, ethical considerations and more general constructions.
As already said, in Figure 1 a self-reflective loop (SRL) is computing processes and
modifying the identity Z of the internal closure of interactions, producing social
situations such as the UNO 17 goals (e.g, climate change, education, use of natural
resources, works of art, and so forth relevant to an extended understanding of
organisational systems). Furthermore, audiences and actors, beyond interpersonal
interactions, interact in contexts, such as culture, nature, climate, which are
1 From the English Dictionary we understand that an Avatar is the embodiment or manifestation of a person or
idea; and also, it is an icon or figure that represents a particular person in an internet forum.
R. Espejo: Interaction Mechanisms and the Performance of Production Enterprises as Social
Systems: The Truth of The Human Spirit
293.
fundamental to understand the balancing of their interactions. It is in these spaces
that the performance of interactions takes place and the question is, are these
contexts contributing to produce valuable second-order experiences or are just good
economic outcomes as we usually construe input-output relations?
Figure 1: Second Order Organizational Systems and Active Contextual Environments The
(Meta) Context of Interactions
Source: Wene (2007).
Beyond subject-subject environmental interactions, which belong to the
organization-environment space of structural formations, this work is recognizing a
subject-metasubject space of interactions which belongs to the cultural formation of
these organisations, in contexts of religious, ethical, climate contexts and others,
which constraint the way the organizational systems operates in those contexts; this
is something that goes beyond the organisation-environment interaction into their
organization- meta environment space; this is a sort of contextual closure as is explained
in Figure 2.
From the perspective of variety management closure (Ashby, 1964) the input-output
loop makes apparent that the output of transformational processes can be related to
a desirable performance; what output is produced by what input? From the
perspective of producing something, this is fundamentally a quantitative loop. If the
purpose is producing something at a given level of performance the law of requisite
variety tells us whether the resources available are adequate or not for this purpose
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and whether the feedback loops are correcting relationships between actors and
audiences to achieve this desirable performance. All these are mutual variety correcting
processes between actors and audiences, in which the high variety experienced by
the latter, in their contexts (what we called avatars) need to be absorbed, one way or
another, by the actors’ varieties in search for desirable (input-output) performance.
But beyond economic performance, if their purpose is respect for participants,
valuable artistic experiences of all participants or, in a more general sense, spiritual
satisfaction, their interactions may contribute through the closure of their learning
loops to ontologically acceptable eigenforms (Espejo & Lepskiy, 2022). Participants
contribute with their creativity, inventiveness, values, histories to the formation of
eigenforms, or stable meanings through their interactions.
4
Results
All this is highly complex. It is possible that actors to produce desirable outcomes,
may recognise different views for their input-output transformations (first loop) and
through their interactions with environmental participants trigger different
understandings of these transformations and open the space for adaptation and
change, that is, trigger different forms of double closure (second loop). These are
non-trivial learning loops related to the black box, which create different
appreciations of the contributions of different actors and trigger computing processes
among the participants themselves and also with their medium or immediate
environment.
From a complexity perspective both actors and audiences experience high varieties.
However, an additional aspect is illustrated by the external loop in Figure 2; these
interactions take place in a wider context, a metacontext, that shapes the
complexities that they experience. As already clarified eigen behaviours lend stability
to objects in a changing world. Actors creative contribution to organisationenvironment interactions can be understood as extensions of Beer’s Viable System
Model with double-closure (Espejo, 2020) offering adaptive products and through
their multiple relationships offering aspects of ethics, values, environmental
responsibilities and what they may require in the spirit of a piece of work or social
construction. Therefore, what happens through the black box, the transformation it
produces, is more than products; it is the outcome of double closure, through linear
and non-linear transformations. This epistemology is explained in Espejo (2020) as
R. Espejo: Interaction Mechanisms and the Performance of Production Enterprises as Social
Systems: The Truth of The Human Spirit
295.
the complementarity of a black box and an operational description of a social
situation.
Figure 2: Viplan Methodology and Ontological Cybernetics
Source: Espejo (2020)
5
Discussion
In today’s world of highly complex, digital technology, what is of significance to the
above elaborated system-environment interaction criteria? In today’s world, how
does it relate to artificial intelligence (AI), that is, to the output of an Image Dream
Generator? How does AI relate to double closure? For instance, can it produce top
notch artwork? Or high-quality art is beyond an AI producer? How does it blur
ethical boundaries as it is the case with human work? Human artists mix emotion
and nuance in their personal styles. Is there a need for regulation in the production
of AI art? AI-generated content has the potential to create new forms of art, but the
complexity of works of art goes beyond computing through selections in a database. At the very least new products in situations of double closure go beyond inputoutput transformations.
As an expression of the human spirit, with a focus on art, artists create, regulate and
implement their works, as they interact among themselves and with other subjects
in their wider environments, at the same time that they are constrained by meta-
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systems that culturally are shaping their spaces for action and development. These
are the actors–metasubject relationships, which are relevant to all forms of social
systems, that is, they apply to interactions between organisations and their
environment and between them and with their contexts.
Whether the dominant epistemologies of people in social contexts are those of firstor second-order cybernetics, social responsibility in ontological cybernetics is
considered in the context of the subject/meta-subject paradigm, that is in the
context of self-developing reflexive-active environments, which vary in degrees of
reflexivity and required regulation (Lepskiy, 2018).
While the meaning of interactions between social and environmental subjects is
about the development, adaptation and implementation of their tasks, the meaning
of belonging to a larger meta-systemic context is about social responsibility in selfdeveloping reflexive-active environments (within social constrains of citizenship
relationships).
These ideas are proposed under the influence of philosophical transdisciplinary,
aimed at bridging social constructivists and embodied cognitivists, making possible
to integrate ideas and concepts of humanitarian studies: ideas of society as social
systems activity (Lepskiy 2018) and subject-activity approaches, interdisciplinary
ideas of the formation of social cybernetics (Beer, 1975; 1979), socio humanitarian
analysis of the experience of developing automated systems (Lepskiy, 2018;
Luhmann, 1995) and others.
Self-developing reflexive active environments are increasing our understanding of
organizations beyond their immediate system-environment definition. Sustainable
issues are better structured and managed if relevant subject-metasubject selfdeveloping reflexive-active environments are entangled with actors and agents in
learning conversations.
Subject-subject interactions are shaped by multiple viewpoints which observe
situations from their own perspectives; these are the foci of second order
cybernetics. In particular these are interactions of agents in general, in which actors
are stretched changing the organization’s structure, triggering a variety of
organizational forms (inner loop in Figure 2). However, these interactions happen
R. Espejo: Interaction Mechanisms and the Performance of Production Enterprises as Social
Systems: The Truth of The Human Spirit
297.
in a context of self-developing reflexive active environments (outer loop in Figure
2). This reflexivity, as presented in Figure 2, is between the organizational system
improving its structure in the cybernetic (inner) loop of its operational environment
and the (outer) loop of reflexive active metasubjects correcting variety imbalances
to improve the organizational context. This is a contextual environmental learning.
It is about correcting responses to the wider organizational environment; it is about
meanings, values, concerns, emotions dominating recursively its organization and its
autonomously contained primary activities; it is about global, regional and local
citizenship. These contexts restrict their spaces of interactions. They are restricting
the subject-subject interactions of the organizational system with its immediate
environment, with the complexity of their wider environmental agents, which belong
to the organization-environment space of structural formation. For its part the
subject-metasubject interactions belong to a cultural formation, including religion,
ethnic differentiation, fundamental societal values, and others which constraint the
way the organizational systems operates in that context. From an ontological
perspective we are talking of two types of cybernetic models: the first is the Viable
System Model (Beer, 1979) expanded by the Enterprise Complexity Model and the
Viplan Methodology (Espejo, 2020), and the second is a model of self-developing
reflexive-active environments, as proposed by Espejo and Lepskiy (2020; 2022) with
the name of ontological cybernetic.
6
Conclusion
Self-developing reflexive active environments as illustrated in the above loops, are
increasing our understanding of organizational systems beyond formal or legal
definitions. Sustainable issues are better structured and managed if relevant subjectmetasubject self-developing reflexive-active environments are entangled with actors
and agents in learning conversations. This entanglement is illustrated in Figure 2 to
introduce a preliminary understanding of the “truth” of the human spirit.
Acknowledgement
This paper has benefitted of Dr. Igor Perko’s comments. However, its content is of my responsibility.
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Wene, C.-O. (2007), Technology Learning Systems as Non-Trivial Machines. Kybernetes, 36, 348-363.
INDUSTRY 5.0: GUIDELINES TO
DIGITAL TRANSFORMATION AS A
STRATEGY FOR SUSTAINABILITY
BIRGIT OBERER,1 ALPTEKIN ERKOLLAR2
ETCOP Institute for Interdisciplinary Research, Klagenfurt, Austria
oberer@etcop.at, erkollar@etcop.at
Abstract Digital transformation involves the integration of
digital technologies and solutions into every facet of an
organization. However, it's not just about technology, but also
requires a cultural shift within the organization. It's a crucial
component for any comprehensive business transformation
strategy and can be the key to success. By leveraging the right
technologies and involving people, processes, and operations,
organizations can adapt quickly to change, seize opportunities,
meet customer demands, and drive growth and innovation. To
ensure long-term sustainability, it's essential to integrate
sustainability strategies across various dimensions of the digital
transformation roadmap. This paper explores how digital
transformation has evolved since the COVID-19 pandemic, the
significant challenges that organizations are facing today, what
leading organizations are doing differently, and what steps can
be taken to identify and address the key areas of focus in the
coming years, with an emphasis on the people component as a
critical success factor.
DOI https://doi.org/10.18690/um.epf.3.2023.34
ISBN 978-961-286-736-2
Keywords:
Industry 5.0,
digital
transformation,
sustainability,
strategy,
organizations
JEL:
L26, M14
300
1
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Introduction
In the digital transformation, organizations are facing a multitude of changes.
Industries, markets, and customer demands are developing with great dynamism,
and not just since the pandemic gave us a digitalization boost. Organizations need
to respond to digitization and shape this change to remain fit for the future and to
address sustainability topics. When organizations undergo organizational change,
this also offers opportunities for sustainable business. Digitization and sustainability
are driving themes of our time and, when considered together, can create social,
ecological, and economic benefits. Not enough organizations focus on the
transformation of the human success factor in digital transformation.
Transformation has always been about people. This has often been a weak point for
many digital transformation efforts and is the component that many organizations
are missing.
2
Literature Review
2.1
Digitization
Digitization involves the integration of digital technologies into business processes
to enhance their effectiveness. This transformational process often changes the way
organizations interact with stakeholders and even their revenue streams.
Fundamentally, digitization involves the mechanical translation of physical data into
a digital format. Digital information consists of ones and zeros and cannot be
distorted, and its transmission occurs without losses. In recent years, digitization has
increasingly been understood as a collective term for the use of digital information
in business, politics, and society. Digitization enables processes in all these areas to
be modernized and improved. Digital transformation is a direct consequence of
digitization (Ordieres-Meré et al., 2020; Ananyin et al., 2018).
2.2
Digital transformation
Digital transformation is the transformation of the corporate world through new
Internet technologies with effects on society. Digital information and
communication technologies are used to improve performance by transforming or
enhancing corporate processes, customer experiences and business models (El Hilali
B. Oberer, A. Erkollar: Industry 5.0: Guidelines to Digital Transformation as a Strategy for
Sustainability
301.
& El Manouar, 2019). The concept of digitization can be used in and affect many
different areas. A common application of digitization is the upgrade of a business
model, where the goal is to achieve added value through the introduction of new
technologies. The introduction of digital technologies can improve industrial
processes (Ghobakhloo, 2020; Ananyin et al., 2018).
2.3
Digitization in organizations
Organizations are currently taking a reactive approach to digital transformation, with
many using new technologies to remain competitive and relevant, rather than
looking to innovate (Erkollar & Oberer, 2023; Craig, 2021). However, when done
correctly, digitization can bring significant benefits to organizations, such as
improved working conditions, new customer acquisition channels, better decisionmaking, higher employee retention, improved teamwork, and a greater willingness
to innovate. Digitization offers primary benefits in the form of better workflows,
greater efficiency, improved products, and new services, leading to secondary
benefits such as improved competitiveness, reduced response times to customer
feedback, and shorter time to market for new products (Ghobakhloo, 2020).
Additionally, end-to-end integration of entire supply chains can lead to cost
reductions in production. Despite the benefits for customers, digitization may not
always provide immediate value to the organization (Craig, 2021; Ghobakhloo, 2020;
Teece & Linden, 2018). However, digital transformation, sustainability, and strategy
are interconnected concepts that are crucial for organizations to succeed in today's
fast-paced and ever-changing world. Digital transformation involves the integration
of digital technology into all areas of a business, leading to fundamental changes in
how the business operates and delivers value to customers. The increasing
prevalence of digital technologies such as cloud computing, artificial intelligence, and
the internet of things are driving this transformation, revolutionizing the way
businesses operate and interact with customers (Erkollar & Oberer, 2023; Craig,
2021; Teece & Linden, 2018).
At the same time, sustainability has become a critical issue for businesses and society
as a whole, as concerns about climate change, resource depletion, and social
inequality have increased. Sustainable business practices involve balancing
economic, environmental, and social considerations to create long-term value for all
stakeholders. Strategic thinking is also essential for businesses to succeed in today's
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highly competitive environment. A strategic approach involves setting goals and
objectives, making decisions, and allocating resources in a way that aligns with the
organization's overall mission and vision. Together, these concepts form a powerful
framework for businesses to navigate the challenges and opportunities of the digital
age. Digital transformation provides the tools and technology to enable sustainable
business practices, while strategic thinking ensures that those practices are aligned
with the organization's overall objectives (Craig, 2021; Manrique et al., 2021; Teece
& Linden, 2018).
Further, a 'the-winner-takes-it-all economy' that encourages the creation of
monopolies. Challenges for most organizations include the complexity of
implementing a new technology, the lack of resources in terms of skilled IT staff,
the general reliance of the workforce on proven technologies, and the question of
why change something if it does work. Other challenges that can stand in the way
of digital transformation include upgrading the workforce to cope with digitization,
introducing new business models, increasing focus on environmental and social
sustainability, transitioning to a digital enterprise, and adapting to the realities of a
digitized economy. This is expressed through decentralized collaboration, and the
merging of digital and physical information (Craig, 2021; El Hilali & El Manouar,
2019; Ananyin et al., 2018).
3
Methodology
A deductive, qualitative research approach with a descriptive research design is
applied. The primary research method used is that of document analysis. The
research question for this publication is explorative: ‘What are the key success factors
of a digital transformation in a post-pandemic environment?’ A document analysis
is conducted on the topics of digitization, digital transformation, and sustainable
development. Based on this, approaches for a successful post-pandemic digital
transformation are analyzed.
B. Oberer, A. Erkollar: Industry 5.0: Guidelines to Digital Transformation as a Strategy for
Sustainability
4
Results
4.1
Digital transformation – a post-pandemic view
303.
The COVID-19 pandemic has acted as a trigger for digital transformation in many
organizations, driving them to accelerate their technology initiatives, make drastic
changes to processes, and re-evaluate their culture's role in today's business world.
However, many organizations are still facing significant challenges in their digital
transformation efforts, and addressing these challenges should be a top priority for
organizations in 2023 and beyond. The integration of technology, streamlining of
processes, and delivery of increased business value remain top priorities as
organizations look to the future. Key investments in digital transformation include
business process automation, artificial intelligence, and machine learning. For many
organizations, 2021 was a year dominated by digital transformation as they evaluated
the impact of their investments and refined their strategies. Successful digital
transformation requires organizations to move beyond survival mode and embrace
change (El Hilali et al., 2020; El Hilali & El Manouar, 2019; McConnell, 2015).
4.2
New success factors and priorities
As organizations seek to adapt to new business models and achieve their goals, they
are also changing their digital transformation objectives. These goals include
optimizing their data strategies, innovating, and enhancing the customer experience
beyond pandemic-related adjustments (Felsberger & Reiner, 2020). However,
achieving these objectives can be challenging and may compromise organizational
success if not addressed properly (Junge, 2019; Kayikci, 2019). Staffing challenges
are a significant impediment to digital transformation, as organizations face difficulty
finding and hiring talent to support new initiatives and in creating a culture of
continuous learning. Failing to address these issues can not only jeopardize the
organization's ability to support new technologies but also compromise its
competitive advantage in the long run. Organizations must also align their digital
transformation efforts with business goals and key performance indicators, which
are critical to the success of the transformation. Digital transformation requires more
than just developing new applications, and it is essential to integrate it into existing
processes and adapt business processes. Retraining employees on new activities is
necessary (Felsberger & Reiner, 2020; El Hilali & El Manouar, 2019).
304
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Why some are more successful than others
Successful digital transformation in organizations is characterized by leaders who
communicate a clear vision of the transformation, and inspire employees to embrace
change to foster a culture of transformation (El Hilali et al., 2020). To achieve this,
leaders need to empower employees at all levels and reward them for taking initiative
in becoming agents of change. Organizations need to create a culture that accepts
failure and encourages taking risks to drive digital transformation (Junge, 2019).
However, building such a culture can be challenging in organizations where success
is defined by not making mistakes.
The COVID-19 pandemic led to unprecedented labor shortages, forcing
organizations to re-evaluate their talent needs and face the challenge of effectively
allocating resources to the right areas of transformation (Ghobakhloo, 2020; El
Hilali & El Manouar, 2019). Many organizations struggle to find and retain talent to
support their new technologies and business initiatives. To address this challenge,
organizations could prioritize upskilling and training their existing employees, which
is an often-untapped opportunity (Alenezi, 2021). However, organizations may
hesitate to invest in training because they assume that employees will leave the
organization at some point (Dias et al., 2022).
In summary, successful digital transformation requires clear communication from
leaders, a culture that embraces change and risk-taking, and effective allocation of
resources, including talent. Organizations can leverage internal talent by prioritizing
their upskilling and training, leading to a more sustainable approach to meeting their
talent needs.y assume they will simply leave the organization at some point (Dias et
al., 2022).
5
Discussion and Conclusion
5.1
Measuring the success of digital transformation
Many organizations struggle with aligning their business goals and key performance
indicators (KPIs) with their digital transformation initiatives. However, leading
organizations prioritize aligning their digital transformation efforts with their
business objectives and KPIs to achieve their goals (Lixu, 2022). They make it clear
B. Oberer, A. Erkollar: Industry 5.0: Guidelines to Digital Transformation as a Strategy for
Sustainability
305.
that their digital transformation initiatives are meant to achieve specific objectives
and goals.
While organizations may focus on operational efficiency as a metric to measure the
success of their digital transformation efforts, it may not be the most effective
measure. Operational efficiency is more about digital refresh than digital
transformation, as organizations replace outdated legacy processes with new digital
ways of working. Instead, organizations should avoid relying solely on processoriented benchmarks to measure the progress of their digital transformation efforts.
Employee satisfaction is a crucial yet undervalued metric that organizations should
use to measure the success of digital transformation initiatives. This is because
engaged employees are more likely to adopt new technologies, leading to successful
digital transformation (Katsamakas, 2022).
5.2
The priority is still on technologies
Organizations have been driven to invest in business process automation due to
labor shortages resulting from the COVID-19 pandemic (Ghobakhloo, 2020; El
Hilali & El Manouar, 2019). As a result, artificial intelligence (AI) and machine
learning are becoming high-profile technology investments once again, as
organizations seek to better interpret data and make more informed decisions, as
well as engage with customers more effectively using analytics (Lixu, 2022;
Katsamakas, 2022). While technological advances have contributed to changes in
markets, organizations must also address ecological and social sustainability deficits,
and integrate core competencies into new business models and market areas in
alignment with corporate sustainability strategies (Dias et al., 2022; Junge, 2019).
Therefore, meaningful digitization of processes is necessary to leverage
opportunities and overcome challenges in the current business landscape.
5.3
What comes next?
Many organizations were quick to jump on the digital transformation bandwagon
without a clear understanding of their goals. To ensure successful investments in
new technologies, organizations must prioritize productivity, good employee
experience, and good customer experience. Digital transformation has become
increasingly crucial for businesses, as it enables them to break free from constrained
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business activities and shift their focus to delivering more business value. To achieve
greater success in their transformation efforts, organizations must address the key
cultural challenges that hinder their progress. In the area of human resource
management, hiring strategies need to be re-evaluated, and retraining and upskilling
programs must be supported to ensure that corporate transformation efforts align
with business goals and KPIs. Sustainability, digital transformation, and strategy are
interdependent and should be approached strategically to ensure long-term business
success. By adopting a strategic approach to sustainability and digital transformation,
businesses can identify new opportunities and markets, develop innovative products
and services, reduce their environmental impact, and create long-term value for all
stakeholders (Katsamakas, 2022).
References
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Ananyin, V. I., Zimin, K. V., & Lugachev, M. I. (2018). Digital organization: Transformation into the
new reality. Business Informatics, 2(44), 45–54. https://doi.org/10.17323/19980663.2018.2.45.54
Craig, R. (2021). How higher ed can prepare students for today's digital jobs. Harvard Business Review.
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Dias, A. M., Carvalho, A. M., & Sampaio, P. (2022). Quality 4.0: Literature review analysis, definition
and impacts of the digital transformation process on quality. International Journal of Quality &
Reliability Management, 39(6), 1312-1335. https://doi.org/10.1108/IJQRM-07-2021-0247
El Hilali, W., & El Manouar, A. (2019). Towards a sustainable world through a SMART digital
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Lixu, L. (2022). Digital transformation and sustainable performance: The moderating role of market
turbulence. Industrial Marketing Management, 104, 28-37.
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Sustainability
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Manrique, A., Villarreal, B., Montoya-Torres, J. R., & Díaz-Garrido, E. (2021). The role of digital
transformation in sustainability: A systematic literature review and future research agenda.
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McConnell, J. (2015). The company cultures that help (or hinder) digital transformation. Harvard
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research agenda. Journal of Strategy and Management, 11(3), 307-316.
https://doi.org/10.1108/jsma-09-2017-0077
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SUSTAINABLE HUMAN
RESOURCE MANAGEMENT
ANA MARIJA GRIČNIK, MATJAŽ MULEJ,
SIMONA ŠAROTAR ŽIŽEK
University of Maribor, Faculty of Economics and Business, Maribor, Slovenia
ana.gricnik@student.um.si, matjaz.mulej@um.si, simona.sarotar-zizek@um.si
Abstract Sustainable HRM (SHRM) is a new approach to people
management, focusing on long-term HRM, regeneration, and
renewal. It helps firms attract and retain high-quality employees:
by integrating SHRM practices into their employee value
proposition, firms establish unique, attractive employer brands.
Socially Responsible HRM, Green HRM, Triple Bottom Line
HRM, and Common Good HRM are types of SHRM. Especially
these characteristics of SHRM matter: Long-term orientation,
care for employees, environment, profitability, employee
participation and social dialogue, employee development,
external partnership, flexibility, compliance beyond labor
regulations, employee cooperation, fairness, equality. SHRM is
based on sustainable HR policies, such as management of
employment relationships, prevention, health and safety at work,
training and continuous development, diversity and equal
opportunities, fair remuneration and social benefits,
communication, transparency, social dialogue, attraction, and
retention of employees, work–family balance. The paper
presents a possible requisitely holistic model of SHRM.
DOI https://doi.org/10.18690/um.epf.3.2023.35
ISBN 978-961-286-736-2
Keywords:
sustainability,
sustainable human
resource
management
(SHRM),
types of SHRM,
characteristics of
SHRM,
social
responsibility
JEL:
Q01, Q10, A13
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE.
310
1
Introduction
Since firms are dealing with the external pressure of society, obstacles in the labor
market, and internal issues in employment relations, they must reconsider their
responsibility and business models. Shortage of skilled labor force, aging society, and
employee health problems are examples that impel firms to search for new ways to
improve their HRM (Clarke, 2011). Therefore, using the potential of sustainability
for HRM, which includes providing a proper work environment and conditions,
providing development opportunities, being genuine towards employees, and being
attentive to employees’ psychological and physical well-being, could make sense
(Wikhamn, 2019).
HRM is now expected to actively help organizations meet the demands of competing
stakeholders, take care of the triple bottom line, and achieve financial, social, and
environmental performance for both the present and the future; thus, sustainability
is increasingly significant for HRM, too (Ehnert et al., 2014).
The United Nations Brundtland Report introduced ‘sustainable development (SD),’
defining it as development that meets the present needs while preserving future
generations' ability to meet their own needs (Brundtland, 1987). The SD perspective
promoted various concepts regarding business responsibilities, including corporate
social performance (CSP) and corporate social responsibility (CSR). CSR exposed
ethical and philanthropic obligations in addition to organizational financial and legal
responsibilities (Ehnert & Harry, 2012).
To authors of this paper, SHRM addresses modern macro and micro challenges.
The demand for sustainability and sustainable development is increasingly gaining
ground globally, including SHRM to ensure a long-term relationship with HRM
stakeholders. To add insight into SHRM, we use available secondary scientific
sources with a qualitative approach.
We present research on SHRM, its characteristics, and types to help managers and
companies implement SHRM. Hence, we derived a possible requisitely holistic
model of SHRM. The paper is structured in 3 sections. After the introduction,
section 2 describes the scope and characteristics of SHRM. Section 3 sets the
discussion and conclusions.
A. M. Gričnik, M. Mulej, S. Šarotar Žižek: Sustainable Human Resource Management
2
Theoretical Background
2.1
The scope of SHRM
311.
SHRM is an extension of strategic HRM (Ehnert, 2009), defined as the set of
planned or developing HRM strategies and practices designed to support the
achievement of economic, social, and environmental goals while sustaining the HR
base over time (Kramar, 2014). Ehnert et al. (2014) see SHRM as a contribution to
sustainable company development: sustainability reaches beyond environmental and
economic sustainability to involve other issues, including justice, employee
participation, health and wellbeing, employability, and employee development.
The SHRM characteristics explain what HRM should look like to be sustainable and
how sustainability can be used for HRM. They were suggested to improve
knowledge on how to make SHRM more explicit (Stankevičiūtė & Savanevičienė,
2018). The following ones matter most:
Long-term orientation prioritizes long-range consequences and impacts of
decisions and actions; they matter after a long period (Lumpkin & Brigham, 2011).
This includes: futurity, which indicates a worry about the future; continuity, which
emphasizes the link between the past and the future; and perseverance, which
stresses the effect of current choices on the future (Lumpkin & Brigham, 2011).
Unfortunately, in many important decisions, the optimal long-run plan of action is
not the most desirable in the short term (Laverty, 1996).
Care about employees, their workload, income, work-life balance, and other
factors (Guerci & Pedrini, 2014) including workforce remaining healthy and
productive over the long term (Ehnert, 2009).
Care about the environment is a critical aspect of green HRM (Renwick et al.,
2008) and the ecological result of SHRM (Kramar, 2014). HRM should heavily
emphasize environmental responsibility, focusing on recruiting environmentally
conscious and highly qualified employees, particularly younger generations (Renwick
et al., 2008). Strategies for environmentally responsible recruitment include using
technology, responsible branding, choosing candidates with environmental
awareness, and including environmental factors in recruitment messages (Opatha &
Arulrajah, 2014). More broadly, environmentally responsible behavior in day-to-day
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tasks might include rational electricity use, limited printing, switching paper-based
tasks to digital platforms, garbage sorting, and eco-friendly transportation (Kramar,
2014).
Profitability has, for a very long time, dominated organizational activity. Now,
financial measures are no longer the sole way to evaluate success as businesses
increasingly commit to sustainability (Kiron et al., 2011). The sustainability factor
does not invalidate economic success (Stankevičiūtė & Savanevičienė, 2018). An
organization's long-term viability depends on both: its financial stability and
environmental competitiveness (Clarke, 2011).
Employee participation and social dialogue: a way to increase employees’
commitment and loyalty toward the organization and fulfill social needs and human
growth (Joensson, 2008). It is also a fundamental goal of SHRM: it enables
perceiving employees as subjects (Zaugg, 2009).
Employee development is linked to long-term orientation, considering employees
as key assets and change agents (Hirsig et al., 2014); future-oriented skills reach
beyond improving the current ones. Investing in future skills challenges viewing
corporate sustainability as a whole because the business environment is constantly
changing and calling for urgent efforts to respond, including in terms of employee
abilities (Stankevičiūtė & Savanevičienė, 2018).
Flexibility: functional and numerical flexibility are two types of flexibility in HRM.
Functional flexibility is the capacity to adjust to changing company’s needs for
versatile, internally mobile people and depends on long-term mutual investment in
employment relationships, while numerical flexibility involves adjusting personnel
numbers to match business demands and minimize costs (Carvalho & Cabral‐
Cardoso, 2008). While numerical flexibility is often associated with short-term costcutting, it can be sustainable if it involves temporary employment of individuals who
need assistance in integrating into the labor market (Stankevičiūtė & Savanevičienė,
2018). Flexibility in SHRM mainly pertains to employee demands such as work
hours, leave, retirements, vacations, rewards, and remote work (Vihari & Rao, 2018).
A. M. Gričnik, M. Mulej, S. Šarotar Žižek: Sustainable Human Resource Management
313.
Compliance beyond labor regulations: one must match the law to operate
(Stankevičiūtė & Savanevičienė, 2018), but it’s not enough sufficient for effective
SHRM. A more comprehensive strategy is required for SHRM and profit from it, as
adherence to institutional standards alone does not guarantee sustainability
(Järlström et al., 2018).
Employee cooperation is created and improved by sharing information, building
trust and respect within the organization, and using open, proactive communication.
It also promotes increased quality and productivity, lowers absenteeism and the
likelihood of labor conflicts, it boosts overall job satisfaction (Hirsig et al., 2014).
Fairness and equality: rules, rights, and responsibilities must be the same for
everyone in the organization (Järlström et al., 2018). To ensure SHRM, diversity
promotion in necessary and fairness and equality should reflect in all aspects of
HRM, including hiring, reviewing performance, awarding employees, etc. (Hirsig et
al., 2014).
External partnership: relationships with the labor market, educational institutions,
non-governmental organizations, and employee families are considered contributing
value. Therefore, in SHRM, a company must recruit and keep employees today and
maintain access to the so-called "source of resources"(Ehnert, 2014; Ehnert, 2009).
2.2
SHRM types
To achieve effective design and implementation of SHRM and contribute to solving
today’s grand sustainability challenges, it is crucial to identify different SHRM types
and their purposes (Ehnert et al., 2020).
Socially responsible HRM (SRHRM) includes HRM techniques that target
implementing employee policies and promoting the implementation of CSR policies
while influencing the conduct and attitudes of employees (Zhao et al., 2021). To help
the organization achieve its CSR goals, SRHRM seeks and keeps employees with a
strong sense of CSR that favor organizational morality and are eager to participate
in ethical activities like protecting the environment and charity (Abdelmotaleb &
Saha, 2019).
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SRHRM encourages employees’ moral behavior more than other HRM strategies.
SRHRM inspires employees to defend the interests of other stakeholders and urges
them to perform initiative behaviors (Zhao et al., 2021). Employees' CSR awareness
will prompt them to act morally to protect the organization's and external
stakeholders' interests when they witness unethical activity in the workplace. On the
other hand, SRHRM considers social performance in evaluation and promotion,
embedding ethics within the organizational structure (Abdelmotaleb & Saha, 2019).
Green H RM refers to organizational creation, implementation, and ongoing
maintenance processes for environmental consciousness. Green HRM makes
employees environment-friendly to meet organizational environmental goals and
substantially contributes to environmental sustainability. Benefits for individuals,
society, the environment, and the company result from policies, procedures, and
processes making all green (Opatha & Arulrajah, 2014).
The role of GHRM is typically seen as either supporting environmental management
(EM) by influencing the environment or focusing on organizational culture towards
EM targets, or it is seen as primarily manifesting itself in HRM practices, e.g., to
reduce carbon footprints by printing less, traveling less, or adopting other
environmentally conscious behaviors (Järlström et al., 2018).
Triple Bottom H RM concentrates on the HRM's presumed economic,
environmental, and social goals all at once (Ehnert et al., 2020). This method
demonstrates that a more comprehensive understanding of sustainable human
resource management is possible when HRM is viewed as a general approach to
people management that concentrates on employee-oriented practices (like
employee well-being or involvement) while also taking into account the impact of
HRM on its social and ecological environments (such as resource regeneration,
and/or ecological goals) (Ehnert, 2009).
Common Good H RM is a fundamental shift in how humans view the purpose of
business and HRM’s contributions. All aforementioned HRM types partly modified
the traditional business objective - financial gain - to adapt to external pressure for
greater social and ecological responsibility. A common good HRM posits that
business has a fundamental duty to contribute meaningfully to sustainability issues.
Its long-term self-interest lies in preserving our way of life (Ehnert, 2009).
A. M. Gričnik, M. Mulej, S. Šarotar Žižek: Sustainable Human Resource Management
3
315.
Discussion and Conclusions
The SHRM may be the most complex challenge ever attempted in HRM
(Westerman et al., 2020). Its HRM techniques and practices enable attaining
financial, social, and ecological goals, with influences inside and outside the business
and over a long period while preventing unwanted side-effects and feedback (Ehnert
et al., 2016).
As a very complex topic, SHRM covers multiple types per their target areas. Along
with economic aspects, SRHRM focuses on the company’s effect on society, GHRM
on its environmental impact, and Triple Bottom HRM combines all three aspects.
These three types of SHRM share the consideration of how implementing
sustainability can help the company achieve higher financial success. On the other
hand, Common Good HRM defines sustainability as a necessary property of HRM
to preserve our life. It is recommended for businesses to implement SHRM practices
in their operations to ensure their long-term survival. Such practices can be
implemented into employees' recruitment, selection, training, rewarding, etc. By
matching SHRM, businesses can make themselves more appealing to
environmentally conscious potential employees. Therefore, managers should use all
types of SHRM and define the extent of effort they would be willing to put into
implementing them.
Since the implementation of SHRM practices would require substantial financial
inputs (employee and management training, as well as a change in a business
organization), there are practical limitations on how many businesses will decide to
implement such practices and the extent of effort they would be willing to put into
implementing them.
The main purpose of this paper was to determine whether SHRM is the answer to
modern macro and micro challenges. Yes, it is. Namely, implementing sustainability
into HRM will benefit the business in the long run, employees, and society as a
whole.
By examining the research reported in this paper, we can derive a holistic model of
SHRM. In the center of the model in Figure 1, we can see the characteristics of
SHRM, beneath are its functions, and on the side are the connections between
different SHRM types.
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE.
The main outcome of this research is a requisitely holistic model of SHRM. As such,
it could be useful for companies in their effort to implement sustainability into their
HRM practices. Therefore, this paper offers the next logical research step, i.e., to
test our model in practice and make suggestions for upgrading it.
A. M. Gričnik, M. Mulej, S. Šarotar Žižek: Sustainable Human Resource Management
Figure 1: Characteristics of SHRM
Source: Auhthor's elaboration.
317.
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CHANGE IN DEVELOPMENT
VECTORS OF UKRAINIAN
ENTERPRISES IN WAR CONDITIONS
VERONIKA VERBA, OLENA KYZENKO,
OLENA HREBESHKOVA
Kyiv National Economic University named after Vadym Hetman, Kyiv, Ukraine
verba@kneu.edu.ua, e.kyzenko@kneu.edu.ua, grebeshkova@kneu.edu.ua
Abstract The war has changed the lives of Ukrainians
dramatically. High turbulence of the economic environment
cause searching potential directions of business activity recovery
for Ukrainian companies. The purpose of the study was to
identify the current development issues and summarize the
experience of survival of Ukrainian enterprises under war
conditions. Based on the analysis of the responses of more than
500 Ukrainian enterprises’ representatives from all regions of the
country, actual functioning problems of Ukrainian business after
February 24, 2022 were revealed. Dynamics of economic results
of the enterprises was analyzed, structural changes of their
contract portfolios were determined, practice of full or partial
relocation of business was revealed, current operating issues of
domestic companies were described. Potential vectors of
development are changes in the company's product portfolio,
logistics chains, structure of the contracts, keeping decent work
conditions and social support for the employees.
DOI https://doi.org/10.18690/um.epf.3.2023.36
ISBN 978-961-286-736-2
Keywords:
economy,
management,
enterprise,
development,
business
JEL:
M10
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
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322
1
Introduction
As a result of external aggression, business in Ukraine was forced to develop and
implement anti-crisis strategies urgently within a significant deterioration of the
general state of the economy. According to the Ministry of Economy of Ukraine, by
the end of 2022, the drop in GDP is estimated to reach 30,4 % (Ukrinform, 2022).
All areas of the economy have experienced a significant negative impact on business
associated with the threat of physical loss of assets, power generation shortages and
disruptions of supply chains due to hostilities and port blockades.
In order to ensure the effectiveness of financial support for the development of
domestic SMEs, new relevance is vested in determining the vectors of their
development, taking into account the current conditions and prospects of European
integration.
The necessity of forecasting the development of the enterprise increases within a
crisis state of the economic system as a whole. This need is especially acute during
systemic crises such as full-scale hostilities. Since February 2022, foreign and
Ukrainian researchers have made numerous attempts to determine the conceptual
basis for forecasting the development of enterprises during the war and in post-war
period and offer effective management tools for predicting the future.
A review of scientific publications of the last year allows us to highlight the key
thematic areas of such research, in particular:
−
−
−
−
Identification and generalization of the consequences of full-scale military
aggression by the russian federation for the economy of Ukraine (Pereira et
al, 2022);
digitization, information support and information security of enterprises,
development of innovative potential of enterprises (Cherep et al., 2022);
peculiarities of export by Ukrainian enterprises (Dvulit & Komarenska,
2022);
peculiarities of strategic decision-making related to enterprise development
management (Bezzubko & Tkachenko, 2022).
V. Verba, O. Kyzenko, O. Hrebeshkova: Change in Development Vectors of Ukrainian
Enterprises in War Conditions
323.
Based on our experience of previous studies of the development of Ukrainian
enterprises, in particular referring to the methodology of company development
management (Verba & Hrebeshkova, 2010; Verba, 2011) and consulting support for
management decision-making based on strategic controlling (Kyzenko, 2019;
Kyzenko et al., 2017), we believe that the above-mentioned topics of the latest
publications reflect the current problems of Ukrainian business in terms of search
for promising directions of development.
2
Methodology
From April to November 2022, CMC-Ukraine with the support of Deutsche
Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH initiated and
implemented the project “Consulting support of small and medium-sized business
of Ukraine in the crisis period caused by the war”. The sample is random, since we
did not apply any criteria by engaging the respondents in the survey. All respondents,
on their own initiative, joined the consulting project. Within the project, we received
and processed 505 questionnaires filled out by representatives of Ukrainian SMEs
enterprises. Based on the results of the project, we analyzed the sample structure at
business areas: wholesale and retail trade (13 % of respondents); light and food
industry, agriculture and professional, scientific and technical activity (10 % each);
construction (9 %); woodworking and furniture production (8 %), as well as
different tertiary industries (17 %).
After February 24, 2022, questionnaire and interview methods are actively used in
Ukraine to collect relevant information, and the results are quickly published in open
sources, which allows comparing data from different sources. By interviewing the
participants, we aimed to find out their opinion on the problems of survival and
development of their businesses and to identify the need for consulting support to
solve the current problems.
3
Results
The working hypothesis is based on the idea that Ukrainian enterprises, changing
the practice of forming the directions of enterprise development in existential
conditions, switched from formal strategies for their development to the creation of
emergent strategies (search for new markets, sources of financing, etc.). Such a
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
flexible approach eliminates the limitations of the classical methodology of
formulating strategic guidelines for company (business) development through the
triad “vision — mission — goals” precisely within a highly turbulent environment.
The Ministry of Economy of Ukraine estimates the overall GDP rate decline for
2022 to reach 30 % (Ukrinform, 2022). The factors that influenced socio-economic
changes include: population migration (external and internal); destruction of social
and industrial infrastructure; loss of production capacity by large industrial
enterprises in the territories with active hostilities; reduction of exports of key
industries; and change in consumer behavior and the structure of consumer needs.
Ukrainian business is adapting to new conditions and is gradually resuming its work.
According to the surveys, the share of enterprises that ceased or almost ceased their
operations fell from 86 % at the beginning of March to 47 % at the beginning of
May and 12 % of enterprises did not change their capacities or increased them since
February 24.
33 % of Ukrainian businesses have an action strategy and have adapted business
plans or undergoing the adaptation.
In order to reveal an idea of the development prospects of SMEs enterprises in
Ukraine, we analyzed the results of surveys and interviews of representatives of 505
Ukrainian companies that participated in the project “Consulting support of SMEs
business of Ukraine in the crisis period caused by the war”.
The project primarily engaged the representatives of SMEs enterprises, which are
unable to solve the problems of functioning during the war and need help of
consultants.
The key issue of our research is to identify the problems of enterprise development
within a full-scale military invasion of the Russian federation in Ukraine.
Respondents could choose several answers (multiple-choice). The results of the
survey are shown in Figure 1.
V. Verba, O. Kyzenko, O. Hrebeshkova: Change in Development Vectors of Ukrainian
Enterprises in War Conditions
(С) Solving problems with the company's personnel
(shortage, competence, motivation and communication).
Conversion of personnel's profile
325.
121
(E) Digitalization and digital transformation of business (IT
assistance)
182
(B) Restoration and optimization of operational and
production processes. Restructuring of the business model
and reorientation of products/services. Certification of
products and systems
198
324
(D) Finding and attracting financial resources (loans, grants
and investments). Optimization of company costs
337
(A) Search for new markets and customers (in Ukraine
and/or abroad). Increase in sales
0
100
200
300
400
Figure 1: Problems of functioning of the investigated enterprises that require business
consulting
Source: Concluded by the authors based on the results of the survey.
Systematization of the received answers in order of reference frequency (Fig. 1)
proves that the most relevant problems for the studied enterprises include searching
for new markets (block A, 337 (67 %) respondents) and finding financial resources
and cost optimization (block D, 324 (64 %) respondents). Operating processes
(block B, 198 (39 %) respondents) and digitalization of business (block E, 182
(36 %) respondents) came in second place in terms of relevance. The least
mentioned domain was personnel management (block C, 121 (24) respondents).
In addition to closed answers, respondents could provide their comments on the
current problems of the development of their enterprises (open answer).
Summarizing the answers provided by the respondents, we should confirm the
relevance of requests regarding further development of the investigated enterprises:
53 % of respondents emphasized the problems in marketing (sales); 26 % of
respondents are focused on the problems of operational activities (logistics and
business processes); and 7 % of respondents deal with finding solutions in
digitalization, financing and personnel.
326
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Discussion
It should be underlined that all the results of the conducted project were received
based on the descriptive statistics and relate to the sample companies. We compared
the results of our research with similar studies. The results of our survey are similar
to the conclusions published in December analytical report, which reveals a gradual
change in short-term expectations and a decrease in the level of uncertainty from
the six-month perspective. The share of enterprises where production growth is
planned almost doubled in December (from 16.9 % to 32.1 %). At the same time,
the share of respondents who could not forecast the changes in the financial and
economic situation at the enterprise in six-month period decreased (from 43.8 % to
42.1 %) (Kuzyakiv et al., 2022). The research of the priorities of the activities of
SMEs during 2022 proves that there is a shift in the priority of the problems these
enterprises solved under various scenarios of the military situation in Ukraine. In the
first months (February through May 2022), the main priority was vested to physical
and information security issues, which were resolved by the termination of activities
and/or relocation of companies. Approximately from May 2022, the focus of
attention of entrepreneurs shifted to the search for new business opportunities for
the launch/relaunch of their business models: search and conversion of personnel's
profile to resume work in new conditions (as well, at a new location); restoration of
operational processes (as well, through digitization); and optimization of business
models (as well, as a result of lost partnerships). From October 2022, the issue of
energy supply became a new challenge for domestic businesses, caused by
purposeful destruction of the energy infrastructure by the russian invaders.
However, despite the objective risks, starting from autumn domestic enterprises
began to actively look for new markets for their goods, new partners for the
implementation of business projects and focused on increasing their sales. A
conscious purposeful movement of businesses towards the recovery and
development of the Ukrainian economy is confirmed by the growth of the rate of
optimistic assessments of prospects from the side of entrepreneurs and the focus on
the search for development drivers.
V. Verba, O. Kyzenko, O. Hrebeshkova: Change in Development Vectors of Ukrainian
Enterprises in War Conditions
5
327.
Conclusions
It should be noted that the obtained results rather raise more questions about the
prospects for the development of Ukrainian enterprises in the post-war period than
provide answers to them. Firstly, the following question remains open: which
indicators should be used to determine promising opportunities for further
development when: a) there is no reliable data on the state and course of processes
in the economy; b) the prediction horizon is reduced to a few weeks; and c) the risks
of economic activity grow exponentially. Development in such conditions requires
entrepreneurs to be constantly ready for systemic changes — in processes,
structures, values and thinking.
In order to successfully implement the development projects, domestic enterprises
should fundamentally change their management model, which involves the spread
of an agile approach in decision-making at all levels, the rejection of the hierarchy
model in the organization and the expansion of the powers of each employee within
the framework of the value he/she creates, focusing on the needs of customers.
Accordingly, it is necessary to prepare systemic transformations at the level of each
enterprise and form business ecosystems, which can fundamentally change
Ukrainian business.
References
Bezzubko, B., & Tkachenko, M. (2022). The features of strategies formation of Ukrainian enterprises
during the war. Galician economic journal, 78-79(5-6), 96-102.
doi:10.33108/galicianvisnyk_tntu2022.05_06.096
Cherep, A., Adamenko, M., & Cherep, O. (2022, September). The Influence of the Innovation Potential
of Personnel on Strengthening Economic Security of Ukrainian Enterprises in the Post-War
Period. WSEAS Transactions on Business and Economics, 20, 70-79. doi:10.37394/23207.2023.20.8
Dvulit, Z. P., & Komarenska, Z. M. (2022). Features of the export of certified dairy products to the
European union countries in the conditions of Russian aggression in Ukraine. Management and
Entrepreneurship in Ukraine: the stages of formation and problems of development, 4(2), 364-373,
doi:10.23939/smeu2022.02.364
Kuzyakiv, O., Angel, E., Gulik, A., & Fedets, I. (2022, December). New monthly survey of enterprises: Vol.
8.
The
Institute
for
Economic
Research
and
Policy
Consulting.
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Kyzenko, O. (2019). Strategic controlling: concept and system implementation at the enterprise. KNEU.
https://ir.kneu.edu.ua:443/handle/2010/37928 (in Ukrainian)
Kyzenko, O., Hrebeshkova, O., & Grebeshkov, O. (2017). Business intelligence in the economic
management of organization. Forum scientiae oeconomia, 5(2), 15-27.
doi:10.23762/fso_vol5no2_17_2
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Pereira, P., Bašić, F., Bogunovic, I. & Barcelo, D. (2022). Russian-Ukrainian war impacts the total
environment. Science of The Total Environment: 837, 155865, ISSN 0048-9697.
doi:10.1016/j.scitotenv.2022.155865
Shpak, N., Podolchak, N., Karkovska, V., Sroka, W. & Horbal, N. (2022). The application of tools for
assessing the financial security of enterprises. Forum Scientiae Oeconomia, 10(2), 29-44.
doi:10.23762/FSO_VOL10_NO2_2
Timchenko, L. (2022, November 22). The IMF gave a forecast for Ukraine for 2023. Postfactum.info.
https://postfactum.info/ua/economy/mvf-dav-prognoz-dlya-ukraini-na-2023-rik14252.html (in Ukrainian).
Ukrainian institute for the future. (2022). Аnalysis of the state of the economy of the Ukraine. First half of 2022.
https://uifuture.org/publications/analiz-stanu-ukrayinskoyi-ekonomiky/ (in Ukrainian).
Ukrinform. (2022). The Ministry of Economy preliminarily estimates the drop in Ukraine's GDP for 2022 at the
level of 30.4% (±2%). https://www.ukrinform.ua/rubric-economy/3646860-ekonomikaukraini-torik-skorotilasa-na-304-minekonomiki.html (in Ukrainian).
Verba, V. (2011). Management consulting: concept, organization, development. KNEU.
Verba, V., & Hrebeshkova, O. (2010). Analytical assessment of management technologies for the
development of Ukrainian enterprises. Actual problems of the economy, 5, 52-59 (in Ukrainian).
THE RELATIONSHIP BETWEEN
ORGANIZATIONAL PRIDE,
JOB CHARACTERISTICS AND
JOB SATISFACTION:
A LITERATURE REVIEW
LORENA PIKL
University of Zagreb: Faculty of Organization and Informatics, Varaždin, Croatia
lpikl@foi.unizg.hr
Abstract Employees with a strong sense of pride in their
organization may be more satisfied at work. This is because
organizational pride can increase a person's sense of meaning and
purpose in their work. Organizations should pay attention to job
characteristics to enhance organizational pride and job
satisfaction. The purpose of this study is to examine the
relationship between organizational pride, job characteristics,
and job satisfaction. Firstly, this paper defines organizational
pride, job characteristics and job satisfaction. After that, there is
a literature review of the previously reported findings regarding
the relationship between organizational pride, job characteristics
and job satisfaction. From a review of the extant literature on job
characteristics, organizational pride and job satisfaction it can be
concluded that future research needs to look into how job
characteristics relate to organizational pride and job satisfaction
because there is not enough research on the relationship between
job characteristics and organizational pride.
DOI https://doi.org/10.18690/um.epf.3.2023.37
ISBN 978-961-286-736-2
Keywords:
organizational
pride,
job pride,
job characteristics,
job characteristics
model
job satisfaction
JEL:
J24, J28, M12
330
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Introduction
The problem of this study is addresses in the relationship between Organizational
Pride (OP), Job Characteristics (JC), Job Satisfaction (JS). The study examines the
importance of OP in enhancing JS through JC. The study is important because it
identifies the role of OP in improving JS, which in turn can lead to better JS. The
literature review suggests that there is a positive relationship between JC, OP and JS.
Precisely, some authors analyze a positive relationship between OP and JC (Seddik
et al., 2022), and some analyze a positive relationship between JC and JS (Ali et al.,
2014; Andrew et al., 2014). Despite the growing interest in OP, there is a lack of
scientific studies that specifically focus on this construct. As a result, there needs to
be more research on the relationship between JC and OP, so researchers must
further look into how JC relate to OP and JS. This paper will define terms and
examine the relationship between OP, JC and JS.
2
Literature Review
2.1
Organizational pride
According to psychological research, pride is a positive emotion that arises when a
perceived performance exceeds expectations or social standards (Verbeke et al.,
2004). Pride is associated with feelings of joy, meaningfulness and increased selfesteem (Tracy & Robins, 2007). OP is defined as organizational performances such
as creating a productive, motivating work environment and high social identification
with the organization (Kraemer & Gouthier, 2014). Furthermore, employees are
proud because they believe their roles are essential to the organization and the public
(Gouthier & Rhein, 2011). Wollack et al. (1971) define OP as the joy and satisfaction
that employees experience as a result of doing a good job. Organizations that provide
a pleasant working environment for their employees and assist them in developing
a sense of pride in themselves, cause them to respect and be proud of their jobs
(Kamani, 2017). OP is related to self-esteem and is a valuable psychological resource
because it provides intrinsic motivation for employees (Mas-Machuca et al., 2016).
According to Kraemer and Gouthier (2014), OP can make exploring an employee's
intentions to quit easier. In other words, an employee with OP is more likely to
remain with the company.
L. Pikl: The Relationship Between Organizational Pride, Job Characteristics and Job
Satisfaction: A Literature Review
331.
Even though OP has not yet received much attention in scientific studies, this
construct is crucial for business success (Gouthier & Rhein, 2011). Similarly,
Kraemer and Gouthier (2014) assert that OP is vital in businesses and has a negative
impact on turnover intentions. Their findings show that OP increases stress
resistance and, as a result, decreases turnover intentions. Arnett et al. (2002) indicate
that JS affects OP positively. Furthermore, Gouthier and Rhein (2011) claim that
there is a positive and substantial association between OP and commitment to
customer service and creativity. On the other hand, according to Mas-Machuca et
al. (2016), OP will improve employees' work-life balance, encourage employees, and
result in improved JS.
2.2
Job characteristics
The JC Model (JCM) states that jobs that include naturally motivating characteristics
will lead to higher levels of JS (Hackman & Oldham, 1976). In the JCM model, the
first three dimensions are skill variety, task identity and task significance—combined
to provide meaningful work that the employee perceives as significant, useful and
worthy. Jobs with a lot of autonomy provide employees with a sense of personal
responsibility for the results, and feedback informs them how well they're doing
(Robbins & Judge, 2019).
Skill variety refers to the extent to which the job requires the employee to draw
from several different skills, abilities and knowledge (Hackman & Oldham, 1975).
Morris and Venkatesh (2010) define skill diversity as the extent to which a job
requires several skills. Job diversity contributes to a better job design by enhancing
JS and motivation. Moreover, task identity refers to whether the job has an
identifiable beginning and end or how complete a working module the employee
performs (Hackman & Oldham, 1975). Task identity, according to Coelho and
Augusto (2010), indicates that each job requires a combination of knowledge,
abilities and the capacity to use a variety of activities and duties. Hoonakker et al.
(2004) state that task identity connects to the workforce's quality of working
life. Task significance refers to the extent to which the job significantly influences
other people's lives or work inside the immediate company or in the external world
(Hackman & Oldham, 1975). When employees believe that the job they perform has
a purpose, there will be a strong feeling of responsibility in completing tasks. This
responsibility will drive employees to work harder to complete their tasks (Hackman
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& Oldham, 1975). Furthermore, autonomy refers to job independence and how
much freedom and control employees have to perform their job (Hackman &
Oldham, 1975). According to Zimmer-Gembeck and Collins (2006), autonomy is
the ability to think, feel, decide and take action. The final dimension, feedback ,
refers to objective information about progress and performance from the job
supervisors or any other information system (Hackman & Oldham, 1975).
2.3
Job satisfaction
According to Spector (1997), JS is the degree to which someone is satisfied or
dissatisfied with their job. Locke (1976) indicates that JS is a pleasant or positive
emotional state that results from an individual's job evaluation or work experience.
On the other hand, Betts (2000) defines JS as the job holder's perception of the job,
which determines the level of satisfaction based on physiological and psychological
factors (Bajwa et al., 2019). Furthermore, Aziri (2011) describes a paradigm for the
new manager who insists on treating employees as individuals with desires, needs
and personal goals. Paradigma is a crucial component of JS in modern organizations
and businesses, so that means that happy employees are satisfied employees, and
satisfied employees are successful employees (Aziri, 2011). Employees' perceptions
of certain aspects of the job and the relationship between their expectations or needs
and their perceptions when performing the job all contribute to JS (Locke, 1969).
In literature, there are different methods for measuring employee JS. Locke (1969)
has extensively discussed measuring overall JS or assessing each element of JS, such
as pay and supervision. However, since jobs cannot be perceived or evaluated as a
single unit, overall satisfaction is the sum of the job element evaluations. Employee
JS has attracted the interest of organizational researchers for decades. Reviewing
previous research, Gupta and Joshi (2008) conclude that JS is essential for
motivating employees to work harder (Saleem et al., 2010). They agree that JS is
critical because most people spend most of their time at work. When employees are
happy with their jobs, they have a more positive impression of the organization's
products and services, and that provides better customer service (Bontis et al., 2011).
L. Pikl: The Relationship Between Organizational Pride, Job Characteristics and Job
Satisfaction: A Literature Review
3
333.
The relationship between organizational pride, job characteristics
and job satisfaction
Many studies have shown a positive relationship between JC and JS and also a
positive relationship between OP and JS. Still, there is not enough research on the
relationship between JC and OP. Table 1 shows findings about the previously
mentioned variables.
Table 1: Literature review on the previously reported findings about organizational pride, job
characteristics and job satisfaction
Authors
Seddik, Elsetouhi and ElBiali
Year
2022
Variables
Job Characteristics
Organizational Pride
Organizational Pride
Job Satisfaction
Organizational Justice
Job Performance
Organizational Pride
Job Satisfaction
Work-life balance
Organizational Commitment
Organizational Pride
Job Satisfaction
Work-life balance
Organizational Pride
Job Satisfaction
Work-life balance
Findings
Direct positive significant effects of job
characteristics on organizational pride.
Widyanti, Irhamni, Ratna and
Basuki
2020
Organizational pride has a positive and
significant influence on job satisfaction.
Anh, Tri and Tu
2022
Mas-Machuca, Berbegal‐
Mirabent and Alegre
2015
Fiernaningsih, Nimran,
Raharjo and Arifin
2019
Ali, Said, Yunus, Kader,
Latif and Munap
2014
Job Characteristics
Job Satisfaction
Job characteristics are positively related to job
satisfaction.
Andrew, Haris, Zakariah and
Zekaria
2014
Job Characteristics
Job Satisfaction
Job characteristics are positively related to job
satisfaction.
Organizational pride is positively related to job
satisfaction.
Organizational pride is positively related to job
satisfaction.
There is no significant effect of organizational
pride on job satisfaction.
Source: Ali et al. (2014), Anh et al. (2022), Fiernaningsih et al. (2019), Andrew et al. (2016), Mas-Machuca et al.
(2016), Seddik et al. (2022), Widyanti et al. (2020).
Seddik et al. (2022) examined the effect of JC named skill variety, task identity, task
significance, autonomy and feedback on OP for employees of Mansoura banks. The
questionnaire was distributed to 400 Mansoura bank workers in order to collect data
for the study. According to the findings of the study, JC (skill variety, task identity,
task significance, autonomy and feedback) had a direct positive significant effect on
OP (Seddik et al., 2022). Furthermore, Widyanti et al. (2020) analyzed the
relationship between organizational justice and OP on JS and job performance
among employees at private universities in Indonesia. This study uses a quantitative
approach by administering a questionnaire to 200 respondents. The results show
that organizational justice and OP can positively and significantly influence JS and
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job performance (Widyanti et al., 2020). Some authors analyze how work-life balance
affects OP and JS of employees, and results show that OP can positively and
significantly influence JS. (Anh et al., 2022; Mas-Machuca et al., 2016). On the other
hand, Fiernaningsih et al. (2019) have also analyzed the mentioned variable, and the
results show no significant effect of OP on JS.
Ali et al.’s (2014) study examined the application of the JC model to JS from the
viewpoint of fast food outlet managers. The primary goal of this study is to identify
the link between JC and JS among fast food restaurant managers, as well as which
of the five aspects of the JC model contributes the most to JS among fast food
restaurant managers. According to the findings of the study, the five dimensions of
the JC model positively connect to JS among fast food restaurant managers (Ali et
al., 2014). Similarly, Andrew et al. (2016) explored the positive relationship between
JC and JS among employees at the Human Resource Department at Craun Research
Sdn. Bhd., Kuching. According to the findings of this study, there is a link between
JC and JS. Employees who were treated well were more likely to do well at work.
Employees should be encouraged to be honest about their job or line of
employment. According to the studies, proper employee placement will provide an
organization and its employee's wealth and satisfaction (Andrew et al., 2016).
4
Conclusion
Pride is a positive emotion that arises when a perceived performance exceeds
expectations or social standards. On the other hand, JS is the degree to which
someone is satisfied or dissatisfied with their job. JC such as autonomy, feedback
and task identity are positively related to OP and JS. The paper highlights the
importance of OP and JC in improving JS. A better understanding of OP, JC and JS
can be used as a guide for future research on explaining the relationship between the
mentioned variables. The JC model is positively linked to JS, and findings suggest
that organizations can improve OP and JS by considering and addressing JC. OP
has not been thoroughly studied, like JC and JS, and it is crucial for business success.
Future research should examine how JC relate to OP and JS and managers should
improve the work environment and characteristics for employees in order to
increase their loyalty and sense of respect while doing their duties.
L. Pikl: The Relationship Between Organizational Pride, Job Characteristics and Job
Satisfaction: A Literature Review
335.
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Ltd.
ARE SLOVENIAN
MANUFACTURING COMPANIES
READY FOR INDUSTRY 4.0?
IZTOK PALČIČ, KLEMEN KOVIČ
University of Maribor, Faculty of Mechanical Engineering, Maribor, Slovenia
iztok.palcic@um.si, klemen.kovic@um.si
Abstract This paper focuses on the diffusion of digital
technologies in Slovenian manufacturing companies with respect
to the concept of Industry 4.0. We present an Industry 4.0
readiness index and assess the Industry 4.0 readiness of
Slovenian manufacturing companies. This index focuses on the
use of selected digital technologies and their distribution within
specific technology fields. The results are based on a sample of
141 Slovenian manufacturing companies whose data was
collected as part of the latest edition of the European
Manufacturing Survey 2022. The results show that the use of
included digital technologies differs between companies and that
the majority of manufacturing companies is still far away from
the highest Industry 4.0 readiness levels.
DOI https://doi.org/10.18690/um.epf.3.2023.38
ISBN 978-961-286-736-2
Keywords:
manufacturing
company,
digital technology,
Industry 4.0,
Readiness Index,
European
manufacturing
survey
JEL:
L60
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338
1
Introduction
Industry 4.0 can be briefly defined as the digitalization of production and services.
The general understanding of the Industry 4.0 concept includes fully automated
physical systems, but it should also be considered as automated and intelligent
decision-making systems, not only automated physical systems (Elibal & Oezceylan,
2021). Industry 4.0 is characterized by sophisticated automation and digitalization
processes and the use of electronics and information technologies in production and
services (Yang, 2017). Digitization refers to the diverse sociotechnical phenomena
and processes of adopting and using (digital) technologies in broader individual,
organizational, and societal contexts (Legner et al., 2017). The adoption of digital
technologies (DT) affects almost all areas of modern businesses, including
manufacturing/production processes (Plekhanov et al., 2002). To determine the
prevalence of different DTs, we analyzed selected technologies from the “digital
factory” field. Therefore, our research presents use of seven selected DTs
characteristic of the Industry 4.0 era in the Slovenian manufacturing industry. In
addition to analyzing the diffusion of these technologies, this paper also presents an
Industry 4.0 readiness index and assesses the Industry 4.0 readiness of Slovenian
manufacturing companies.
This paper is organized as follows: First, the concept of Industry 4.0 readiness and
maturity models in general are presented, followed by the Industry 4.0 readiness
index that we used in our research. In the methodology section, we explain the
characteristics of the European Manufacturing Survey (EMS). Then we present the
use of selected DTs in Slovenian manufacturing companies and the results obtained
using the Industry 4.0 readiness model. Finally, we conclude with a discussion of the
results and some implications for business management, limitations of the research,
and directions for future research.
2
Industry 4.0 readiness & Maturity Models
With the emergence of the Industry 4.0 concept, both scholars and practitioners face
the challenge of determining the current maturity and readiness of companies for
Industry 4.0 concepts (Elibal & Oezceylan, 2021). To perform better, industry and
academia have continuously sought to develop and refine self-assessment models
that can be used to assess companies' Industry 4.0 readiness (Hizam-Hanafiah et al.,
2020). Identifying these Industry 4.0 readiness models is also of great importance as
I. Palčič, K. Kovič: Are Slovenian Manufacturing Companies Ready For Industry 4.0?
339.
they allow companies to measure antecedents and preconditions in the digital
transformation process, which can then lead to organizational transformation
(Canetta et al., 2018).
The Industry 4.0 readiness model attempts to represent how ready a company is to
implement advanced technologies and concepts. Some authors define the readiness
model as “the degree to which organizations can take advantage of Industry 4.0
technologies” (Hizam-Hanafiah et al., 2020), while others define it as “a tool to
conceptualize and measure the baseline situation and initialize the development
process” (Schumacher et al., 2016). To successfully master Industry 4.0 readiness,
researchers from academia and industry have developed a variety of Industry 4.0
readiness models in recent years.
Schumacher et al. (2016) developed a maturity model to assess the Industry 4.0
readiness and maturity of manufacturing companies. Their main goal was to extend
the prevailing technology focus by including organizational aspects. De Carolis et al.
(2017) developed a maturity assessment method to measure the digital readiness of
manufacturing companies. Using different dimensions, they assess 5 areas in which
key manufacturing processes can be grouped: 1) design and engineering, 2)
production management, 3) quality management, 4) maintenance management, and
5) logistics management. Canetta et al. (2016) proposed a digitalization readiness
model to assess the state of a company's journey towards Industry 4.0, taking into
account five dimensions: 'strategy', 'processes', 'technologies', 'products and
services', and 'people'. Pacchini et al. (2019) proposed a model that includes eight
technological enablers that are most relevant based on existing literature: Big Data,
Internet of Things (IoT), cloud computing, autonomous robots, additive
manufacturing, cyber-physical systems, augmented reality, and artificial intelligence.
3
Industry 4.0 Readiness Index
Our proposed Industry 4.0 readiness index was developed by Fraunhofer ISI to
analyze the data collected in our research: EMS (Lerch et al., 2016). The logic of the
Fraunhofer Industry 4.0 Readiness Index is shown in Figure 1 and is based on the
selected DTs. Since the different technologies are highly process and operation
dependent and come from different technology fields, a simple enumeration of the
technologies used is not sufficient for an Industry 4.0 Readiness Index. Therefore,
these DTs are divided into three technology fields: Digital Management Systems,
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Wireless Human-Machine Communication, and Cyber-physical System (CPS)related Processes. While the first two technology fields cover IT-related processes
(Industry 4.0 basic technologies) and still have a clear distance to Industry 4.0, the
technology field CPS already contains initial approaches to networked/digital
production and can therefore be classified as closer to Industry 4.0 than the other
two technology fields (Lerch et al., 2016).
Figure 1: Industry 4.0 readiness index
Source:(Lerch et al. (2016)
With this grouping, companies can be classified as Industry 4.0-related companies
that, on the one hand, use and combine several technology fields in production and,
on the other hand, use several of the CPS -related processes in their production.
Accordingly, the Industry 4.0 readiness index results in the following main groups
and levels:
Non-users who are not (yet) ready for Industry 4.0:
−
−
−
Level 0: Companies that do not use any of the Industry 4.0 enabling
technologies and tend to still rely on traditional production processes.
Basic levels, as the basis on the way to Industry 4.0, with little readiness:
Level 1 (beginners): Companies that use IT-related processes in one of the
three technology fields.
I. Palčič, K. Kovič: Are Slovenian Manufacturing Companies Ready For Industry 4.0?
−
−
−
−
−
341.
Level 2 (advanced beginners): Companies that use IT-related processes in
two of the three technology fields.
Level 3 (advanced users): Companies that are active in all three technology
fields and use both IT-related processes and CPS-related processes.
Top group, as a pioneer on the way to Industry 4.0, with a slightly higher
readiness:
Level 4: Companies that are active in all technology fields and use at least
two technologies of CPS-related processes.
Level 5: Companies that are active in all technology fields and use at least
three technologies of the CPS-related processes.
Production control
Digital Management
Systems
Near Cyber-PhysicalProduction System (CPS)
processes
Product-LifecycleManagement
Digital exchange
of data
ERP – Software
for production
planning and
scheduling
Automation and
management of
internal logistics
Wireless humanmachine cooperation
Near real-time
production control
system
Mobile devices for
programming
and/or operating
systems and/or
machines
Digital
visualization
(solutions) on shop
floor
Figure 2: Industry 4.0 readiness index with selected DT
Source: Lerch et al. (2016)
With each level, the status of Industry 4.0 maturity increases or the distance to
networked production decreases. While there is no readiness for Industry 4.0 in stage
0, companies in stages 1 to 5 have a basic readiness. However, companies that
already use IT-related processes (levels 1 and 2) have a greater distance to Industry
4.0 than companies in levels 3 to 5 that are already implementing the first elements
of networked production. But even at levels 4 and 5, it cannot be assumed that the
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threshold to Industry 4.0 has been crossed. Rather, the distance to networked
production has merely decreased. This Industry 4.0 readiness index can be used to
map the change from traditional production to Industry 4.0-related production.
Companies with a higher level have already made the transition to a greater extent
than companies with a lower level (Lerch et al., 2016). Figure 2 shows all three
technology fields in the Industry 4.0 Readiness Index with the associated DTs.
4
Methodology
The research data was collected as part of EMS, coordinated by the Fraunhofer
Institute for Systems and Innovation Research – ISI, which is the largest European
survey of manufacturing. The survey’ questions address manufacturing strategies,
the use of innovative organizational and technological concepts in production,
cooperation issues, production offshoring and backshoring, servitization, and
workforce deployment and skills issues. Data is also collected on performance
indicators such as productivity, flexibility, quality and return on investment. In the
last round of the survey EMS, we added questions on digital elements of products,
new business models, artificial intelligence, circular economy, etc. The survey takes
place every three years. In most countries, EMS is organized as a paper-based survey
at the company level (the core questionnaire is six pages long). The people contacted
to fill in the questionnaires are the production managers or the general managers of
the manufacturing companies. The responding companies represent a cross-section
of the major manufacturing industries. These include manufacturers of rubber and
plastics, the metal industry, mechanical engineering and the electrical industry.
The survey is administered to manufacturing companies (NACE revision 2 codes
from 22 to 32) with at least 20 employees. The main objectives of the EMS project
are to find out more about the use of production and information technologies, new
organizational approaches in manufacturing and the implementation of best
management practices. Our research is based on data from EMS from a Slovenian
subsample from 2022. We received 141 responses – a response rate of 16%. We
divided manufacturing companies into three classes based on the number of
employees. The largest share of respondents came from medium-sized companies
(around 49%), followed by small companies (31%) and large companies (20%).
5
Results
I. Palčič, K. Kovič: Are Slovenian Manufacturing Companies Ready For Industry 4.0?
343.
The analysis shows (Table 1) that digital solutions for providing drawings, routings,
or work instructions directly on the store floor and software for production planning
and control (e.g., ERP or APS systems) are the most commonly used technologies,
installed in about two-thirds of Slovenian manufacturing companies.
Mobile/wireless devices for programming and controlling machines and/or
equipment and digital exchange of product/process data with suppliers/customers
(Electronic Data Interchange EDI) are also catching up and are installed in almost
50% of Slovenian manufacturing companies.
Table 1: DT adoption in Slovenian manufacturing companies
Digital technology
Mobile/wireless devices for programming and controlling machinery and/or facilities
Digital solutions to provide drawings, work schedules, or work instructions directly on
the shop floor
Software for production planning and scheduling (e.g. ERP or APS system)
Techniques for automation and management of internal logistics (e.g. Warehouse
management systems, RFID)
Digital Exchange of product/process data with suppliers/customers (Electronic Data
Interchange EDI)
Product-Lifecycle-Management-Systems (PLM) or Product/Process Data Management
Near real-time production control system (e.g. Systems of centralized operating and
machine data acquisition, MES)
Share
[%]
47.5%
64.5%
63.8%
27.7%
44.0%
17.7%
33.3%
Using these DTs helped us develop Industry 4.0 readiness levels for Slovenian
manufacturing companies. Figure 3 shows the distribution of all six Industry 4.0
readiness levels described. Around 14% of all companies have not yet installed any
DTs in production. A little under 60% of all companies already have IT-related
processes in their production and form the basic levels. This group of basic users
includes the group of beginners that only use technologies from one area (almost
18%; level 1), the advanced beginners that are active in two technology areas (almost
24%; level 2), but also the already advanced companies that combine technologies
from all three technology areas (over 16%; level 3). In the two highest levels, 4 and
5, this top group consists of a total of 28.4% of all companies. Accordingly, around
one in four companies is active in all three technology areas and uses not only ITrelated processes but also several CPS-related processes simultaneously. Levels 4 and
5 have a very similar proportion of companies.
A look at the Slovenian manufacturing sector shows that there is still a certain
proportion of companies that rely heavily on traditional production processes (non-
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users). The main group of Slovenian manufacturing companies has slowly started to
use IT-related processes, but there is a big difference between beginners and
advanced users. The former are closer to the non-users in terms of the type of
manufacturing processes, and the advanced companies are slowly preparing to join
the top group. The top group is not only active in each of the three technology areas,
but also uses several CPS-related processes. There is some willingness to digitize
their production, with level 5 companies in particular (14.9%) appearing to be
preparing for or already trying to implement Industry 4.
25%
23,4%
20%
15%
17,7%
16,3%
14,9%
14,2%
13,5%
10%
5%
0%
Level 0
Level 1
Level 2
Level 3
Level 4
Level 5
Figure 3: Industry 4.0 readiness index in Slovenian manufacturing companies
Source: Authors' calculations.
6
Discussion and Conclusion
Our results show that the use of DT in Slovenian manufacturing companies depends
on the type of technology and the characteristics of the manufacturing company.
Not surprisingly, not all selected DT are equally suitable for all manufacturing
companies in the included industries. Nevertheless, some of the included DT are
beneficial or even absolutely necessary in all manufacturing companies (e.g. ERP or
real-time data collection) but are still not present in all companies. The absence of
DT is several manufacturing companies is also evident from Industry 4.0 readiness
assessment. Almost 50% of manufacturing companies use only from 0 to 2 DTs.
Our research has several limitations and consequently several future research
agendas. For this research, we only considered the general distribution of the
selected DTs, regardless of company characteristics such as size, OEM or supplier
status, technological intensity of the industry to which they belong, etc. We have also
I. Palčič, K. Kovič: Are Slovenian Manufacturing Companies Ready For Industry 4.0?
345.
neglected some other specific characteristics, such as product complexity,
production type and innovation capability. Another limitation is that we observed
only one country and the number of cases was limited. In our future research, we
will conduct a multinational study with a much larger sample of manufacturing
companies. Our future research will also look more deeply into the combinations
and relationships between DTs and their effects on firm performance.
Our findings have some initial implications for business management. The presented
Industry 4.0 readiness index can serve as a simple tool for managers to assess which
DT and the nature of its structural distribution contribute to the determination of
the basic Industry 4.0 readiness index. It also enables managers to compare the level
of Industry 4.0 readiness of their company with that of other Slovenian
manufacturing companies from their industry.
References
Canetta, L., Barni, A., & Montini, E. (2018). Development of a Digitalization Maturity Model for the
Manufacturing Sector. In Proceedings of the 2018 IEEE International Conference on
Engineering, Technology and Innovation (ICE/ITMC) (pp 1-7). Stuttgart, Germany. doi:
10.1109/ICE.2018.8436292
De Carolis, A., Macchi, M., Negri, E., & Terzi, S. (2017). A Maturity Model for Assessing the Digital
Readiness of Manufacturing Companies, In Lödding, H., Riedel, R., Thoben, K.D., von
Cieminski, G. & Kiritsis, D. (eds), Advances in Production Management Systems. The Path to
Intelligent, Collaborative and Sustainable Manufacturing (pp. 13-20). Springer.
https://doi.org/10.1007/978-3-319-66923-6_2
Elibal, K., & Özceylan, E. (2021). A systematic literature review for industry 4.0 maturity modeling:
state-of-the-art and future challenges, Kybernetes, 50(11), 2957-2994. doi: 10.1108/k-07-20200472
Hizam-Hanafiah, M., Soomro, M.A., & Abdullah, N.L. (2020). Industry 4.0 Readiness Models: A
Systematic Literature Review of Model Dimensions. Information, 11, 364.
https://doi.org/10.3390/info11070364
Legner, C., Eymann, T., Hess, T., Matt, C., Bohmann, T., Drews, P., & Ahlemann, F. (2017).
Digitalization: Opportunity and challenge for the business and information systems
engineering community, Business and Information Systems Engineering, 59(4), 301-308. doi:
10.1007/s12599-017-0484-2
Lerch, C., Jaeger, A., & Meyer, N. (2016). I4.0-Readiness – Baden-Württemberg auf dem Weg zur
Industrie 4.0?, Fraunhofer ISI working paper
Pacchini, A. P. T., Lucato, W. C., Facchini, F., & Mummolo, G. (2019). The degree of readiness for the
implementation
of
Industry
4.0,
Computers
in
Industry,
113,
1-8.
https://doi.org/10.1016/j.compind.2019.103125
Plekhanov, D., Franke, H., & Netland, T. (2022). Digital transformation: A review and research agenda,
European Management Journal. https://doi.org/10.1016/j.emj.2022.09.007
Schumacher, A., Erol, S., & Sihn, W. (2016). A maturity model for assessing Industry 4.0 readiness and
maturity
of
manufacturing
enterprises,
Procedia
CIRP,
52,
161-166.
https://doi.org/10.1016/j.procir.2016.07.040
Yang, L. (2017). Industry 4.0: A survey on technologies, applications and open research issues, Journal
of Industrial Information Integration, 6, 1-10. https://doi.org/10.1016/j.jii.2017.04.005
346
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE.
THE FAILURE OF BUREAUCRACY
ON “NEXTGENERATIONEU” FUNDS
DESTINED TO REFURBISHING
BUILDINGS IN CATALONIA
ARNAU GUIX SANTANDREU
Universidad Nacional de Educación a Distancia (UNED), Faculty of Law. Madrid,
Spain
aguix3@alumno.uned.es
Abstract The deployment of the «NextGenerationEU» (NG)
funds is an exceptional and multifaceted moment. In Spain,
among other objectives, such resources help finance the
refurbishment of buildings and dwellings with the ultimate goal
of increasing the energy efficiency and sustainability standards.
Therefore, subsidies contribute to the struggle against the climate
crisis and the European energy dependence. Under the
framework of the Royal Decree 853/2021, the central
government of Spain has regulated six subsidy programmes for
such purposes. Regions are entitled to distribute the funds and
deploy their own grant proceedings. In Catalonia, the situation is
surprising because the exposed subsidies are demanded in very
low levels. Thus, the present paper analyses the causes behind
the failure of bureaucracy on NG funds dedicated to restoring
buildings and dwellings in Catalonia, following an approach
based on the analysis of official publications to detect three great
administrative inefficiencies and propose corrective measures.
DOI https://doi.org/10.18690/um.epf.3.2023.39
ISBN 978-961-286-736-2
Keywords:
buildings, energy
efficiency,
refurbishment,
grants,
NextGenerationEU
JEL:
D73, H25, K25
348
1
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Introduction
It is well known the fact that buildings contribute to global warming. Actually,
concrete production is responsible of 8% of the global carbon dioxide emissions,
equivalent of more than a single country except China or the US (Harvey, 2021).
Also, the energy demand required for heating, cooling, lighting and providing
electricity to equipment causes 40% of Europe’s energy demand, most of it (80%)
originated from fossil fuels (United Nations Environment Programme, 2022, 30).
Thus, the UN has set a sustainable development goal (SDG) worldwide related to
cities (SDG no. 11), aiming to “Make cities and human settlements inclusive, safe,
resilient and sustainable” (United Nations, 2023).
In this context, the European Union has presented a large-scale plan, integrated
within the NextGenerationEU (NG) funds, that pretends to double the annual
refurbishing rate of residential and non-residential buildings and thus improve 35
million building units by 2030; to create 160,000 green jobs in the construction
sector’s renovation wave; and in the long run, to foster building renovation for
reaching climate neutrality by 2050 (European Commission, 2020: 2-3). By the Royal
Decree 853/2021, the Spanish central government has regulated the framework of
six grant programmes that distribute the NG funds for buildings among the 17
regions or autonomous communities of the country. Henceforth, such
administrations have determined other public bodies in charge of processing
requests, with increasing complexity of procedures and where various professionals
are mandatory for a successful application. At present, in Catalonia most of the
ownership associations and individual proprietors have omitted to present their
requests and funds destined to the 2022 budget are available in the middle of 2023,
in significant amounts. Then, our research question is mandatory: “Why NG funds
for refurbishing buildings and dwellings in Catalonia are not solicited as expected?“.
2
Theoretical Background
In this section is depicted the theoretical and regulatory background behind the
deployment of NG funds in Catalonia. It conceptualises the programmes, the
policies’ characteristics and the territorial distribution of resources. First of all, the
Royal Decree 853/2021, of 5 October, has determined the programmes for all Spain.
Table 1 illustrates a summary of their properties.
A. Guix Santandreu: The Failure of Bureaucracy on “Nextgenerationeu” Funds Destined to
Refurbishing Buildings in Catalonia
349.
Table 1: Description of the NG programmes dedicated to buildings in Spain, by number.
1
2
3
4
5
6
Refurbishment grants at the neighbourhood level. The funds are destined to restore
buildings with residential use and re-urbanisation of public spaces inside the so-called ERRP
(letters that stand for “Residential Areas of Programmed Refurbishment”, in Castilian), which
have been delimited in municipalities previously. Population is not a determinant factor for
establishing an ERRP. The main goal is reaching at least 30% savings in primary energy
consumption. Subsidies range from 8,100 to 21,400 euros per refurbished dwelling, depending
on the energy efficiency attained.
Support funds for refurbishment offices. The Spanish legislator has created a category
which does not seem much related to the other programmes, as resources are only destined to
the bureaucratic apparatus and not to improvements in energy efficiency in buildings. The
funds are destined to the autonomous communities, local administrations and other public
and private bodies to coordinate, inform and manage the grants, excluding the ones of the first
programme.
Refurbishment grants for buildings. They are destined to residential buildings with one or
more households, with the goal of increased energy efficiency. A technical analysis has to
endorse significant savings in the consumption of non-renewable primary energy (at least 30%,
compared to before the implementation) and energy demand (at least 35% or 25% in heating
and cooling demand, depending on the climate of the geographic area where the building is
located). In this case, the grant ranges from 6,300 to 18,000 euros per dwelling, subject to
energy efficiency improvements. There are extra funds for the removal of asbestos, up to
12,000 for each entire building.
Refurbishment grants to increase the energy efficiency of dwellings. Such funds are
destined to the owners of dwellings who desire to improve the energy efficiency of their usual
residence. The resources cover the replacement of doors, windows or variations in the climate
control systems to start renewable energy or biomass equipment, instead of fossil fuels. The
minimum cost of the intervention is fixed at 1,000 euros and the grant reaches a maximum of
3,000 euros, reaching up to 40% of the whole refurbishing costs.
Grants for Building and Project Book preparation. A Building Book is a technical report
which depicts the properties of a building, including use and maintenance. It describes the
necessary measures for improvements in energy efficiency. The programme funds the
professional expenses of the elaboration of the Building Book and the development of
technical refurbishment projects. There are different grant ranges, with top amounts set at
3,500 euros for the Building Book and 12,000 for the technical refurbishment projects.
Construction of dwellings under social rent schemes in energy efficient buildings. The
programme pretends to build from scratch or rehabilitate buildings situated on terrains of
public ownership, with the aim of incorporating them as affordable housing assets. Publicprivate partnerships (PPP) are considered to be the priority for optimising the allocation of
funds. Social housing financing has a limit of 700 euros per square metre of useful surface of
residences, with a maximum of 50,000 euros per dwelling.
Source: Adapted from the Royal Decree 853/2021, of 5 October. Ministry of Transports, Mobility and Urban
Agenda of Spain (2021).
The Spanish regions manage the NG funds with a relative self-ruling competence.
In Catalonia the situation is characterised by a notable fragmentation. At first, an
office dependent on the City Council of Barcelona, the Barcelona Housing
Consortium (CHB, in Catalan), concentrates its services on the petitions coming
from the largest city of the region. Secondly, an office of the Metropolitan Area of
350
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Barcelona (AMB), called the Barcelona Metropolitan Housing Consortium (CMH),
attends the requests coming from municipalities situated in the metropolis, but
excluding the city of Barcelona. Finally, the Catalonia Housing Agency (AHC) offers
administrative coverage for the rest of the regional territory (Figure 1).
Barcelona Housing Consortium (CHB).
City of Barcelona.
Barcelona Metropolitan Housing Consortium (CMH).
Metropolitan Area of Barcelona.
Catalonia Housing Agency (AHC).
Rest of the Catalan territory.
Figure 1: Institutions involved at refurbishing grants in Catalonia.
Source: Graph elaborated by the author.
Table 2: Calls for refurbishing grants in Catalonia (Programmes 1 to 5 currently in force)
Institution
Territory
Programmes
BDNS
ref.
3|4|5
616994
Catalonia Housing
Agency (AHC)
Catalonia without the city of Barcelona
and the metropolitan area
Whole Catalonia. After the pre-selection
phase, the call for applications is
expected to be published during AprilMay 2023.
6
Not
available
Barcelona Metropolitan
Housing Consortium
(CMH)
Metropolitan area of Barcelona (AMB)
excluding the city of Barcelona
1|3|4|5
623085
3|4|5
1|4|5
632786
634272
1|4|5
634273
Barcelona Housing
Consortium (CHB)
City of Barcelona
City of Barcelona, only defined ERRPs
City of Barcelona, only defined ERRPs
of the Neighbourhood Plan
City of Barcelona, Besòs - Maresme area
City of Barcelona, Can Peguera area
City of Barcelona, Canyelles area
City of Barcelona, Congrés - Indians area
City of Barcelona, La Pau area
City of Barcelona, Trinitat Vella area
1|4|5
1|4|5
1|4|5
1|4|5
1|4|5
1|4|5
634274
634275
634276
634277
634278
634279
Source: 2022 calls published at the Official Journal of the Government of Catalonia (DOGC).
A. Guix Santandreu: The Failure of Bureaucracy on “Nextgenerationeu” Funds Destined to
Refurbishing Buildings in Catalonia
351.
Table 2 illustrates the grant procedures produced by the exposed institutions that
are currently in force in Catalonia. The state of affairs is particularly difficult in the
city of Barcelona, where CHB has participated in numerous calls that can be
overlapping and thus oblige citizens to consult a grant specialist. The National Grant
Database of Spain (BNDS) provides an individual code for each proceeding, which
is paramount for successful call identifications, as CHB omits publishing any other
references. The numerous calls try to target certain areas affected by gentrification
and speculation; however, public intervention in the city produces inefficiencies and
distortions (Uzqueda et al., 2021).
3
Methodology
The methodology is characterised by a literature review of official publications,
centred in grant regulations destined to restoring buildings and dwellings in Spain
and particularly in Catalonia. They were issued during the years 2021 and 2022, under
the NextGenerationEU framework, and are currently in force. It is expected that the
programmes will last until June 2026 with small variations. As the deployment of
such public policies is relatively new and is on the move right now, the scientific
literature in the field is limited. Qualitative content analysis and close reading of the
applicable regulations allow identifying the relevant alignments and weaknesses of
the policies. The objective of the research is to identify the reasons behind the lack
of demand in Catalonia for NG funds destined to refurbishing.
4
Results
The first aspect to be analysed is the territorial distribution of resources in the
country. Setting four outlier regions apart, it is clear that the prevalent factor has
been the fraction of the Spanish population in 2020-2021, with slight variations
among territories. At first sight, there are no detectable correlations that can explain
the existing gaps in population and assigned funds, like urban vs. rural areas, high
vs. low income territories, more vs. less populated regions, or even the north vs.
south divide. The Princedom of Asturias holds the highest positive variation of
funds compared to its population, while the autonomous cities of Ceuta and Melilla
register the weakest ratios. Catalonia is to some extent underserved of resources
at -1.35%, compared to its population. If the transfer was remarkable, we could infer
352
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
that the hypothetical extraordinary funds would explain the lingering resources, but
it is not the case. Table 3 presents regional distribution of the NG funds.
Table 3: Regional distribution of the NG funds (Programmes 1 to 5 of the RD 853/2021).
Autonomous
community / Region
% of the
total
funds
% of the
State
population
(2021)
17.880
2.799
Differential
(% funds
minus
% population)
- 0.510
+ 0.098
% of disparity
(funds compared to
the population in
2021)
- 2.85%
+ 3.50%
±
Andalucía
17.370
Aragón
2.897
Principado de
2.429
2.135
+0.294
+ 13.77%
Asturias
Illes Balears
2.461
2.475
- 0.014
- 0.57%
Canarias
4.591
4.586
+ 0.005
+ 0.11%
Cantabria
1.296
1.234
+ 0.062
+ 5.02%
Castilla y León
5.441
5.029
+ 0.412
+ 8.19%
Castilla – La Mancha
4.212
4.325
- 0.113
- 2.61%
Catalunya / Catalonia
16.163
16.384
- 0.221
- 1.35%
Com. Valenciana
10.821
10.675
+ 0.146
+ 1.37%
Extremadura
2.305
2.236
+ 0.069
+ 3.09%
Galicia
5.845
5.689
+ 0.156
+ 2.74%
Com. de Madrid
14.007
14.248
- 0.241
- 1.69%
Región de Murcia
2.939
3.205
- 0.266
- 8.30%
Com. Foral de
1.380
1.396
- 0.016
- 1.15%
Navarra
País Vasco (Euskadi)
4.858
4.672
+ 0.186
+ 3.98%
La Rioja
0.698
0.675
+ 0.023
+ 3.41%
Ceuta
0.146
0.176
- 0.030
- 17.05%
Melilla
0.141
0.182
- 0.041
- 22.53%
Total of Spain
100.000
100.000
0.000
Sources: Data adapted and calculated from the Ministry of Transports, Mobility and Urban Agenda of
Spain (2021: article 5) and National Institute of Statistics of Spain (2022).
Therefore, inefficiencies that explain the low demand may be observed directly at
the grant procedures that are currently deployed in Catalonia. To simplify the
viewpoint, here is a brief analysis of a possible request made for restoring a building
located in the city of Barcelona. In this context, it is applied the framework of the
Programme 3 of the Royal Decree 853/2021, under the call of the Barcelona
Housing Consortium (CHB) with BDNS ref. 632786 (Figure 2).
At first, citizens with interest in the subsidy will probably take a look at the website
of the municipality (Barcelona City Council, 2023). They may have the first
impression that the Local Renovation Office is the public body in direct charge of
A. Guix Santandreu: The Failure of Bureaucracy on “Nextgenerationeu” Funds Destined to
Refurbishing Buildings in Catalonia
353.
managing the requests and the funds. However, in this case most of the proceedings
will be managed by external professional organisations before reaching the City
Council: the Association of Architects of Catalonia (COAC), the Association of
Technical Architects and Building Engineers of Barcelona (CATEB) and the
Council of Territorial Associations of Property Administrators of Catalonia
(CCTAFC). Consequently, citizens will contact the related professionals (step 1).
Before presenting the formal request of the grant (step 4), two verifications will be
made simultaneously, which are very demanding in terms of documents (step 2).
The “technical suitability” analyses the adequacy of the project and energy efficiency
improvements with the subsidy rules. It is managed by the COAC or the CATEB,
at the choice of the gran applicant, and requires hiring a professional that has to be
a member of an association. The expert will generate the required files and present
them online. After verifying 20 documents, the COAC or the CATEB will produce
a first suitability code (step 3).
The “administrative suitability” is organised by the CCTAFC. In this case, applicants
do not have to hire a property administrator to prepare the documents and present
them, but most of the petitioners will not know this advantage. After the verification
of 8 documents, most of them forms, contracts and budget plans between the
property owners and the chosen refurbishing companies, the CCTAFC produces a
second suitability code (step 3). Both suitability approvals allow presenting the
formal request of the subsidy at the City Council of Barcelona (step 4). The definitive
grant application needs two more forms and after a thorough analysis the City
Council will be able to release a favourable resolution (step 5).
Figure 2: Standard sequence of steps to obtain a renovation grant for a building
(Programme 3).
Source: Data adapted from the call of the Barcelona Housing Consortium (BDNS ref. 632786).
354
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
It should be noticed that the remunerations of the professionals that participate in
this grant process are not covered unless the subsidy is accepted by the
administration. Unfortunately, the payment will not be immediate; according to the
grant call, only after the verification of the works (step 6) and the delivery of all the
required documents, the Administration will order the imbursement of the subsidy
(Barcelona Housing Consortium, 2023: art. 9.4) (step 7). The operation of other
grant programmes in Catalonia is very similar to the exposed case.
5
Discussion and Conclusion
The present paper has analysed the bureaucracy behind the NextGenerationEU funds
for renovating buildings in Spain, and particularly in Catalonia. Overall, the
administrative apparatus created for the occasion is connected to inefficiencies,
second-rate transparency and citizens’ dissatisfaction. Our initial question, “Why
NG funds for refurbishing buildings and dwellings in Catalonia are not solicited as
expected?”, can be answered now. It is because:
1. The management of the subsidy implies too many administrations and
professional organisations, which are overlapping in tasks. Citizens do not
know where to begin. It would have been much easier to concentrate all on
the Catalonia Housing Agency.
2. The request of the subsidy obliges citizens to disburse the remuneration of
architects, building engineers and other specialists, without knowing the
application’s success. Moreover, this is a symbolic step, as even if the grant
is approved, the funds will come only after an exhaustive justification of the
accomplished refurbishing works. Other regions have settled subsidy
payments in advance. Their successes could be emulated.
3. Programme 4, more known as the grant “to change windows”, only covers
up to 40% of the costs, reaching a maximum of 3,000 euros. In other
autonomous communities, the administrations have established other
subsidies to complement the fraction, and thus numerous applications have
been registered. Such policies could be replicated.
Further research can study the effects of eventual corrective policies during the 2023
budget.
A. Guix Santandreu: The Failure of Bureaucracy on “Nextgenerationeu” Funds Destined to
Refurbishing Buildings in Catalonia
355.
References
Barcelona City Council – Ajuntament de Barcelona (2023). The best opportunity to renovate your building.
Renovation is saving with NextGen funds. https://www.habitatge.barcelona/en/servicesgrants/renovation/renovation-saving-nextgen-funds .
Barcelona Housing Consortium – Consorci de l’Habitatge de Barcelona (2022). Anunci sobre convocatòria
per a la concessió, en règim de concurrència pública no competitiva, de subvencions a l’empara del Reglament
(UE) 2021/241 del Parlament Europeu i del Consell, de 12 de febrer de 2021 [...] (ref. BDNS 632786).
Barcelona, Official Journal of the Government of Catalonia, 8696.
https://dogc.gencat.cat/ca/document-del-dogc/?documentId=932395
European Commission (2020). Communication from the Commission to the European Parliament, the Council,
the European Economic and Social Committee and the Committee of the Regions. A Renovation Wave for
Europe – greening our buildings, creating jobs, improving lives. Brussels, COM(2020) 662 final.
https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52020DC0662
Harvey, F. (2021). “Cement makers across world pledge large cut in emissions by 2030”. The Guardian,
12.10.2021. https://www.theguardian.com/business/2021/oct/12/cement-makers-acrossworld-pledge-large-cut-in-emissions-by-2030-co2-net-zero-2050
Ministry of Transports, Mobility and Urban Agenda of Spain – Ministerio de Transportes, Movilidad
y Agenda Urbana (2021). Real Decreto 853/2021, de 5 de octubre, por el que se regulan los programas de
ayuda en materia de rehabilitación residencial y vivienda social del Plan de Recuperación, Transformación y
Resiliencia. Madrid, Agencia Boletín Oficial del Estado, 239. Reference: BOE-A-2021-16233.
https://www.boe.es/buscar/act.php?id=BOE-A-2021-16233
National Institute of Statistics of Spain – Instituto Nacional de Estadística (2022). Population by
Autonomous Community and Autonomous City and size of municipalities.
https://www.ine.es/jaxiT3/Datos.htm?t=2915
United Nations Environment Programme (2022). 2022 Global Status Report for Buildings and Construction:
Towards a Zero-emission, Efficient and Resilient Buildings and Construction Sector. Nairobi.
https://www.unep.org/resources/publication/2022-global-status-report-buildings-andconstruction
United Nations. Department of Economic and Social Affairs, Sustainable Development (2023). Make
cities and human settlements inclusive, safe, resilient and sustainable. https://sdgs.un.org/goals/goal11
Uzqueda, Á.; Garcia-Almirall, P.; Cornadó, C.; Vima-Grau, S. (2021). “Critical Review of Public Policies
for the Rehabilitation of Housing Stock: The Case of Barcelona”. Buildings, 11(108), 1-16.
356
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
SUSTAINABLE ORGANISATIONS TO
IMPLEMENT THE STRATEGIC
CONCEPT OF SUSTAINABILITY
NOMI HRAST, TJAŠA ŠTRUKELJ
University of Maribor, Faculty of Economics and Business, Maribor, Slovenia
nomi.hrast@student.um.si, tjasa.strukelj@um.si
Abstract Achieving the goals of sustainable development is only
possible by representing the interests of all the organization’s
stakeholders. The purpose of the article is to show that for the
competitive flourishing of the economy and the achievement of
a just society, we must direct socio-economic trends to the
concept of equal fulfilment of the interests of organizations and
the economy, people and society, and nature and the natural
environment. Using a qualitative methodological approach and
limitation to a case study of a public organization, our research
results showed that to implement such a concept of
sustainability, we need sustainable organizations that are
committed to sustainable development with a sustainable vision,
mission, purpose, (fundamental) goals, strategic directions, and
strategies.
DOI https://doi.org/10.18690/um.epf.3.2023.40
ISBN 978-961-286-736-2
Keywords:
sustainability,
sustainable
development,
strategic
management,
organisation,
social
responsibility
JEL:
L21, L30, M14
358
1
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Introduction
The global environment and industry bring many opportunities to organisations. To
take advantage of business opportunities, an organisation must consider different
aspects of sustainable development and include them in its development guidelines.
If the organisation’s development is intended for sustainable development, the
organisation’s business operations will also be sustainable (Štrukelj et al., 2020;
Wheelen et al., 2018).
In this research, we, therefore, started with the following research questions (RQs):
(RQ1): What kind of organisation do we need to introduce a strategic concept of organisational
sustainability?
(RQ2): Do we need sustainable governance of the organisation to introduce a strategic concept of
organisational sustainability?
From the knowledge of integral management (Belak et al., 2014; Belak and Duh,
2012; Štrukelj et al., 2017), it is clear that the governance and management process
is superior to the business process, and therefore, we set the following research thesis
(T):
(T1): Responsible organisation governance is a key starting point for the organisation’s sustainable
development and, therefore, to establish justification for a strategic concept of organisational
sustainability.
The article is structured following the IMRaD structure, so the next section is
dedicated to the theoretical background/literature review (section 2), followed by
the methodology (section 3), then we present the research results from findings
(section 4), and the article ends with a presentation of the discussion and conclusions
(section 5).
2
Theoretical Background
Sustainable development is “the ability to make development sustainable to ensure that it meets
the needs of the present without compromising the ability of future generations to meet their own
needs” (World Commission on Environment and Development, 1987).
N. Hrast, T. Štrukelj: Sustainable Organisations to Implement the Strategic Concept of
Sustainability
359.
The model of the UN (United Nations) SDGs (Sustainable Development Goals)
(UN, 2015) tries to create social equality and economic certainty and equality for
humans. These goals are part of the UN 2030 Agenda, which aims to ensure
prosperity, end poverty and protect the planet by 2030.
We emphasise that the organisation is the key to achieving sustainability and the key
link between both personal and social responsibility. We suggest setting up
responsible management and the assimilation of sustainable development and social
responsibility into the strategic development orientations of organisations, and,
consequently, into their operations.
When working at the attainment of sustainable development within an organisation,
it is, for that reason, required to begin from the micro aspect (personal), which by
the mezzo aspect (organisation) affects the macro aspect (social, environmental and
economic) (Štrukelj et al., 2020; 2022).
Reaching out towards sustainable development is more straightforward with
partnerships, which is the 17th SDG of the UN. Three key forms of partnerships
are (Dodds, 2016): (1) Multi-stakeholder partnerships – remarkable transformations,
contributions and dedications to sustainable development; (2) Voluntary initiatives
–individual non-compulsory commitments that to reach selected, well-defined
outcomes for sustainable development; (3) Public-private partnerships –contractual
arrangements between private and public sector agencies. They join forces and share
knowledge and resources.
Organisations play an important part in guaranteeing sustainability, as shown in
Chapter 4 (research) – the selected public and non-profit university is introduced.
Universities are important partners in reaching the UN SDGs because they have a
powerful, visible role among their stakeholders and are crucial partners in multistakeholder memberships. An important part of the longer-term, strategic directions
of public and private universities is “reaching the strategic goals of sustainability”.
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Methodology
Various data collection methods were employed in the examination’s conceptual
part. The research and analysis of the fundamental studied literature were employed
as a fundament in the empirical section.
In the conceptual part, descriptive methods. i.e. the comparative method,
classification method, method of abstraction, method of induction and deduction
were used (Ambrož et al., 2015; Ivanko, 2007). The Dialectical Theory of Systems
(DTS) was also used, with interdependence and synergy of all necessary aspects
taken into deliberation (Mulej et al., 2013).
In the practical part of the examination, the procedure of the case study technique
(Dingsøyr et al., 2023) was used to help understand diverse circumstances and
situations. For examining and explaining the case, publicly accessible data were used.
4
Research Results
In this chapter, sustainable management of universities is presented first to
understand better a case study presented secondly.
The universities can help to reach the SDGs. They must go along with time,
continuously change, meet up with local and global environment expectations and
flexibly reply to the various stakeholder’s demands. They impact the identification
and visibility of necessary changes. With innovative, recently developed new
understanding and knowledge as well as recent initiatives, universities help to solve
problems and transform practice. They are initiators of future leaders (Hanieh et al.,
2015; Knez-Riedl, 2006).
To fulfil the SDGs (UN, 2015), humanity must reach a sufficient amount of
innovation, and this is why it is important to develop our values and foster needed
competencies (UNESCO, 2020). To the universities, it is given the responsibility for
a fundamental part in this development. Through their activities, universities impact
the development of the community and national economy, society, and the global
economy. Universities are an important link between crucial sustainable
development areas, as they educate a profile of various stakeholders that will
N. Hrast, T. Štrukelj: Sustainable Organisations to Implement the Strategic Concept of
Sustainability
361.
stimulate their innovativeness and make communities stronger by adaptation, to
support changes in contemporary and future development. Consequently, they have
to be sustainable and need sustainable strategic management. From the
aforementioned role of the university comes the significance of its integral
management and the importance of establishing a strategic concept of sustainability.
Universities must take knowledge of integral management into account in their
(long-term, medium-term and short-term) development as well as operations (Belak
et al., 2014; Štrukelj et al., 2017; 2020).
Today, a socially responsible and sustainable university is understood as an
organisation that puts in use the concept of social responsibility and sustainable
development in its education system, project activities, research activities, and
development and operation (Glavič et al., 2012; Knez-Riedl, 2006), as is in the case
of the university under study.
The initiatives for the sustainability of the University of Maribor started before
nearly 20 years. In the beginning (Hrast, 2022), in the year 2005, they included
sustainable concepts into the project of Glavič et al. (2012). The concept of social
responsibility and sustainable development Council and Commission was presented
in the year 2013. This content (University of Maribor, 2021) is also prominently
included in the Strategy of the University of Maribor 2021–2030. They are
developing innovative and interdependent university that practice responsible,
critical and active students, guarantee high standards of education, research and
projects, academic honesty work, and protect society. Especially they raise awareness
towards upgrading communication among its stakeholders, to inform them
regarding its different and numerous activities towards sustainability, as well as raise
awareness among stakeholders about sustainable development and social
responsibility. Of Slovenian universities (Hrast, 2022), only the University of
Maribor was ranked in the Times Impact Ranking in 2021; it has been included yearly
since then. In the QS Sustainable Universities 2023 ranking (QS, 2023), it was also
acknowledged as a sustainable university. This year, for the first time, QS measured
an aspect of sustainability: the institution’s capability to tackle the most prominent
social, environmental and governance challenges we are confronted with.
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BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
In the absence of internalising socially responsible and sustainable development, our
society will not prosper, which became aware of by the University of Maribor
management. They understand the importance of developing the strategic concept
of sustainability realisation: to advance in a high-quality, responsible and successful
manner. The university should be an organisation that includes socially responsible
and sustainable activities in all aspects and for all stakeholders.
5
Discussion and Conclusion
Reaching the SDGs is nowadays very significant. Nowadays, society faces many
challenges. Therefore, our civilisation must strengthen diversity with sustainability
and (social, environmental, and economic) responsibility. Organisations like
universities will play a crucial part in this because they significantly impact our
society. Therefore, their development should be oriented towards sustainability, and
our values should be accordingly changed.
Conducted examination confirmed the research questions “What kind of organisation
do we need to introduce a strategic concept of organisational sustainability?” and “Do we need
sustainable governance of the organisation to introduce a strategic concept of organisational
sustainability?” positively. Introducing organisational sustainability through a strategic
concept requires an organisation oriented towards sustainability and the SDGs (UN,
2015). A sustainable organisation takes into consideration the characteristics of a
single human being, of the organisation and the society and economy. It should be
aware of the characteristic of sustainability (Štrukelj et al., 2020; 2022; UN, 2015).
Different structures of partnerships applied by sustainable organisations’ strategic
concepts can notably contribute to SDGs achievement (Dodds, 2016). This is why
organisations require sustainable governance (Belak et al., 2014; Štrukelj and Gajšt,
2019; Štrukelj et al., 2020; 2022; Wheelen et al., 2018). This research has confirmed
the thesis set. We found that the responsible governance of the organisation is a key
starting point for the organisation’s sustainable development and, therefore, for a
strategic concept of organisational sustainability. The integral management models
(Belak & Duh, 2012) instruct that governance is higher-level than management In
order to perform the concept of sustainability, we require sustainable-oriented
organisations. To attain this, we need partnerships to achieve the SDGs – the 17th
UN SDG (UN, 2015).
N. Hrast, T. Štrukelj: Sustainable Organisations to Implement the Strategic Concept of
Sustainability
363.
For further research, we propose exploring other organisations and their significance
in partnerships for achieving the SDGs. It is meaningful to research the micro, i. e.
personal sustainability; mezzo, i. e. organisational sustainability; and macro, i. e.
economic sustainability.
References
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založba Oddelka za slovanske jezike in književnosti.
Belak, Ja., Belak, Je., Duh, M. (2014). Integral management and governance: basic features of MER model.
Saarbrücken: Lambert Academic Publishing.
Belak, Ja., Duh, M. (2012). Integral management: key success factors in the MER model. Acta
Polytechnica Hungarica, 9(3), 5–26.
Dingsøyr, T., Bjørnson, F. O., Schrof, J. et al. (2023). A longitudinal explanatory case study of
coordination in a very large development programme: the impact of transitioning from a firstto a second-generation large-scale agile development method. Empirical Software Engineering,
28(1), 49 pgs. Doi: https://doi.org/10.1007/s10664-022-10230-6.
Dodds, F. (2016). Multi-stakeholder partnerships: Making them work for the Post-2015 Development Agenda.
North Carolina, ZDA: Global Research Institute, University of North Carolina. Commissioned
by the United Nations Department of Economic and Social Affairs.
Glavič, P., Kovačič Lukman, R., Mulej, M., Vovk Korže, A., Bavec, M., Vuk, D., Kante, B., Rebolj, D.
(2012). Trajnostna in družbeno odgovorna Univerza v Mariboru. 7. IRDO mednarodna
konferenca Družbena odgovornost in izzivi časa 2012: Inoviranje kulture za več družbene
odgovornosti – kot pot iz socio-kulturne krize, Maribor: IRDO – Inštitut za razvoj družbene
odgovornosti.
Hanieh, A. A., AbdElall, S., Krajnik, P., Hasan, A. (2015). Industry-Academia Partnership for
Sustainable Development in Palestine. 12th Global Conference on Sustainable Manufacturing.
Proceedings CIRP 26 (pp. 109–114).
Hrast, N. (2022). Akademske skupnosti kot partnerji za doseganje ciljev trajnostnega razvoja. Diplomsko delo.
Maribor: Ekonomsko-poslovna fakulteta.
Ivanko, Š. (2007). Raziskovanje in pisanje del. Metodologija in tehnologija raziskovanja ter pisanja strokovnih in
znanstvenih del. Kamnik: Cubus image d. o. o.
Knez-Riedl, J. (2006). Družbena odgovornost in univerza. 1. IRDO mednarodna konferenca Družbena
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Mulej, M. et al. (2013). Dialectical Systems Thinking and the Law of Requisite Holism Concerning Innovation.
Litchfield Park, Arizona: Emergent Publications.
Qs. (2023). Sustainability 2023: University of Maribor, Slovenia. QS Quacquarelli Symonds. Available on
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Štrukelj, T., Gajšt, N. (2019). Indispensability of socially responsible business policy. V GolinskaDawson, P., Spychała, M. (Eds.): Corporate social responsibility in the manufacturing and services sectors
(pp. 93–125). Germany: Springer.
Štrukelj, T., Nikolić, J., Zlatanović, D., Sternad Zabukovšek, S. (2020). A Strategic Model for
Sustainable Business Policy Development. Sustainability, 12(2), 1–28. Doi:
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Policy: Globalization, Innovation and Sustainability. 15th Edition. London: Pearson.
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Environment and Development: Our Common Future. Oslo: United Nations. Available on January 23,
2023, at: https://sustainabledevelopment.un.org/content/documents/5987our-commonfuture.pdf.
INTERNATIONAL TRADE IN WASTE:
THE CASE OF CROATIA
MAJA BAŠIĆ, MILE BOŠNJAK, IVAN NOVAK
University of Zagreb Faculty of Economics and Business, Zagreb, Croatia
mbasic1@net.efzg.hr, mbosnjak1@net.efzg.hr, inovak@efzg.hr
Abstract The aim of this paper is to analyse Croatia’s
international trade in waste, in terms of both export and import
quantity, value, origin and destination. Data on trade in waste are
available from Eurostat for the period 2004-2020. Results show
that extra-EU trade in tonnes increased dramatically. Extra-EU
export of waste increased for 3475% and extra-EU imports for
433% in the observed period. Intra-EU exports increased for
50% and intra-EU imports increased for 417%, especially after
2013. Intra-EU exports of waste are 3.45 times larger than extraEU exports. Intra-EU imports are on average 1.76 times larger
than extra-EU imports. Croatia’s trade in waste is predominantly
with other EU member states. In order to make national and
global economy resilient to environmental changes and decrease
material footprint, generation of waste followed by a trade in
waste should be decreased by establishing and following
responsible consumption and production patterns.
DOI https://doi.org/10.18690/um.epf.3.2023.41
ISBN 978-961-286-736-2
Keywords:
sustainable
development,
trade in waste,
material footprint,
Croatia,
EU
JEL:
F18, F64, Q56
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE.
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1
Introduction
In today’s economy waste has outgrown its locally generated problematics. Waste
generated locally requires appropriate disposal techniques. Demand for waste
disposal sites outgrows their supply, thereby presenting an environmental problem
and pressuring waste generators to seek new waste disposal sites. Waste can be
traded, as other goods and services, especially internationally. This paper looks into
the Republic of Croatia’s trade in waste to answer the question: Where does Croatia
dispose its waste? and Which countries dispose their waste into Croatia?
The next section portrays the literature in the field of international trade in waste,
after which it explains the used methodology and presents the results of the
descriptive analysis. The paper finishes with conclusion and discussion.
2
Literature Review
Global consumption increased by more than 65% in the period 2000-2019 (the
United Nations, 2022). An increase in the global consumption (demand) raises
global production thereby raising the amount of generated waste. Eurostat (2023a)
defines waste as “any material which the holder disposes of or is required to dispose of pursuant
to the provisions of national law in force.” Even in case of the appropriate disposal of
waste, waste disposal causes environmental and health consequences. Landfills cause
soil, water and biodiversity depletion, as well as air pollution. Herewith connected
loss of biodiversity occurs globally. In that manner the United Nations addressed
responsible consumption and production in the Sustainable Development Goal 12
(SDG12), closely relating to SDG 8 Economic growth and SDG 15 Life on Land,
the protection and restoration of ecosystems and preservation of biodiversity. Table
1 depicts differences between developed, developing countries, EU-27 member
states and Croatia in terms of income per capita, biocapacity, consumption and
production ecological footprint and air pollution.
Global average in generated waste is 0.74 kg per capita per day, while the average
for the Europe and Central Asia amounts to 1.18 kg per capita per day, and in Croatia
1.1 kg per capita per day of waste is generated (World Bank, 2018). In 2020 in
Croatia, the greatest generators of waste by sectors are construction (23.8%),
households (20.2%), waste/water (16.3%), mining and quarrying (11.6%),
manufacturing (7.5%) and energy (1.1%) (Eurostat, 2023a). This section points out
M. Bašić, M. Bošnjak, I. Novak: International Trade in Waste: The Case of Croatia
367.
that consumption generates large ecological footprint, even larger than production,
and that ecological footprint, which measures the quantity of nature necessary to
support people and their economies, is larger in developed economies as opposed
to less developed ones. As economic growth is inseparable from consumption and
production, and with intertwined waste generation and trade, this paper explains the
importance of dealing with the topic of trade in waste and describes the waste trade
flows from and into the Republic of Croatia in order to depict the underlying
Croatian waste trade flows.
Table 1: Income shares, waste trade shares and socioeconomic differences by groups
GDP per capita
Renewable
energy
consumption rate
(%)
Biocapacity
Ecological
footprint
(production)
Ecological
footprint
(consumption)
CO2 emissions
per capita
Share of world
income
Developed
countries
42,539.9
Developing
countries
1,061.9
EU-27
Croatia
32,828,5
15,166.4
11.42
72.95
21.8
33.1
2.7
1.0
2.7
2.8
5.6
0.9
4.6
3.1
6.0
1.1
6.1
3.9
9.8
0.3
6.1
4.1
41.17
58.83
14.92
0.09
Source: Authors’ compilation according to Kellenberg (2015) and World Economic Forum (2019) data. GDP per
capita in constant US$ in 2021 (World Bank database, 2023). Share of world income based on GDP based on PPP
(IMF, 2023). Biocapacity and ecological footprint for 2018 (Global Footprint Network, 2018). Share of energy from
renewable resources from 2021 are available from Eurostat (2023b) for European union-27 and Croatia for 2021,
and for developing and developed countries from the World Bank in 2015.
3
Methodology
This paper analyses Croatian international trade in waste in terms of exports and
imports quantity, value, waste origin and destination in order to gain an
understanding of Croatian waste in trade flows, namely: Where is the Croatian waste
disposed and which countries dispose their waste into Croatia? Data for the analysis
are extracted from the Eurostat (2023a) database. Eurostat database offers the data
about trade in waste in the following manner: (a) quantity of trade in waste, (b) value
of the trade in waste, and (c) the direction of waste in trade. This paper uses a
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descriptive analysis of the data from the Eurostat database on waste and trade in
waste to illustrate Croatian trade flows connected to trade in waste, and with it
connected directions.
4
Results
This section illustrates the Republic of Croatia’s trade in waste. Figure 1 illustrates
total annual imports and exports in waste in tonnes and thousands of euros. Croatian
exports of waste are larger than imports. However, both in terms of quantity and
value, imports of waste show a tendency to increase exponentially, while an increase
of waste exports seems to have slown down in the period 2004-2021.
(a) quantity
(b) value
Figure 1: Imports and exports of waste in the Republic of Croatia
Source: Eurostat (2023a). Authors’ representation.
M. Bašić, M. Bošnjak, I. Novak: International Trade in Waste: The Case of Croatia
369.
Figure 2 shows the Republic of Croatia’s imports of waste. The amount, in tonnes,
and value of waste follow a similar pattern. It is interesting to note that waste imports
from other EU-27 member states and from extra EU-27 were similar in quantity and
value. However, after Croatia accessed into the European Union in 2013, imports in
waste from other EU-27 member states increased drastically (417% in total in the
period 2004-2021). Annual change in imports intra EU-27 was approximately 8% in
the period 2004-2012 and increased to 33% in the period after the EU accession.
The greatest increase in quantity was 113% in 2009-2010, followed by an increase of
76% in 2012-2013, 61% in 2013-2014 and 54% in 2019-2020 (Figure 4). An
exponential increase in intra EU-27 imports is visible (Figure 2).
Intra EU-27 imports are on average 1.76 times larger than extra EU-27 imports.
Extra EU-27 imports increased in total for 433%, amounting 13% annually,
approximately 20% in the period 2004-2012 and increased to 8% in the period after
the EU accession. The greatest annual increase was 72% in 2004-2005, 46% in 20072008 and 38% in 2017-2018. Figure 2 shows that both in terms of quantity and value
intra EU-27 imports of waste show signs of exponential rise and extra EU-27
imports remain fairly constant compared to intra EU-27 imports.
Exports of waste show a somewhat different dynamic. Although intra EU-27
exports outstrip intra EU-27 exports in the entire observed period, extra EU-27
exports started to drastically increase after 2016. Extra EU-27 export of waste
increased for staggering 3475% (27% annually on average). The largest increase was
in the period 2004-2005 when extra EU-27 exports increased for 3,408%. Extra EU27 exports increased annually for 27% on average in the period 2005-2012, and
12.5% annually on average in the period after the EU accession.
Intra EU-27 exports of waste are 3.45 times larger than extra-EU exports. Intra-EU
exports increased for 50% (3% annually on average). In the period 2004-2012 intra
EU-27 exports increased approximately 5% per annum, and approximately 1% per
annum after the EU accession (Figure 3).
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(a) quantity
(b) value
Figure 2: Imports of waste in the Republic of Croatia
Source: Eurostat (2023). Authors’ representation.
(a) quantity
M. Bašić, M. Bošnjak, I. Novak: International Trade in Waste: The Case of Croatia
371.
(b) value
Figure 3: Exports of waste in the Republic of Croatia
Source: Eurostat (2023a). Authors’ representation.
Figure 4: Percentage change in trade in waste
Source: Eurostat (2023a). Authors’ representation.
Figure 4 shows the annual percentage change in intra and extra EU-27 imports and
exports. The greatest positive change is evident in intra EU-27 imports increase,
while the smallest oscillations in intra EU-27 exports.
Imports of waste from selected extra EU-27 countries and Greece shows that the
structure of extra EU-27 imports has changed (Figure 5). Croatia imports majority
of its extra EU-27 waste from Bosnia and Herzegovina (56% in 2004; 69% in 2021).
However, in 2004 North Macedonia was the second largest exporter of waste into
Croatia (29%), while in 2021 it is Serbia (23%).
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2004
2021
Figure 5: Imports of waste from selected extra EU-27 countries and Greece
Source: Eurostat (2023a). Authors’ representation.
In terms of Croatia’s structure of extra EU-27 exports and Greece, in 2004 the
largest importer of Croatia’s waste was Bosnia and Herzegovina (90%), while in 2021
it is Turkey (81%) (Figure 6).
M. Bašić, M. Bošnjak, I. Novak: International Trade in Waste: The Case of Croatia
373.
2004
2021
Figure 6: Exports of waste from selected extra EU-27 countries and Greece
Source: Eurostat (2023a). Authors’ representation.
Figure 7 illustrates Croatia’s terms of trade in waste, its material footprint and net
exports, both in terms of quantity and value. Material footprint as a measure of raw
materials required to meet final consumption demand is negative, thereby showing
a positive tendency to decrease. Terms of trade in waste, as a ratio of export and
import value, although positive point to a tendency to decrease, thereby showing an
increase in import relative to export values.
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Figure 7: Terms of trade and material footprint
Source: Eurostat (2023a). Authors’ representation.
Material footprint and Terms of trade (left axis). X-M (tonnes) and X-M (value)
(right axis).
5
Conclusion
This paper attempted to portray a clearer picture of bi-directional trade in waste in
and from the Republic of Croatia in order to answer the question: Where is the Croatian
waste disposed and which countries dispose their waste into Croatia? In order to answer the
question data on waste trade flows are retrieved from the Eurostat (2023a) database
on waste. Data on the Croatian trade in waste show an exponential rise in waste
imports, especially from EU-27 member states, and a decrease in rise in exports,
especially to EU-27 member states. Additionally, Croatia’s extra EU-27 exports are
increasing whereby the destination of waste exports shows that larger amount of
waste is sent to Turkey.
M. Bašić, M. Bošnjak, I. Novak: International Trade in Waste: The Case of Croatia
375.
Future studies should look into the structure and hazardousness of imported and
exported waste, examine the Croatian loss of biocapacity due to trade in waste, relate
the trade in waste with the amount of consumption, production and with it
connected amount of generated waste. Future studies should inspect whether
Croatia has become the regional waste disposal or transfer site, and examine the
impact of both on ecological and material footprint.
References
Eurostat (2023a). Waste statistics. Retrieved from: https://ec.europa.eu/eurostat/statisticsexplained/index.php?title=Waste_statistics (10 March 2023)
Eurostat (2023b). Renewable energy statistics. Retrieved from: https://ec.europa.eu/eurostat/statisticsexplained/index.php?title=Renewable_energy_statistics (10 March 2023).
Global Footprint Network (2018). Global Footprint Network database. Retrieved from:
https://data.footprintnetwork.org/ (1 March 2023).
IMF (2023). GDP based on PPP, share of world. Retrieved from:
https://www.imf.org/external/datamapper/PPPSH@WEO/OEMDC/ADVEC/WEOWO
RLD (10 March 2023).
Kellenberg, D. (2015). The economics of the international trade of waste. Annual Review of Resource
Economics, 7(1), 109-125. https://doi.org/10.1146/annurev-resource-100913-012639
OECD (2023). Municipal waste (indicator). Retrieved from: doi: 10.1787/89d5679a-en (14 March
2023)
United Nations (2022). Sustainable Development Goals Report. Retrieved from:
https://unstats.un.org/sdgs/report/2022/The-Sustainable-Development-Goals-Report2022.pdf (20 February 2023).
World Bank (2018). What a Waste 2.0: A Global Snapshot of Solid Waste Management to 2050.
Retrieved from:
https://datatopics.worldbank.org/what-a-waste/trends_in_solid_waste_management.html
(10 March 2023).
World Bank (2023). World Bank database. Retrieved from: https://data.worldbank.org/ (5 March 2023).
World Economic Forum (2019). The Global Competitiveness Report 2019. Retrieved from:
https://www3.weforum.org/docs/WEF_TheGlobalCompetitivenessReport2019.pdf
(8
March 2023).
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE.
INVESTIGATION INTO THE USE OF
BIG DATA AND ANALYTICS IN
GHANAS INSURANCE INDUSTRY
KEVIN KWASI ANNO FIREMPONG-BOAKYE,1
DIEGO NAVARRA2
University of Essex, Colchester, United Kingdom of Great Britain and Northern
Ireland
kwasianno@yahoo.com
2 Studio Navarra, London, United Kingdom of Great Britain and Northern Ireland
diego@studionavarra.co.uk
1
Abstract This paper investigates how big data and analytics in
Ghana’s non-life insurance industry is being deployed. Although
the deployment of big data and analytics is widespread in the
global insurance space, little is known about its role in the
decision-making process in Ghana’s rapidly growing and highly
competitive insurance market. The methodology is informed by
the success of many large global insurance organizations in
leveraging big data and analytics and through a mix of interviews
and surveys. Qualitative research design underpinned by
interpretivism was applied in this study to investigate the
deployment of big data and analytics in Ghana’s non-life
insurance industry. The study reveals that Big data and analytics
in Ghana are found to be still emerging and mostly limited to
descriptive and reporting purposes, although some are found to
be making important strides towards more advanced analytics
usage. Big data in insurance can pave the way for AI and data
driven decision making to be used to reduce insurance risk,
increase food security, and enhance organisations adaptiveness
to uncertain environments while improving climate resilience
and promoting more sustainable cities and communities.
DOI https://doi.org/10.18690/um.epf.3.2023.42
ISBN 978-961-286-736-2
Keywords:
big data,
analytics,
insurance industry,
sustainable
development goals,
Ghana
JEL:
Q01, O14
378
1
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Introduction
Discussions around the use of big data and analytics are prominent in advanced
economies. However, little is known about the situation in the emerging digital
markets in Sub-Saharan Africa. Within the African continent research on big data
has focused on South Africa, which is considered more technologically advanced
than most African nations (Sekli and De La Vega, 2021and Kruger et. al., 2014).
Studies on big data and analytics use in Ghana have focused on its application in
disciplines other than insurance. For example, Yeboah-Boateng and Nwolley’s
(2018) and Dzandu (2019) analyse its use in marketing whilst Awuah, et. al (2021)
study focuses on public sector business. Ghana’s non-life insurance industry and
related regulatory initiatives to digitally transform the Ghanaian industry to drive
insurance penetration, have not yet been studied and this is the research gap this
paper aims to fill.
Therefore, the research questions this study will focus on is: how is big data and
analytics being deployed in Ghana’s non-life Insurance Industry? Big data can pave
the way for AI and data driven decision making to be used to reduce insurance risk,
increase food security, and enhance organisations adaptiveness to uncertain
environments while improving climate resilience and promoting more sustainable
cities and communities (Navarra, 2022). The next section will review the literature,
followed by the methodology. Next, we discuss the findings followed by the
conclusions.
2
Literature Review
In contrast to findings from Europe, America, and Asia, where big data and analytics
is deployed out of necessity to remain competitive (Benfeldt et. al., 2020; Huang,
2019), Yeboah-Boateng and Nwolley’s (2018) find that, the motivation to deploy big
data and analytics across businesses in Ghana is dependent on the personality and
biases of the organisations leadership.
Generally, Yeboah-Boateng and Nwolley’s (2018) findings show that there is overall
recognition of the importance, risks and demands of big data amongst various
business stakeholders, thus, suggesting appreciable level of knowledge on the central
role big data and analytics is taking at global level. Yeboah-Boateng and Nwolley’s
K. K. A. Firempong-Boakye, D. Navarra: Investigation into the Use of Big Data and
Analytics in Ghanas Insurance Industry
379.
(2018) study however focuses on Ghana’s SME industry. Unlike Ghana’s insurance
industry, Ghana’s SME industry is highly informal and characterised by low or nonexistent corporate governance and small capital (Osei-Boateng and Ampratwum,
2011; Mintah and Darkwah, 2018). Given the differences in the characteristics of
Ghana’s SME sector and the insurance industry, it is perhaps hasty to assume
findings from such a highly irregular sector represent the state of business operations
in Ghana especially the non-life insurance industry which is much more capital
intensive.
Afful et. al., (2018) provide a Ghanaian perspective on the concept of big data. They
find that, until recently, companies in Ghana had failed to fully realise the usefulness
of big data analytics, largely due to the lack of knowledge and limited penetration of
supporting technologies. Their findings corroborate Dzandu (2019) key findings of
a general lack of adequate know-how with the use of various analytics software/tools
by employees. Afful et. al. (2018) also finds that, organisations in Ghana recognise
that they possess valuable assets, capable of providing them with a wealth of
knowledge to improve efficiency and productivity in their large data sets.
Ghana has great potential for employing big data and data analytics and is a heaven
for tech businesses, with tech companies including Google and Twitter, opening
offices locally. Ghana’s insurance industry employs about 15,000 people, consists of
23 Insurance Companies, 90 Insurance Brokers, 5 Reinsurance Brokers, 4
Reinsurance Companies and over 6,000 tied and independent agents. Research
results suggest that organisations are less mature in their analytics beyond reporting,
and that heavy spreadsheet use may be holding back advanced insight generation to
support business growth. Big data and analytics in Ghana is found to be still
emerging and mostly limited to descriptive and reporting purposes.
3
Methodology
Qualitative methods underpinned by interpretivism was applied in this study to
investigate the deployment of big data and analytics in Ghana’s non-life insurance
industry. The study further infers the preparedness of industry players to support
the digital transformation agenda by the local regulator, against the premise that the
strategic deployment of big data and analytics promotes business efficiency and
supports growth.
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
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By employing constructivism, the researcher draws on the flexibility of
interpretivism to observe, document, and investigate subtilties of learners experience
through interviews and surveys. This study deploys a non-probability sampling
design, which combines the quota and purposive sampling techniques. The quota
technique is used to collect data from participants touted to have a greater
understanding of the phenomenon being studied. The purposive technique is used
to collect qualitative data from executives. This mix is deemed critical to obtaining
information rich data that represent the different realities experienced by different
levels of employees in an organisations deployment of big data and analytics. 4
participants were selected for the qualitative methods part of this study. The sample
size was guided by Creswell’s (2013) guiding principle of not more than 4 or 5
participants in qualitative studies.
4
Results and Discussion
The study reveals that, delivering operational efficiency and executive management
insight is the most important benefit sought from big data and analytics. From
literature, analytics can improve the ability of users, to explore and customize views
that are relevant to their analytical processes. These benefits are noted to lead to
greater operational efficiencies hence, it is of little surprise that they rank highest in
importance for many non-life insurance organisations in Ghana. For example, one
executive made the following comment:
For us, data and analytics is supposed to support the bottom line. Our portfolio managers should
be able to easily interact with information to diagnose the root cause of a situation and take corrective
measures, preferably in real-time to improve performance or address customer concerns. since we
started building dashboards with QLIK, we can consolidate information more easily to identify why
a branch like Tamale was not performing.
These are the types of insights we expect to see across other workgroups with such
programmes.
The study further finds that, analytics in most organisations, is used primarily to
measure, track, and compare business performance against certain key performance
indicators, including prior year performance. As such, investment in analytics is
K. K. A. Firempong-Boakye, D. Navarra: Investigation into the Use of Big Data and
Analytics in Ghanas Insurance Industry
381.
seldom tailored towards predictive analytics as seen in more analytics mature
environments like Europe, America, and South Africa.
A senior executive from a market leading insurer made the following comment:
The organisation is very much aware of the benefits of analytics, which is the reason why we are
relentless with our plans to continue analytics development. To be honest, it is not as though we were
not aware of the benefits associated with the use of analytics, the difference now is that we are
pursuing various plans to collect customer data through our new CRM tool from the group.
This should give us greater information, especially when looking to develop products
and pursing certain marketing angles.
Considering that a key characteristic of big data is its collation from various sources,
one may ask if the data used in decision making in Ghana may even be considered
as big data. Nonetheless, the reliance on a single data source, especially
organisational data is found as a key reason as to why big data and analytics is being
deployed in descriptive and reporting capacities. Organisations simply do not have
access to the variety of data to discover subtle patterns capable of transforming their
business models. For example, in budgeting and forecasting, external data is hardly
considered. Essentially, the impact of external risk factors on the business is usually
not adequately catered for.
Findings reveal that whilst integration of analytics with core business applications
ranks high on the wish list of many organisations, they have simply not found
enough success in this area to suggest imminent positive results in achieving dataoriented goals. According to findings the prevalence of legacy technologies which
do not promote knowledge sharing is a major driver for the lack of success. It is
perhaps little wonder as to why users find little success or satisfaction in their big
data and analytics journeys.
Big data can bring several potential benefits, however research on their adoption in
the case of the insurance industry in Ghana shows the risk of a potential clash
between traditional and data driven models as the latter require customer feedback
mostly ignored by the former. Lack of policies to support adoption of big data, AI
& smart technology makes it difficult to attract investment opportunities in big data
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
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382
infrastructure leading to a catch 22 situation where critical data gaps affect policy &
KPIs delineation, performance, monitoring, and feedback to measure progress
towards the achievement of Sustainable Development Goals (Navarra, 2022).
5
Conclusions
While this study acknowledges the significant developments around the topic of big
data and analytics especially within the insurance space, it shows how different the
story in Ghana’s context is. The paper adds meaningfully to the body of literature
on the progressive development of big data and Analytics in insurance, especially
within the Sub-Saharan region. Data-driven insights has been a key difference maker
between an organisations competitiveness and passiveness in the last few years, with
greater influence expected going forward. Simple facts such as knowing about digital
literacy levels within the boundaries of big data and analytics use, can be the basis
for more assertive strategic decisions for business leaders, regulators, and investors
with interest in Ghanaian and similar markets in consideration of Sustainable
Development Goals.
Implications of the findings of the study include the following:
−
−
The introduction of accessible executive training programs and data
visualization tools to support data driven decision making should be
integrated in insurance industry practice
Data ‘producers’ should be involved while devising policies and incentives
that acknowledge and incorporate feedback mechanisms based on wellconceived data structures and data analytics platforms that can then
delineate KPI tracking policy progress and the achievement/localisation of
SDGs
Achieving the above in tandem with policy coherence across a varied ecology of
public and private organisations represents a significant research and practical
challenge still to be fully investigated.
K. K. A. Firempong-Boakye, D. Navarra: Investigation into the Use of Big Data and
Analytics in Ghanas Insurance Industry
383.
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3(1), 9-21.
MULTIDISCIPLINARITY AND
INTERDISCIPLINARITY: KEY
ELEMENTS FOR TEACHING
ENVIRONMENTAL SUSTAINABILITY
AT ECONOMIC AND
BUSINESS FACULTIES
GREGOR RADONJIČ, MATJAŽ DENAC
University of Maribor, Faculty of Economics and Business, Department of Technology
and Entrepreneurial Environment Protection, Maribor, Slovenia
gregor.radonjic@um.si, matjaz.denac@um.si
Abstract The fact is that topics related to sustainable
development are becoming an important integral part of
curricula in economics and business higher education. However,
the question arises how to include the field into educational
practices, what competences and knowledge are required for
different study courses (both to lecturers and students) and how
to understand interdisciplinarity within different faculty
departments. In this paper, we present 30 years of experiences of
teaching sustainability topics with the emphasis on environmentrelated issues given by the members of the Department of
technology and entrepreneurial protection at the Faculty of
Economics and Business in Maribor. Several decades of
experiences confirm that multi- and interdisciplinarity are one of
the key features in the education of economics and business
students due to the ever-increasing complexity of environmental
issues that companies face in practice. In order to demonstrate
the importance of multi- and interdisciplinarity in teaching
environmental sustainability, we present two cases given in our
current courses: carbon footprint calculation and evaluating of
''greener'' products with the application of software tools and
databases (like Life Cycle Assessment tools).
DOI https://doi.org/10.18690/um.epf.3.2023.43
ISBN 978-961-286-736-2
Keywords:
sustainability,
interdisciplinarity,
teaching,
higher education,
carbon footprint
JEL:
I23, Q56
386
1
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Introduction
There has been a growing consensus that universities play a strategic role in the
promotion of sustainability by creating relevant knowledge and its transfer to the
society, and, secondly, by preparing their students for their future roles in the society
where they will make sustainable and responsible decisions (Lozano et al., 2015;
Figueiro & Raufflet, 2015; Blanco-Portela et al., 2017; Csillag et al., 2022). Several
teaching techniques and didactical approaches were proposed on how to integrate
sustainable development (SD) into higher education curricula (Figueiro & Raufflet,
2015; Barth & Rieckmann, 2012) and how to overcome barriers of such
implementations (Naeem & Neal, 2012; Blanco-Portela et al., 2017; Csillag et al.,
2022).
Integrating environmental sustainability topics into economics and business
education raises several important questions such as which SD topics should be
included into different study courses, how to relate such topics within the already
existing courses, what the overall level of the sustainability knowledge of teaching
staff is, and where lecturers get their environmental sustainability education and skills
to be able to understand very complex environmental impacts interrelations,
methodologies and tools.
In such efforts, the staff that lacks sustainability-related skills and has insufficient
specialized knowledge of sustainability can be a problem because most academic
staff in the past have never received training on the topic and do not feel comfortable
to work across disciplinary areas on the topic of sustainability (Csillag et al., 2022).
On the other hand, many academics have become ''over-night experts'', which is
even worse. Naeem and Neal (2012) and Peña et al. (2018) reported that the most
significant barriers to the integration of sustainability into the business curricula were
associated with the lack of training of sustainability themes by most faculty members.
Therefore, as emphasized by Lozano (2006), 'educating the educators' is an
important element for promoting the incorporation of education for SD into
universities, because a clear understanding of SD is necessary for the incorporation
of the concept.
G. Radonjič, M. Denac: Multidisciplinarity and Interdisciplinarity: Key Elements for
Teaching Environmental Sustainability at Economic and Business Faculties
387.
It is clear that the complex problems sustainability sciences are facing cannot be
addressed sufficiently from a single-disciplinary perspective (Brudermann et al.,
2019). Therefore, many authors agree that sustainable development and
sustainability implementation require at least multi- and/or interdisciplinary
approaches (if not more holistic ones). In such a way, it is possible to overcome too
narrow and fragmented teaching in economics- and business-oriented faculties
based on the management views only and which cannot embrace the complexity of
environmental sustainability that companies face in business practice.
The aim of this paper is to reflect on how environmental sustainability topics as a
part of wider SD goals can be addressed in the economics and business curricula by
giving the example of the Faculty of Business and Economics at the University of
Maribor, where the first courses that integrated environmental pollution and control
problems in companies were already launched in 1970s, i.e. long before the
importance of such topics was recognized as important in business-oriented schools
curricula worldwide. Based on more than thirty years experiences in teaching and
researching environmental sustainability issues, we present the importance of multiand interdisciplinarity approach.
2
The Role of Multi- and Interdisciplinarity in Teaching
Environmental Sustainability
Despite significant efforts in last decade and a half, higher education institutions are
still far from solving complex SD problems in an interdisciplinary manner as
confirmed by several authors partly because they are organized into highly
specialized areas of knowledge and traditional disciplines.
Based on literature reports, Watson et al. (2013) observed that many higher
education institutions curricula have relied on single-disciplinary specialization and
reductionist thinking. As reported by Dlouhá et al. (2017) in a review paper for the
case of Central European countries, single disciplinary-based SD courses are
introduced without commensurate efforts to create an interdisciplinary or
multidisciplinary dialogue. Furthermore, the disciplines may be too often focused on
defending their own boundaries and resources (Darian-Smith & McCarty, 2016)
what results in fragmented learning (Lambrechts et al., 2013).
388
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Whereas in a single-disciplinary approach, a stand-alone course is taught with no ties
to other courses, an interdisciplinary approach means the combination of knowledge
of multiple established disciplines for solving specific issues (such as sustainability).
In addition, a multidisciplinary approach consists of different fields of knowledge
where each discipline retains its own method or theoretical concept and may be
responsible for a different topic linked to the sustainability (Figueiro & Raufflet,
2015). Multidisciplinary approaches use the perspectives of a number of different
disciplines with no necessary overlap. Interdisciplinary approaches use the methods
and theories of one discipline to inform other disciplines (Darian-Smith & McCarty,
2016).
With regard to the study program, the study by Barth et al. (2007) showed that the
competence for interdisciplinary cooperation appears to be central and urgently
needed for teaching SD topics because personal and specialized knowledge is applied
to new questions and problems in different combinations or disciplines and placed
in an integrative perspective. However, learning processes which can enable such
transformative changes largely depend on academic staff and their capabilities and
willingness to support such processes (Barth & Rieckmann, 2012). Unfortunately,
the complex structure of educational institutions may involve groups or individuals
with diverse interests, which can hinder the process of SD interdisciplinary
integration (Figueiro & Raufflet, 2015).
2.1
Environmental sustainability teaching at the Faculty of Economics
and Business Maribor
Environmental sustainability and sustainability-related courses have been present in
the contents of curricula at the Department of technology and entrepreneurial
environment protection since the 1970s. Figure 1 shows the development of
environmental and sustainability related contents in the courses given in terms of
the share of the number of pages in textbooks written by professors in our
department. Also, we develop, transform and upgrade the courses on a continuous
basis. Some of the current courses are: Environmental management, Ecology of
products, Sustainability of products, Technological and eco-innovation and others.
A couple of courses are delivered together with the colleagues from other
departments, like Environmental economics and environmental management and
Sustainability accounting.
G. Radonjič, M. Denac: Multidisciplinarity and Interdisciplinarity: Key Elements for
Teaching Environmental Sustainability at Economic and Business Faculties
389.
Figure 1: Development of environmental and sustainability related contents in the courses
given at the Department of technology and entrepreneurial environment protection
Source: Authors' elaboration.
In the continuation, we present two examples of environmental sustainability topics
that are included in the study courses and in the research work of the Department
of technology and entrepreneurial environment protection and that are based on the
engineering-oriented approach of modelling and calculations of environmental
impacts: product carbon footprint (CF) and Life Cycle Assessment (LCA).
3
Case Studies of multidisciplinarity Related to Environmental
Sustainability
The case study research methodology was used to demonstrate multi- and
interdisciplinarity in the implementation of environmental sustainability topics in
economic and business-oriented schools.
The relevant environmental data are the basis for any environmental policy. To
determine the impact of processes and products on the environment, they must be
calculated accurately. Different methodologies are used for such calculations
supported by special software tools and comprehensive databases. Two of such
methods are carbon footprint (CF) and Life Cycle Assessment (LCA). Both tools
originate from engineering-based calculation procedures and standards and require
390
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
knowledge on modelling complex product life cycles which is impossible without
expert knowledge of technological processes, energy and mass flows, raw materials,
materials, energy conversions, etc.
If companies want to implement a greenhouse gases (GHG) reduction strategy and
if they want to declare their products as more environmentally friendly, the results
obtained from CF and LCA calculations are crucial. Data obtained by CF and LCA
calculations are nowadays widely used in research and development, environmental
management, marketing and supply chain management etc. However, management
and marketing decisions and claims cannot take place without data obtained by such
methods. Moreover, the interpretation and contextualization of such data cannot be
successful without knowing the background of data determination.
To understand environmental impacts of a company or a product, the understanding
of various environmental categories is necessary, which is based on natural sciences.
Secondly, both methods, although widely used, have several methodological
shortcomings that needs to be taken into account when interpreting the results and
setting the decision-making priorities (Radonjič, 2015). In addition, if one really
wants to understand the CF concept, the concept needs to be placed in the wider
context of environmental sustainability, which means comparing it with other
environmental impacts and methods.
Figure 2: Connections between environmental engineering and business/management
topics within the SD framework
Source: Authors' elaboration.
G. Radonjič, M. Denac: Multidisciplinarity and Interdisciplinarity: Key Elements for
Teaching Environmental Sustainability at Economic and Business Faculties
391.
Due to these reasons, CF and LCA are good examples for studying multi- and
interdisciplinarity in business practice, as they combine both engineering and
management approaches of environmental sustainability. Figure 2 shows some
examples of interdisciplinary interwining of these fields within the SD framework.
3.1
Carbon footprint calculation procedure
Although widely used in business decisions nowadays, CF is an environmental
parameter based on a special engineering- oriented calculation procedure defined by
standardized methodology to quantify GHG emissions. There are two main CF
types: the product CF and the organizational CF. After CF determination, the
obtained data can be used to establish carbon policy in companies, including goal
setting for GHG reduction, for sustainable reporting and for the detecting the most
contributing sources of GHG emissions along supply chains. CF can be calculated
by different calculation methods, resulting in different final values; therefore,
calculations require expert knowledge. This also includes the knowledge on energy
sources, their calorific values, heat and energy consumption, special conversion
factors for single energy sources and selection criteria on global warming potentials.
Several GHGs exist with completely different emission sources. In case of CO2
related emissions, the energy consumption data are collected and converted to CO2
emissions by multiplying it with special emission factors (equation 1). In order to do
this, selection of relevant emission factors must follow energy conversion
characteristics of different fossil fuels and related energy technologies, CF standards
guidelines and/or data from national energy operators.
GHG emissions = Σ (ADi x EFi)
(1)
where ADi represent activity data from source i (based on a unit of measurement),
and EFi is emission factor for source i (kg CO2/unit of measurement). When dealing
with the quantities of fuels, expressed in tonnes and/or m3, net calorific values has
to be used to calculate the amount of energy per tonne or m3.
To calculate a CF, emission quantities of individual GHGs have to be converted to
so-called carbon dioxide equivalents (CO2eq) using Global Warming Potentials
(GWPi) values (equation 2). That allows different GHGs to be compared on a basis
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relative to one unit of CO2. Measuring the comparative impact of different GHG is
further complicated by the fact that different GHGs vary both in the greenhouse
effect intensity in atmosphere and how long they remain in atmosphere. Therefore,
GWPi factors must be carefully selected, since they are available for different time
horizons (20 years, 100 years and 500 years).
CF (CO2eq) = Σ ((GHG emissions)i x GWPi)
(2)
In addition, biogenic carbon uptake (CO2 removed from the atmosphere) has to be
included as well. Finaly, the CF result represents a sum of particular GHG emissions
(expressed as CO2eq), reduced for biogenic carbon uptake (equation 3).
CF (CO2eq) = Σ ((GHG emissions)i x GWPi) - CO2eq biogenic
(3)
For product CF calculation, life cycle of product must be modelled first on a basis
of engineering principles of mass and energy flows, backed by the application of
special software tools. However, calculating CF has a limited practical value if we do
not have an indication of which processes contribute most to such a result. This
kind of indication can easily be given by special software tools, linked to verified
environmental databases.
3.2
Using LCA methodology in defining 'green' products
LCA is a complex analytical method that determines the impacts of products
throughout their life cycles, covering the extraction of raw materials and energy
resources, the production of materials, chemicals and energy, the production of
intermediate products, products and by-products, transport and distribution,
impacts during use and after disposal. The LCA method quantifies mass and energy
flows and links them to different environmental and health impacts. It can include
up to 22 environmental categories, including carbon footprint. The results of an
LCA help to identify how different products differ in terms of their environmental
impacts, which are the most impactful stages in the product life cycle, which
environmental impacts are most problematic and how a change in one part of the
life cycle affects the other phases. Thus, LCA is known for its intensive contribution
to better decision making which qualifies it as one of the most distinguished tools
for products eco-design of products and strategic decision-making regarding
G. Radonjič, M. Denac: Multidisciplinarity and Interdisciplinarity: Key Elements for
Teaching Environmental Sustainability at Economic and Business Faculties
393.
products development and marketing. LCA results represent the information basis
for decisions whether a certain product is more environmentally friendly or not.
Without LCA calculations such decisions are not relevant and can lead to
greenwashing when comparing products.
As an example of LCA analysis, we show the application of LCA using the SimaPro
software for double-layer laminated packaging produced from low-density
polyethylene and polyamide used in the food industry for vacuum or modified
atmosphere packaging. Methodological and data details of the study can be found in
(Denac & Radonjič, 2019). The SimaPro software tool, supported by comprehensive
environmental databases was used which enables the results to be presented in a
wide range of graphics and formats (Figure 3). From Figure 3, we can detect which
packaging's life cycle phases contribute the most serious environmental impacts.
Figure 3: LCA graphical presentation of the environmental impacts calculated by SimaPro
software of the laminate packaging (based on ReCiPe calculation method)
Source: Authors' elaboration.
4
Discussion and Conclusions
This paper reflects the need to move beyond the single-discipline/interdisciplinary
divide. It raises the awareness that multi- and interdisciplinary approaches to
sustainability teaching within and among different courses at the economics and
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
business higher education institutions is required in order to achieve a correct
understanding of environmental problems in business practices. Namely, very often
environmental topics related to business practices require an understanding of
natural sciences phenomena or engineering-oriented calculations to deal with proper
contextualization and implementation. In order to obtain necessary quantitative data
on which a company's effective environmental policy is based, calculation
procedures and modelling of complex products life cycles are required based on
engineering principles.
One of the reasons why there are so many examples of greenwashing in business
practice is the insufficient knowledge of marketing and management staff about
determining the overall life cycle effects of products on the natural environment and
human health. Engineering-like modelling and use of modern tools and software are
necessary to support marketing and management decisions with relevant data.
However, it has to be emphasized that even interdisciplinarity in the sense of
combining knowledge from different academic disciplines is still insufficient for
tackling complex real-world problems. More holistic approach is necessary to attain
the transition to a more sustainable economy serving all three SD pillars:
environmental, social and economic. Although this paper is limited on
environmental dimension of SD, multi- and interdisciplinarity approach is essential
for social/environmental and social/economic interactions, too.
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Blanco-Portela, N., Benayas, J., Pertierra, LR., Lozano, R. (2017). Towards the integration of
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Brudermann, T., Aschemann, R., Füllsack, M., Posch, A. (2019). Education for sustainable
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Darian-Smith, E., McCarty, P. (2016). Beyond interdisciplinarity: Developing a global transdisciplinary
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Denac, M., Radonjič, G. (2019). Pomen analize življenjskega cikla z metodo LCA na področju embalaže
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396
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
ADOPTION OF SUSTAINABLE
TECHNOLOGIES IN SMART CITIES:
A GOVERNANCE FRAMEWORK
AHMED M. RAGAB,1 DIEGO NAVARRA2
University of Hull, Hull, United Kingdom of Great Britain and Northern Ireland
a.ragab-2020@hull.ac.uk
2 Studio Navarra, London, United Kingdom of Great Britain and Northern Ireland
diego@studionavarra.co.uk
1
Abstract This research presents a literature review on sustainable
technologies and smart city governance models and a primary
study on people’s feedback on the adoption of sustainable
technologies in smart cities. Based on the gaps in the available
literature and the responses of the study of 100 participants, this
research introduces a governance framework to be considered
for the adoption of sustainable technologies in the smart cities
context. During this research, a survey has been conducted for
participants from the information and communication industry
to reflect on the main aspects of sustainable technologies,
applications, and priorities, link with the United Nations’
Sustainable Development agenda. Outcomes of the survey along
with an expert interview came to conclude that sustainable
technologies should include multiple aspects such as mobility,
infrastructure, government, economy, living style, environment,
safety, and data privacy. Sustainable technologies are considered
as a new life vehicle that can drive not only the application of the
technology itself but also human behaviour. The research
proposes a Governance Framework practitioners may leverage
to classify sustainable technologies in smart cities’ context and
define more governing parameters for adopting sustainable
technologies.
DOI https://doi.org/10.18690/um.epf.3.2023.44
ISBN 978-961-286-736-2
Keywords:
sustainable
technologies,
governance,
smart cities,
sustainable
development,
AI
JEL:
Q01, O14
398
1
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Introduction
Sustainable technologies have been actively utilized in cities to enhance their
“smartness”. Smart cities are gaining increasing recognition and are meant to be
technologically managed urban spaces that leverage technologies to create a better
world for citizens (Dameri et al., 2014). Some examples include computational
technologies such as the Internet of Things (IoT), Artificial Intelligence (AI),
Blockchain, Big Data, Cloud Computing, and Virtual and Augmented reality.
Therefore, these emerging technologies contribute vastly towards sustainable
development (Rani et al., 2021).
Therefore, to expand on the application of sustainable technologies in smart cities,
this research aims to answer the following question: what is the relevant governance
framework that may be used to adopt sustainable technologies in the smart cities
context? The research targets specified objectives that can be achieved through
fundamental questions and are discussed below.
2
Theoretical Background
2.1
Research theoretical framework
To enrich the perspective shown by Activity Theory, the System Dynamics Theory,
demonstrates the movement and interaction of different aspects of Smart Cities
(Figure 1; Das, 2013). These six aspects – smart people, economy, living,
environment, mobility and governance are all interconnected and affect each other.
This understanding fit greatly as a visual demonstration of sustainable technology,
its users and all the actors within smart and sustainable cities across the globe.
The System dynamics model (Figure 1) showcases that different aspects of the
subject are intertwined and co-dependent (Sirovs, 2022, Navarra and Bianchi, 2013a;
Navarra and Bianchi, 2013b). Each aspect creates a loop, and each of the loops
interconnects with each other, affecting the others. In the case of the Smart City, the
research aims to identify how the governance framework can facilitate the adoption
of sustainable technologies in the smart cities while fulfilling SDG11, and therefore
intercombination of understanding the activity theory and the system dynamic
theory, the outcome of the dissertation can be achieved.
A. M. Ragab, Diego Navarra: Adoption of Sustainable Technologies in Smart Cities: A
Governance Framework
399.
Figure 1: Systems Dynamics Model for Smart Cities
Source: Das (2013).
Sustainable Technologies (object, as per Activity Theory), are utilised across all six
pillars and are a variable input to the system of the smart city as a whole. As
sustainable technologies are applied by smart cities' technology users (subjects), this
enhances smart living through citizen utilisation, increased quality of life and safety,
health and well-being as well as housing quality. For instance, sustainable
technologies such as smart lighting systems can optimise the energy consumption of
electricity per living unit if made more widely accessible.
2.2
Introduction to Sustainable Development Goals
The Sustainable Development Goals (SDGs) were first introduced by the United
Nations in 2015 and are supposed to be accomplished by 2030 (United Nations
DESA, 2022; United Nations, 2015). In total, seventeen SDGs were developed (Wu
et al., 2018).
2.3
Economic impact of sustainable technologies
According to Levi-Jaksic et al. (2018) and Stritch et al. (2018), the impact of
sustainable technologies on economic welfare may result in the arrival of the concept
known as a circular economy. This concept showcases the production of reusable
resources through the transformation of waste, thus creating a circular flow of
economic activities rather than linear hence regeneration concept is emphasised
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rather than having “end of the lifecycle" (Sempels and Hoffman, 2013; Andersen,
2007). According to United Nations DESA (2022) Wu et al. (2018) and United
Nations (2015) if SDGs 1,2,3,8 and 9 are achieved by 2030, the reduction in poverty,
hunger, accessibility of good health and well-being, availability of decent work along
with stable economic growth.
2.4
Existing smart cities governance frameworks
The balance between all aspects of the smart city can only be achieved with strong
data governance established, carefully planned and implemented. Therefore, as the
smart city layers must be tackled simultaneously to achieve a sustainable impact,
which is in alignment with the SGD11 Goal, various sustainable data-driven
initiatives are applied.
One example of technology governance in smart cities includes real-time and
interactive data visualisation and cities analytics via cities’ dashboards, which can give
great insight into what aspect requires attention on priority (Wang & Shirowzhan,
2022). For example, if road infrastructure is overcrowded (such as in the Case of the
City of London) (Bibri et al., 2020), the city introduced smart mobility solutions by
applying IoT to optimise the traffic and encourage the mindset of usage of public
transportation (Wang & Shirowzhan, 2022). On the other hand, the increase in
mobility solutions will enable more population to move to urban areas, causing cities
to expand or overcrowd yet again. This example highlights the multidimensional
complexity and challenge of achieving sustainability (Navarra & Osu, 2021).
Table 1: Top 10 Smart Cities in the world.
(Bris et al., 2021)
A. M. Ragab, Diego Navarra: Adoption of Sustainable Technologies in Smart Cities: A
Governance Framework
401.
However, the top 3 ranked smart cities that most closely achieved success in
establishing smart living, environment, people, economy, mobility and governance
are Singapore, Zurich and Olso (ranked 1 to 3 respectively) (Bris et al., 2021, Table
1). These cities are ranked highest in the efficiency of structure as well as the use of
technology.
2.5
Data governance framework by Navarra and Osu (2022)
There are various data governance frameworks have been introduced to the
literature in this century (Al-Badi et al., 2018; Abraham & Schneider, 2019).
However, as the concept of big data has been introduced, updated big data
governance frameworks have been established. For example, Navarra and Osu
(2022), have introduced a five-pillar framework which covers the data types, data
process, protection, technology, applications and target audience. It showcases that
the data governance framework is multidirectional and requires an interconnected
approach when applying it in the smart cities environment (see Figure 2).
Figure 2: Data governance framework
Source: Navarra and Osu (2022).
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Methodology
The study's research design evolves from the underlying research philosophies or
positions and directly impacts the methodology described later. The primary data is
mainly collected through the survey with the voluntary research participants. The
survey is to be completed by a sample of 120 participants, who access the survey
online through multiple channels such as LinkedIn and WhatsApp groups. The
selected participants are working in the Information and Communication
Technology Industry (ICT). However, there is an aim to target technology
professionals, sustainable development practitioners, smart cities professionals,
researchers and Subject Matter Experts (SMEs). The duration of questionnaire takes
10 minutes to complete and includes the relevant questions to achieve the research
objectives. Additionally, secondary research has also been undertaken. The essential
data to answer the research questions will be obtained by examining scholarly
articles, research papers, government websites, business magazines, technology
vendors' websites, and international organisations' publications.
4
Results
The primary research conducted via survey has demonstrated that the most
important Sustainable Technology application in the future cities is by far the electric
vehicles and mobility solutions. This showcases that almost half (49%) of the
surveyed population sees a greater impact from this technology solution rather than
sustainable energy, smart gadgets and waste recycling. Following Electric Vehicles
(EVs), 27% of the participants showed solar panels as the second most important
application of sustainable technologies. These indicators may inspire one important
dimension to classify any technology application as “sustainable” based on the
environmental impact, and demonstrate the criticality of mobility as one of the 6
pillars of sustainable cities (Das, 2013). According to the survey, half of the
respondents reported that smart mobility was the most impactful technology that
can improve citizen’s life and will contribute to sustainable societies, while AI-based
citizen services and digital assistants came in the second rank for the same. This leads
to the conclusion that mobility and eco-friendly technology applications are
perceived as the main criteria for sustainable societies, which correlates with the
earlier perception of sustainable technology applications, which corresponds with
existing research (Wang & Shirowzhan, 2022). According to the survey, 42% of the
A. M. Ragab, Diego Navarra: Adoption of Sustainable Technologies in Smart Cities: A
Governance Framework
403.
respondents believed that using technology to ensure safety for citizens believe is
having the highest impact to accelerate the United Nation Sustainable Development
Goal (UNSDG) agendas.
4.1
A proposed governance framework
Based on the above research inputs, comprehensive governing aspects should come
all together to formulate a collective of the main parameters to classify a “Sustainable
Technology” within the context of Smart Cities. In Figure 3, the research tried to
address the following aspects: mobility, infrastructure, government, economy, living
style, environment, safety, and data privacy.
Figure 3: The proposed Sustainable Technology Governance Framework for Smart Cities
Source: Authors' elaboration.
Though this proposed framework represents collective criteria for the governance
framework to classify sustainable technologies in smart cities’ context, it is highly
recommended that researchers seek further enrichment and share more thoughts on
the guidelines on specific technologies or applications, as well as the implementation
of it within smart cities.
404
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Discussion and Conclusion
In conclusion of this studying, a wider perspective has been presented to show the
importance of adopting sustainable technologies and how the governance
framework developed may be used to regulate their adoption. Recommendations for
further research include considering future aspects such as: (a) involving nontechnology industry practitioners, such as development practitioners, sustainability
professionals and also sociologists, as this may give a deeper and holistic
understanding of the sustainable technology term, (b) considering sample from
different development levels: the economic maturity may influence the participants’
responses from the various economic background (developed, developing, and
underdeveloped countries), and (c) Considering some qualitative and quantitative
indicators to realize the governance framework application. While this research
presents an open eye on sustainable technologies and adoption in smart cities, a
limitation of this research is that it is still relatively ambiguous and uncertain what
the future holds and how the human-behaviour will be shaped accordingly.
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BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
POST CSRD WORLD:
PROSPECTIVE AMENDMENTS TO
SLOVENIAN LEGISLATION IN THE
FIELD OF AUDITING
DANIEL ZDOLŠEK
University of Maribor, Faculty of Economics and Business, Department of Accounting
and Auditing, Maribor, Slovenia
daniel.zdolsek@um.si
Abstract The European Union adopted the Corporate
Sustainability Reporting Directive (2022/2464/EU). The CSRD
amends, among others, the Auditing Directive (2006/43/EC
with amendments) in the light of establishing the European
Union’s cornerstone rules in relation to the assurance of
sustainability reporting of entities. The CSRD’s provisions
mirror existing provisions concerning auditing for sustainability
assurance to ensure consistent rules in the field. Nevertheless,
there remain dilemmas, especially in the forthcoming transitional
period. These are dilemmas that are systemic. For example, who
will be capable of doing sustainability assurance engagements,
which pronouncements in relation to sustainability assurance
should be used, who should prepare them, what architecture
should be established for education and training, by who,
oversight dilemmas, etc. Our paper aims to present the CSRD’s
provisions in relation to sustainability assurance and interlinked
dilemmas. Slovenia will need to implement the CSRD’s
provisions in relation to auditing into its legislation.
DOI https://doi.org/10.18690/um.epf.3.2023.45
ISBN 978-961-286-736-2
Keywords:
assurance,
audit,
sustainability,
Corporate
Sustainability
Reporting
Directive,
Slovenia
JEL:
M14, M42, M48
408
1
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Introduction
The European Union adopted the Corporate Sustainability Reporting Directive
(2022/2464/EU; hereafter: CSRD) in 2022. The CSRD impacts organisations and
the EU’s member states in various ways (i.e., risk and compliance, auditing, human
resources, finance and treasury, investor relations, etc.). The CSRD amends, among
others, the Auditing Directive (Directive 2006/43/EC with amendments) in the
light of establishing the European Union’s (EU) cornerstone rules in relation to the
assurance of annual and consolidated sustainability reporting of entities.
Sustainability information assurance engagement is set to be one of the main pillars
to achieving the EU’s strategic goals in relation to sustainability (i.e., climate-neutral
economy and area, achieving a sustainable world, eradicating poverty, etc.).
Assurance engagement is meant to be a mechanism that eliminates the information
asymmetry problem regarding the credibility of entities’ sustainability information
and reports. Until now, there have not been any legislative pronouncements in
relation to assurance on sustainability reporting. The CSRD acknowledges this fact.
Nevertheless, in the field of auditing, the IFAC’s International Auditing and
Assurance Standards Board (IAASB) has for years been active in this area as the
landscape has continued to evolve. Additionally, in the field of auditing, there is
some research regarding sustainability information assurance engagement (for
example, see O’Dwyer, 2011; Gillet-Monjarret, 2015; Farooq & de Villiers, 2017;
Channuntapipat et al., 2020; Hazaea et al., 2022; Hsiao et al., 2022).
The CSRD puts legislative provisions regarding sustainability information assurance
engagement in place. In short, CSRD’s provisions mirror existing provisions
concerning auditing for sustainability assurance to ensure consistent rules in the
field. Our paper aims to present the CSRD’s provisions in relation to sustainability
information assurance engagement and interlinked dilemmas. Slovenia will need to
implement the CSRD’s provisions in relation to auditing into its legislation. It can
be expected that the Companies Act (in Slovene: Zakon o gospodarskih družbah,
ZGD-1) and the Auditing Act (in Slovene: Zakon o revidiranju, ZRev-2) will be
amended in 2023–2024. Prospective amendments are expected to gradually assist in
building more nationally sustainable businesses and economy in the long term. Our
paper briefly presents a few prospective amendments, which are the most important.
Only some prospective amendments are presented. Therefore, our paper is not
comprehensive regarding sustainability information assurance engagement and all
D. Zdolšek: Post CSRD World: Prospective Amendments to Slovenian Legislation in the
Field of Auditing
409.
interlinked dilemmas that will influence prospective amendments of the Auditing
Act and the Companies Act.
2
The CSRD Directive Puts Light Onto the Auditing Profession
As previously stated, the CSRD puts legislative provisions regarding sustainability
information assurance engagement in place. The International Federation of
Accountants (IFAC), in their framework, defines assurance engagement as an
engagement in which a practitioner expresses a conclusion designed to enhance the
degree of confidence of the intended users other than the responsible party about
the outcome of the evaluation or measurement of a subject matter against criteria.
The CSRD follows this idea (with the use of different terminology). The CSRD’s
sustainability information assurance engagement is an engagement in which the
statutory auditor (a practitioner) expresses an opinion (a conclusion) designed to
ensure credibility (to enhance the degree of confidence of the intended users) about
the sustainability information or report (the subject of assurance engagement)
against the European Sustainability Reporting Standards (the criteria). With
sustainability assurance entities obtain legitimacy (O’Dwyer, 2011; Gillet-Monjarret,
2015). Additionally, a practitioner’s conclusion helps ensure the connectivity
between the entity’s financial and sustainability information.
To following briefly outlines the main ideas in the CSRD regarding sustainability
information assurance engagement. Sustainability information assurance
engagement is mandatory from 2025 for the 2024 year-end sustainability reports. A
practitioner that conducts an engagement must be an independent third-party
practitioner. First, limited assurance engagement is put in place. Second, if eligible,
the CSRD foresees a reasonable assurance engagement will follow limited assurance.
This will require, in an assurance engagement, the conduct, assessment and
verification processes similar to auditing processes for the sustainability information.
Besides the difference in the level of assurance, the difference between limited and
reasonable assurance engagements is in the practitioner’s work and form of
expressed conclusion (i.e., a negative form of assurance in the limited assurance
engagement and a positive form of assurance in the reasonable assurance
engagement). Sustainability assurance engagement differs from financial statements
auditing. Nevertheless, the CSRD Directive stipulates that the statutory auditor of
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the entity’s financial statements is allowed to provide sustainability information
assurance.
Nevertheless, there remain dilemmas in relation to assurance engagements in the
field of sustainability reporting, especially in the forthcoming transitional period.
These are systemic dilemmas. For example, who will be capable of doing
sustainability assurance engagements (i.e., a person with a high level of technical and
specialised expertise in the field of sustainability), which pronouncements in relation
to sustainability assurance should be used, who should prepare them (i.e., who has
the capabilities to prepare such pronouncements) what architecture should be
established for education and training, by who, oversight dilemmas, etc. The
following section presents the current state and a few prospective amendments to
the Slovenian auditing pronouncements. The prospective amendments deal with the
dilemmas in relation to sustainability information assurance engagements.
3
Slovenia: Current State and Prospective Changes to Auditing
Pronouncements
In Slovenia, the Auditing Act (ZRev-2) sets up the legislative frame for the auditing
profession. The Act pushes forward the legislative definition of auditing that is
comprehensive and wider than the IFAC’s definition of financial statements audit.
Furthermore, the Act sets up organisations related to auditing and its surveillance
(i.e., the Agency for the Public Oversight of Auditing), lists their responsibilities,
authorities and tasks, defines various processes, among other matters, who is eligible
to become a certified auditor, who conducts their surveillance, etc. On the other
hand, the Companies Act (ZGD-1) has pronouncements in relation to an entity’s
statutory audit (i.e., financial statements audit). It lists entities that must have a
financial statements audit, until when the audit should be performed, warrants when
the obligation of an audit is not fulfilled, lists some of the elements an auditor’s
report must have, defines the auditor’s legal liability for damages and sets up the
process of appointing an auditor. Both Acts (ZRev-2, ZGD-1) are in accordance
with the EU’s pronouncements, except for the CSRD Directive.
D. Zdolšek: Post CSRD World: Prospective Amendments to Slovenian Legislation in the
Field of Auditing
411.
In the following paragraphs, we outline a few prospective amendments that will alter
current auditing pronouncements (i.e., in the Auditing Act and the Companies Act
which represent Slovenian law). Amendments are stipulated to be prepared in the
short term.
We start with the following. The first amendment will incorporate a definition of
sustainability reporting (from the CSRD, Article 1, point 2.b) into the Companies
Act with direct interoperability with the Auditing Act. Briefly, sustainability
reporting represents reporting information regarding issues in the field of
sustainability (i.e., environmental, social, and governance issues) in accordance with
stipulated prospective European Sustainability Reporting Standards (ESRS
Standards). Following the determination of sustainability reporting, again, both acts
will incorporate a definition of assurance of sustainability reporting (from the CSRD,
Article 3, point 2). Again briefly, sustainability information assurance represents
assurance engagement in which a practitioner expresses a conclusion about the
outcome of the evaluation of sustainability information against ESRS Standards and
other legislative pronouncements (from the CSRD, Article 3, point 18).
Subsequently, new terms will be placed at least in the Auditing Act. These are key
sustainability partner and independent assurance service provider (IASP) (from the
CSRD, Article 3, point 1). The following definitions will be altered, which is
extended to include matters in relation to sustainability information assurance under
CSRD Directive requirements that sustainability information assurance
engagements are going to be conducted by an auditor of financial statements. These
definitions are statutory auditor, audit firm, third-country audit entity, third-country
auditor, and group auditor (from the CSRD, Article 3, point 2). A statutory auditor
(in Slovenia subsequently further defined in Auditing Act as a certified auditor) is
going to be a practitioner that can express a conclusion on a sustainability
information assurance engagement. A statutory auditor will take the role of key
sustainability partner as a person with the responsibility of carrying out sustainability
information assurance engagement and signing the auditor’s assurance report on the
entity’s sustainability reporting (from the CSRD, Article 3, point 2). To put it simply,
the term independent assurance service provider will be incorporated into
pronouncements under the condition that a political decision will be made that other
providers than an auditor of financial statements could also conduct sustainability
information assurance engagements. Any practitioner will have to follow the
standards adopted by the European Commission. Since the CSRD Directive requires
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that IASP have equivalent educational qualifications and examination of
professional competence, ethical requirements (i.e., independence requirements) and
quality assurance as are stipulated for statutory auditors (from the CSRD, Article 3,
points 3–8), it is in our opinion considering all circumstances in relation to the
auditing framework in Slovenia less likely that this political decision will be made.
At the same time as the amendment regarding statutory auditor, the amendments
concerning licence (approval) to carry out the task of a certified auditor will be
placed. These will dissolve the dilemma of who has the capabilities to conduct
sustainability information assurance engagements. Currently, a certified auditor must
meet the following three conditions (note: there are three more requirements): at
least a second-level study programme (i.e., master’s degree), a minimum of three
years of experience in auditing and at least five years of work experience
cumulatively, passed examination of professional competence for a certified auditor.
In relation to the examination of theoretical knowledge, a prospective certified
auditor (for sustainability information assurance engagements) will have to pass an
examination in courses in (a) legal requirements and standards relating to the
preparation of sustainability reports (i.e., demonstrate knowledge of national
pronouncements in relation to sustainability, ESRS Standards and other standards,
frameworks and guidelines in relation to sustainability reporting); (b) sustainability
analysis; (c) due diligence processes in relation to sustainability issues; and (d) legal
requirements and standards in related to conducting sustainability information
assurance engagements (from the CSRD, Article 3, point 5). Furthermore, in relation
to practical training requirement, a prospective certified auditor (for sustainability
information assurance engagements) will have to carry out at least eight months of
practical training on sustainability information assurance engagements or
sustainability-related services (from the CSRD, Article 3, point 6). Both
requirements, the examination of professional competence and practical training,
shall guarantee the necessary level of theoretical knowledge and the ability to apply
such knowledge in practice. Requirements will be equal for a certified auditor who
previously conducted auditing of financial statements and will want to gain an
additional licence for carrying out sustainability information assurance engagements
(from the CSRD, Article 3, point 9). There are transitional provisions in place but
are not explained in detail in this paper.
D. Zdolšek: Post CSRD World: Prospective Amendments to Slovenian Legislation in the
Field of Auditing
4
413.
Conclusion
The CSRD Directive stipulates that the statutory auditor of the entity’s financial
statements will provide sustainability information assurance. Sustainability
information assurance engagement differs from financial statements auditing.
Therefore, there are dilemmas that are systemic in nature, especially in the
forthcoming transitional period. The first concluding remark is the following. It
cannot be concluded without the feeling that in the current rush to ensure some
form of sustainability assurance, the approach is more an ad hoc approach (not being
carefully thought through) than it is a systemically thoroughly planned approach.
There is a missing decision on the final system, structure and form of the
sustainability information assurance engagement system and how to enable and
achieve envisioned system. The current ad hoc approach resembles the work of a
bulldozer: first, the existing financial statements auditing system will be amended,
and if necessary, the system will be later changed.
The second conclusion is the following. The CSRD Directive does not stipulate any
new institutes regarding auditing. The existing financial statements auditing
provisions are amended with matters in relation to sustainability information
assurance engagements. Third conclusion. The CSRD stipulates an assurance related
to the credibility of the sustainability information or reporting. Nevertheless, the
level of assurance is limited assurance. It can be expected that this will cause a growth
in the expectations gap regarding sustainability assurance. This gap could be
enormous in the first few years of CSRD’s sustainability information assurance
engagements.
References
Channuntapipat, C., Samsonova-Taddei, A., & Turley, S. (2020). Variation in sustainability assurance
practice: An analysis of accounting versus non-accounting providers. The British Accounting
Review, 52(2), 100843. https://doi.org/10.1016/j.bar.2019.100843
Directive (EU) 2022/2464 of the European parliament and of the Council of 14 December 2022
amending Regulation (EU) No 537/2014, Directive 2004/109/EC, Directive 2006/43/EC
and Directive 2013/34/EU, as regards corporate sustainability reporting. OJ L 322,
16.12.2022,
p.
15–80.
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comprehensive literature review and future avenues for research. Pacific Accounting Review, 29(1),
79–106. https://doi.org/10.1108/PAR-10-2016-0093
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Gillet-Monjarret, C. (2015) Assurance of Sustainability Information: A Study of Media Pressure.
Accounting in Europe, 12(1), 87–105. https://doi.org/10.1080/17449480.2015.1036894
Hazaea, S. A., Zhu, J., Khatib, S. F. A., Bazhair, A. H., & Elamer, A. A. (2022). Sustainability assurance
practices: a systematic review and future research agenda. Environmental Science and Pollution
Research, 29, 4843–4864. https://doi.org/10.1007/s11356-021-17359-9
Hsiao, P.-C. K., Scott, T., & Zang, Z. (2022). A snapshot of sustainability assurance market in New
Zealand. Pacific Accounting Review, 34(5), 669–686. https://doi.org/10.1108/PAR-08-2021-0142
O’Dwyer, B. (2011). The Case of Sustainability Assurance: Constructing a New Assurance Service.
Contemporary Accounting Research, 28(4), 1230–1266. https://doi.org/10.1111/j.19113846.2011.01108.x
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33/11, 91/11, 32/12, 57/12, 44/13 – odl. US, 82/13, 55/15, 15/17, 22/19 – ZPosS, 158/20
– ZIntPK-C in 18/21). Retrieved from
http://www.pisrs.si/Pis.web/pregledPredpisa?id=ZAKO4291 (28h February 2023).
Zakon o revidiranju (ZRev-2), Uradni list RS, št. 65/08, 63/13 – ZS-K, 84/18 in 115/21. Retrieved
from http://pisrs.si/Pis.web/pregledPredpisa?id=ZAKO5273 (28th February 2023).
BLOCKCHAIN TECHNOLOGY IN
BANKING AS A TOOL TOWARDS
THE SDGS
ALEKSANDRA AMON, TIMOTEJ JAGRIČ
University of Maribor, Faculty of Economics and Business, Maribor, Slovenia
aleksandra.amon@um.si, timotej.jagric@um.si
Abstract Purpose of this paper is to investigate potential
implications of blockchain in banking and its contribution
towards the Sustainable Development Goals (SDGs). We use
qualitative analysis based on case study analysis and netnography
for determining existing and potential implications of blockchain
in banking and their possible contributions towards the SDGs.
This paper’s originality is finding specific potential contributions
of blockchain technology in banking towards SDGs, such as
towards ending poverty with increasing financial inclusion,
promoting well-being for all with improving banking institutions’
performance and towards climate action by reducing banking
institutions’ environmental print with digitalizing their processes
and services.
DOI https://doi.org/10.18690/um.epf.3.2023.46
ISBN 978-961-286-736-2
Keywords:
blockchain,
banking,
SDGs,
case studies,
practical
implications
JEL:
G21, L86, Q01
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE.
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1
Introduction
Banking is one of systemically most significant industries in the global economy. It
is vital that systemically important industries focus on its contribution towards the
SDGs for swifter movemement towards these goals. Blockchain presents significant
potential for banking institutions. Banks invest the most in blockchain technology
compared to other financial institutions as it offers various implications that could
significantly benefit the banking sector. Due to that it poses crucial tool for simpler
and more efficient achievement of SDGs (Aysan et al., 2021).
This paper focuses on potential blockchain’s contributions to banking industry’s
movement towards the SDGs. We conduct complex literature review to find
particularly to which SDGs and how can blockchain implementations in banking
contribute. Purpose is to contribute to better understanding and future seizing of
blockchain’s potential in banking industry in the context of sustainable development
of global economy.
The paper is structured as follows. An introduction is followed by theoretical
background and methodology. Then we present results of our findings and conclude
with discussion.
2
Theoretical Background
Blockchain is a new type of technology defined as a “type of distributed ledger
technology (DLT) in which transactions are validated and recorded in the distributed
ledger in separate but connected batches known as blocks” (ECB, 2022). Blockchain
presents the most known example of DLT (Garg et al., 2021) and is most known as
the infrastructure of cryptocurrencies. Recently, blockchain technologies became an
area of interest in the financial industry. Providers of financial services are using it
to amplify their data classes security, setups cooperation, as well as for decentralizing
their transactions and increasing their safety (Garg et al., 2021). Figure 1 presents
investments of leading financial institutions in blockchain enterprises in 2019, by
number of investments. Banking industry conducted the vast majority of
investments, gesturing blockchain’s importance in it.
A. Amon, T. Jagrič: Blockchain Technology in Banking as a Tool Towards the SDGS
417.
3,00
Diversified financial institutions
10,00
11,00
Payments systems and fintech services providers
Companies dealing in securities
17,00
Insurance companies
46,00
Banks
0
5
10
15
20
25
30
35
40
45
50
Figure 1: Investments of financial institutions in blockchain technology (in 2019, by number
of investments)
Source: (Statista, 2022b; MINDSMITH, 2020).
Blockchain has a wide range of possible implications in banking sector. Firstly, it
could reinforce security. Financial crime is a serious threat that is frequently
increasing, especially in the form of cybercrime, as digital banking increases in
popularity. Europol (2021) states that cybercrime is increasing along with the
sophistication of attacks, which are likely underreported. This issue will most likely
increase in the future, as Europol expects the use of AI to increase in cybercrime,
thus widening the scope and scale of cyberattacks. Blockchain could bring an extra
sense of security in banking business models (Hassani et al., 2018; Maiya, 2017),
mostly due to the fact that within blockchain technologies, changing historical
information is not possible, while any new information is shared with multiple
participants, thus the probability for data manipulation is lowered significantly
(Hassani et al., 2018). Changes to data are monitored and tracked to prevent fraud
and embezzlement and communication and updates are enabled in a timely matter
to detect financial crime (Hassani et al., 2018). Blockchain works as a distributed
ledger entirely open to network participants. Once the information is registered, it is
very challenging to make any changes, thus ensuring built-in security (Garg et al.,
2021).
Secondly, blockchain could increase transparency. It could enhance transaction
capacities of debit and credit cards. As they increase, so does the importance of
transparency. Traditional banking models can be considered secretive, while any
alteration of public blockchains is fully viewable. Thus, the challenge of trust in
transactions can be conquered with blockchain technology. Additionally, more
transparent and quickly viewable auditing can be achieved. Automated financial
reporting is another potential benefit, as banks and regulators could communicate
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and implement actions much faster in case of compliance violations (Hassani et al.,
2018).
Moreover, blockchain could enable faster transactions. Traditional banks have
rigorous rules regarding users’ transactions, often resulting in delays. Use of
blockchain technology offers banks the possibility of speeding up their procedures
with direct and frequently updated transactions made immutable with the help of
encryption (Hassani et al., 2018).
Further, blockchain has significant potential for reducing banking costs for
procedures and transactions (Hassani et al., 2018). Study found blockchain is
expected to enable notable cost reductions in banks (Rajnak & Puschmann, 2021).
Moreover, Rega (2017) studied 38 banks in European area and found that
innovations in technology are positively correlated with profitability of banks. IFC
also reported blockchain can lower verification costs in remittance services, as well
as other provisions (IFC, 2019).
Lastly, blockchain could better customer verification and KYC, which present great
cost for banks. Blockchain could be a lower-cost solution with digital fingerprint.
McKinsey estimated blockchain to reduce fraud losses from 7 to 9 billion USD
annually, while lowering operating costs of traditional banks up to 1 billion USD
(Higginson et al., 2019).
Additionally, blockchain can improve with intelligence and simplify essential
elements of financial industry, such as contracts. Due to blockchain, smart contracts
created with programming could substantially ease the complexity and time needed
for arranging contracts, positively influencing value chains and procedures (Hassani
et al., 2018; Rajnak & Puschmann, 2021). Gambacorta (2022) from Bank for
International Settlements also noted that smart contracts and DLT in generally could
better monetary and financial system’s efficiency. Blockchain technology would
enable banks to pool large quantities of data and anonymize and protect them with
ledger’s encryption procedures. With customer consent ensured with smart
contracts, banks could view uploaded information from any bank in network,
enabling them to make decision faster and more efficient (Higginson et al., 2019).
A. Amon, T. Jagrič: Blockchain Technology in Banking as a Tool Towards the SDGS
419.
Thus far, blockchain has been implemented in banking to some extent. State Bank
of India developed a blockchain consortium, comprised of 10 banks, intended for
financial transactions. Included banks share KYC information, as well as
information about terrorism and money laundering situations (Garg et al., 2021, p.
2). The Emirates Islamic bank from UAE as the first Islamic bank implemented
blockchain technology for cheque books to better prevent fraud. The South Africa
Reserve bank has also used blockchain for their payment transactions, and managed
to settle 70.000 transactions in just two hours while ensuring full anonymity (Hassani
et al., 2018). Goldman Sachs and J.P. Morgan now have blockchain laboratories. J.P.
Morgan partnered up with banks to launch blockchain payments network Interbank
Information Network (INN). American Express established blockchain-based
payments with Ripple, a fintech enterprise (Osmani et al., 2021). At first, blockchain
was not accepted well in the banking and investment industries (Garg et al., 2021),
however now it seems financial and banking industry no longer see it as a threat but
finally as an opportunity (Osmani et al., 2021). Figure 2 shows that in 2020, the
banking industry had almost 30% share in global blockchain spending.
Others
Retail
Professional services
Discrete manufacturing
Process manufacturing
Banking
35,30%
6,00%
6,60%
10,90%
11,40%
29,70%
0,00% 5,00% 10,00% 15,00% 20,00% 25,00% 30,00% 35,00% 40,00%
Figure 2: Blockchain market value (in 2020, by sector)
Source: Statista (2022a).
One of the most significant potential implementations of blockchain in banking is
in terms of Central Bank Digital Currency (CBDC), electronic version of cash issued
by a central bank (Alonso et al., 2021), which could compared to private alternatives
such as cryptocurrencies offer more privacy and security (Ahnert et al., 2022).
Almost 50% of central banks have already run experiments regarding CBDC or
released proofs-of-concept (Syarifuddin & Bakhtiar, 2022), such as People’s Bank of
China, Central Bank of The Bahamas, European Central Bank and others.
Additionally, fundamental question is how it would impact monetary and financial
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE.
420
stability (Alonso et al., 2021). Undoubtedly, it will impact every participant in the
financial system. Because of that and their market position banks are aiming to
acquire a significant role in the process.
While it promises many benefits, blockchain is not without its challenges, such as
limited transaction capacity and scalability (Gambacorta, 2022; Hassani et al., 2018),
security, regulation, governance and costs (Garg et al., 2021; Hassani et al., 2018). In
terms of SDGs, main concern are higher energy costs (Garg et al., 2021). Analysis
such as cost-benefit can determine whether benefits outweight the costs for banks.
3
Methodology
Data included blockchain statistics and studies collected from digital research bases
and banks. Research was limited to publicly available data. The methodology is based
on qualitative analysis. Firstly, we used netnography for observing online research
findings and discussions on blockchain’s potential and implementation in banking
and towards the SDGs. Secondly, we focused on the case study method, for this
purpose we collected data on existing blockchain use in banking sector from various
banks worldwide such as State Bank of India, South Africa Reserve Bank, The
Emirates Islamic Bank, J.P. Morgan, Goldman Sachs, and others. Lastly, based on
both methods, we conducted theoretical inference on possible contribution of
blockchain in banking towards achieving the SDGs.
4
Findings
Potentials of blockchain in banking are wide and promising. As such they could be
a significant element of banking industry’s contribution towards the SDGs (Kewell
et al., 2017).
The first SDG is to end poverty. Blockchain can contribute to this goal by increasing
financial inclusion. Offering more affordable services to less fortunate might not be
cost-effective for traditional banks, processing micro-transactions through
blockchain technology could connect smallholders and enable engagement in microtrade or micro-lending for the fortunate population, which is often overlooked by
traditional banks (Aysan et al., 2021). Neobanks, new digital banks often using
blockchain technology, offering lower-priced banking products and services, could
also be an important tool in lowering banking inequality (Temelkov, 2020). Asian
A. Amon, T. Jagrič: Blockchain Technology in Banking as a Tool Towards the SDGS
421.
Development Bank established its blockchain-based decentralized network called
Everest. It focuses on cross-border payments through blockchain, while it also
enables biometrics verifications, e-wallets and compliance reporting regarding KYC
and anti-money laundering (Aysan et al., 2021; Everest, 2023). Blockchain’s
improvement of management of records and surveillance for banks could enhance
their performance and reduce their inefficiencies, which could contribute to third
SDG: promoting well-being for all (Aysan et al., 2021). The digital authentication
could reduce the need for visits to bank’s operating branch, as well as more simple
and digital delivery of banking services (Aysan et al., 2021), which would result in
lower logistics imprint on the environment, contributing to the thirteen SDG,
climate action. By enabling secure digital transfers, it could reduce the range of
physical documents, processes and meetings in banking institutions, which would
also lower logistics imprint and contribute to the thirteen SDG. Optimizing these
processes would make them more efficient, thus contribute to the eight SDG, decent
work and economic growth, while also making consumption of energy in banks and
their production more responsible, consistently with twelve SDG, responsible
consumption and production. By making banking institutions more cost-effective,
blockchain could enhance their budget for further investments and donations
towards other SDGs, for instance toward resilient infrastructure, fostering
innovation, sustainable industrialization and protecting ecosystems and biodiversity
loss.
Potential for blockchain’s contribution to SDGs extends beyond banking, such as
contributing to second SDG, ending hunger, by optimizing global food chain, loss
and waste with increased transparency, to fourth SDG by optimizing healthcare
processes and raising financing for future development (Aysan et al., 2021).
5
Discussion and Conclusion
The aim of this paper was to investigate possible contributions of blockchain in
banking towards the SDGs. Many potential contributions were found, such as
increasing financial inclusion and reducing environmental imprint of banking
institutions by optimizing and digitalizing their processes. Findings can be used in
the development of sustainable practices in banks. Banking institutions, along with
blockchain technology, can significantly contribute to global achievement of SDGs.
For that reason, SDGs must be prioritized and further researched in the context of
banking and blockchain technology.
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE.
SUSTAINABLE FINANCING –
EUROPEAN LEGISLATIVE
FRAMEWORK AND IMPACT ON THE
ECONOMY
SANJA GONGETA,1 STJEPAN DRAGANIĆ,2
VEDRAN GONGETA2
University of Applied Sciences Lavoslav Ružička in Vukovar, Vukovar, Croatia
sanja.gongeta@vevu.hr
2 The Ministry of the Interior of the Republic of Croatia, Zagreb, Croatia
sdraganic2@mup.hr, vgongeta@gmail.com
1
Abstract The financial sector is not immune to the risks caused
by climate change and environmental degradation, and it follows
trends and improves its contribution to sustainability.
Strengthening economic and financial resilience to sustainability
risks is one of the priorities of legislators at the global level.
Sustainable financing as one possible solutions refers to the
practice of providing funding to projects or businesses that
promote sustainability, including social, environmental, and
economic sustainability and the paper analyses its impact on
economic development and increasing competitiveness. The aim
of sustainable financing is to support projects that not only
generate financial returns, but also have a positive impact on
society and the environment. The paper is based on the analysis
of empirical data and critical review of literature. Empirical data
for the study are the secondary data retrieved from European
Central Bank and European regulations.
DOI https://doi.org/10.18690/um.epf.3.2023.47
ISBN 978-961-286-736-2
Keywords:
sustainable
financing,
economic and
financial resilience,
circular economy,
sustainable
development,
European Central
Bank,
European
regulations
JEL:
F18, F64, K20
426
1
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Introduction
An effective and smooth transition towards a net-zero economy cannot be made
without a coordinated response between fiscal authorities, central banks, regulators,
and supervisors. Public policies created for the purpose of reducing climate change
directly affect the economies of the member states, but also of the European Union
and its single market. After the UN General Assembly adopted a new global
sustainable development framework: the 2030 Agenda for Sustainable
Development, which is fully compliant with the Sustainable Development Goals,
the European Council confirmed the commitment of the Union and its Member
States to the implementation of the 2030 Agenda in a full, coherent, comprehensive,
integrated and effective manner (Regulation EU 2019/2088, 1).
The financial sector holds power in funding and bringing awareness to issues of
sustainability, whether by allowing for research and development of alternative
energy sources or supporting businesses that follow fair and sustainable labor
practices (Bakken, 2021) and sustainable finance is one of key factors of the circular
economy contributing positively to growth, development, and financial inclusion.
The circular economy is an economic system that aims to eliminate waste and
promote the continuous use of resources. It is a model of economic development
that emphasizes the importance of sustainability and seeks to replace the linear
“take-make-dispose” approach with a more cyclical one. In a circular economy,
resources are kept in use for as long as possible, waste is minimized and materials
are regenerated at the end of their lifecycle. The circular economy has become
increasingly important as a model of economic development that aligns with
environmental and social goals. Governments and businesses around the world are
adopting circular economy principles to reduce waste, conserve resources, and
promote sustainable growth.
Sustainable financing refers to the process of raising and managing financial
resources in a way that supports sustainable development, which is the ability to
meet the needs of the present without compromising the ability of future generations
to meet their own needs. This type of financing is designed to integrate
environmental, social, and governance (ESG) considerations into financial decision-
S. Gongeta, S. Draganić, V. Gongeta: Sustainable Financing – European Legislative
Framework and Impact on the Economy
427.
making. Sustainable financing includes a range of financial instruments such as green
bonds, sustainability-linked loans, and social impact bonds.
According to the Special Audit Report 22/2021 on the EU’s approach to sustainable
finance, “under the 2021-2027 Multiannual Financial Framework, the EU plans to
support public and private investment by allocating at least 30 % of the EU budget
to climate action. The EU budget part is estimated to be around €358 billion,
including the €7.9 billion budgetary guarantee related to Invest EU. In addition,
Member States will have to allocate at least 37 % of the funds they receive under the
Recovery and Resilience Facility to supporting climate action. This is estimated to
be around €268 billion.”
Hence the question arises: how important an adequate legal framework is for the
implementation of sustainable financing and how much it, as part of the circular
economy, affects the increase in competitiveness?
The aim of this paper is to answer to that question, so authors discuss the very
concept and types of sustainable financing as part of the circular economy, its
legislative framework and find a link to the direct impact on the economy, as well as
the potential increase in competitiveness as a result of sustainable financing of
innovations and acceptance of the circular economy as condicio sine qua non.
The paper contributes to the literature by emphasizing the importance of adequate
regulatory framework and its impact on boosting the global competitiveness in
innovation and green and digital transition.
2
Theoretical Background
In the literature, definition and importance of sustainability, sustainable financing
and its impact on the economy is analyzed from very similar perspectives. As
previously said, the effective transition to a net-zero carbon economy requires a
major shift in financial flows and it depends of coordination of financial policy
bodies — financial regulators, ministries of finance and supervisors (Mikheeva &
Ryan-Collinc, 2022; ECB, 2022).
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Lovciová (2022) and Bednarčíková and Repiská (2021) define sustainability as
protection of our natural environment and support of the balance between
ecosystems and innovation. Abdalmuttaleb et al. (2022) explain that sustainability
involves the adaptation of today’s business model to the dynamic nature of the
current digitalized environments and that corporations need to make sure that
resources are being used responsibly and efficiently.
As previously said, sustainable financing includes a range of financial instruments
such as green bonds, sustainability-linked loans, and social impact bonds.
Green bonds are debt instruments that are used to finance environmentally
sustainable projects, such as renewable energy, energy efficiency, and sustainable
agriculture. These bonds are certified by third-party organizations to ensure that the
funds are used for sustainable projects. Like any other bond, a green bond is a fixedincome financial instrument for raising capital from investors through the debt
capital market (OECD, 2015).
Sustainability-linked loans are a type of loan that incentivizes borrowers to achieve
specific sustainability targets, such as reducing greenhouse gas emissions, by offering
lower interest rates if the targets are met.
Social impact bonds are a type of financing that links financial returns to achieving
social outcomes, such as reducing homelessness or improving education outcomes.
These bonds are often issued by governments or non-profit organizations.
The circular economy is an economic system that aims to eliminate waste and
promote the continuous use of resources. It is a model of economic development
that emphasizes the importance of sustainability and seeks to replace the linear
“take-make-dispose” approach with a more cyclical one. In a circular economy,
resources are kept in use for as long as possible, waste is minimized and materials
are regenerated at the end of their lifecycle.
Discussing about connection between sustainability and finance sector, Mikheeva
and Ryan-Collinc (2022) emphasize the fact how historically, financial policy bodies
have played a direct and coordinative role in industrial and economic development,
S. Gongeta, S. Draganić, V. Gongeta: Sustainable Financing – European Legislative
Framework and Impact on the Economy
429.
often via close collaboration with dedicated public financial institutions such as
national development banks.
When analyzing the connection between sustainable financing and circular economy,
it is easy to see their close connection as both focus on creating a long-term
sustainable future. Sustainable financing is the practice of providing financial
services to companies that operate in the most sustainable way possible, while
circular economy is an economic system that aims to reduce waste and promote the
use of resources in a more sustainable and efficient manner.
In a circular economy, products are designed to be reusable, repairable, and
recyclable, reducing waste and extending their lifespan. Sustainable financing can
help to support this approach by providing funding to companies that prioritize
investments in circular economy practices, such as the adoption of renewable energy,
the development of circular supply chains, and the implementation of innovative
recycling and waste management processes.
Additionally, sustainable financing can also incentivize companies to engage in
sustainable business practices, such as reducing their carbon emissions and using
sustainable materials. These efforts can contribute to the circular economy by
reducing resource consumption and waste production.
Overall, sustainable financing and circular economy are inherently linked as they
both strive towards creating a sustainable future where economic growth is achieved
without harming the environment or depleting natural resources.
This paper focuses on the importance of adequate legislative framework and the
impact that sustainable financing has on the economy.
When analyzing the regulatory framework, the most important part of European
regulation for sustainable financing are Regulation (EU) 2020/852 (the ‘Taxonomy
Regulation’), Regulation (EU) 2019/2088 on sustainability‐related disclosures in the
financial services sector and Regulation (EU) 2019/2089 as regards EU Climate
Transition Benchmarks, EU Paris-aligned Benchmarks and sustainability-related
disclosures for benchmarks.
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The Taxonomy Regulation is an important piece of legislation for enabling and
scaling up sustainable investment and thus implementing the European Green Deal,
including an economy that works for people and ensures a just transition that creates
employment and leaves nobody behind. It applies to financial market participants
that offer financial products, financial and non-financial undertakings within the
scope of Directive 2014/95/EU (the Non-Financial Reporting Directive - ‘NFRD’).
“On November 28, 2022 the EU Council and European Parliament reached an
agreement to adopt the Corporate Sustainability Reporting Directive (CSRD). The
legislation significantly expands mandatory sustainability disclosure requirements for
all large EU companies operating in the EU. More recently, the EU Council
proposed to exempt banks and investment funds from CSRD following resistance
from several member states including Spain, France, Italy and Slovakia. The draft
proposal allows each member state to decide whether financial services providers
should account for their environmental and social footprint” (ESG Book, 2022).
3
Methodology
The paper is based on the analysis of empirical data and critical review of literature.
Empirical data for the study is the secondary data retrieved from European Central
Bank, OECD and European regulations.
The paper analyzes the literature that has studied the relationship between energysaving innovation and two broad factors: market forces and public policies. Studies
using various methods and samples have reached the same conclusion: higher energy
prices speed up innovation in energy-saving technologies and have major impact on
sustainable (Breckenfelder et al., 2023).
According to Breckenfelder et al. (2023) the studies show that the energy efficiency
of home appliances was strongly correlated with energy prices. Also, some studies
find that a 10% increase in energy prices leads to 3.5% more patents in energy-saving
technologies. If using aggregate data on GDP, energy, capital, and labor to compute
a measure of the energy efficiency, studies show that energy efficiency has increased
steadily since the oil shocks of the 1970s. If comparing how gas prices shape
innovation in the car industry, there are conclusion that 10% increase in fuel prices
leads to 8.5% more innovation that develops alternatives to fossil fuel engines, and
S. Gongeta, S. Draganić, V. Gongeta: Sustainable Financing – European Legislative
Framework and Impact on the Economy
431.
an 8.3% decline in innovation within the class of fossil fuel engines. In other words,
the literature has broadly concluded that the direction of energy-saving innovation
is endogenous and can be changed by market forces and adequate regulatory
framework (Breckenfelder et al., 2023; OECD 2015).
4
Discussion and Conclusion
Sustainability is based on three pillars: economic, social, and environmental
sustainability. Economic sustainability refers to the ability of an economy to support
long-term growth and development. It includes creating jobs, reducing poverty, and
promoting economic stability. Social sustainability refers to the ability of a society to
support the well-being of its members and includes social equity, access to education
and healthcare, and human rights. Environmental sustainability refers to the ability
of natural systems to support life and maintain their ecological balance and includes
protecting biodiversity, reducing pollution and waste, and addressing climate change.
Sustainable financing refers to the practice of investing in projects and businesses
that promote long-term economic, social, and environmental sustainability. This
type of financing can have a positive impact on the economy in several ways.
First of them is improved resource efficiency. Sustainable financing can encourage
businesses to adopt more resource-efficient practices, reducing waste and lowering
operating costs. This can lead to increased productivity and profitability, which can
help stimulate economic growth.
Second one is increased investment in green technology. Sustainable financing can
help direct investment towards companies that develop and produce green
technologies, such as renewable energy, energy-efficient buildings, and sustainable
transportation. This can create new jobs and industries, as well as reduce dependence
on fossil fuels.
Third is related to reduced risk. Investing in sustainable projects and companies can
reduce risk in the long term. For example, by investing in companies that have strong
environmental and social practices, investors can avoid potential negative impacts
such as environmental disasters or social unrest, which can have significant
economic costs.
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
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Improved reputation is also a way sustainable financing affects economy. Companies
that prioritize sustainability and responsible practices may have a better reputation
among customers, investors, and other stakeholders. This can lead to increased
brand value and customer loyalty, as well as improved access to financing and
investment.
Also, sustainable financing can spur innovation by incentivizing companies to
develop sustainable products and services that meet the demands of environmentally
conscious consumers.
Improving corporate reputation is another element of effecting economy by
sustainable financing models. Sustainable financing can enhance a company's
reputation by demonstrating its commitment to sustainability, which can help attract
socially responsible investors and customers.
In big way sustainable financing can lead to reducing costs. Sustainable financing
can help reduce costs by promoting energy efficiency and waste reduction, which
can lead to lower operating expenses and higher profits.
Also, sustainable financing can help companies mitigate risks associated with
environmental and social issues, such as climate change and human rights violations.
This can help prevent costly legal and reputational damages.
And last but not least, sustainable financing is connected with supporting economic
growth. Sustainable financing can support economic growth by promoting
sustainable development and reducing environmental degradation, which can help
ensure the availability of natural resources and preserve ecosystems.
Sustainable financing can help promote long-term economic growth and stability by
encouraging businesses to adopt sustainable practices, invest in green technology,
and reduce risk.
The impact of different sustainable financing models on organizations varies
depending on their nature, size, industry, and financing needs. Here are some
potential impacts:
S. Gongeta, S. Draganić, V. Gongeta: Sustainable Financing – European Legislative
Framework and Impact on the Economy
433.
Equity financing: Organizations that opt for equity financing sell a portion of their
ownership to investors in exchange for funds. This model may be more suitable for
startups or smaller businesses that have limited financial resources or no credit
history. Equity financing could provide access to significant capital, but it also means
that the organization has to share its profits with the investors and may have to
sacrifice some control over its decision-making.
Debt financing: Organizations that choose debt financing take loans from financial
institutions, such as banks or credit unions, and pay them back with interest. This
model may be more suitable for larger organizations with proven track records and
stable cash flows. Debt financing could provide a predictable source of funds, but it
also means that the organization has to pay interest and principal on time and may
face penalties for default.
Crowdfunding: Organizations that use crowdfunding platforms, such as Kickstarter,
Indiegogo, or GoFundMe, ask the public to contribute small amounts of money to
fund their projects or ventures. This model may be more suitable for organizations
that have a loyal customer base or a compelling social or environmental mission.
Crowdfunding could provide a way to test the market and engage with supporters,
but it also means that the organization has to meet its fundraising goals and deliver
on its promises.
Impact investing: Organizations that receive impact investments from investors who
prioritize social or environmental outcomes along with financial returns. This model
may be more suitable for organizations that have a clear social or environmental
mission and can demonstrate their impact. Impact investing could provide access to
patient capital and strategic partnerships, but it also means that the organization has
to measure and report its impact and align its goals with the investors' values.
In conclusion, each sustainable financing model has its advantages and
disadvantages, and organizations should carefully consider their goals, priorities, and
capacities before choosing the most appropriate one for their needs.
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BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
References
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artificial intelligence in sustainable finance, Journal of Sustainable Finance & Investment, DOI:
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Bakken, R. (2021) What Is Sustainable Finance and Why Is It Important?
https://extension.harvard.edu/blog/what-is-sustainable-finance-and-why-is-it-important/
Bednarčíková, D. & Repiská, R. (2021). Digital Transformation in the Context of the European Union and the
Use of Digital Technologies as a Tool for Business Sustainability. SHS Web of Conferences, Current
Problems of the Corporate Sector, Bratislava, Slovak republic, January 30, 2021. doi:
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Breckenfelder et al. (2023). The climate and the economy, European Central Bank Working Paper Series
No 2793 / March 2023
https://www.ecb.europa.eu/pub/pdf/scpwps/ecb.wp2793~7969efec4f.en.pdf
Directive 2014/95/EU of the European Parliament and of the Council of 22 October 2014 amending
Directive 2013/34/EU as regards disclosure of non-financial and diversity information by
certain large undertakings and groups Official Journal of the European Union L 330
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Lovciová, K. (2022) Digitisation – an important tool for the transformation of society in terms of sustainable
development, 6th FEB International Scientific Conference, DOI
https://doi.org/10.18690/um.epf.5.2022.38 , Maribor, Slovenia.
Mikheeva, O. and Ryan-Collinc, J. (2022) Governing finance to support the net-zero transition: Lessons from
successful industrialisations UCL Institute for Innovation and Public Purpose, Working Paper
Series, (NO 2022/01) WPS
OECD (2015) Green bonds - Mobilising the debt capital markets for a low-carbon transition
https://www.oecd.org/environment/cc/Green%20bonds%20PP%20%5Bf3%5D%20%5Blr%5D.p
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Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the
establishment of a framework to facilitate sustainable investment, and amending Regulation
(EU) 2019/2088 Official Journal of the European Union L 198
Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on
sustainability‐related disclosures in the financial services sector Official Journal of the
European Union L 317
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amending Regulation (EU) 2016/1011 as regards EU Climate Transition Benchmarks, EU
Paris-aligned Benchmarks and sustainability-related disclosures for benchmarks Official
Journal of the European Union L 317
EMOTIONAL INTELLIGENCE
TRAINING TOOLS FOR BUSINESS
YULIIA FEDOROVA, ANNA PILKOVÁ, JURAJ MIKUŠ,
MARIAN HOLIENKA
Comenius University Bratislava, Faculty of Management, Department of Strategy and
Entrepreneurship, Bratislava, Slovakia
yuliia.fedorova@fm.uniba.sk, anna.pilkova@fm.uniba.sk, juraj.mikus@fm.uniba.sk,
marian.holienka@fm.uniba.sk
Abstract This study aims to present practical tools for
developing emotional intelligence (EI) in training entrepreneurs,
managers and business students. The study proposes innovative
tools that allow consistent development of each part of the 4component instrumental model for emotional intelligence
development. The systematic approach is based on
contemporary theoretical research and uses applied software. An
alarm clock is one of the promising Emotional Intelligence
Training Tools. Alarm clocks are created using chatbots in the
Smart Sender program. The dynamics of emotional intelligence
development of entrepreneurs, managers and business students
is tracked through questionnaires and building emotional
intelligence profiles. The practical value of Emotional
Intelligence Training Tools lies in their simplicity and
effectiveness in an educational environment.
DOI https://doi.org/10.18690/um.epf.3.2023.48
ISBN 978-961-286-736-2
Keywords:
emotional
intelligence,
model,
tools,
training,
entrepreneurs
JEL:
A20, C83, O35
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE.
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1
Introduction
Sustainability goals include quality education, good health and well-being (United
Nations, 2015). The current challenge in the training of highly skilled managers,
entrepreneurs and business students is the development of soft skills. The Future of
Jobs Report 2020 proclaimed emotional intelligence a key and high-demand soft skill
(The Future of Jobs Report 2020; 2020). EI can be the foundation for crucial soft
skills such as leadership and social influence, resilience, stress tolerance, flexibility,
etc. One of the preconditions for the successful development of EI is using
Emotional Intelligence Training Tools (EITTs) in the educational environment
(Almeida & Buzady, 2022). Implementing EITTs enhance the use of time, age
advantages and potential of learners. The up-to-date software has the potential to
diversify the process of building self-awareness, self-management, cognitive
empathy, teamwork, and effective communication. Documents presented at learning
platforms such as Coursera, Udemy, Prometheus and scientific results from Scopus
and Web of Science databases are also essential sources of information that can
enliven the learning process and maximise its effectiveness.
This study aims to present EITTs we have developed to contribute to the successful
training of managers, entrepreneurs and business students. The tools proposed in
this study have been tested in an educational setting and may interest educators and
researchers interested in EI development.
2
Theoretical Background
Emotional intelligence creates additional opportunities throughout the professional
activity of entrepreneurs, managers and business students. In the beginning, EI
increases the learning of new knowledge and boosts the formation of other soft skills
necessary for a successful career. EI enhances entrepreneurial intentions and selfefficacy, increases stress tolerance, openness, and knowledge-sharing behaviour
(Hornung & Smolnik, 2021), increases communication effectiveness and improves
decision-making (Çetin & Karakaş, 2021). EI helps realise leadership skills, increases
team cohesion and collaboration, and saves time in achieving results (Zhang &
Shengyue, 2022; Brečko, 2021). Furthermore, EI ensures stable social connections
(Zhang & Adegbola, 2022), a good reputation and success.
Y. Fedorova et al.: Emotional Intelligence Training Tools for Business
437.
Overall, EI positively affects job performance and productivity in the professional
activities of entrepreneurs (Lu et al., 2022). Employees with high EI increase the
company's value and lead to an increase in company revenues, cash flow and
customer loyalty. EI is particularly relevant for human management research. The
higher the position managers hold, the more significant the impact of their EI.
Managers' EI affects not only the quality of work but also the financial performance
of companies. Managerial EI also impacts employee well-being, satisfaction, and
health (Semenets-Orlova et al., 2021).
Research studies likewise proved the importance of EI for business students, as
highlighted in recent research (Lu et al., 2022). Karimi and Ataei (2022) suggested
that the students' higher emotional intelligence is a precondition to acquiring and
reinforcing entrepreneurial skills. The researchers proved a significant positive
correlation between entrepreneurial self-efficacy and EI (Karimi & Ataei, 2022;
Halliwell et al., 2022). The university study is considered an ideal entrepreneurial
period, especially for vocational college students who pay more attention to
entrepreneurship and innovation education (Wen et al., 2020). However, despite the
undeniable value of EI, a literature review revealed a need for practical tools for
developing the EI of entrepreneurs, managers and students (Nurhas et al., 2022).
There are three main theories behind EI development: the non-cognitive theory of
EI developed by Bar-On, the theory of emotional and intellectual abilities by Meyer
and Salovey, and the mixed theory of emotional competence by Goleman. However,
the proposed models do not fit the entrepreneurial and business environment well.
Therefore, we developed a 4-component instrumental model for developing EI (4EI
Model). The 4EI Model was developed as a result of the generalisation of
fundamental and recent scientific publications, including Goleman's model (Wolff,
2005). This model is the basis for the evolution of EITTs. Using EITTs develops
Self-awareness, Self-management, Social-awareness and Relationship management
of entrepreneurs and managers.
3
Methodology
This study uses the 4-component instrumental model to develop EI (4EI Model).
The 4EI Model is adapted to the entrepreneurial and business environment and
includes 19 competencies (Mikuš et al., 2021). We use the “Emotional Intelligence
in Business” questionnaire to monitor the learning outcomes of the 4EI Model
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(Mikuš et al., 2021). The questionnaire allows us to visually display the results as an
EI diagram of four quadrants – emotional intelligence profile (EI profile). The
questionnaire has been empirically proven, and demonstrator and confirmation
analysis was carried out using the programs MS Excel, SPSS, STATISTICA,
FACTOR, and R-Studio.
To develop EITTs, we used the Smart Sender program. Self-awareness Аlarm
Сlocks and Self-management Alarm Clocks are projects in the Smart Sender
program with separate funnels. By following the links, students sign up for the
chatbot on Telegram and receive messages for a set period of study. Subscription to
the Alarm clocks is free and voluntary.
Testing is part of the learning process. We offer students to take the "Emotional
Intelligence in Business" questionnaire before and after their training. The proposed
EITTs have been implemented and validated in the elective course “Emotional
intelligence in youth and senior entrepreneurship” at Comenius University Bratislava
and “Leadership and emotional intelligence” at the Ukrainian engineering
pedagogics academy.
4
Results
In the educational course, we selected EITTs for the development of each
component of EI: Self-awareness, Self-management, Social-awareness and
Relationship management. We implement Challenge Based Learning (Leijon et al.,
2021) by solving real-world challenges. In addition to revealing the theory for each
quadrant, we use the following practical tools.
4.1
Self-awareness tools
The alarm clock is one of the promising Emotional Intelligence Training Tools. To
form the Self-awareness skill, we use three types of Alarm Clocks.
Self-awareness Аlarm Сlock 1 helps students better understand their limitations,
fears, opportunities, strengths, and weaknesses.
Y. Fedorova et al.: Emotional Intelligence Training Tools for Business
439.
Procedure. During the week, every 3-4 hours, students receive questions to which they
can immediately write an answer (Figure 1). Students cannot see each other's
answers. The alarm clock invites them to reflect on one’s self-perception and forms
the habit of thinking.
Result. Accurate self-assessment and self-confidence are formed.
Figure 1: Fragment of Self-awareness alarm clock 1, own elaboration
Source: https://t.me/Clock_SEID_bot?start=ZGw6MzU3MDU
Self-awareness Evening Аlarm Сlock 2 forms the habit of reflecting on the day
that has passed.
Procedure. During the week, students receive evening messages. The message offers
to describe the three main emotions of the past day. It is vital to describe emotions
and the events that caused them.
Result. Increased awareness of one's most experienced emotions and moods.
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Self-awareness Stop Alarm Clock 3 is a stopping tool that helps to track and clarify
the internal state.
Procedure. During the week, at various time intervals, students are given a question to
track their current emotions. A prerequisite is using an emotion dictionary to
describe their feelings in clear and precise words.
Result. The accuracy of perception of one's emotions increases.
4.2
Self-management tools
We use the Alarm Clock and the Presentation to form the competencies of this
component.
Self-management Alarm Clock introduces students to possible non-standard
situations at work.
Procedure. During the week, several times a day, students receive short video
assignments with problem situations at work. For example, the video material from
training courses on Coursera is used. Students can send their solutions to prevent
conflict and stressful situations at work.
Result. Awareness of the importance of self-control at work is growing. There is an
identification of unacceptable actions in professional activities.
Presentation of ways to control conditionally negative emotions.
Procedure. Students are encouraged to watch the video, for example, the cartoon
"Inside out". Then, they can suggest possible problem situations at work for each
conditionally negative emotion in the video. Students must propose a solution to the
situation. The practical application of this tool indicates an increase in interest and
participation of students in discussions.
Result. The ability to predict the consequences of one's behaviour at work is being
developed.
Y. Fedorova et al.: Emotional Intelligence Training Tools for Business
4.3
441.
Social- awareness tools
We use the "Pay attention to faces and body" presentations and the "Reading others'
emotions" exercise to develop Social-awareness.
" Pay attention to faces and body" presentations contain short video questions
and photos to determine emotions.
Procedure. In dynamic mode, students view pictures and videos. They are offered
answers. Students guess emotions not only by facial expressions but also by a
person's posture. For example, we use an illustration from Pease and Pease (2008).
Result. Increased cognitive empathy.
Exercise “Reading others’ emotions”
Procedure. The roles of speakers, face decoders, body decoders and speech decoders
are distributed among students. Speakers are given tasks to portray different
emotions. Decoders focuses on verbal and non-verbal characteristics for guessing
emotions (3-Emotional-Intelligence-Exercises-1.pdf positivepsychology.com).
Result. Organisational awareness improves.
4.4
Relationship management tools
In the last stage, assertive behaviour, teamwork, and effective communication skills
are formed. Public speaking with arguments is the primary tool.
Procedure. Students are invited to prepare a speech on one of the issues on which
society has different opinions. The student's task is to convince the audience of the
correctness of his point of view. For persuasion, they can use the Argumentation
Algorithm, Figure 2. The identifier of success is the number of votes of classmates
who believed the speaker.
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Figure 2: Argumentation Algorithm, author's elaboration.
Source: Authors' elaboration based on Nepryakhin (2016).
In that way, the training course contains dynamic, engaging tools. Involving
entrepreneurs and managers in the training process improves the use of their time
and potential. Evidence for the effectiveness of the proposed EITTs is the numerical
increase in the components of the EI profile, Figure 3.
Figure 3: The EI profiles of students before and after applying EITTs
Source: Authors's elaboration.
Y. Fedorova et al.: Emotional Intelligence Training Tools for Business
443.
The effectiveness of EITTs has been confirmed in practice. Thus, presented EITTs
develop all four components of the model, Self-awareness, Self-management, Socialawareness and Relationship management of entrepreneurs and managers.
5
Discussion and Conclusion
Despite the importance of EI for entrepreneurs, managers and business students,
teaching these skills in universities is still at an early stage. Therefore, the application
of EITTs is an essential practical step. Our approach uses the latest theoretical
research, modern software, and visualisation elements. Purposeful consistent
development of each component makes it possible to increase the level of training
of successful entrepreneurs, managers and business students. EITT can enrich
modern education. We follow Challenge Based Learning, which enhances the
prospects and effectiveness of entrepreneurs', managers' and business students'
training. The EITTs are visual, engaging, and involve trainees in learning.
Moreover, in addition to teacher assessment, trainees track their progress by
changing their EI profile. We continue to conduct statistical research. Further
directions of our research are expanding the arsenal of EITTs and evaluating the
effectiveness of EITTs based on statistical studies.
Acknowledgements
Thisresearch was funded by the EU NextGenerationEU through the Recovery and Resilience Plan
for Slovakia under the project No. 09I03-03-V01-00055; and the Slovak Research and Development
Agency under Grant APVV-19-0581.
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Brečko, D. (2021). Intergenerational Cooperation and Stereotypes in Relation to Age in the Working
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https://doi.org/10.15826/csp.2021.5.1.124
Çetin, S. & Karakaş, A. (2021). Effects of emotional intelligence on knowledge sharing among
employees: A study of HoReCa companies in Turkey. Upravlenets – The Manager, 12(3), 44–55.
doi: 10.29141/2218-5003-2021-12-3-4
Halliwell, P., Mitchell, R. & Boyle, B. (2022). Interrelations between enhanced emotional intelligence,
leadership self-efficacy and task-oriented leadership behaviour–a leadership coaching study.
Leadership & Organization Development Journal, 43(1), 39–56. https://doi.org/10.1108/LODJ-012021-0036
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Hornung, O. & Smolnik, S. (2022). At the mercy of our emotions? A multi-dimensional analysis of
emotions in knowledge management research. Knowledge Management Insights in Times of Global
Challenges, 29(2), 109–120. doi: org/10.1002/kpm.1701
Karimi, H. & Ataei, P. (2022). The effect of entrepreneurship ecosystem on the entrepreneurial skills
of agriculture students: The mediating role of social intelligence and emotional intelligence
(The case of Zabol University, Iran). Curr Psychol. https://doi.org/10.1007/s12144-022-03479z
Leijon, M., Gudmundsson, P., Staaf P.& Christersson, C. (2021). Challenge based learning in higher
education– A systematic literature review. Innovations in Education and Teaching International.
https://doi.org/10.1080/14703297.2021.1892503
Lu, X., Xiong, Y., Lv, X. & Shan, B. (2022). Emotion in the Area of Entrepreneurship: An Analysis of
Research Hotspots. Frontiers in psychology, 13. doi: org/10.3389/fpsyg.2022.922148
Mikuš, J., Pilková A., Fedorova, Y. & Btytan Y. (2022). Model for the emotional intelligence’s
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Nepryakhin, N. (2016). Use your arguments!: How to convince anyone of anything.
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EXPLORING THE ROLE OF GAMEBASED LEARNING IN ENHANCING
SUSTAINABILITY KNOWLEDGE: A
QUALITATIVE STUDY
BIRGIT OBERER, ALPTEKIN ERKOLLAR
ETCOP Institute for Interdisciplinary Research, Klagenfurt, Austria
oberer@etcop.at, erkollar@etcop.at
Abstract This paper explores the potential of digital games as a
tool for promoting sustainability education. A deductive,
qualitative research approach using a descriptive research design
was employed, with a focus on document analysis on selected
digital games already used in education. The study aims to
identify key factors that make digital games effective in teaching
sustainable topics and to examine the transferability of skills and
experiences from the game to real life. The findings indicate that
digital games have the potential to be a valuable tool in
promoting sustainability education, providing an engaging,
interactive, and effective learning experience. The implications,
challenges, and opportunities for games-based sustainability
education are discussed. The study concludes that further
research is needed to explore the most effective ways of
integrating digital games into educational curricula and to assess
the long-term impact of digital games on sustainability
knowledge and behaviour change.
DOI https://doi.org/10.18690/um.epf.3.2023.49
ISBN 978-961-286-736-2
Keywords:
digital games,
sustainability
education,
learning transfer,
game-based
learning,
qualitative study
JEL:
I21, O36
446
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Introduction
Digital games provide an engaging and interactive way to explore socially relevant
topics such as sustainability, particularly in classrooms. Recent research shows that
digital games enhance student engagement and motivation, facilitate active learning,
and promote sustainability knowledge and skills sustainability (Chen et al., 2019).
Game designers can effectively coordinate game content, rules, and mechanics to
teach sustainability topics. Therefore, further exploration of digital games' potential
to promote sustainability is worth considering (Wang et al., 2022).
This exploratory study with its research question ‘What are the key factors of a digital
game that can be effectively applied in an educational context?’ aims to identify the
key factors of digital games that can enhance sustainability knowledge in an
educational context. Objectives include analyzing existing games on sustainability,
identifying player motivation mechanisms, and exploring how real-life experiences
can be incorporated into gameplay to promote transferability of skills and
knowledge.
This study explores how digital games can enhance sustainability education,
identifying player motivation mechanisms and potential classroom applications. The
findings could support the development of future games to promote sustainability
knowledge and practices. The study provides a unique perspective on the role of
digital games in fostering sustainability education and promoting sustainable
practices.
2
Literature Review
2.1
Game based learning
Digital game creators excel at coordinating important elements of teaching and
learning such as motivation, content presentation, and interaction. Even as gaming
becomes more complex, Callois's principles of play, such as voluntary participation,
a distinct space from reality, and non-predetermined outcomes, remain relevant.
Dicheva et al. (2015) found that gamification strategies in education still incorporate
these principles and can promote successful learning outcomes such as autonomy,
B. Oberer, A. Erkollar: Exploring the Role of Game-Based Learning in Enhancing
Sustainability Knowledge: A Qualitative Study
447.
competence, and relatedness. Successful learning depends on ensuring learners
experience autonomy, competence, and acceptance.
2.2
Serious games and gamification
Digital games have influenced game theory and games studies, and serious games
are digital games designed for learning. Gamification uses game principles, such as
progress bars, badges, and ranking lists, to increase motivation and promote
learning. Successful gamification requires elements such as points, badges, and
leaderboards, as well as cooperation, competition, and timely feedback.
Gamification elements can be added to learning management systems, including
quests, progress bars, badges, leaderboards, avatars, and feedback mechanisms
(Deterding et al., 2011; Michael & Chen, 2006; Salen & Zimmermann, 2004).
2.3
Sustainability education and digital games
Digital games are ideal for sustainability education due to their immersive and
interactive nature, allowing learners to experiment with strategies and explore
complex issues in a risk-free environment. They can also foster emotional
connections with sustainability issues, motivating learners to act (Janakiraman et al.,
2021; Janakiraman, 2021).
3
Methodology
3.1
Research design and approach
This study employs a qualitative approach with a descriptive research design and
utilizes document analysis as the primary research method. It focuses on game
theory, game design, gamification, and play and learning, and examines a selection
of digital games used in education. The study analyzes the mechanisms that motivate
players to engage with the game, the incorporation of real-life experiences, and the
transferability of skills.
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Data collection and analysis
This study analyzes how digital games can enhance sustainability education by
examining game mechanics, design, and player motivation in educational settings.
Over 30 popular games are analyzed based on their potential for learning and
reviewed through manuals, design documents, and online forums to identify
mechanics that motivate players, such as rewards and challenges. Researchers
interviewed players to explore skill transferability to real-world situations, specifically
in problem-solving, decision-making, and collaboration. Thematic analysis is used to
draw conclusions. The data collected provides insights into the factors of digital
games that can enhance sustainability knowledge in education, including the
transferability of skills and experiences from games to real-world contexts. The study
also reviews relevant literature on game theory, design, gamification, and play and
learning to identify key concepts and frameworks.
4
Results
4.1
Using educational games as a tool for sustainability learning
Recent years have seen a growing recognition of digital games as an educational tool.
Gee (2018) cites successful educational game projects and the benefits of gamebased learning. However, the key consideration in using digital games for educational
purposes is the selection of appropriate games and the development of meaningful
pedagogical strategies for their use (Rieck, 2022; Schell, 2016).
4.1.1
Analysis of selected games
Recent years have seen a rise in digital games dedicated to teaching sustainability
topics, including games like 'The Sims 4 - Live Sustainably' and 'PhoneStory'.
The Sims 4 - Live Sustainably 1 is a digital game that promotes sustainable living by
managing a Sims household with eco-friendly items to reduce waste and carbon
footprint. Players receive rewards for making sustainable choices, which increases
income and reduces bills. The game provides feedback and notifications on
1
URL: https://www.ea.com/de/games/the-sims/the-sims-4/store/addons/the-sims-4-eco-lifestyle#related-news
B. Oberer, A. Erkollar: Exploring the Role of Game-Based Learning in Enhancing
Sustainability Knowledge: A Qualitative Study
449.
sustainable practices and uses graphics and animations to engage players. It also
features a point system that rewards players for their progress and encourages
experimentation with different sustainable strategies. Overall, the game is an
effective educational tool that showcases how digital games can teach sustainable
practices.
PhoneStory 2 is a digital game that exposes the unethical practices of the smartphone
industry, including child labour and toxic waste dumping. It takes players through
the four stages of a smartphone's lifecycle, promoting critical thinking and awareness
of the social and environmental impacts of technology consumption. Players are
motivated to complete all levels and learn more about the industry's impact, making
the game a fun and engaging way to encourage positive change in technology
consumption. The game aims to encourage players to think critically about the
impact of their technology consumption and act towards positive change.
4.1.2
Mechanisms that motivate players
Players are motivated by different factors when playing games. Progression and
rewards give a sense of achievement, while competition motivates players to beat
other players' scores. Social interaction in multiplayer games drives players to
collaborate or compete with others. Immersive environments, compelling narratives,
and engaging characters create emotional attachment and escapism. Challenge and
skill-building motivate players to master a game, while exploration and discovery
motivate players to uncover new content. Customization options and creative tools
let players personalize their experience, while cooperative games motivate players to
work together towards a common goal.
4.1.3 Real-life experiences incorporated in games
Digital sustainability games provide a more engaging and relevant learning
experience for players by simulating real-life experiences such as energy
conservation, waste reduction, and sustainable transportation. Players can
experiment with different strategies and solutions in a safe environment while realworld data such as carbon emissions and energy consumption can be incorporated
2
URL: https://phonestory.org/
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BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
to help them understand the impact of their actions. These games can also promote
empathy and understanding of different perspectives by simulating experiences like
living in a low-income community with limited access to sustainable resources.
Incorporating real-life experiences and data can not only educate players on
sustainable practices but also deepen their understanding of social and
environmental sustainability issues.
4.1.4
Transferability of skills and experiences from games to real world
Digital games have the potential to transfer skills and knowledge from virtual worlds
to real-world scenarios, particularly in sustainability education games. These games
can teach practical skills related to sustainable living, such as reducing energy
consumption and using public transportation. They can also enhance cognitive skills
like problem-solving, critical thinking, creativity, and innovation as players strategize
to manage resources sustainably. Sustainability education games can also create
emotional connections to environmental and societal issues, motivating players to
act towards sustainability in their daily lives. By transferring skills and experiences
from virtual to real-world contexts, digital games can contribute to a more
sustainable future.
4.2
Areas of use for sustainability games
Digital games provide an immersive and interactive learning experience for
sustainability education, offering a safe space for learners to explore complex issues,
experiment with different strategies, and receive immediate feedback. Games can
transfer skills and foster emotional connections, motivating players to act towards
sustainability.
5
Discussion
5.1
Implications of the findings for sustainability education
Digital games provide a unique opportunity for interactive sustainability education,
as shown by the study's findings. Key game factors can enhance sustainability
education and promote sustainable practices among students. They could be applied
B. Oberer, A. Erkollar: Exploring the Role of Game-Based Learning in Enhancing
Sustainability Knowledge: A Qualitative Study
451.
in various subjects, providing educators with multiple options for incorporating
them into teaching.
5.2
Challenges and opportunities for games-based sustainability
education
Digital games have many opportunities for sustainability education, but there are
also challenges to overcome. The lack of appropriate digital games addressing
sustainability issues makes it difficult for educators to find suitable games.
Additionally, educators need adequate training and resources to effectively use digital
games in the classroom. Nevertheless, games-based sustainability education provides
an engaging and interactive way to teach sustainability concepts and promote
sustainable practices, and stimulate critical thinking and problem-solving skills,
essential for addressing complex sustainability challenges.
5.3
Future research directions
This study offers insights into using digital games for sustainability education.
However, more research is needed to better understand the best practices for
designing and using digital games in the classroom. Future studies can explore
effective game mechanics and content, digital games in various educational contexts,
and the impact of digital games on student outcomes and behaviour change.
Addressing these gaps can help educators enhance sustainability education and
promote sustainable practices among students.
6
Conclusions
6.1
Summary of key findings
Digital games have potential for enhancing sustainability knowledge in education
through effective game mechanics, incorporation of real-life experiences, and
transferability of skills to real life. Furthermore, digital games have the potential to
address sustainability concerns and promote sustainable practices.
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Contributions of the study
This study highlights the potential of digital games for sustainability education and
identifies key factors that enhance their effectiveness in an educational context. It
contributes to both the field of sustainability education and educational game design.
6.3
Limitations and suggestions for future research
The study is limited by the lack of empirical data, but future research can explore
digital games' effectiveness in sustainability education using virtual and augmented
reality. New games can be developed and tested, and different game types’
effectiveness can be studied. Overall, the study emphasizes digital games' potential
as an innovative and engaging platform for sustainability education. Further research
can build on these findings to create effective and engaging digital games that
promote a sustainable future.
6.4
What comes next?
Future research can focus on addressing the limitations identified in the previous
section to improve the effectiveness of digital games for sustainability education.
This includes empirical studies to investigate their impact on enhancing sustainability
knowledge and promoting sustainable practices among students, as well as exploring
the potential of incorporating virtual reality and augmented reality technologies.
References
Chen, C. H., Law, V., & Huang, K. (2019). The roles of engagement and competition on learners'
performance and motivation in game-based science learning. Educational Technology Research and
Development, 67(4), 1003-1024.
Deterding, S., Dixon, D., Khaled, R., & Nacke, L. (2011). From Game Design Elements to
Gamefulness: Defining “Gamification”. Proceedings of the MindTrek 2011, Finland, 9-15.
Dicheva, D., Dichev, Ch., Agre, G., & Angelova, G. (2015). Gamification in education: A systematic
mapping study. Journal of Educational Technology & Society, 18(3), 75-88.
Gee, J. P. (2018). The anti-education era: Creating smarter students through digital learning. St. Martin's
Press.
Janakiraman, S., Watson, S., Watson, W., & Newby, T. (2021). Effectiveness of digital games in
producing environmentally friendly attitudes and behaviors: A mixed methods study. Computers
& Education, 160, 104043.
B. Oberer, A. Erkollar: Exploring the Role of Game-Based Learning in Enhancing
Sustainability Knowledge: A Qualitative Study
453.
Janakiraman, S. (2021). Digital Games for Environmental Sustainability Education: Implications for
Educators. Proceedings of the Eighth International Conference on Technological Ecosystems
for Enhancing Multiculturality Spain, 542-545. https://doi.org/10.1145/3434780.3436649.
Michael, D., & Chen, S. (2006). Serious games: Games that educate, train and inform. Thomson Cours
Technology PTR, Boston.
Rieck, Ch. (2022). Spieltheorie: Eine Einführung, 14. Auflage, Rieck Verlag GmbH: Eschborn.
Salen, K., & Zimmerman, E. (2004). Rules of play: Game design fundamentals. MIT Press.
Schell, J. (2016). Die Kunst des Game Designs. Bessere Games konzipieren und entwickeln (2nd ed.).
mitp Verlags GmbH & Co. KG.
Wang, LH., Chen, B., Hwang, GJ., Guen, JQ & Wang, YQ. (2022). Effects of digital game-based STEM
education on students' learning achievement: A meta-analysis. International Journal of STEM
Education, 9(1), 26.
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BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
WHAT ARE THE YOUNG
PEOPLE'S PERCEPTIONS OF THE
CIRCULAR ECONOMY?
CECILIA SZIGETI,1 SÁNDOR REMSEI,2 KATALIN BÁNDY2
BGE-CESIBUS, Budapest, Hungary
cecilia.szigeti@uni-bge.hu
2 Széchenyi University, Győr, Hungary
remsei.sandor@sze.hu, bandy@sze.hu
1
Abstract The circular economy is often seen as a technical issue
and focuses on the better organization of work processes. A
more accurate and holistic approach to the cycle can help create
a better and more inclusive future for all. The circular economy
has been linked to several SDGs in previous research, of which
our research focuses on SDG 12 (responsible consumption and
production). Young people play a key role in achieving a circular
future (as an organizing principle of the socio-economic system).
In our research, we asked 1,442 university students (most born
around 2000) about their awareness, understanding, and
participation in the social cycle using a standardized
questionnaire. Our research shows that those who consider
themselves environmentally conscious are more likely to recycle
and collect separately, but it is not clear that they are involved in
extending the life of objects (exchange, second market, etc.). Our
research found that students don’t use, but are typically unaware
of, internet applications that promote circular living.
DOI https://doi.org/10.18690/um.epf.3.2023.50
ISBN 978-961-286-736-2
Keywords:
circular economy,
SDG 12,
holistic approach,
lifestyle,
consumer habits
JEL:
D12, I31
456
1
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Introduction
Changing the unsustainable logic of the global economy is the most important
challenge of our time. The constantly and rapidly changing climate and the tensions
arising from growing inequality on the human side make the responsibility of all
economic actors clear (IPCC, 2022). There were also high expectations that COVID
would make a positive difference to sustainability issues, but recent research shows
that while there are temporary and partial results, there has been no significant
change (Csutora et al., 2022b). The practical implementation of the concept of
sustainability (UN, 1987), which is essentially macro and initially mainly related to
the environment, requires interventions and conscious action at both micro and
meso-levels, since the actions and impacts of actors are far from independent of
each other and determine each other's potential. Nevertheless, the responsibilities of
the different levels and actors are typically treated separately. This is how the theory
and practice of corporate social responsibility (CSR) has been formulated on the
corporate side (Carroll, 2008) and the expectation of conscious and responsible
consumption on the consumer side (Csutora et al., 2022a). The authors show that
the circular economy can be organized in very different ways (Bowens et al., 2020).
In our research, we are mainly interested in how young people relate to circular
economy processes. From this, we want to find out what a circular economy future
might look like.
2
Theoretical Background
The circular economy may hold great promise for achieving sustainability (Szigeti et
al., 2022). Much of the contemporary literature on circular economy (CE) presents
the transition to CE as a simple, neutral process, implicitly characterized by a technooptimistic and eco-modernist stance. Therefore, most research on the circular
economy focuses on a practical and technical level, looking at the material and
energy flows of production-consumption systems. However, the underlying
worldview assumptions that need to be embedded in CE are largely ignored (LoweGenovese, 2022). Research by Bowens et al., (2020) develops four scenarios for the
future of the circular economy, these are:
C. Szigeti, S. Remsei, K. Bándy: What are the Young People's Perceptions of the Circular
Economy?
−
−
−
−
3
457.
‘planned circularity’ – CE transition is centrally controlled by the
government through strong coercive measures (taxation, bans, mandatory
repair),
'bottom-up sufficiency', – focuses on small-scale CE solutions at local level,
'circular modernism' – technological innovation and market forces are seen
as able to decouple resource use and carbon emissions from human
development, is compatible with the concept of ‘green growth’, does not
call into question the high consumption and growth focus and business
models of significantly capitalist societies.
'peer circularity' – focus on technologies that enable collaborative
consumption (e.g. internet platforms).
Methodology
Our questionnaire was based on the survey of Csutora et. al., (2022a). This previous
research covered all sustainable business models, however, our research focused
only on the circular economy. The questionnaire used for our research contains
closed questions. The questionnaire was completed electronically by university
students between 29 November and 13 December 2022. We received a total of 1442
completions. Of the students who completed the questionnaire, 48.3% were enrolled
in a bachelor's degree in engineering, 15.8% in economics, the remainder being
distributed among several courses (e.g. sociology, law, international studies,
computer science in economics). Most of the students (83.9%) reached by the
questionnaire, were born after 2000. In addition to the demographic questions, we
asked 5 questions, of which we will now elaborate on the first one. The first question
was: " To what extent do these statements apply to you?" There were 11 response
options, which respondents rated using a Likert 6-point scale (6: very specific, 1: not
at all specific). We use a 6-point Likert scale to avoid neutral answers. The
respondent must therefore decide at the time of scoring whether he/she considers
the statement to be typical or not. The answer choices listed below are indicated by
a letter in brackets, e.g. (A). The answer choices in Table 1 and Figure 1 are indicated
by this letter. Questions (A) and (K) show general statements, while questions (B),
(C) and (D) show simple, slogan-like statements offered by consumer society.
Statements (E) (H) (I) (J) refer to active participation in circular processes in
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
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458
everyday life. And statements (F) and (G) refer to the use of internet platforms in
circular processes.
Response options:
−
−
−
−
−
−
−
−
−
−
−
I am environmentally conscious (A),
recycling is important to me (B),
I collect my waste separately (C),
I do not buy products in disposable packaging (D),
we swap personal stuffs, books, and clothes among friends (E),
I am a member of online groups whose main profile is to facilitate swaps
between members (F),
I often swap items via internet platforms (G),
I used to buy second-hand clothes (H),
I usually borrow books from the library (I),
I like to use recycled products (e.g. a bag sewn from used jeans) (J),
I live frugally, I spend my money wisely (K).
Questions (A) and (K) show general statements, while questions (B), (C) and (D)
show simple, slogan-like statements offered by consumer society. Statements (E),
(H), (I), (J) refer to active participation in circular processes in everyday life. And
statements (F) and (G) refer to the use of internet platforms in circular processes.
Using the Likert scale, the ordering can be clearly clarified, but the distance between
each response cannot be interpreted, so the resulting result can be interpreted as an
ordinal scale, which determines the further processing possibilities. From the total
sample, we examined separately the results of respondents who gave a score of 6 for
statement (A), i.e. who considered themselves to be very environmentally aware.
These results are shown in Table 2. Both the total population and the set of
environmentally conscious respondents were analyzed using the positional averages,
i.e., the mode and the median.
The median is the middle value of a data series, where the number of data smaller
and larger than this is the same. Its value is equal to the 50th percentile or the middle
quartile. It belongs to the group of central tendencies, within which it belongs to the
group of positional averages. The concept of a mode indicates the most common
C. Szigeti, S. Remsei, K. Bándy: What are the Young People's Perceptions of the Circular
Economy?
459.
value of a data series. That is, the mode is the value that occurs most often in our
sample. It belongs to the group of central tendencies, including positional averages.
After analyzing the answers to the first question, we decided to look at the question
related to the most divisive item in our questionnaire (this is question 5, so we refer
to it in the article). In the fifth question (this is a one-choice, closed question), we
asked about the knowledge and use of online applications and web shops that could
be relevant for the circular economy. These were:
−
−
−
−
−
Munch: Munch is a platform where restaurants and retailers offer unsold
but high-quality food at a discount (munch.hu)
Háda: online store selling second-hand clothes, shoes, and accessories
(hadawebshop.hu)
Rukkola: an online book exchange site where you can earn points for
donating books. And you can use the points to buy other books
(rukkola.hu).
Vinted: an online marketplace for second-hand clothing and accessories
where you can buy directly from the seller. The online marketplace provides
security for the buyer and increased turnover for the seller (vinted.hu).
LiveRobe: An online marketplace for used, but brand new, premium
clothing and accessories https://liverobe.com/.
The question was: ‘Have you tried it?’ And the answer options were:
−
−
−
−
I have not heard of it,
I've heard of it, but I don't know it,
I've tried it a few times,
I used it regularly.
The number of responses for each answer is shown in Table 3 and the distribution
of responses in Table 4.
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460
4
Results
There are many similarities between the results for the full sample (Table 1) and
those who consider themselves environmentally aware (Table 2). As expected, those
who are environmentally aware have a higher degree of self-perceived statements.
Comparing the two tables, the most interesting situation is seen in statements (F),
(H), (I), (J), where the median increased by 1 for the environmentally conscious but
the mode changed from 1 to 6 (highlighted in bold). For (G), the median has been
increased from 2 to 4, but the mode remains 1. If we look at Table 2, we can see that
the second most frequent value in column (G) is 6.
1600
1400
1200
1000
800
600
400
200
0
A
B
C
D
E
1.
2.
F
3.
4.
H
G
5.
I
J
K
6.
Figure 1: To what extent do these statements apply to you? (6: very specific, 1: not at all
specific) (N=1442)
Source: Authors' elaboration.
Table 1: Response distribution to question 1 for the whole sample
1.
2.
3.
4.
5.
6.
median
mode
A
7
24
153
499
585
174
5
5
B
8
37
169
448
529
251
5
5
C
50
90
169
268
426
439
5
6
D
193
338
403
336
127
45
3
3
E
220
223
224
316
294
165
4
4
F
468
226
182
195
193
178
3
1
G
498
256
207
200
175
106
2
1
H
422
230
194
194
204
198
3
1
I
367
241
225
217
188
204
3
1
J
270
229
246
266
235
196
3
1
K
25
49
146
362
462
398
5
5
C. Szigeti, S. Remsei, K. Bándy: What are the Young People's Perceptions of the Circular
Economy?
461.
Table 2: Response distribution to question 1 among environmentally aware respondents.
1.
2.
3.
4.
5.
6.
median
mode
A
0
0
0
0
0
174
6
6
B
1
0
0
8
30
135
6
6
C
1
0
6
17
27
123
6
6
D
11
12
29
59
37
26
4
4
E
22
15
12
46
35
44
4
4
F
34
15
15
36
26
48
4
6
G
46
18
13
25
32
40
4
1
H
36
21
20
25
28
44
4
6
I
27
20
17
25
27
58
4
6
J
21
13
12
31
37
60
5
6
K
2
3
4
16
44
105
6
6
Tables 3 and 4 show that the students surveyed (with the exception of the Háda
webshop) are generally neither familiar with nor use online exchange applications.
Looking at the data in the tables, it can be seen that less than 5% of the applications
listed are used regularly. Even in the case of the best known Háda webshop, the
higher figure (24%) is related to infrequent users. Although it can be said here that
many people are aware of its existence, even if they do not use it. LiveRob is hardly
known among the respondents.
Table 3: Number of responses to question 5 of the questionnaire
I have not heard of it
I've heard of it, but I don't
know it
I've tried it a few times
I used it regularly
Munch
832
Háda
222
Rukkola
931
Vinted
660
LiveRob
1107
470
820
378
620
282
108
31
345
55
107
26
114
48
38
15
Table 4: Distribution of responses to question 5 of the questionnaire (%)
I have not heard of it
I've heard of it, but I don't
know it
I've tried it a few times
I used it regularly
5
Munch
55
Háda
15
Rukkola
65
Vinted
46
LiveRob
77
33
57
26
43
20
7
2
24
4
7
2
8
3
3
1
Discussion and Conclusion
Our research investigated which circular business model can be facilitated by the
manifested consumer behaviour. Circularity is particularly important because it is
not only one of the sustainable business models, but can also be an important
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manifestation of responsible, sustainability-oriented consumer behaviour at the
individual level (Szigeti et al., 2022). The results of our research show that young
people consider themselves to a large extent environmentally conscious,
participating in techno-optimistic processes (selective waste collection) that lead to
a world of circular modernism. Bottom-up efficiency is clearly present in smaller
groups, but its causes and forms need to be examined in more detail below. It is
surprising that applications linked to exchanges and secondary markets are not
known or used, so that the conditions for peer circularity are not yet in place. At this
stage of the research, we can’t draw any conclusions about planned circularity.
One of the main limitations of our research is that there are circular business models
that can't be effectively investigated from a consumer perspective. The other
limitation is that the questionnaire was distributed only among Hungarian students.
Another limitation stems from the concept of circularity. As with sustainability, there
are criticisms of circularity.
References
Bauwens, T., Hekkert, M., & Kirchherr, J. (2020). Circular futures. What will they look like? Ecological
Economics, 175, 106703.
Carroll. A. B. (2008). A history of corporate social responsibility: Concepts and practices. In: The Oxford
Handbook of Corporate Social Responsibility. Oxford. UK: Oxford University Press. 19-46.
Csutora M. Harangozó G., & Szigeti C. (2022a). Factors behind the Consumer Acceptance of
Sustainable Business Models in Pandemic Times. Sustainability, 14(15), 9450.
https://doi.org/10.3390/su14159450.
Csutora, M., Harangozo, G., & Szigeti, C. (2022b). Sustainable Business Models—Crisis and Rebound
Based on Hungarian Research Experience. Resources, 11(12), 107. MDPI AG. Retrieved from
http://dx.doi.org/10.3390/resources11120107.
IPCC (2022). Climate Change 2022: Impacts, Adaptation and Vulnerability. Contribution of Working Group II to
the Sixth Assessment Report of the Intergovernmental Panel on Climate Change. H.-O. Pörtner; D.C.
Roberts; M. Tignor; E.S. Poloczanska; K. Mintenbeck; A. Alegría; M. Craig; S. Langsdorf; S.
Löschke; V. Möller; A. Okem; B. Rama (Eds.). Cambridge, UK: Cambridge University Press.
Retrieved from https://report.ipcc.ch/ar6/wg2/IPCC_AR6_WGII_FullReport.pdf
Lowe, B. Genovese, A. (2022) What theories of value (could) underpin our circular futures?, Ecological
Economics, 195, 107382.
Szigeti C., Szegedi K., Győri Zs., & Körtvési D. (2022). Körforgásos modell a divatiparban. Polgári
Szemle, 18, 1–3, 14–32. DOI: 10.24307/psz.2022.1108
Tóth G. (2021). A gazdasági növekedés hármas határának kiszámítása felé In: Besenyei, M.
CLIMATTERS: Tanulmányok a fenntarthatóságról, Ludovika Egyetemi Kiadó, Budapest, 105-114.
United Nations (1987). Report of the World Commission on Environment and Development
Retrieved from https://digitallibrary.un.org/record/139811
ADVANTAGES AND CHALLENGES
OF DEVELOPING A SUSTAINABLE
SUPPLY CHAIN
KLAVDIJ LOGOŽAR
University of Maribor, Faculty of Economics and Business, Maribor, Slovenia
klavdij.logozar@um.si
Abstract Nowadays, companies are expected to recognize their
social responsibilities related to their supply chains. At the same
time, it is essential to identify impacts on people and the
environment because negative impacts can represent risks for
businesses and society in various forms. Supply chains provide
opportunities to decrease risks to the environment, and supply
chain management can help decrease resource, energy, and
transport costs. Companies are actively addressing significant
sustainability impacts and risks by introducing sustainable supply
chain management. In this paper, the author reviews the
literature on the advantages and challenges that companies have
to take into account while developing sustainable supply chains.
DOI https://doi.org/10.18690/um.epf.3.2023.51
ISBN 978-961-286-736-2
Keywords:
supply chain,
supply chain
management,
sustainability,
environment,
advantages,
challenges
JEL:
M11, M14
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE.
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1
Introduction
As consumers become increasingly aware of the social and environmental impacts
of the products they buy, companies are under pressure to adopt more sustainable
practices throughout their supply chains (Jo & Kwon, 2022). Sustainable supply
chain management (SSCM) is a framework that helps businesses identify and address
their supply chains' social, economic, and environmental impacts. SSCM is a holistic
approach to managing the social, environmental, and economic impacts of a
company's supply chain (Pagel & Wu, 2009; Sarkis et al., 2011). SSCM aims to create
a sustainable supply chain that benefits all stakeholders, including suppliers,
customers, employees, and the environment. SSCM involves identifying and
managing risks and opportunities throughout the supply chain, from raw material
sourcing to product disposal. It has become an increasingly important issue for
companies as they seek to improve their environmental and social performance
while still achieving their economic goals.
Several principles underpin SSCM (Anilkumar & Sridharan, 2019; Balon, 2020):
1.
2.
3.
4.
5.
Transparency: Companies should be transparent about their supply chains,
including the origin of raw materials, the conditions under which products
are made, and the environmental impacts of their operations.
Responsible sourcing: Companies should source materials and products
from suppliers who follow ethical and sustainable practices, including fair
labor practices, safe working conditions, and environmental responsibility.
Resource efficiency: Companies should strive to reduce waste and use
resources efficiently throughout their supply chains, from raw material
extraction to product disposal.
Collaboration: Companies should work with suppliers, customers, and other
stakeholders to identify and address social and environmental risks
throughout the supply chain.
Continuous improvement: Companies should continually monitor and
improve their supply chain practices, using metrics and reporting to track
progress and identify areas for improvement.
K. Logožar: Advantages and Challenges of Developing a Sustainable Supply Chain
465.
Developing sustainable supply chains can bring numerous advantages, but it has
challenges. This paper will explore some of the advantages and challenges of
developing sustainable supply chains. The research method used in this paper is the
review of literature focusing on the advantages and challenges that companies must
consider while developing sustainable supply chains.
2
Advantages of Sustainable Supply Chain Management
Implementing sustainable supply chain management practices requires a concerted
effort from all stakeholders in the supply chain. To implement SSCM, companies
have to take some steps (Balon, 2020; Dubey et al., 2018; Novitasari & Agustia,
2021):
1.
2.
3.
4.
5.
Conduct a sustainability audit of the supply chain to identify risks and
opportunities.
Set sustainability goals and targets for the supply chain and communicate
these goals to all stakeholders.
Develop sustainability metrics to track progress and measure performance.
Collaborate with suppliers, customers, and other stakeholders to identify
and address sustainability risks and opportunities.
Use sustainability reporting to communicate progress and achievements to
stakeholders.
Completing those steps and adopting sustainable supply chain management
practices can benefit companies in several ways (Balon, 2020; Dubey et al., 2018):
1.
2.
Cost savings: Sustainable practices can reduce waste, increase efficiency, and
reduce costs throughout the supply chain.
Reputation: Adopting sustainable practices can enhance a company's
reputation, helping to attract customers and retain employees. Because of
networking and digitization, consumers and civil society now find it simpler
to track things back to their source. Moreover, communication technology
allows for instant access to this information, for instance, through apps.
Then, customers are in a position to see a product's place of origin and
working conditions. The company can demonstrate to customers, the
general public, and politicians that it is conscious of its duties, eager to
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE.
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3.
4.
5.
actively address critical sustainability consequences and risks, and ready to
mitigate them to the greatest extent feasible by implementing SSCM.
Risk management: Sustainable practices can help mitigate the risks of supply
chain disruptions, environmental disasters, and social unrest.
Directly or indirectly, upstream processes—from primary production to
specific production processes to transportation—act as value drivers. This
way, careful resource selection and processing to create precursor goods
improve product quality. Inhumane working conditions and severe
environmental harm brought on by upstream processes, on the other hand,
are signs of a risky, unreliable supplier and a lack of quality. Corporations
are increasingly held responsible for the societal effects of their upstream
operations. Hence, public crises and the resulting reputational damage can
hinder economic performance.
Innovation: Sustainable practices can drive innovation, helping companies
to develop new products and services that meet the needs of a changing
market (Novitasari & Agustia, 2021).
Costs of resources, energy, and transportation can be methodically collated
with the help of supply chain management. When companies create their
processes, such as logistics, more effectively and assist their suppliers in
developing or enhancing management processes, these costs can continue
to decline. Moreover, more effective systems and processes reduce the need
for materials and, consequently, the cost of production. With higher
production and fewer accidents, ethical occupational health and safety
measures can also result in cost savings. By incorporating sustainability
concepts into product creation, innovation potential may be increased.
Working with suppliers to resolve these problems can also lead to the
discovery of novel approaches to production and transportation.
Creating values collectively: According to Umweltbundesamt (2017), social
responsibility is partly achieved because of SSCM.
The UN has enhanced the sustainable management approach with the
approval of the Sustainable Development Goals (SDGs) in 2015 for the
years up to 2030. The SDGs can act as a "compass" for the problems we
will face in the future and as a catalyst for innovation. More and more people
want to see a better connection between entrepreneurial value creation and
societal requirements. Nevertheless, this necessitates collaboration with
other firms with comparable supply chains, nongovernmental
organizations, and other actors within the company's own supply chain.
K. Logožar: Advantages and Challenges of Developing a Sustainable Supply Chain
3
467.
Challenges of Sustainable Supply Chain Management
As shown in Chapter 2, adopting sustainable practices throughout the supply chain
can benefit companies in several ways; however, it is not without its challenges. The
most common challenges in developing sustainable supply chains include (Balon,
2020; Prakash et al., 2022):
1.
2.
3.
4.
Lack of Awareness and Commitment: Developing sustainable supply chains
requires a commitment from senior management and engagement across
the organization. Many companies lack the awareness and understanding of
the importance of sustainability, which can make it challenging to develop
and implement sustainable practices. Moreover, sustainability often requires
a long-term perspective and investment, which can be challenging for
companies focused on short-term goals.
Complex Supply Chains: Supply chains are often complex and involve
numerous stakeholders, making it challenging to identify and address
sustainability issues. Moreover, many sustainability issues are
interconnected, meaning that actions in one area may have unintended
consequences in another. Taking a holistic approach to sustainability is
essential, considering the entire supply chain and its impact on the
environment, society, and the economy.
Regulatory and Legal Requirements: Many sustainability issues are subject
to regulatory and legal requirements, making it essential for companies to
comply with relevant laws and regulations. Compliance can be challenging,
particularly in global supply chains, where laws and regulations vary across
countries and regions.
Cost Considerations: Developing sustainable supply chains often requires
investment in new technology, processes, and systems. While the benefits
of sustainability can be significant, the costs of implementing sustainable
practices can be high, particularly in the short term. Companies need to
consider the financial implications of sustainability and balance the costs
against the benefits.
These days, supply chains are frequently worldwide and comprise intricate networks.
There are numerous supply chains due to the wide range of items. Companies should
start realistically and move forward gradually. Finding areas with major sustainability
benefits is the first milestone. A better understanding of the supply chain,
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE.
information sharing with other companies in the sector, and establishing
connections with direct and sub-suppliers lead to an increasing number of choices
and strategies for optimal sustainable supply chain management over time.
Identifying actual and potentially significant effects on people and the environment
is crucial. Negative effects might pose dangers for the company in a number of ways,
including those involving the law, money, or reputation. It is essential to have precise
local knowledge about suppliers and locations in order to assess significant
consequences. In actuality, this is hard to come by and expensive. Hence, companies
should concentrate on particular countries or leverage already-existing industry
information on the effects of sustainability to produce helpful filters
(Umweltbundesamt, 2017).
Obstacles may arise while promoting sustainability to suppliers. This is particularly
true when there is little chance of influencing the supplier due to factors like low
contract volumes, a lack of a direct contractual link, or client requirements. To jointly
exert influence, businesses typically select direct exchange with their suppliers,
maybe in collaboration with their customers. SSCM must be included in several
existing internal procedures to be effective.
This may lead to conflicts with conventional procurement criteria like price, delivery
date, and quality. Companies try to resolve these conflicts of interest through open
dialogue. The value added by supply chain sustainability should be made explicit.
SSCM involves more than just direct suppliers. Typically, companies start by
contacting their direct suppliers, with whom they have binding contracts. The
materiality analysis frequently demonstrates that the adverse effects start at the subsupplier level. So, it is crucial to consider how sub-suppliers can be incorporated
before taking any action. A code of conduct, for instance, can require suppliers to
hold their own suppliers to the same standards.
Nevertheless, companies should refrain from merely shifting the obligations—and
corresponding responsibility—to others. Data management must adhere to strict
guidelines. Robust data from direct and sub-suppliers are required to be able to
identify sustainability implications. However, managing data can be complicated.
The data is likely in multiple forms, coming from numerous direct and indirect
providers and starting in totally different systems (Chalmeta & Barqueros-Munoz,
2021; Prakash et al., 2022). This data must frequently be manually compiled, which
requires expensive personnel. As there is no direct communication with sub-
K. Logožar: Advantages and Challenges of Developing a Sustainable Supply Chain
469.
suppliers, obtaining data from them might also be challenging. Estimating negative
effects, particularly those related to emissions or water use, is frequently challenging.
Industry-wide initiatives can be helpful here. Also, the materiality analysis should
operate as a risk filter to locate areas with significant sustainability impacts.
4
Conclusion
Sustainable supply chain management is a framework that helps companies identify
and address their supply chains' social, environmental, and economic impacts.
Adopting sustainable practices throughout the supply chain can benefit companies
in several ways, including cost savings, enhanced brand reputation, risk management,
increased innovation, and improved supplier relationships. However, it has its
challenges. Companies need to overcome issues such as lack of awareness and
commitment, the complexity of supply chains, regulatory and legal requirements,
and cost considerations to develop sustainable supply chains. Nevertheless,
companies can improve their social and environmental performance by developing
sustainable supply chains while still achieving their economic goals.
Implementing sustainable supply chain management practices requires a concerted
effort from all stakeholders in the supply chain, including suppliers, customers, and
employees. By adopting sustainable practices throughout their supply chains,
companies can create value for all stakeholders and contribute to a more sustainable
future.
References
Anilkumar, E. N. & Sridharan, R. (2019). Sustainable Supply Chain Management: A Literature Review
and Implications for Future Research. International Journal of System Dynamics Applications, 8(3),
15-52, https://doi.org/10.4018/IJSDA.2019070102
Balon, V. (2020). Green supply chain management: Pressures, practices, and performance - An
integrative literature review. Business Strategy and Development, 3(2), 226-244,
https://doi.org/10.1002/bsd2.91
Chalmeta, R., & Barqueros-Munoz, J. E. (2021). Using Big Data for Sustainability in Supply Chain
Management. Sustainability, 13(13), 7004, https://doi.org/10.3390/su13137004
Dubey, R., Altay, N., Gunasekaran, A., Blome, C., Papadopoulos, T. & Childe, S.J (2018). Supply chain
agility, adaptability and alignment: Empirical evidence from the Indian auto components
industry. International Journal of Operations & Production Management, 38(1), 129-148,
https://doi.org/10.1108/IJOPM-04-2016-0173
Jo, D., & Kwon, C. (2022). Structure of Green Supply Chain Management for Sustainability of Small
and Medium Enterprises. Sustainability, 14(1), 50, https://doi.org/10.3390/su14010050
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE.
Novitasari, M.; Agustia, D. (2021). Green Supply Chain Management and Firm Performance: The
Mediating Effect of Green Innovation. Journal of Industrial Engineering and Management, 14(2),
391-403, https://doi.org/10.3926/jiem.3384
Pagell, M., & Wu, Z. (2009). Building a more complete theory of sustainable supply chain management
using case studies of 10 exemplars. Journal of Supply Chain Management, 45(2), 37-56,
https://doi.org/10.1111/j.1745-493X.2009.03162.x
Prakash, S., Kumar, S., Soni, G., Jain, V., Dev, S., Chandra, C. (2022). Evaluating approaches using the
Grey-TOPSIS for sustainable supply chain collaboration under risk and uncertainty.
Benchmarking: An International Journal, (Early Access), https://doi.org/10.1108/BIJ-05-2022-0319
Sarkis, J., Zhu, Q., & Lai, K. H. (2011). An organizational theoretic review of green supply chain
management literature. International Journal of Production Economics, 130(1), 1-15,
https://doi.org/10.1016/j.ijpe.2010.11.010
Umweltbundesamt. (2017). Step-by-Step Guide to Sustainable Supply Chain Management – a Practical Guide for
Companies. Federal Ministry for the Environment, Nature Conservation, Building and Nuclear
Safety. Retrieved from: www.bmuv.de/fileadmin/Daten_BMU/Pools/Broschueren/nachhal
tige_lieferkette_en_bf.pdf
UNIVERSITY 5.0 FOR RESILIENCE
- A SYSTEMIC APPROACH
INEZA GAGNIDZE
Ivane Javakhishvili Tbilisi State University, Tbilisi, Georgia
ineza.gagnidze@tsu.ge
Abstract Within this study the author discusses Industry 4.0 and
Industry 5.0 concepts. The author tries to prove that the
achievement of resilience is given a special role. Achieving
resilience itself has many challenges and is highly dependent on
the effectiveness of the education system. The author notes that
the educational links should be established between HEIs of
developed and less developed countries. Resilience cannot be
achieved without international efforts. This means that the joint
initiative of several countries will not yield the desired results if
this action does not take on a global character. Due to this, the
technologies corresponding to Industry 5.0 will only give the
desired results to the world when the technologies from the
inventing countries are successfully introduced in the receiving
economies. According to the author, close ties between the
universities of the inventing and receiving countries ensure the
achievement of the desired results in the shortest possible time.
In this process, the author assigns a special role to the formation
of the University 5.0 model. At the end of the paper, the author
will schematically present systemic links between the inventing
and receiving countries' universities in order to achieve resilience.
DOI https://doi.org/10.18690/um.epf.3.2023.52
ISBN 978-961-286-736-2
Keywords:
Industry 4.0,
Industry 5.0,
resilience,
education,
system
JEL:
A19, A29, I25
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE.
472
1
Introduction
The Fourth Industrial Revolution conceptualizes rapid change to technology,
industries, and societal patterns and processes in the 21st century due to increasing
interconnectivity and smart automation. The discussion about Industrial Revolution
5.0 has recently started and has already becomes an active debate. Regarding this
term, Muller (2020) argues that several of the ideas of Industry 4.0 seem to be
revitalized under a new terminology. As is mentioned in the documents for the
European Commission, Industry 5.0 complements the existing Industry 4.0
paradigm by highlighting research and innovation as drivers for a transition to a
sustainable, human-centric and resilient European industry. Researchers predict that
Industry 5.0 will help the formation of Society 5.0. This kind of big transition will
require a number of policy actions in many areas, such as digitalization, education,
taxation, energy, industrial policy, etc.
To respond to the title of the study, the author discusses the main challenges for
building resilience, provides arguments for the role of education, and the possibility
of educational systemic links. The author has developed a new approach to connect
educational links from the new technology inventing countries to the receiving
economies, with the self-designed graphical image. The paper ends with a number
of brief conclusions.
2
Resilience – Brief Literature Review
In the Industry 4.0 paradigm, businesses have been forced to cope with increased
uncertainties and adapt to cope with change (Potočan et al., 2021; Gagnidze, 2022;
Sepashvili, 2020). That’s why Industry 5.0 bolsters resilience for companies looking
to balance man and machine.
Resilience is discussed in the scientific literature firstly as one of the main directions
of economic development in the future and secondly, as the challenges of individual
companies to achieve resilience. Traditionally ‘resilience’ meant cutting costs and
preserving capital. According to the World Economic Forum and McKinsey &
Company (2022) for the economy, resilience should be seen as the ability to deal
with adversity, withstand shocks, and continuously adapt and accelerate as
disruptions and crises arise over time. Grant et al. (2022) discuss the geopolitical
risks at the level of companies.
I. Gagnidze: University 5.0 for Resilience - A Systemic Approach)
473.
As a response to the challenges of Industry 5.0, ‘the Recovery and Resilience Facility
(RRF) has become the cornerstone of the European Union’s future-oriented
strategy, as national Recovery and Resilience Plans set the investment and reform
agenda to boost an inclusive and sustainable growth for the coming years’ (EURLex, 2022, 30). The RRF will advance large-scale investments and reforms in
education that have the potential to make an impact in the medium to long-term.
The literary analysis on resilience shows that in order to effectively overcome the
challenges, it is necessary to find such links that contribute to the achievement of
resilience at the level of the economy, individual industries, and organizations. The
author considers the education system in general and the modern model of
universities to be one of these tools.
3
Methodology
During research on this topic, the author reviewed the relevant literature and studied
documents, reports, surveys, and reviews from the European Commission and other
international organizations and established research centers. In addition, synthesis
and analogy, as well as descriptive and correlative methods were employed. In this
case, under the term ‘university’, the author theoretically allowed a combination of
scientific research, and higher and professional education, with effective dialogue
with public authorities and business at local and international levels. Accordingly,
they are a kind of connecting bridge in the implementation of goals set at the macroand micro-levels of the economy to build resilience. Such an effective space to
overcome resilience challenges can only be achieved in the University 5.0 model.
This theoretical assumption is due to several reasons:
1. It is clear that all levels of science and general education must contribute
their roles to the challenges of Industry 5.0, however, a detailed analysis of
the issue is impossible since the format of this study is limited;
2. The paper will focus on the concept of University 5.0;
3. The descriptive model of the systemic approach describes the process in
general, and considering the additional details, would have complicated it.
The author has developed a new approach to connect educational links from the
new technology inventing countries to the receiving economies, with the selfdesigned graphical image.
474
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE.
With these foundations, this study aims to answer the following research question –
Can University 5.0 play a systemic role in the process for building resilience?
4
Why Universities for Resilience?
Why University 5.0? ‘University 5.0 is an integrated news, information, research, and
consulting resource that explores the ways in which online education is
fundamentally changing higher education. Its mission is to contribute to the national
and international conversation about the pros and cons of online education in higher
education, and to consult with relevant stakeholders in their efforts to effectively
respond to the changing environment in higher education’ (Alperstein & King,
2020).
This definition shows that the possibilities of the University and their sphere of
influence are expanding significantly. Therefore, for the three reasons mentioned
above in this study, it was assumed that the term ‘education’ is equated with the
University 5.0 model. Accordingly, by education we mean all the processes that take
place in the University 5.0 model.
It is important to note that the transition to the University 5.0 model will not be an
easy process in many countries, because the formation of even the University 4.0
model in most countries is associated with great challenges. These problems are
indicated by: Audretsch (2014), Etzkowitz and Zhou (2008), Dominici and
Gagnidze (2021), Kharadze et al. (2021), Seturidze and Topuria (2020), Sobolieva
and Harashchenco (2020), and Vesperi and Gagnidze (2021a). There are many
studies that discuss the problems related to the change of the university model of
individual countries, including: Sperrer et al. (2016), Vesperi and Gagnidze (2021b),
Lekashvili (2019), Papachashvili et al. (2021), Gogorishvili & Zarandia (2021), and
Kharaishvili et al. (2022).
Acquaintance with these works will convince the reader that a great effort in the
direction of education will be necessary to achieve the goals of Industry 5.0.
I. Gagnidze: University 5.0 for Resilience - A Systemic Approach)
5
475.
A Systemic Approach
Resilience cannot be achieved without international efforts. This means that the joint
initiative of several countries will not yield the desired results if this action does not
take on a global character. Due to this, the technologies corresponding to Industry
5.0 will only give the desired results to the world when the technologies from the
inventing countries are successfully introduced in the receiving economies. That is
why it is important for building resilience to form systemic links between countries.
The main reason for presenting the systemic approach to the reader in the presented
study is the properties of the system. One of them is the synergy effect. The interest
of many actors participating in the system strengthens their own efforts, helping to
create a solid network. By utilizing synergy and consistency, resilience can be
achieved relatively easily. This is especially noticeable as a result of the establishment
of effective international links of education and science (Gagnidze, 2018). This was
the main reason to develop a systemic approach in the paper.
From Figure 1, which shows systemic links between inventing and implementing
countries’ universities, it can be seen that in the process of building resilience,
international effort is very important. Accordingly, in the author’s opinion, the
attention should be focused on several aspects, namely:
−
−
Inventing countries need to introduce and operate new technology
themselves as well. Because of this, they also need to train people with
scientific, higher, and professional education. The developed and less
developed countries have the same goals in implementing technology. In
this regard, systemic educational links should be implemented at least at
three levels: scientific research, higher, and professional education.
Accordingly, it is necessary for universities involved in the system to switch
to the 5.0 model and harmonize educational programs. This process should
start in the early stages of implementing a resilience plan. The potential of
universities should be selected carefully;
The effectiveness of the international educational system is determined by
the strong connection and feedback between all participating universities.
The accumulation and exchange of experience plays a critical role in
minimizing errors and quickly achieving the desired goal;
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE.
476
−
It is necessary simultaneously to start the activities in several countries to
build the system. This should be planned well in advance, since any mistakes
made will lead to a lot of time and money wasted.
University 5.0
from
inventing and
implementing
developed
country
(countries)
University 5.0 from developed
implementing countries from the
same continent(s)
University 5.0 from developed
implementing countries from the
other continent(s)
University 5.0 from
less developed implementing
countries from the same
continent(s)
University 5.0 from
less developed implementing
countries from the other
continent(s)
Figure 1: Systemic educational links between inventing and implementing countries’
universities
Source: Author's eleboration.
Thus, by establishing international educational links and considering the abovementioned emphases, the challenges for building resilience will be relatively easy to
overcome. Based on all the above-mentioned issues, it can be concluded that the
answer to RQ is positive, and University 5.0 can play a systemic role in the process
for building resilience.
6
Disscusion and Conclusion
The paper concentrates on Industry 4.0 and Industry 5.0 concepts. The author
discusses the challenges of resilience. Building of resilience is one of the three
directions of Industry 5.0. Its provision is connected with a number of difficulties.
For building resilience, the author places great importance on education. To simplify
the systemic model, the main actors are the universities of the participating
countries. In the author’s opinion, it is necessary to establish the University 5.0
model in all participating countries. The possibilities and sphere of influence of such
I. Gagnidze: University 5.0 for Resilience - A Systemic Approach)
477.
Universities are very large. By combining them in the system, an effective network
will be created. With a properly written plan, they can effectively promote and
accelerate the building of resilience processes. The author also notes that the
formation of such a university model will be associated with many difficulties.
The opinions given in the paper allow that the answer to the Research Question is
positive. Given the scope of this paper, which represents limited desk research, it
proves difficult to analyze the multifaceted picture of all levels of the educational
system. In this regard, the Author made a theoretical assumption, according to which
education is understood as such a university (University 5.0) where research, study,
commercialization, and a high level of digitalization are in the same space. It should
be noted that the commitment of the entire society is necessary to reach resilience,
and therefore, all levels of education must contribute to it. Focusing attention on
these and other challenges of resilience will be further developed in our future
studies.
References
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Audretsch, D. B. (2013). From the entrepreneurial university to the university for the entrepreneurial
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Dominici, G., & Gagnidze, I. (2021). Effectiveness of Entrepreneurial Universities: Experiences and
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PARLIAMENT AND THE COUNCIL. Review report on the implementation of the Recovery and
Resilience
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https://eur-lex.europa.eu/legalcontent/EN/TXT/?uri=CELEX:52022DC0383.
European Commission, Directorate-General for Research and Innovation, Müller, J. (2020). Enabling
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Gogorishvili, I., & Zarandia, E. (2021). Expansion of Capacity Development of Local SelfGovernment in Georgia. Estonian Discussions on Economic Policy, 29(1-2), 100-121.
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Grant, A., Haider, Z., & Mieszala, J. C. (2022, September 8). How to build geopolitical resilience amid a
fragmenting global order. Mckinsey.com. https://www.mckinsey.com/capabilities/risk-andresilience/our-insights/how-to-build-geopolitical-resilience-amid-a-fragmenting-global-order.
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strategies to manage teacher intellectual work productivity in distance learning. Journal of Eastern
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https://doi.org/10.15549/jeecar.v8i4.840.
Kharaishvili, E., Natsvlishvili, I., & Shonia, N. (2022). Challenges of Distance Assessment in Higher
Education and the Impact of Academic Achievement on Alumni Employment (Evidence from
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https://doi.org/10.21125/edulearn.2022.0395.
Papachashvili, N., Mikaberidze, T., Tavartkiladze, M., & Roblek, V. (2021). Progress in Education, 68 (R.
V.
Nata,
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advancement and social problems. Kybernetes, 50(3), 794-811. https://doi.org/10.1108/K-122019-0858.
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businesses in a time of COVID-19. Kybernetes, 50(5), 1661-1678. https://doi.org/10.1108/K08-2020-0518.
Sepashvili, E. (2020). Supporting digitalization: Key goal for national competitiveness in digital global
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Sobolieva, T., & Harashchenko, N. (2020). Intellectual property indicators and renewable energy
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https://doi.org/10.33223/epj/127911.
Sperrer, M., Muller, C., & Soos, J. (2016). The concept of the entrepreneurial university applied to
universities of technology in Austria: Already reality or a vision of the future?. Technology
Innovation Management Review, 6(10), 37–44. https://doi.org/10.22215/timreview/1026.
Vesperi, W., & Gagnidze, I. (2021a). Progress in Education, 68 (R. V. Nata, Ed.), (1st ed., 143-169), Nova
Science Publishers, Inc. https://doi.org/10.52305/WPPN2619.
Vesperi, W., & Gagnidze, I. (2021b). Rethinking the university system: Toward the entrepreneurial
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World Economic Forum in collaboration with McKinsey & Company, Resilience for sustainable,
inclusive growth. White Paper. (2022), June 2022,
https://www.weforum.org/whitepapers/resilience-for-sustainable-inclusivegrowth/?DAG=3&gclid=EAIaIQobChMI6qmtueD_QIVyuN3Ch3PaAeNEAAYASAAEgJqRvD_BwE
DEFINING THE IMPACT OF NONFINANCIAL REPORTING ON THE
PROCESS, INSTRUMENTAL AND
INSTITUTIONAL DIMENSIONS OF
CORPORATE GOVERNANCE
MATIC ČUFAR, ANDREJA PRIMEC, JERNEJ BELAK
University of Maribor, Faculty of Economics and Business, Maribor, Slovenia
matic.cufar@student.um.si, andreja.primec@um.si, jernej.belak@um.si
Abstract With the adoption of the Non-Financial Reporting
Directive (NFRD) and the Corporate Sustainability Reporting
Directive (CSRD), selected companies have to include and
publish non-financial information in the course of their annual
business reports (such as environmental and social matters etc.).
This paper aims to determine the methodology and develop a
research model to evaluate the impact of non-financial reporting
requirements on the selected companies' process, as well as
instrumental and institutional dimensions of corporate
governance. Research methodology and research model will be
defined in application with the MER model of integral
management and governance (MER model). In connection with
the MER model, this paper aims to contribute to the theoretical
body of literature by developing a new research model using
NFRD, CSRD, and EFRAG requirements to measure how nonfinancial reporting impacts process, instrumental and
institutional dimensions of corporate governance. This paper
also sought to illustrate the value and expected results of the
future study when the research model is used in an empirical
survey. A company must meet non-financial reporting
requirements through all three dimensions of governance
(process, instrumental, and institutional) to contribute to the
company's long-term success, the well-being of society, and the
achievement of sustainable development goals.
DOI https://doi.org/10.18690/um.epf.3.2023.53
ISBN 978-961-286-736-2
Keywords:
non-financial
reporting,
integral
management,
sustainability,
corporate
governance,
MER model of
integral
management and
governance
JEL:
M14, Q01, Q56
480
1
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Introduction
Due to several financial crises, environmental accidents, and employment matters
recently, stakeholders and investors have raised concerns regarding corporate
governance and corporate reporting. Especially in the last decade, corporate reporting
has extended beyond traditional financial reporting including the reporting of nonfinancial information. In the first stage, this information was mainly reported voluntarily,
mostly prepared based on guidelines delivered by different standards setters and
organizations (such as GRI and IFRC). The content of this information included mainly
the management and disclosure of risks and related policies. Over time, they have
evolved to information concerning environment and social sustainability, business
model, corporate governance, etc. (Cinquini & De Luca, 2022). With the adoption of
Directive 2014/95/EU (hereinafter: NFRD), certain companies (entities of public
interest with more than 500 employees) were obliged to report non-financial information
as part of their year-end reporting. All countries of the EU adopted the NFRD, and
selected companies had to report the first non-financial information for 2017. Due to
several shortcomings of the NFRD, mainly related to comparability issues and auditing,
the EU adopted the Sustainability Reporting Directive (hereinafter: CSRD). The CSRD
introduced a more detailed reporting requirement, EU sustainability reporting standards
(issued by the European Financial Reporting Advisory Group (EFRAG)) and extended
the scope of companies obligated to report the information. In addition to the NFRD
and the CSRD, the EU has adopted other legislation, such as the Directive on corporate
sustainability due diligence (CSDDDD) and Taxonomy regulation. However, even
though the EU has taken regulatory actions to increase sustainable corporate
governance, the question remains whether the company's reported sustainability
information is integrated into its governance structures. To prove this question, we focus
on the determination of methodology and development of a research model in this paper
to evaluate the relationship between non-financial information disclosure and corporate
governance structure.
2
Literature Review
Corporate social responsibility was introduced in early 1950 with the book "Social
Responsibilities of Businessman". In the book, H. Bowen addressed how much social
responsibility can be rightly expected from a businessman by the public (Bohinc, 2016).
Over the following years, the term has evolved into ever greater dimensions (Benn et al.,
M. Čufar, A. Primec, J. Belak: Defining the Impact of Non-financial Reporting on the
Process, Instrumental and Institutional Dimensions of Corporate Governance
481.
2016; Carroll, 1979). By introducing new terms, various authors have emphasized that
social obligation has become too broad to promote effective CSR management (Bohinc,
2016; Maignan & Ferrell, 2004). Based on content analysis of 37 definitions of SRD,
Dahlsrud (2008) defined CSR as a specter of five dimensions: environmental, social,
economic, stakeholder, and voluntariness dimensions. At the end of the 20th century, an
international standard of social responsibility, ISO standard 26000, was introduced,
showing the development and extended meaning of CSR in previous years (Primec &
Belak, 2022). In this dynamic context, previous research has shown that non-financial
reporting has been applied worldwide in the past decade. However, to achieve
comparability of non-financial information, it was evident that there was a growing need
for convergence among different non-financial reporting frameworks (Cinquini & De
Luca, 2022).
In the EU, the concept of CSR was first implemented voluntarily with the aim that
companies would integrate social and environmental matters into their governance by
themselves. The financial crisis and the collapse of organizations showed that the
voluntary concept of reporting was ineffective and that most companies did not provide
a comprehensive overview of the risk they faced. Growing pressure was experienced
from investors and standard-setting bodies toward the adoption of sustainable corporate
governance (Dobija et al., 2023). Thus, the EU has introduced the NFRD, which made
it compulsory for certain large undertakings and groups to report and manage their nonfinancial risks and opportunities. The NFRD consists of two parts. The first part
presents the diversity policy. It represents the company's management or supervisory
bodies regarding gender, age, or education. It includes the indication of the objectives,
manner of implementation, and the results achieved by the diversity policy during the
reporting period (Belak & Primec, 2020). Based on previous studies, diversity policy
shapes the company's decision-making process and provides an essential driver of
sustainable development (Dobija et al., 2023). The second part presents the non-financial
statement. Companies shall prepare a non-financial report that includes at least
environmental and social matters, employee-related issues, respect for human rights, and
anti-corruption and bribery. Companies shall report policies, outcomes, and risks
(Primec & Belak, 2017). In 2020, the European Commission published a document in
which they emphasized that the NFRD has led the companies to change their strategies
into a different, more social form of governance by including non-financial risks they
encounter in their operations.
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
482
However, based on multiple studies, it was emphasized that the NFRD falls short in
providing harmonized reporting due to integrated reporting and assurance and to excess
possibilities for the company to diverge from reporting requirements (Parguel et al.,
2011; Primec & Belak, 2022; Reddy, 2019). To resolve the identified shortcomings, the
EU adopted the CSRD. The CSRD supersedes and complements the NFRD.
Compared to the NFRD, the CSRD increases the number of companies that will be
obliged to report the scope of the requirements and assurance. Companies will be
obliged to report under the CSRD from the year 2025 on (the financial year 2024). To
assure that the NFRD and the CSRD will meet the objectives set by the EU, it is,
therefore, of high importance that sustainable governance is implemented in the whole
structure of the company and its environment. The MER model on integral
management and governance (hereinafter: MER model) is based on the multidimensional integration of control with the company and its environment considering
the primary purposes of surviving and developing (Belak & Duh, 2012). The structure
of the MER model is visible in Figure 1 and includes (Belak & Duh, 2012):
−
−
−
integral management dimensions and special management which include
process dimension, institutional dimension, and instrumental dimension,
enterprise which includes the life cycle, developmental and growth cycle of an
enterprise, objective, time and space dimensions, and its environment, which
provides for economic environment, technological environment, sociopolitical
and other social environments, natural environment, and cultural environment,
key success factors of an enterprise which include credibility, ethics, ecology,
efficiency, entrepreneurship, competitiveness, synergy, compatibility, culture,
and philosophy.
The MER model defines that process, institutional, and instrumental dimensions have
to be integrated into one holistic and complex cooperation process. All three integral
management dimensions must be implemented at three levels of an enterprise: policy of
the enterprise, strategic management, and tactical/operational management (Belak &
Duh, 2012).
M. Čufar, A. Primec, J. Belak: Defining the Impact of Non-financial Reporting on the
Process, Instrumental and Institutional Dimensions of Corporate Governance
483.
Figure 1: The MER model of integral management and governance
Source: Belak and Duh (2012).
3
Methodology
A research model for investigating the NFRD and the CSRD impact on the process,
instrumental, and institutional dimensions of corporate governance was defined in
application with the MER model of integral management and governance. Based on the
prepared research model, it is investigated whether the NFRD and the CSRD provisions
impact process, instrumental, and institutional dimensions in all three hierarchical levels
(policy of an enterprise, strategic management, tactical and operational management) of
a company. To this aim, seven categories were developed in the research model for the
following groups of information:
−
−
C1: companies' mission, purposes, and primary goals on the policy level,
C2: corporate, general, and business strategies on the strategic management
level,
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
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484
−
−
−
−
−
C3: implementation of policy and design strategies on the tactical and
operational management levels,
C4: description of the planning, organizing, directing, and controlling,
C5: an overview of preparatory information activities, decision-making, and
measures undertaken as process functions,
C6: an overview of values, business and management guiding principles,
styles, techniques, and management methods,
C7: an overview of corporate governance institutions.
The first group (C1) of the information includes the companies’ mission, purposes, and
primary goals on the political level. Based on the research model prepared, it is
investigated whether the company reported any sustainable-oriented mission, purpose,
and basic goals (such as managing non-financial risk) in their annual reports. Further, it
is explored in the second (C2) and third (C3) groups whether a sustainably oriented
mission, purposes, and basic goals are also described as the basis of companies’ strategies
(corporate, general, and business) and how the implementation of the strategy on the
tactical and operational management levels of the company is planned or was already
executed. The fourth (C4) and fifth (C5) groups of the research model include the
essential functions of planning, organizing, directing, and controlling, as well as the
process functions of an overview of preparatory information activities, decision-making,
and measured undertaking. Based on the research model, each essential and process
operation will be investigated on policy, strategic management, and tactical/operational
levels. In particular, it will be evaluated whether the company included basic and process
functions in any of the above-mentioned hierarchical levels (policy level, strategic
management level, and tactical/operational management level) when reporting nonfinancial information. The sixth group (C6) includes an overview of values, business and
management guiding principles, styles, techniques, and management methods which the
company reported in their annual reports to non-financial disclosure. Based on the
research model, it will be investigated whether the company reported any styles,
techniques, tools, instrumentation, and methods (such as policy, codes, semiconsolidated plans, guidelines, rules of procedure, etc.) concerning the management of
risk and sustainability matters requested by the NFRD and the CSRD. The seventh
group (C7) contains a description of corporate governance institutions. Based on the
research model, it will be investigated whether the company described/reported any
M. Čufar, A. Primec, J. Belak: Defining the Impact of Non-financial Reporting on the
Process, Instrumental and Institutional Dimensions of Corporate Governance
485.
governance institutions (such as committees for sustainable risks) and their functions to
govern and manage sustainability matters requested by the NFRD and the CSRD.
The most suitable companies for the research are those that are committed to
sustainability reporting following the NFRD and the CSRD. Hence the research model
will be most applicable in the period from 2018 onwards (covering the financial year
2017) when companies had to start reporting under the NFRD. The empirical research
will be conducted in two phases. In the first phase, the research model will be used to
assess non-financial information published by selected companies in their annual or
sustainability reports. Multiple case studies will be used since they enable the researcher
to focus on specific examples or phenomena. Such a methodology aims to research and
understand the real and reciprocal functioning of variables or events (Primec & Belak,
2022; Yin, 2016). Based on the information received from the annual and sustainability
reports, sustainability reporting categories will be shaped and assessed. Each category of
information will be assessed in two timeslots. In both timeslots, it will be evaluated
whether the company reports the information requested per each of the above categories
and whether the reported information complies with the NFRD and the CSRD. When
the results for each time slot are prepared, a comparison analysis will be processed as
part of the second phase of the empirical research. The comparison analysis will be made
between the data reported in the first timeslot and the data reported in the second
timeslot. The quality of information gathered from the results will indicate whether the
quality of the information reported has improved. The quality of information disclosed
shall be assessed based on content analysis. Content analysis grants replicable and valid
inferences from the text and was used for sustainability reporting analysis in the past
(Nicolo et al., 2020). Based on information gathered from the reporting and the usage
of the research model, it will be examined whether the company complies with and
reports the information stated in the categories described above.
Based on the research model prepared, we expect to answer the following designed
research questions whether and how the NFRD and the CSRD legislation, in line with
the MER model of integral management and governance, influence:
−
the content of the vision, mission, purposes, and basic goals (within the process
dimension); the core strategies, business strategies, and overall strategies (in the
context of the process dimension); the tactical and operational level of the
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
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486
−
−
4
implementation of policies and procedures (within the process dimension) of
selected companies.
the values and management principles and the application of styles, techniques,
tools, instruments, and methods (in the context of the instrumental dimension)
at the corporate policy level, strategic management level, and operational and
tactical management level of the selected companies.
the governance institutions (in the context of the institutional dimension) of the
selected companies; the corporate governance institutions (in the context of the
institutional dimension) of the chosen companies; the middle and lower
management institutions (in the context of the institutional dimension) of the
selected companies.
Results
With the development of methodology and implementation of the research model in
practice, we expect to identify whether regulatory actions, such as the NFRD and the
CSRD, influence corporate governance. In particular, the results will indicate how the
provisions of the NFRD and the CSRD affect the corporate governance of companies
in practice. The results will also show whether sustainability reporting has improved
since the implementation of the NFRD and whether the adoption of the CSRD had any
impact on companies' sustainability reporting in practice. We also expect that the results
analyzed by the research model will indicate whether the implementation of the NFRD
and the CSRD influenced the quality of corporate governance. The research model will
enable the comparison of different non-financial reporting practices and their influence
on sustainable corporate governance.
5
Discussion and Conclusion
In this paper, we briefly define a methodology and research model which can be used to
determine and investigate the connection between non-financial reporting and corporate
governance. To achieve the company's and its stakeholders' long-term success,
sustainability and corporate social responsibility must be implemented in a company's
corporate governance structure. This research model can provide valuable insights into
companies' reporting in practice. Due to upcoming legislation changes, the research
model also brings further insight into how legislation affects/changes non-financial
reporting and sustainable corporate governance. To improve the results obtained from
M. Čufar, A. Primec, J. Belak: Defining the Impact of Non-financial Reporting on the
Process, Instrumental and Institutional Dimensions of Corporate Governance
487.
the research, interviews may be conducted with the companies selected for the study as
a second method to gather additional insights.
References
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Benn, S., Abratt, R., & O'Leary, B. (2016). Defining and identifying stakeholders: Views from management
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https://hdl.handle.net/10520/EJC190102
Bohinc, R. (2016). Družbena odgovornost. Fakulteta za družbene vede, Založba FDV. ISBN: ISBN 978-961235-814-3
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Cinquini, L., & De Luca, F. (2022). Non-financial Disclosure and Integrated Reporting. Springer International
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Dahlsrud, A. (2008). How Corporate Social Responsibility Is Defined: An Analysis of 37
Definitions. Corp. Soc. Responsib. Environ. Manag,, 15(1), 1–13.
Dobija, D., Arena, C., Kozłowski, Ł., Krasodomska, J., & Godawska, J. (2023). Towards sustainable
development: The role of directors' international orientation and their diversity for non‐financial
disclosure. Corporate Social Responsibility and Environmental Management, 30(1), 66-90.
https://doi.org/10.1002/csr.2339
Maignan, I., & Ferrell, O. C. (2004). Corporate social responsibility and marketing: An integrative
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Nicolo, G., Zanellato, G., & Tiron-Tudor, A. (2020). Integrated reporting and European state-owned
enterprises: A disclosure analysis pre and post 2014/95/EU. Sustainability, 12(5), 1908.
https://doi.org/10.3390/su12051908
Parguel, B., Benoît-Moreau, F., & Larceneux, F. (2011). How sustainability ratings might deter 'greenwashing':
A closer look at ethical corporate communication. Journal of business ethics, 102, 15-28. DOI:
10.1007/s10551-011-0901-2
Primec, A., & Belak, J. (2017, April). Corporate Governance and Management: An Institutional and Formal
Approach Towards Socially Responsible Corporate Governance. In International OFEL Conference on
Governance, Management and Entrepreneurship (p. 154). Centar za istrazivanje i razvoj upravljanja doo.
DOI:10.30924/mjcmi/2018.23.1.203
Primec, A., & Belak, J. (2022). Sustainable CSR: Legal and Managerial Demands of the New EU Legislation
(CSRD) for the Future Corporate Governance Practices. Sustainability, 14(24), 16648.
https://doi.org/10.3390/su142416648
Reddy, B. V. (2019). Thinking Outside the Box–Eliminating the Perniciousness of Box‐Ticking in the New
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Yin, R. K. Qualitative Research from Start to Finish; Routledge: London, UK, 2016. ISBN 9781462517978
488
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BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
THE USE OF BIOFUELS AS
AN EXAMPLE SOLUTION TO
ENERGY SECURITY
CHALLENGES IN POLAND
IRENEUSZ TEODOR DZIUBEK,1 TATIANA MANASTERSKA2
Calisia University, The Centre for Implementation Research, Kalisz, Poland
i.dziubek@akademiakaliska.edu.pl
2 Calisia University, Kalisz, Poland
t.manasterska@akademia.kalisz.pl
1
Abstract The aim of this article is to critically analyse the
problem of expected changes in the field of energy security. The
events of the war in Ukraine have brought the issue of energy
security management to new levels of business, political and
economic considerations. Energy security is most often
understood as such a state of the economy that ensures that
consumers' demand for fuel and energy is met - economically,
technically and socially. Separate studies indicate that the supply
of the energy system should be flexible and diverse. Any negative
impact of the energy sector must be short-lived, minor and
quickly minimized. The ongoing analysis and inference carried
out by the authors of this article showed that the EU's intentions
and projects, including in Poland, can be disrupted by the fact
that each country develops its economy and manages energy in
its own way. It was shown that biofuels will be an important
element in ensuring Poland's future energy security. On such a
basis of research conclusions, a practical implication was derived
that, given the assumed costs of the energy transition and the
requirements of the "Green Deal," preparatory activities should
begin in the country now.
DOI https://doi.org/10.18690/um.epf.3.2023.54
ISBN 978-961-286-736-2
Keywords:
energy security,
energy security
management,
renewable energy
resources,
biofuels,
Poland
JEL:
H50, O13, O31
490
1
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Introduction
Contemporary state economy is not an isolated entity - it is largely dependent on
international relations and a network of mutual relations. In this area, the energy
stability of the state is one of the most important issues related to its national
security. Therefore, the energy market is regulated by governments and is under their
strict control (Yering, 2006; Młynarski, 2011; Trubalska, 2015). Since the dawn of
time, the security of energy supply has depended on many factors. Sample
statements related to the functioning of the Organization of the Petroleum
Exporting Countries (OPEC) and the oil crisis revealed in the 1970s made it clear
that energy should be supplied from many sources. It was recognized that any
negative impact of the energy sector must be short-lived and quickly minimized.
This is the security aspect that must be maintained not only in a given macro-region,
but also in each country and its economy (OPEC, 2023).
The war in Ukraine brought the issue of energy security management to new levels
of business, political and economic considerations. It highlighted, above all, the need
to become independent of Russian fossil fuels through the use of renewable energy
sources. On such grounds Ursula Von der Leyen at the World Economic Forum,
Davos 2023 announced "the beginning of a revolution in energy security." The
meeting was held under the theme "Cooperation in a Divided World," and the basis
for deliberations was the "Global Risk Report" (World Economic Forum, 2023). In
her speech, the European Commission President noted that the European Union
(EU) is approaching a geopolitical shock and an energy crisis, and "the next decade
will bring the greatest industrial transformation of our time." She stressed that EU
countries were the first in the world to launch the "European Green Deal," which
has brought innovative investments in clean technologies in all sectors of the green
transition. She made it clear that EU countries must take better care of their own
clean technology industries.
The Green Deal industrial plan will thus have four pillars: regulatory environment,
financing, skills and trade. The first pillar is about speed and access - the regulatory
environment allows for the rapid scaling of operations and the creation of favourable
conditions for sectors that are key to achieving the goal. These include wind, heat
pumps, solar, clean hydrogen and energy storage. The second pillar deals with
increasing financing for energy transition projects and public assistance. The third
I. Teodor Dziubek, T. Manasterska: The Use of Biofuels as an Example Solution to Energy
Security Challenges in Poland
491.
pillar of the Green Deal plan is about developing the skills to achieve this
transformation. The fourth pillar will address facilitating open and fair trade for the
essential supply chain (World Economic Forum, 2023). In light of the above, the
attention of all EU member states, including Poland, should shift from primary
energy carriers (oil, gas, coal) to renewable ones. One such energy source should be
biofuels.
2
Theoretical Background
Energy security is a multifaceted and very dynamic concept. This causes numerous
difficulties in defining it. A uniform and common concept of energy security has not
been developed so far. In the simplest terms, energy security is the possibility to
access energy resources at any time, at an affordable price and guarantee of raw
materials supply (Yering, 2006; Trubalska, 2015). The essence of energy security has
also been defined by the United Nations as "the availability of energy at any time, in
various forms, in sufficient quantities and at a reasonable price" (World Energy
Assessment 2000; Elżanowski, 2008). In the Polish legal system, energy security has
been defined in the Energy Law Act and is understood as the state of the economy
that makes it possible to cover the current and prospective demand of consumers
for fuels and energy in a technically and economically justified manner, while
maintaining the requirements of environmental protection (Act, 10.04. 1997). In
theoretical terms, energy security has two dimensions (Młynarski, 2011): "internal"
(balancing demand and supply, taking into consideration the environment,
consumers, as well as political and economic requirements) and "external" (filling
the gap resulting from the difference between production and domestic needs).
3
Methodology
The purpose of the study was to identify the state and determine the direction of the
expected changes in the area of energy security with particular emphasis on Poland.
The available literature on the subject and data were used to determine the current
state and dynamics of change in the energy sector. On this basis, the thesis was put
forward that the production, generation and use of biomass can become an
important element of improving energy policy both in the country and in the EU.
Methodologically: an analysis and synthesis was applied for the theoretical
background, normative material and new practices on the subject of challenges and
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threats to energy security. Including with the use of biofuels. Data on EU intentions
and projects were obtained from official international sources. This allowed further
operations of abstraction, comparison and generalization. The final conclusion was
a summary of own research. In this part, the officially established position of Poland
on the directions of energy changes without slowing down the country's economy
was used.
4
Results
At the core of its functioning, the Polish energy sector is largely based on hard coal
and lignite (Poland, 2022). On one hand, this results in relatively stable electricity
production. On the other hand, it means high levels of greenhouse gas emissions,
including carbon dioxide, methane, nitrous oxide, fluorocarbons, perfluorocarbons
and sulphur hexafluoride, into the atmosphere (Pioch, 2013).
In view of the EU requirements, since 2008, the country has been fulfilling the
obligations of the "climate and energy package" (Strateg, 2023). Under this legislative
basis, the signatories were obliged to carry out a thorough reform of the energy law,
adopt the so-called emission obligations, and increase the share of energy from
renewable sources in the entire production balance (Directive, 2003/87).
Failure to meet the requirements of the package may result in shutting down
domestic power plants or extremely high financial penalties. The task of the Polish
government should therefore be to strive for the intensification of scientific and
research works and to create facilities for the development of unconventional energy
sources, including solar, wind, hydro, geothermal, and biomass energy. Their use can
bring measurable benefits in the field of environmental protection and reduce energy
costs (Strateg, 2023). A separate problem in Poland is the poor technical condition
of power plants. According to the preliminary assessment of specialists, more than
60% of domestic production capacity is technologically obsolete, decapitalized and
ineffective. In addition, the lack of real capacity reserves in the "National Power
System” poses a threat to the security and stability of energy supplies. Another major
challenge is the necessity of constant transposition of the EU energy law into the
Polish legal order (Sokołowski, 2002). This process is complicated not by problems
with timely fulfilment of the implementation obligation or lack of social acceptance
I. Teodor Dziubek, T. Manasterska: The Use of Biofuels as an Example Solution to Energy
Security Challenges in Poland
493.
for the harmonization of the law, but also due to the shortage of financial and human
resources.
An equally important threat is the small territorial range and the high degree of wear
of the transmission and distribution networks. The former is used to transfer
electricity from the power plant to the grid, while the latter to supply it to consumers.
The vast majority of them were built in Poland in the 1970s, and the constant passage
of time reduces their technical condition. Their expansion and modernization are
necessary, because due to the prevalence of weather anomalies, it is becoming more
and more difficult to guarantee supply continuity.
A similar situation applies to natural gas and crude oil distribution networks, whose
technical condition remains at the level of technology used at the turn of the 1960s
and 1970s and requires urgent modernization. This results in a multitude of
complications during the necessary renovations, maintenance, or construction of
new infrastructure such as the need to pay high compensation benefits, obtain
administrative decisions or carry out works based on much more capital-intensive
technologies. An additional threat to the energy security of both individual citizens
and the entire country appears in the absence of the owner's consent to enter the
property during activities aimed at minimizing or eliminating emergency states. All
this, also despite pressure from the EU, has not changed for years (Bartnik, 2014).
The most basic classification of biocomponents divides them into alcohols and
esters. Among alcohols, ethanol deserves special mention. Others, such as methanol
and butanol, are rarely used. Ethanol is an alternative fuel for low-pressure (gasoline)
engines and can be used as a pure fuel (E100 = bioethanol) or as an additive to
traditional unleaded gasoline in various proportions. Ethyl and methyl esters can be
used as a substitute (B100 = biodiesel) or as an additive to diesel fuel, also in various
proportions. Since biodiesel is an alternative fuel to diesel, that is, a diesel fuel, its
production and consumption in Poland is by far the largest of all biofuels, due to
the popularity of diesel vehicles (KN ORLEN, 2023).
Esters are used in public transportation, freight transport and agriculture. They take
the form of an additive as well as a stand-alone fuel. In several Western European
countries (Austria, France, Germany) and in Scandinavian countries, esters have
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been a well-accepted solution for years. In Poland, the development of this fuel
source became more pronounced only in early 2008 (Borychowski, 2012).
Meanwhile, the biofuels sector is occupying an increasingly important place in the
energy policy of the European Union and individual member states. This is
influenced by a number of factors, the most important of which are the availability
and prices of raw materials for the production of biocomponents, crude oil prices
and policies to support the supply and demand side. The importance of the
biocomponent sector is emphasized primarily for ecological (environmental
protection), economic (increases and strong fluctuations in oil prices), social
(creation of additional demand for agricultural raw materials, which positively affects
the development of agriculture and rural areas) and energy security reasons
(Sobierajska, 2009).
Absolutely, therefore, the production and use of biofuels is the branch of the
economy that should develop rapidly. The general benefits of their use include: their
natural origin and renewable nature; the possibility of reducing oil imports and
increasing energy independence; independence from oil price fluctuations and
uncertainty about oil availability; activation of the countryside and rural areas
through increased demand for agricultural products, and thus additional income for
farmers; creation of new jobs at all stages of production and sale of biofuels and
biocomponents; possibility to use surplus agricultural raw materials; reduction of
emissions of carbon dioxide, aromatic hydrocarbons, nitrogen and sulfur oxides,
phosphorus compounds, soot and solids (copper, iron) (Blażejewska, 2011).
On the other hand, domestic opponents of the use of biofuels emphasize their
disadvantages: an increase in biofuel production forces the allocation of new land
(including valuable and biodiverse land) for biomass production; monoculture of
crops for energy purposes can lead to soil depletion and reduced resistance of plants
to pests and diseases; a possible increase in the price of food produced from raw
materials for energy purposes due to the competitiveness of the directions of raw
material use (food production vs. biocomponent production); in the cultivation of
raw materials, fuel is used for agrotechnical procedures and energy is used for the
production of inputs (e.g. fertilizers); biofuel and biocomponent production
processes require significant energy inputs, in addition to generating pollution (e.g.
during fermentation of raw materials containing sugars); rising prices of agricultural
I. Teodor Dziubek, T. Manasterska: The Use of Biofuels as an Example Solution to Energy
Security Challenges in Poland
495.
raw materials increase the cost of production of biocomponents and reduce its
profitability; there are no complete quality standards for biofuels and
biocomponents; biofuels have a lower calorific value and their consumption in the
combustion process is higher; it is possible that vehicle mechanics problems may
occur when burning esters, which increases vehicle maintenance costs (Biernat,
2010; Błażejewska, 2011; Borychowski 2011; Lach, 2013; Pioch 2013; KN ORLEN,
2023).
5
Discussion and Conclusion
The problem of anticipated changes in the area of energy security due to the wartime
events in Ukraine has been brought to a very high level of theoretical and practical
research. The EU's position here is clear - the negative impact of the energy sector
must be short-lived, small and quickly minimized. The "Green Deal" industrial plan
will help with this (Wold Economic Forum, 2023).
In Poland, the biofuels sector is developing and growing in size. However, this
progress is uneven, as the biodiesel sector is at a much higher stage of development.
This state of affairs needs to change. EU requirements are gradually increasing, so
Poland should create a robust and absorbent market as soon as possible for the
benefit of both producers and consumers of bio-components.
There is a practical implication: given the assumed costs of the energy transition and
the requirements of the "Green Deal" in Poland, preparatory measures must be
taken, and this includes the use of biomass resources.
However, each member country, including Poland, manages energy in its own way.
This is due to various conditions (owned deposits, industrial production, long-term
supply contracts and others). Therefore, Poland does not want to make
revolutionary and financially demanding changes in energy security at the expense
of slowing down its economy. In the long term, however, it is estimated that these
measures will be necessary.
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
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SUSTAINABILITY MANAGEMENT IN
THE LIGHT OF QUANTUM PHYSICS
DUŠAN KUČERA
Prague University of Economics and Business, Faculty of Business Administration,
Praha, Czech Republic
dusan.kucera@vse.cz
Abstract The purpose of the conceptual study focuses on the
sustainability management in the light of philosophical,
managerial and ethical implications of the basic findings of
quantum physics. The methodology follows the current impetus
of sustainability as a complex challenge related to economic,
environmental and societal crises. The common denominator for
the topic is a contextual perspective and comprehensive
solutions in time. The older concept of CSR, for example,
offered a concrete forms for the management of companies and
organizations, while the newer concept of PRME and SDGs
requires a deeper and broader background that provides better
tools for educating of managerial responsibility for younger
generation at business schools. The findings build on the
managerial and teaching experience of the author and existing
studies summarizing the current challenges of quantum physics
in four dimensions: economic, social (anthropological),
environmental and long term. The applications make use of the
hitherto almost untapped concept of quantum physics, which
formulates several essential philosophical, managerial, and
ethical pillars for universal responsibility and sustainable
Business and Management. The limitations are due to the wide
range of discussion of quantum physics among physicists
themselves, but the implications of the study point to obvious
implications for sustainability management.
DOI https://doi.org/10.18690/um.epf.3.2023.55
ISBN 978-961-286-736-2
Keywords:
sustainability,
management,
quantum physics,
ethics,
SDG,
PRME
JEL:
A12, A20, QO1
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE.
498
1
Introduction
The emphasis on sustainability management in the 20th century is based on a
conscious existential need for survival in modern crises and in the present and future.
This paper demonstrates an overlooked correspondence with the natural
philosophical and ethical implications of quantum physics. The philosophy of
quantum physics has fundamental implications for sustainability management: to
free modern science, and therefore economics and management, from the modern
fragmentation of science, the reduction of social disciplines to isolated objects,
deterministic and strictly causal analysis using mathematical formulas. Natural
scientific approaches in economics and management have created the impression
that the disciplines are capable of predicting future developments. These hopes,
using economic models and experiments, have demonstrated only minimal evidence
for the world's complexity and unpredictable future.
The field of management has started to use the term "sustainability" since the 1992
UN Conference in Rio de Janeiro (UN, 1992). The contribution of quantum physics
is the current emphasis on universal context, interconnectedness and complexity of
processes.
Some specific direction of sustainability management has found some specific CSR
concepts, which have been transformed into specific PRME initiatives and
reinforced by the recent emphasis on SDGs (SD, 2015) All this has shown in the
last decades a completely new perspective to the classical concept of management,
which business schools are still learning to cope with and to integrate the strategy
adequately into their curricula and academic work. Even the EU developments show
that some schools and countries have not understood and exploited the challenges.
Especially the post-communist CEE countries even like to relativize them (Kučera,
2022). This is due to an overly entrenched emphasis on capitalism's utilitarian
approach, profit and market economy, which sees consideration of the human and
natural context more as a brake on the private interests of investors and owners of
companies or shares. Moreover, the transformation economies in CEE are marked
by the centuries-old influence of Marxism as a materialist starting point, which is in
direct conflict with the idea of comprehensiveness, as well as the responsibility of
management and government in all the aforementioned dimensions of sustainability.
D. Kučera: Sustainability Management in the Light of Quantum Physics
499.
In the following chapters, therefore, we will briefly introduce the philosophical
impetus of quantum physics and its fundamental relevance to sustainability
management.
2
Theoretical Background
2.1
The path to quantum physics
Among the main fathers of quantum physics are well-known figures such as Max
Planck, Niels Bohr, Erwin Schrödinger, Max Born, Louis de Broglie, Wolfgang
Pauli, Werner Heisenberg, and others. Quantum physics represented a departure
from classical physics, whose representatives were, for example, Isaac Newton and
Blaise Pascal. The discoveries and the subsequent scientific debate also gave rise to
the philosophical treatment of quantum physics to which we will refer in the context
of management reality (Omnès, 1999; Baggott, 2004).
For the purpose of the present study, we will only touch on some examples and
relevant historical steps that we select to understand the basic differences and lessons
for sustainability management.
2.2
Loss of versatility and complexity
We refer to the necessary overview of the historical development of sustainability
strategy (Kučera, 2020) The ancient philosophy developed the sciences in the
context of universality and universitas. The modern science changed the perspective
reducing on strict rational, mathematical, and statistical methods (Galileo Galilei,
Francis Bacon, etc.) Isaac Newton began to speak of "exact science". Francis Bacon
(1561-1626) declared that such knowledge based on mathematics constituted a kind
of “power”.
What we are seeing is a loss of universal concepts that have led primarily to new
discoveries in astronomy, physics, chemistry, and biology (especially in the 19th
century starting with Darwin). Contextuality and the social sciences, however, have
been left behind. Even worse, they were negatively influenced by so-called "social
Darwinism" (H. Spencer). The grand conception of the world, society and man has
been displaced by the exact sciences and precise expertise. Above all, let us recall the
absolute claim of the paradigm of mathematics, or mathematization as a scientific
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method also in management. And here also begins the critique from the perspective
of quantum physics (Weizsäcker, 1985). Wenzl, (1960) writes about the tension
between mathematical fiction and physical reality, subject and objectivity. For
management, a space opens up for thinking, analyzing and strategic planning from
a certain ideal through reality to a potential future at a higher level of thinking that
does not let itself be bound by strictly isolated statistical data and managerial
applications based primarily on the natural sciences (see Figure 1).
Figure 1: The division of scientific disciplines.
Source: Author's elaboration based on Anzenbacher (2002).
2.3
The emergence of the experience of the whole and the unity of the
world
Classical physics introduced mechanical laws that found an adapted echo in
economics and management: e.g. the laws of equilibrium, leverage, universal
gravitation, inertia, force and interaction. Some originally purely physical laws have
also influenced the social sciences and the concept of politics. Quantum physics has
articulated the limits of any isolated mechanical phenomena in management in favor
of a perspective of the whole, and sustainability.
The classical fragmentation of the sciences at the beginning of renaissance and
modernism was replaced by the search for a "theory of everything". Classical theory
was challenged by the theory of relativity and by reference to far more complex and
D. Kučera: Sustainability Management in the Light of Quantum Physics
501.
intricate processes in the cosmos and on Earth. Complexity, intricacy, and the need
to account for various relationships, special conditions, quanta, waves, unpredictable
motions, etc., entered simple models. Physics is discovering that at the microcosmic
level, that is, at the level of elementary particles smaller than individual atoms,
particles behave differently than in our everyday life. Finally: quantum physics
demonstrates the limits of empiricism, determinism and statistics that management
is so fond of using. Quantum phenomena are non-deterministic, non-deterministic,
probabilistic and non-local (Schüz, 1986).
3
Methodology
The beginning of the study is the acquaintance with the works concerning first the
foundations of quantum physics (Weizsäcker, 1985; Wenzl, 1960). We then focus
on authors describing the implications of quantum physics. Finally, some references
to the implications for management itself (Schüz, 1986). The sources used deal with
chapters concerning the return to a unified conception of reality against the longstanding fragmentation and reduction of modern science - and also of management.
Among the scholarly works, we find only isolated works in the field of management
that relate to the connection with leadership and innovation (Zohar & Marshal,
2016), the importance of interdisciplinarity (Rigolot, 2020), the dimension of
organization (Kilmann, 2011) and strategy (Messner, 2018), and computer science
for distribution management (Gaily & Sándor, 2021).
3.1
Elements of quantum physics for management
Many quantum physics topics do not yet have a direct analogue in our everyday life
and management. The term "quantum" refers to the smallest possible value of any
physical quantity. In the microworld, the physicist observes the so-called
corpuscular-wave dualism, according to which particles in the microworld have both
particle and wave properties. For the sustainability management, this implies
completely new challenges in the consequences for managerial philosophy.
According to quantum physics, for example, light can behave as both a particle
(photon) and a wave. Light is not just a uniform stream that we perceive with the
naked eye. Thus, it opens up completely different perspectives for perceiving the
world and the philosophical consequences for sustainability management.
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In quantum phenomena, for example, interference occurs, which describes a
situation where two quantum particles with wave properties collide: the waves
multiply. When the maxima with minimum waves collide, the waves cancel out. To
make matters strange, there is a fundamental uncertainty relation in the microworld,
it is referred to as the “Heisenberg uncertainty principle” (Ozawa, 2003). Its essence
is that we cannot simultaneously measure the complementary properties of particles.
Let us imagine, what it means for current management methods: The best known
relation is the momentum (velocity) - position relation. If we make the measurement
of position more precise, we make the measurement of momentum less precise (de
facto impossible), and vice versa. For the claims of management, this implies a
certain relativization of its expectations of precision and dominance through
arguments and methods that do not take into account motion, time, changes in
energy, conditions, and attitudes.
Other uncertainty relations include the time-energy relation, according to which we
can never know both the time at which a particle was measured and its energy.
We know from quantum physics that every object in the universe has its own wave
function. Using the square of the wave function, we can calculate the probability
that a particle is in a particular state. Classical physics is deterministic, quantum
physics is probabilistic. The nature of the reality of the microcosm is therefore
random and open in quantum physics. The probability and the non-locality of
quantum physics play a role. The question of what these phenomena mean for
sustainability management will be the subject of further studies.
3.2
The new dimensions of reality
Max Planck opened the discoveries of quantum physics by showing that instead of
individual parts, quanta play a role in reality. Light has been shown to be a flowing
quantity in waves that have different inertial frequencies (like when we observe
propagating circles on the surface of water after an object is thrown in). Even in
reflection, light is quantum. Erwin Schrödinger (Mehra & Rechenberg, 1987)
generalized: every particle has a wave function (position and time). Everywhere we
find the probability of a wave, the location, its amplitude.
In the spirit of quantum physics, the German philosopher Georg Picht reminded us
that we are responsible for everything within our range of possibility (Picht, 1985).
D. Kučera: Sustainability Management in the Light of Quantum Physics
503.
We are responsible for our thinking, decision-making and actions with implications
for the near and distant future we do not know but influence. Whatever we do has
an impact on people, the environment and also affects future generations. No
statement or action is isolated.
Speaking of sustainability for the future, let us remind ourselves that physics also
knows the negative role of time. Newly emerging orders abolish past ones.
According to the first theorem of thermodynamics, the energy content of the
universe is constant. Energy can neither be destroyed nor produced. We only change
its form. Under the second theorem of thermodynamics, we know that some
processes in nature are irreversible. It is impossible to recover heat from a cold
reservoir without leaving noticeable changes in the surrounding environment.
Entropy therefore increases with time and our actions. In management and
economics we talk about resource limits. Entropy is universal! And we cannot turn
back time. For management, this means an unimaginable increase in awareness of
its responsibility and the importance of Business ethics (Schüz, 1986; 2001).
4
Results and Conclusions
The above-mentioned principles of quantum physics give rise to current suggestions
for sustainability management context. It is primarily the problem of fragmentation
of the modern sciences that management uses, which must be replaced by the
concept of the whole and unity of the world. The knowledge of quantum physics
about waves is in direct opposition to the inertia of classical management, which is
still based on the concept of separate "particles" (fields, departments, disciplines,
and specializations).
Applications in management must deal with the implications of new knowledge
about complexity, context and continuity over time to the implications in the future
in all areas. The quantum perspective on complexity leads us to a necessary
rethinking of the long-standing narrow neoliberal focus on economic growth,
individual data, empirical evidence and statistical methods that have overlooked the
maintenance of existence and quality of life or social stability. In the perspective of
quantum physics, the dimension of reality increases and opens up different
probabilities and interdisciplinary interactions. Reality contains infinite possibilities
of choice and combination. For management, this means a new level of tasks and
ethical responsibility at all points of its activity over time and in various
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transformations. The practical application of the theoretical understanding concerns
the education of the young generation of managers and executive education. In this
sense, the presented field awaits a lot of challenging scientific work.
References
Anzenbacher, A. (2002) Einführung in die Philosophie. Herder.
Baggott, J. (2004). Beyond Measure. Modern Physics, Philosophy and the Meaning of Quantum Theory. Oxford
University Press.
Gaily, S. El. & Sándor, I. (2021). Constrained Quantum Optimization for Resource Distribution
Management. International journal of advanced computer science & applications, 12(8), 42-51.
Kilmann, R. (2011). Quantum Organizations: A New Paradigm for Achieving Organizational Success and
Personal Meaning. Kilmann Diagnostics.
Kučera, D. (2020). A historical approach to understanding values and its importance for corporate responsibility. In:
Farache, F., Grigore, G., Stancu, A., McQueen, D. (Eds.) Values and Corporate
Responsibility - CSR and Sustainable Development. Palgrave Macmillan.
Kučera, D. (2022). Challenges of managerial responsibility and ethics for Central and East European
countries based on the experience from the Czech Republic. The International Journal of
Management Education, 20(2), 100583. https://doi.org/10.1016/j.ijme.2021.100583
Mehra, J. & Rechenberg, H. (1987). Erwin Schrödinger and the Rise of Wave Mechanics. Springer.
Messner, D. (2018). Quantum Strategy at Work: Toward a New Strategic Management. Springer
International Publishing.
Omnès, R. (1999). Quantum Philosophy, Understanding and interpreting contemporary science. Princeton
Universtiy Press.
Ozawa, M. (2003). Universally valid reformulation of the Heisenberg uncertainty principle on noise
and disturbance in measurement". Physical Review A, 67(4), 42105.
Picht.G. (1985). Philosophie der Verantwortung. Constanze Eisenbart.
SD (2015). Sustainable development transforming our world: The 2030 Agenda for Sustainable
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Schüz, M. (2001). Zeit, Entropie und Bewusstsein - Oder: Wie entstehen Werte? Evangelische Akademie
Baden, Karlsruhe. In: Zeit und Ewigkeit – Theologie und Naturwissenschaft im Gespräch
(hrsg. v. J. Audretsch/ K. Nagorni). Karlsruhe, p. 104-136.
Schüz, M. (1986). Die Einheit des Wirklichen. Guenter Neske Pfullingen.
Rigolot, C. (2020). Quantum theory as a source of insights to close the gap between Mode 1 and
Mode 2 transdisciplinarity. Sustainability science, 15, 663–669. https://doi.org/10.1007/s11625019-00730-8.
UN (1992). United Nations. Conferences | Environment and sustainable development.
https://www.un.org/en/conferences/environment/rio1992.
Weizsäcker, C. Fr. v. (1985). Wahrnehmung der Neuzeit. Deutscher Taschenbuch.
Wenzl A. (1960). Die philosophischen Grenzfragen der modernen Naturwissenschaft. W. Kohlhammer.
Zohar, D. & Marshal. I. (2016). The Quantum Leader: A Revolution in Business Thinking and Practice.
Prometheus.
YOUTH CLUSTERS IN THE
FIELD OF DIGITALIZATION
ATTILA KURUCZ,1 ADRIENN DERNÓCZY-POLYÁK,1
KORNELIA OSIECZKO-POTOCZNA2
Széchenyi István University, Győr, Hungary
kurucz.attila@sze.hu, dernoczy@sze.hu
2 Rzeszow University of Technology, Rzeszów, Poland
k.osieczko@prz.edu.pl
1
Abstract This paper focuses on the new values of the digital age
which impact the decisions of customers and influence attitudes
towards technology and products. The research aimed to identify
some typical groups among millennials. The research was carried
out in Hungary and in Poland. We generalized the results based
on their attitudes, feelings and behavior. According to the
responses of more than 2000 young people this study presents
the different clusters of the Y generation in their purchasing
behavior and preferred digital values. We categorized them based
on their opinions and profiled them using other demographic
features. Environmental protection, health and safety were
proven values and therefore important; digital solutions or the
new products of industry 4.0 are examined in more in detail. With
these clusters the economic role-players can gain insight into the
differences between each consumer group and how to fulfil their
needs regarding sustainable services and goods.
DOI https://doi.org/10.18690/um.epf.3.2023.56
ISBN 978-961-286-736-2
Keywords:
Y generation,
digital values,
sustainable
services,
Industry 4.0,
smart products
JEL:
M14, M30
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Introduction
In the era of a changing environment, e-commerce, digitization and automation in
line with Industry 4.0, it is important to learn about the expectations and approaches
of the young generation. The new industry paradigm focuses on changing existing
business models, company strategies, supply and value chains, business
organizations, products and required skills. There is talk about the expected
competences of managers and about combining technical knowledge with soft skills
(Culot, et. al., 2020; Buchi, et. al., 2020; Santos, et. al., 2021). However, it is worth
knowing the opinion of the young generation on available technologies and their
approach to current solutions.
In recent years, great interest has been shown in achieving the Sustainable
Development Goals and all the efforts made by NGOs, businesses and governments
to reach these aims. The challenge is to create a comprehensive system in which all
countries work together towards a sustainable world, which will allow economic
development and solve social problems (Du Vall, 2019). The idea of Society 5.0 first
emerged in Japan. This concept of a modern, future-oriented and human-centered
society assumes, using the latest technologies, the integration of cyberspace and the
real world. The idea of Society 5.0 is to help achieve the 17 Sustainable Development
Goals (CAO, 2016). The purpose of the article is to verify the approach of young
people to current technologies. It is acknowledged that people born before 1980 are
classified as generation X, people born between 1980 and 1990 are classified as
generation Y, while people born after 1990 are generation Z. The Pew Research
Center report states that the Millennial generation (Y, Z) has a positive attitude
towards all technological devices, while generation X does not (Ersöz and
Askeroğlu, 2020). We can analyze in several areas whether we are looking at the
digitization of political elections (Nemeslaki et. al., 2016), job searches (Bührer,
2017), or even booking leisure programs (Ehm et. al., 2022). Based on the results,
the use of digital solutions has increased among young people - i.e., more and more
people use them. Therefore, in this study the viewpoint of companies was our
starting point in determining whether the development of sustainable digitalization
can create value for the youth.
A. Kurucz, A. Dernóczy-Polyák, K. Osieczko-Potoczna: Youth Clusters in the Field of
Digitalization
507.
Our chosen research countries, Poland and Hungary, are European countries with
many similarities. They both became parliamentary democratic states after 1989
(Sroka, 1995). Both countries are members of NATO and the European Union, and
also members of the Visegrad Group. Political events in Hungary are often preceded
by similar events in Poland. Likewise, they are both considering the introduction of
the Euro currency, but still stick with their own (Kovács, 2005). The research was
therefore conducted on a group of people who theoretically come from similar
Central European countries. Based on this, it is confirmed that digital solutions
represent value. We determined these digital values from the elements of Industry
4.0, which are supported by the use of smart devices and technology. In our research,
we also asked about classic values as a reference, such as environmental protection,
safety and reliability, which were proven to be valued almost regardless of age group.
2
Theoretical Background - The values of Industry 4.0
First of all, Industry 4.0 (I4.0) and electronic commerce should be defined as these
two terms have the most direct relationship if we are analyzing the acceptance of the
values of digitalization. I4.0 is the source of radical change, covering a wide range of
innovative technologies, and all sectors and the value-creating activities that create
value for young consumers are an intrinsic element of this.
The term Industry 4.0 first appeared in 2011 at the Hannover Messe fair (Geissbauer,
et. al., 2016). It refers to cyber-physical systems, smart industry, Internet of Things
(IoT), Big Data and hyper connectivity. Electronic commerce means managing the
processes of buying, marketing, selling, distributing products and services over the
Internet, and seeking to complete all transactions by digital means (Hitpass and
Astudillo, 2019). Adopting technological trends influences the development of ecommerce at a significant pace (Baskaran & Rajavelu, 2020).
Industry 4.0 (Figure 1), often referred to as the "fourth industrial revolution"
(Zhong, et. al., 2017), is an extremely complicated process and requires knowledge
and determination to implement it (Woźniak, et. al., 2018). The fourth industrial
revolution offers a great opportunity to build a competitive advantage for the entire
European Union and its individual countries. The leading country in this respect is
Germany (Stadnicka, et. al., 2017). The introduction of Industry 4.0 is supported at
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a governmental level (Boyes, et. al., 2018) along with the recommendations given
(Kagermann, 2015).
Additionally, it is believed that it is possible to talk about the next revolution, which
is Industry 5.0. This focuses on using the creativity of human experts in cooperation
with intelligent, efficient and accurate machines to achieve cost-effective production
solutions compared to Industry 4.0 (Maddikunta, et. al., 2021). In addition to
automation and digitization, Industry 5.0 focuses more on humans (Saniuk &
Grabowska, 2022). This highlights one of the main aims of this paper, namely the
need to draw attention to the attitudes of young people towards current solutions.
In Figure 1 we summarize our own views on traditional and digital values.
Figure 1: Comparison of the traditional and digital values
Source: Authors' compilation.
Based on the above theoretical foundations, in the next chapter we summarize the
results of our empirical work.
3
Empirical Research
The aim of our research was related to the above-mentioned values. Regarding the
theoretical background we can deduce that we have both traditional and digital
values. It was our aim to find ways to define the major groups, distinguish them and
A. Kurucz, A. Dernóczy-Polyák, K. Osieczko-Potoczna: Youth Clusters in the Field of
Digitalization
509.
profile them. Accordingly, the objective was to segment the Polish and Hungarian
respondents based on our scale and explore the relations between segments,
examining the effect of nationality and gender. The following research hypotheses
were set:
−
−
−
3.1
Respondents can be segmented based on their opinion relating to digital
values, robotics and environmental issues
There are differences between segments based on nationality
There are differences between segments based on gender
Methodology
According to the literature review it is our assumption that people can be classified
into homogeneous groups based on their opinion. We believe that there are
statistically significant differences between groups based on gender and nationality.
Thus, we tested the following theoretical hypotheses derived from our research
questions:
H1: Respondents can be distinguished and grouped based on their digital
related (and so on) opinion.
H2: There is a relationship between cluster membership and nationality.
H3: The gender and the cluster membership can be associated with each other.
To check the differences, we conducted a cluster analysis mentioned below, and to
prove the distances between subsamples we used ANOVA. In every single case we
found statistically significant differences.
3.2
Measurement and specification of scales and sampling
In our primary research we developed our own scale related to the previously
mentioned values of digitalization. After some modification (one item was excluded
in order to increase the Cronbach alpha value) we had 12 items, measured on a four
pointed Likert scale, where 1 is totally disagree and 4 totally agree. Gender and
nationality was measured on a nominal, non-metric scale.
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We did a multi cross sectional research design. The empirical research was conducted
in October 2019. We used the self-reported online questionnaire with convenient
sampling method. All in all, we had 2966 respondents, and the ratios regarding the
main variables were: 61.3% female and 38.3 male, 71.2% Hungarian and 28.8%
Polish respondents. Our sample was not representative, but in this phase our aim
was to explore the main phenomenon and gain some insight into this field. All of
our recommendations and findings are true only in this sample, and we have
discovered our limitations related to the response bias as well.
4
Results of the Cluster Analysis
As previously stated our aim was to segment our respondents based on their
opinions. The advantage of this is that using or just knowing these groupings means
we can handle them with different strategies. Our scale items are: (1) I look for the
latest technology when buying new products. (2) I look for communication
technology when buying new products. (3) When buying a car, I find it important
for it to be equipped with different sensors (e.g., a parking radar system) because it
increases my personal safety and I would pay more for it. (4) I am willing to pay
more for antivirus software if it provides better protection than a free one. (5) I
would support more robots being used in health care (for example, robots who help
make appointments, arrange affairs or even perform surgery). (6) I would rather buy
a product made by machines or robots rather than a human workforce. (7) I find ebooks readers more practical so I use them instead of the traditional printed
versions. (8) Self-driving vehicles and smart cars use technology to make driving
easier and more convenient. For me this is a value that is worth paying more money
for. (9) If I would use public transport with a card system that I could also use for
other devices and services (e.g., public transport + bike sharing services) I would
rather choose public transport. (10) I am willing to pay more for a product or a
service if I am sure that the company makes an effort to be environmentally
conscious. (11) I would rather buy a product if its packaging is environmentally
friendly. (12) Electric and hybrid cars produce less harmful emissions. If I could
choose, I would buy one of these due to environmental considerations.
To check the reliability of our multi-item scale we conducted the related analysis.
The Cronbach alpha value was 0.637, which is acceptable. We conducted a factor
analysis in order to define the main dimensions. (KMO: 0.682, Bartlett’s test of
A. Kurucz, A. Dernóczy-Polyák, K. Osieczko-Potoczna: Youth Clusters in the Field of
Digitalization
511.
Spericity’s sig: 0.000; extraction method: principal component analysis; rotation
method Varimax with Kaiser). So our factors were: novelty, where we can find the
variables number 1 to 4, robotics and digitalization (variable No. 5-9) and finally
environmental awareness with the rest of the variables. However, no emphasis
will be placed on this in the article, only on the cluster itself.
We use the factors to understand and profile the clusters, but additionally we
checked the mean values of the original variables as well. Figure 2 shows the average
values of our variables.
Figure 2: Average values of the variables
Source: Authors' compilation.
The highest agreement among the respondents seems to be regarding environmental
awareness, then next regarding innovative technological solutions and the novelty
of these concepts, whereas they express some doubts about robotics and
digitalization. There is an exception in this last group where we focused on the
considerations of the convenience of using the improved technology (Variable No.
9) as well as an agreement.
However, it is more interesting to examine in more depth and try to focus on the
differences. So we conducted a cluster analysis (hierarchical, agglomerative cluster
method, Ward linkage, with Squared Euclidien Distance used); and attempted to
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profile them based on the mean values. We distinguished four different clusters, see
Figure 3. To check the differences, we conducted ANOVA to analyze them. All of
them are statistically significant.
Figure 3: Differences from mean and neutral values
Source: Authors' compilation.
The first segment is the larger one, it contains more than one-third of the sample
(37.98%, 968 people). Compared to the mean in respect of novelty, robotics and
digitalization we have lower values but in relation to environmental awareness they
are higher. Compared to the neutral status the product’s novelty is less neutral; they
disagreed with digitalization in its entirety, but their behavior related to
environmental consciousness is supportive. We have named this group FlowerPower. Mostly Hungarians and female respondents can be found in this segment.
We have statistically significant values in relation to nationality and gender associated
with the cluster membership in every below mentioned case. The chi2 values are
48.343, sig.: 0.000 and 44.628, sig.: 0.000 and the contingency coefficients are
accordingly 0.136 and 0.131, which is somewhat weak, but significant.
21.15% (539 people) of the sample belong to the second cluster. Compared to the
mean they have lower values, and the biggest difference can be found in the case of
car-related variables. Being environmental consciousness is less important for them;
they have neutral opinions in almost in all cases. We call them the Neutrals. Mostly
Hungarian male respondents can be found here.
More than quarter of the sample can be found in the third cluster. It is exactly
25.34%, 646 people. They are the opposites of the previous ones. Their values
exceed the average; only in the case of human workforce vs. robots related variable
A. Kurucz, A. Dernóczy-Polyák, K. Osieczko-Potoczna: Youth Clusters in the Field of
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513.
did they state a statistically neutral opinion. Everything which is digital or makes our
life more comfortable is highly welcomed. We call them the Digital Omnivores.
We can find mostly Polish and male respondents in this group.
The last and fourth group consists of 15.54% (396 people) of the sample. For them
environmental awareness and security is less important, but regarding the digital
offered comfort they have emergent values compared to the other groups.
Accordingly, they are called the Leisure-loving Digitals. Again we can find Polish
and male predominance here.
5
Discussion and Conclusions
Based on the results of our empirical research all of our previously mentioned
hypotheses can be rejected, so
−
−
−
we can distinguish consumer groups based on their opinion and attitude
concerning the digital values,
there are statistically significant differences between the clusters based on
nationality,
and gender.
According to the results we can handle the different groups in the correct way. As
we can see we can find similarities and dissimilarities among the respondents related
to digitalization. We have to recognize that not everyone is open-minded; indeed
some are critical, and have crucial opinions about development.
Although our focus was on the young generations, surprisingly, we encountered
young people who have almost the same values or attitudes as the older generations.
Therefore, we can conclude that there are some traditional values that are deeprooted and perpetual. Based on our empirical research the Polish youth are more
open minded towards digital values, while the Hungarians still prefer the traditional
ones. Although the two countries are similar, Generation Y in Poland is more
focused on digitization and a conscious approach for the sake of the environment.
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All in all, we distinguished those customer groups who can be targeted in a more
specific way due to the information we revealed. To use a better segmentation
strategy, we need to use a strong data-based system Specifically we profiled those
groups where these digital values (as the result of digitalization in the field of
Industry 4.0) are crucial. Thus, based on this, companies should consider using this
insight in their product- or process development.
In our research we were faced with several problems and limitations. Although it
was a multi-cross sectional study, we placed less emphasis on the Polish part. In
addition, systematic response error can be mentioned as another limitation, due to
the collection of data using a self-descriptive questionnaire. It is our assumption that,
due to the pandemic, people nowadays possess more developed digital skills;
therefore, attitudes must also have changed. On the other hand, our research is
rather pioneering in its nature as no other studies as yet focus on digital and
traditional values in quite this way.
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COAL BED METHANE:
OPPORTUNITIES AND
CHALLENGES IN INDIA
NIDHIJA REJO,1 SANTANU PUROHIT,2
ARVIND KUMAR JAIN2
BPCL Housing Complex, Gokuldham, Goregaon East, Mumbai, Maharashtra, India
nidhijaroy@gmail.com
2 University of Petroleum and Energy Studies, P.O Bidholi via-Prem Nagar, Dehradun
India
purohits13@gmail.com, akjain@ddn.upes.ac.in
1
Abstract Energy deficit countries like India are heavily reliant on
importing fuel. If the fuel is harnessed locally, it can help the
country reduce its import dependency and build a secure energy
future. To cater to the energy demand, various renewable energy
options are being looked into. One such fuel option is coal bed
methane (CBM), which comprises methane trapped in coal bed
reservoirs that can be extracted and used as a fuel source to meet
energy demands. Methane is a combustible hydrocarbon with
varied uses ranging from commercial industries to a commonly
used household fuel. India has the fifth largest coal reserves in
the world and can harness the entrapped methane from the coal
beds seams. As per India's regulatory body, the Directorate
General of Hydrocarbons, India has prognosticated 92 TCF
(2600 BCM) in 12 states of CBM resources. CBM is a clean and
unconventional fuel resource that may help tackle the fuel
shortage for India's expanding GDP. And to meet the energy
constraint of the growing Indian economy, the potential of CBM
needs to be explored. This paper focuses on the overview of
CBM in India and analyses the techno-economic challenges,
including investment opportunities, policy limitations, and
technological bottlenecks.
DOI https://doi.org/10.18690/um.epf.3.2023.57
ISBN 978-961-286-736-2
Keywords:
Coal Bed Methane,
Alternate fuel,
CBM technology,
Environment
challenges,
Economic
opportunities
JEL:
Q2
518
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Introduction
Technological advancement and constant population growth have led to an increase
in energy demand. As such, the reliance on fossil fuels will keep skyrocketing;
currently, the global demand for fossil fuels is at 80% (IEA, 2022). Efforts are made
to harness energy through unconventional sources to reduce fossil fuel reliance.
Further, the inflationary price pressure due to geopolitical tensions also adds to the
volatility of trade markets. The need for an energy-secure future has led to research
and exploration activities in the renewable sector. And SDGs, the seventh goal to
"ensure access to affordable, reliable, sustainable and modern energy for all" by 2030,
is propelling the energy commodity market to scope out energy-efficient fuel options
(Goal 7 | Department of Economic and Social Affairs, 2015)
One such option is natural gas which comprises methane. The extraction of methane
from coal bed reservoirs is called Coal Bed Methane (CBM), wherein entrapped
methane is desorbed from the coal bed matrix. It is a result of geochemical and
biological transformations happening at the sub-surface level. The volatile organic
matter of the coal gets degraded by a synergistic action by bacteria at the subsurface
level at high pressure and temperature into gas. The gas produced is then extracted
through drilling (Singh et al., 1999).
CBM represents a sizeable unconventional source of natural gas (Beaton et al., 2006).
Countries like USA and Canada are leading global producers of CBM. In the USA,
CBM accounts for 2TCF/ year, i.e. 10% of total gas consumption (Boger et al.,
2014). India is an energy deficit country and, for its growing economy, has a very
high dependence on the import of oil and gas. As per Petroleum Planning & Analysis
Cell (PPAC), India's oil import for FY 2021-22 has been 84.4%. The Indian
government is gearing up to reduce gas imports and set a gas production target of
50 BCM by 2023-24. Production of CBM internally can help to cater to the energy
demand to some extent and thus can help to build a resilient economy for India.
2
Methodology
An extensive literature review is done from EBSCO, Scopus, and Google databases.
Research on coal bed methane and its significance in India's fuel energy mix has
been gathered for this paper. The extent of CBM and its associated challenges have
N. Rejo, S. Purohit, A. Kumar Jain: Coal Bed Methane: Opportunities and Challenges in
India
519.
been identified. The nation's policy initiatives and the corresponding policy
impediments have been discussed. The paper's main argument revolves around the
CBM's potential to produce accessible energy that can be harnessed locally, reducing
India's reliance on imports and advancing the country's sustainable transition to
energy security.
3
Literature Review
3.1
CBM genesis and biogenic production
Anoxic conditions facilitate the generation of biogenic methane from coal as the
result of complex biochemical reactions by groups of bacteria during the
decomposition of organic matter (Krüger et al., 2008; Beckmann et al., 2011; Guo
et al., 2012, Gründger et al. 2015). CBM is extracted by drilling boreholes into the
coal bed reservoir and injecting it with produced water (Thielemann et al., 2004).
The reservoir is depressurised due to the influx of produced water, and the methane
gets desorbed and ready for collection (Reddy et al., 2022). Figure 1 shows
gGeneration of methane gas during coalification.
Figure 1: Generation of methane gas during coalification
Source: Singh et al. (1999)
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Factors like coal type, rank, volatile matter, and fixed carbon affect methane
adsorption capacity. Methane gas generation can get impacted due to coal maturity
and rank, i.e. the deep-seated coal on maturation can generate more methane than
shallowed coal bed (Ojha et al., 2011).
3.2
Economic opportunities of CBM in India
Methane sold in the CBM market comprises secondary biogenic methane,
thermogenic methane, residual thermogenic carbon dioxide and heavy
hydrocarbons. The value of the product by the manufacturer or creators of the
goods is sold at 'factory gate' values to downstream manufacturers, wholesalers,
distributors and retailers or, in some cases, directly to the end customers. Annual
growth of 5.6% is expected in the CBM market for the year 2023 from its current
size of $17.82 billion (Coal Bed Methane (CBM) Market Size, Trends and Global Forecast
To 2032, 2023).
One of the significant CBM-producing countries is the US. However, the Asia
Pacific region is expected to be the fastest-growing market. Countries like India,
China and Indonesia are the major contributors to the growth due to the increase in
drilling activities in these areas. Europe and Australia have been significant
contributors to the market and are aggressively expanding to new regions (Coal Bed
Methane (CBM) Market - Global Summary & Outlook, 2020).
India is one of the fastest-growing economies in the world, and its energy
requirement to drive growth is also constantly growing. And to cater to this demand,
domestic production should be prioritised, and sustainable alternatives must be
explored. Meeting energy demand helps build a more robust economy for any
country. India ranks fifth in terms of the largest coal reserves in the world. The
coalfield beds that have the potential for CBM extraction are indicated in Figure 2.
India has set a target for natural gas to account for 15% of its energy mix by 2030,
up from the current 6.7%, while the global average of more than 20% (Government
Sets Target to Raise Share of Natural Gas in Energy Mix to 15% by 2030 - The Economic
Times, 2022). In 2021, domestic gas production reached 32 BCM and catered to 50%
of the consumption, lowering imports by 3.4%. Suppose the prognosticated 92 TCF
(2600 BCM) of CBM resources can be optimised. In that case, it is estimated by the
N. Rejo, S. Purohit, A. Kumar Jain: Coal Bed Methane: Opportunities and Challenges in
India
521.
Government of India that the total CBM production may be increased to
4MMSCMD ( Million Metric Standard Cubic Meters per Day i. e. equivalent to
approximately 1 TCF). The reserves are spread across the states as indicated in Table
1 by the Ministry of Petroleum and Natural Gas (MoPNG) (EXP AND PROD UN CONVENTIONAL HYDROCARBON | Ministry of Petroleum and Natural Gas
| Government of India - Ministry of Petroleum And Natural Gas, 2019).
Figure 2: Classification of coalfields based on CBM potential, India
Source: Panwar et al. (2022).
Table 1: Total CBM resources by MoPNG, India
S. No.
1
2
3
4
5
6
7
8
9
10
11
State
Jharkhand
Rajasthan
Gujarat
Orissa
Chattisgarh
Madhya Pradesh
West Bengal
Tamil Nadu
Andhra Pradesh
Maharashtra
North East
Total CBM Resources
Estimated CBM Resources (BCM)
722.08
359.62
351.13
243.52
240.69
218.04
218.04
104.77
99.11
33.98
8.5
2,599.40
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3.3
Price trend of methane across the world
It is observed that the price of methane for developed countries is higher compared
to a non-developed country which is mainly on account of taxation policy imposed
locally. The US is an exception where the price of gas is kept low. The average price
of methane worldwide is about 1.23 US Doller per litre (Methane Prices around the
World, 2023).
Below is the price trend of methane in significant countries in UD Dollars per litre.
Azerbaijan 0,235
Belarus 0,42
Argentina 0,488
Georgia 0,649
Chile 0,934
India 1,007
France 1,161
N. Macedonia 1,312
Spain 1,533
Switzerland 1,626
Italy 1,798
Czech Republic 2,332
Hungary 2,486
0
0,5
1
1,5
2
2,5
3
Figure 3: Country-wise methane pricing, Mar-2023 (litre, US Dollar)
Souce: Coal bed methane (2023).
3.4
Environmental challenges associated with CBM extraction
Management of the produced water associated with CBM production poses a
primary environmental concern. The pressurised water is pumped into the reservoir
to desorb the gas from the coal bed. And like conventional reservoirs, once the peak
gas rate is achieved, the water saturates, and methane is then collected (Surya et al.,
2008). During the process, the produced water discharged needs to be properly
N. Rejo, S. Purohit, A. Kumar Jain: Coal Bed Methane: Opportunities and Challenges in
India
523.
disposed of as it has a potential impact on the surrounding habitats due to high
salinity and sodicity levels (Mendhe et al., 2017).
As an industry practice, the produced water undergoes desalination, degassing, and
removal of suspended solids, organic compounds, heavy metals, and others is carried
out. After improvements and toxicity checks, the treated water can then be used for
irrigation, deep well injection, aquifer storage, livestock watering, surface water
discharge, and impoundment in infiltration ponds, evaporation ponds, or zerodischarge ponds. The treatment of the produced water incurs high expenditures, so
the produced water's toxicity determines its usability. Therefore garnering public
acceptance is challenging (Mendhe et al., 2017).
Nevertheless, the advantage of CBM extraction is that it helps capture methane, a
potent greenhouse gas (GHG), thereby lowering GHG emissions. CBM capture also
helps ensure mine safety, as methane in coal reservoirs has explosive tendencies.
Methane is a potentially valuable alternative fuel used to produce electricity in
transportation, such as CNG, and in various other commercial industries.
Furthermore, if harnessed locally, it provides additional revenue, which can help
bolster the country's fuel economy (US EPA, 2015).
3.5
Policy challenges in CBM extraction in India
While CBM has immense potential in India, the progress on CBM has been relatively
low. The government had awarded 33 blocks in 4 rounds of bidding from 2001 to
2008, of which only five blocks have commenced commercial production. After
2010, new licenses for CBM exploration were not granted. At the same time, the
gestation period for exploration, discovery, development, and production has a high
lead time of over 5 to 7 years. With inherent long production cycle for any block to
materialise, combined with the limited focus in the past by the government, has kept
the development of CBM in India on a slow track (ETEnergyworld, 2022).
One of the significant challenges witnessed for the blocks awarded was land
acquisition. CBM projects usually are spread across a large area of land. At such
widespread locations, local and sociopolitical issue has significantly delayed the
commencement of work. Another challenge observed is that the statutory approvals
pertaining to clearance from Environment and Forest department and other local
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authorities are delayed after the land acquisition. While the government had
introduced the Single Window System wherein the interested organisation had to
submit information for trade facilitation at a single agency rather than multiple
agencies for faster implementation of projects, however, at the field level, it did not
achieve its intent. Administrative challenges have also been observed between the
petroleum and coal ministries as the CBM areas overlap the coal blocks. Mining
license and joint approval challenges have become a bottleneck at the field level. The
formula-based gas price fixation by the government, on many occasions, made the
overall investment not economically viable.
Moreover, if levied, any imposition of tax similar to the Carbon Tax will be
detrimental to the entire project. Without the flexibility of the gas pricing and the
clarity on the taxation module, bidders have been conscious of investing in CBM in
India. While India launched the auction of CBM blocks in 2021 with more liberal
terms under the new policy initiative such as Hydrocarbon Exploration and
Licensing Policy (HELP) and Open Acreage Licensing Programme (OALP), the
result of the same is yet to be perceived (ETEnergyworld, 2022).
4
Discussion
It is of pivotal importance for India to increase its production of local fuel to cater
to its growing energy demand and for a sustainable economy. Optimisation of CBM
has to be among one of the critical areas of focus for the government to achieve its
goal. While steps are being made towards the same, the following four strategy points
need to be addressed for it to succeed.
i)
Easy of operation and implementation
From awarding the CBM blocks to getting the site ready for production, it has to be
executed in close coordination with the concerned authorities to ensure faster
implementation and time reduction of a bottleneck at multiple stages during the
process.
N. Rejo, S. Purohit, A. Kumar Jain: Coal Bed Methane: Opportunities and Challenges in
India
525.
ii)
Project viability
The pricing mechanism needs to be developed, keeping the global pricing trend and
volatility of the worldwide trade market in consultation with the investors. This will
help mitigate long-term and short-term setbacks associated with price inclusivity.
iii)
Long-term sustenance assurance
In order to cater to the extensive CBM project timeline, measures need to be taken
for the viability and redressal of any future challenges, including sociopolitical issues
or geopolitical issues. Further, assurance is provided for the agreed duration of the
project to ensure that it becomes viable.
iv)
Clarity and transparency
Administrative challenges, pricing bottlenecks, and vague taxation policies must be
addressed with more concrete and clear procedures. The policies should be
transparent throughout the project duration, and the decision-making process from
the investor's point of view should also be incorporated.
5
Conclusion
While CBM technology will continue progressing, India's policy environment will
determine the field's purpose. The government will help draw in foreign investment
if it takes a committed and targeted approach to the abovementioned issues. Hence
assisting India in lowering its imports and supplying its own energy needs.
Methane's contribution to the energy mix could increase due to CBM. Compared to
fossil fuel alternatives, methane collected using CBM is a cleaner fuel choice,
containing 50–60% less carbon dioxide. If locally available resources are used
effectively, imports can be reduced, aiding India's transition to an energy-secure
future economy.
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527.
Ojha, K., Karmakar, B., Mandal, A., & Pathak, A. K. (2011, August). Coal Bed Methane in India:
Difficulties and Prospects. International Journal of Chemical Engineering and Applications, 256–260.
https://doi.org/10.7763/ijcea.2011.v2.113
Reddy, G. V., Khan, A. A., & Sharma, V. (2021, December 8). Coal bed methane: Changing India's gas
market. Innovative Exploration Methods for Minerals, Oil, Gas, and Groundwater for Sustainable
Development, 79–87. https://doi.org/10.1016/b978-0-12-823998-8.00081-8
Singh, A., & Singh, B. D. (1999, June 25). Methane gas: An unconventional energy resource. Current
Science, 76(12), 1546–1553. http://www.jstor.org/stable/24102137
Surya, S. Y., & Rameshchandra Y. (2008, January). Technical Challenges and Solutions of Produced
Waters from Coal Bed Methane [CBM] Reservoirs. Proceedings of 7th International Conference &
Exposition on Petroleum Geophysics 2008 (pp. 22). https:// https://spgindia.org/2008/022.pdf
Thielemann, T., Cramer, B., & Schippers, A. (2004, July 20). Coalbed methane in the Ruhr Basin,
Germany: a renewable energy resource? Organic Geochemistry, 35(11–12), 1537–1549.
https://doi.org/10.1016/s0146-6380(04)00120-2
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
COMPARATIVE ANALYSIS OF THE
USE OF WINE POUCH BASED
ON SUSTAINABILITY AND
CONSUMER RESILIENCE ASPECTS
BOGLÁRKA EISINGER BALASSA, RÉKA KOTECZKI,
BENCE LUKÁCS, ÁGNES CSIBA-HERCZEG
Széchenyi István University, Győr, Hungary
eisingerne@ga.sze.hu, koteczki.reka@ga.sze.hu, lukacs.bence@ga.sze.hu,
agnes@herczegagnes.com
Abstract Wine packaging, which is one of the largest CO2
emitting areas of the wine market, is undergoing significant
changes. Alternative packaging has appeared on the market and
is expected to gain ground in the near future, replacing the classic
glass bottles. The key research question is: how do different types
of packaging influence wine purchasing decisions and what
cognitive biases can be identified in the decision-making process?
The aim of this paper is to investigate two alternative packaging
formats, the pouch and the bag-in-box, from two perspectives:
sustainability and consumer behavior. To carry out the
sustainability analysis, we used data provided by a Hungarian
winery, with the help of which we determined the production
and transport emissions of pouch and bag-in-box. In addition to
presenting sustainability indicators, we aimed to assess the level
of resilience of these consumers in the wine market, using an
experiment. The results suggest that Hungarian participants are
resilient to use new alternative packaging types, but prefer bagin-box packaging to pouches, which can be considered the
novelty of the study.
DOI https://doi.org/10.18690/um.epf.3.2023.58
ISBN 978-961-286-736-2
Keywords:
wine market,
alternative
packaging,
cognitive biases,
resilience,
sustainability
JEL:
O33, Q56, C91
530
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Introduction
The role of food packaging is of growing concern from an environmental
perspective due to waste management impacts, but it also plays a very important role
from a health perspective, as packaging also serves to protect food (Ferrara & De
Feo, 2020; Wikström et al., 2014). Nowadays, a number of packaging alternatives
are available for drinks, such as PET (polyethylene terephthalate) bottles, bag-inbox, aseptic cartons and cans (Nesselhauf et al., 2017). The different types of
packaging have also been studied in a number of academic studies from a
sustainability perspective (Ferrara & De Feo, 2020; Ponstein et al., 2019; Gomes et
al., 2019) and in relation to consumer behaviour in terms of purchasing decisions
(Orlowski et al., 2022; Ruggeri et al., 2022). In our previous research, we examined
the sustainability indicators of PET and single-use glass bottles, the results of which
show that PET bottles are a viable alternative for lower and mid-range wines in
terms of cost and CO2 emission reduction. It is important to note that a glass bottles
are considered less sustainable than PET bottles if they are not in a multi-pass
system, i.e. it is not reused.
In the next part of the study, we present the sustainability background related to
individual wine packaging, as well as consumer behavior based on the literature.
After knowing the related background, we will present the two applied
methodologies, then carry out the sustainability calculations related to the two types
of wine packaging and the experiment measuring consumer attitudes. In this study,
the aim is to investigate two alternative packaging formats, the pouch and the bagin-box, from two perspectives: sustainability and consumer behaviour. By carrying
out the experiment, we are looking for the answer how consumers perceive
alternative packaging types and what is their resilience level?
2
Theoretical Background
The packaging industry has developed several alternatives for packaging wine, such
as aluminum can, Tetra Pack, PET bottle, Bag in Box or Pouch. These alternative
packaging types are lighter and more flexible than glass bottles, while glass bottles
are heavier and more fragile (Gomes et al., 2019). To investigate how
environmentally damaging each packaging alternative is, researchers often use Life
Cycle Analysis (Ferrara & De Feo, 2020; Gomes et al., 2019). When considering the
B. Eisinger Balassa, R. Koteczki, B. Lukács, Á. Csiba-Herczeg: Comparative Analysis of
the Use of Wine Pouch Based on Sustainability and Consumer Resilience Aspects
531.
environmental impact of different wine packaging, it is also essential to consider the
environmental impact of transport. Logistics and global emissions from transport
are major contributors to environmental pollution (Wild, 2021; Stojanović et al.,
2021).
Product packaging is one of the most powerful ways to communicate with
consumers, as it can influence consumer behaviour through perception. Since
consumers most often do not have the opportunity to taste food, they often rely on
external characteristics (shape, colour, size, etc.) (Orlowski et al., 2022; Spence,
2016). Parr (2019) examined the cognitive processes associated with wine and the
perception of wine through the lens of cognitive psychology. During wine tasting,
the colour of wine can also influence perceived flavours and aroma (Wang & Spence,
2019). Cognitive biases have also been observed in relation to wine packaging.
Consumers tend to judge the quality of wine on the basis of perceptual
characteristics. Several studies have concluded that wine bottles are associated with
higher quality compared to other alternative packaging (Ruggeri et al., 2022; Ferrara
et al., 2020). Hearnshaw and Wilson (2013) define resilience as the ability of a system
to return to its original or even a better state after an unexpected event. In this case,
this reflects the ability of consumers to adapt to changes in the wine sector (Forbes
& Wilson, 2018).
3
Methodology
To approach the problem under study from the perspective of sustainability and
consumer behavior, two methodologies were used. The sustainability aspect
associated with alternative packaging (bag-in-box and pouch) is presented in terms
of the CO2 value of the products produced and the CO2 emitted during the delivery
of the products.
To carry out the sustainability analysis, a Hungarian winery provided the required
data, through which the production and transport emissions of pouch and bag-inbox are described. As the wine market is changing rapidly due to environmental and
other aspects, it is essential to assess the level of consumer resilience in this area. To
investigate consumer attitudes and consumer resilience level towards alternative
wine packaging, an experiment was conducted in January 2023 at Széchenyi István
University in Hungary with a total of 330 participants. The scales used in the
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
experiment were adopted from the study by Orlowski et al. (2022). In this study only
a subset of the experiments were conducted, showing participants only a picture of
each alternative packaging type. For validation purposes, a pilot study was conducted
with 23 participants. The aim was to explore whether the experimental method is
appropriate for the phenomenon under investigation. Based on the participants'
feedback, minor changes were made, but the method was found to be appropriate.
In the experiment, the students were shown a picture of two types of wine packaging
(pouch and bag-in-box), which they had to evaluate by means of a questionnaire.
The two types of alternative packaging were from a Hungarian winery called Feind.
To avoid distorting the label, a wine label from a foreign brand was also used.
Table 1: Study measures
Measure
Traditionality
Familiarity
Purchase intention
Product Appeal
Taste expectations
Uniqueness
Demographic questions
Source: Orlowski et al. (2022).
2 questions
1 questions
4 questions
3 questions
3 questions
8 questions
4 questions
6 point Likert scale
The questionnaire used in the experiment contained a total of 25 questions. With
the exception of the demographic questions, we used a 6-point Likert scale. The
questions were grouped into a total of six categories: Traditionality, Familiarity,
Purchase intention, Product appeal, Taste expectations and Uniqueness (Table 1).
4
Results
The carbon dioxide (CO2) emissions from bag-in-box and pouch production were
calculated using a combination of data from Ponstein et al. (2019) and Ecoinvent
3.4 using SimaPro software. In the analysis, transport data are taken from a specific
winery in Hungary for the year 2023.
B. Eisinger Balassa, R. Koteczki, B. Lukács, Á. Csiba-Herczeg: Comparative Analysis of
the Use of Wine Pouch Based on Sustainability and Consumer Resilience Aspects
533.
Table 2: Sustainability data for alternative packaging types
Product weight
(kg)
Weight per package
(kg)
Weight per pallet
(kg)
Weight per truck
(kg)
CO2 per product
(kgCO2 )
Weight per place
(t/m3)
Co2 per delivering weight
(gCO2/t-km)
Bag-in-box (5l)
Pouch (3l)
5.20
3.10
5.20
18.80
749.00
475.20
23,968.30
15,682.30
0.35
0.29
0.26
0.17
32.69
49.96
Source: Data from a selected Hungarian winery.
Table 2 shows the characteristics of Pouch and Bag-in-box alternative packaging,
such as weights and Co2 emissions. The above table contains the necessary data that
can be used to calculate the CO2 generated during transport. For truck transport,
CO2 emissions are calculated using the indicator "gCO2/t-km", which includes the
payload weight, the distance travelled and the CO2 emissions weighted by these
factors. In the case of wine transport, the problem is not necessarily the weight
transported, but the lack of space, the goods to be loaded or the pallet's inability to
carry the additional load. Thus, trucks may not reach their maximum load (ECTA,
2011), based on an average CO2 emission of 783.50 gCO2/km for a truck with a
load of 13.84 tonnes, which corresponds to 56.60 gCO2/t-km (ECTA, 2011). For
the bag-in-box it was 32.69 gCO2/t-km, while for the pouch it was 49.96 gCO2/tkm. This means that the bag-in-box is more sustainable than the pouch in terms of
transport. This is confirmed by the volume of litres transported, as CO2 emissions
per litre transported are lower for the bag-in-box than for the pouch. For the bagin-box, 23,100 litres are transported per lorry, compared to 14,256 litres for the
pouch.
The statistical analysis of the data from the experiment was analysed using statistical
software. The data are not normally distributed, the test was performed with
Saphiro-Wilk Index, which in all cases showed a result of p=<.001. The reliability
of the uniqueness questions used as variables was tested using Cronbach's alpha, and
the variables were found to be reliable (0.855-Hungarian; 0.850-foreign). Wine
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
knowledge did not correlate with any of the other wine packaging factors in the
foreign test. In the case of the "foreign" test, traditionalism was weakly positively
related to the other factors in the analysis of bag-in-box, meaning that the more
traditional the participant found the BIB packaging to be, the more the other factors
were positively related. In the evaluation of taste, the more positively the participant
rated the expected taste, the higher the propensity to buy. The appearance of the
BIB was positively and strongly associated with the expected taste. In the 'foreign'
test, traditionalism showed a moderately strong relationship with willingness to buy,
appearance and expected taste. Willingness to buy showed a positive moderately
strong relationship with pouch appearance and expected taste. Furthermore, positive
ratings of pouch appearance showed a positive and moderately strong relationship
with expected taste. The uniqueness variable did not show a strong relationship with
either variable, so participants who like unique things or are more open to new things
were not more open to alternatively packaged wines.
0.332***
0.398***
0.356***
0.688***
0.476***
0.478***
0.393***
0.525***
0.447***
0.447***
0.530***
0.565***
0.522***
0.541***
0.453***
0.738***
0.729***
0.763***
Taste
expectations
Purchase Intention
Product Appeal
Taste expectations
Product Appeal
0.273***
Purchase
Intention
0.752***
0.360***
Traditionality
Taste
expectations
0.624***
0.593***
0.366***
Purchase
Intention
Traditionality
0.241**
0.326***
0.276***
0.583***
Traditionality
Product Appeal
Table 3: Analysis results in the case of the ‘foreign’ test
Pouch
BIB
Traditionality
Purchase Intention
Product Appeal
Taste expectations
Source: Own research
Table 3 shows the results of the correlation calculation. Wine knowledge showed a
weak and positive relationship with willingness to buy for the "Hungarian" test for
BIB and Pouch respectively. In the case of the "Hungarian" test, the variable of
traditionalism was weakly and positively related to willingness to buy in the bag-inbox evaluation of appearance and taste. For BIB, willingness to buy was positively
and moderately strongly related to the appearance and expected taste of the product.
Furthermore, the appearance of BIB was positively and moderately strongly related
to the expected taste. In the case of the "Hungarian" test, the traditionality of the
B. Eisinger Balassa, R. Koteczki, B. Lukács, Á. Csiba-Herczeg: Comparative Analysis of
the Use of Wine Pouch Based on Sustainability and Consumer Resilience Aspects
535.
packaging was positively and moderately strongly related to the willingness to buy,
the expected taste and the appearance of the product. Furthermore, the purchase
intention of the pouch was positively strongly related to the appearance and
expected taste of the product. Product appearance was positively and moderately
strongly related to expected taste. The uniqueness variable was weakly and positively
related to both variables for wine packaging, meaning that more open participants
tended to rate each attribute positively (Table 4).
Product Appeal
0.598***
0.394***
0.358***
0.446***
0.407***
0.317***
0.281***
0.428***
0.392***
0.550***
0.264***
0.438***
0.510***
0.398***
0.301***
0.714***
0.691***
0.220**
0.660***
0.329***
Taste expectations
Purchase Intention
Purchase Intention
0.582***
0.545***
0.233**
0.638***
0.349***
0.453***
0.188*
Traditionality
Source: Own research
0.160*
0.261**
0.182*
0.321***
0.154*
0.268***
0.294***
0.180*
Taste expectations
Traditionality
Purchase Intention
Product Appeal
Taste expectations
Traditionality
Purchase Intention
Product Appeal
Taste expectations
Uniqueness
Product Appeal
Pouch
BIB
Traditionality
Table 4: Analysis results in the case of the ‘Hungarian’ test
0.215**
Based on the Mann-Whitney test, there is a significant difference (p=<.001) between
the two groups (Hungarian, foreign) in the perception of traditionalism with a power
of 0.2968 for BIB and 0.1695 for taste expectations (p=0.006). For pouch, there was
no difference between the two groups. Furthermore, uniqueness attitude showed a
significant difference (p=0.042) with an effect size of 0.1243 (Table 4).
The analyses suggest that the perception of wine packaging as traditional packaging
is related to other perceptional factors. A product perceived as traditional may be
more acceptable in some cases than new things that are not yet experienced.
Willingness to buy products is higher when the product is familiar, has more positive
expectations and is attractively-packaged. The bag-in-box is an older alternative
packaging method than the pouch, and therefore this type of product may seem
more traditional to participants.
536
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Discussion and Conclusion
The present study presented the CO2 emissions and transport parameters (t/m3;
gCO2/t-km) of two alternative packaging options. The calculations show that the
bag-in-box has better transport parameters and that the CO2 emissions of bag-inbox packaging are lower compared to pouch. As a result of the experiment, it should
be underlined that the BIB wine packaging was rather more acceptable than the
pouch type packaging. Some practical, quality and aesthetic aspects can be
responsible for this finding. The fact that the factor of traditionality is related to the
other factors suggests that consumers are more accepting and more willing to
purchase alternative packaging with packaging types that they perceive as more
traditional. For this reason, overall, the level of resilience to the unpredictable among
the participants cannot be considered high. To make it more comfortable and
flexible for consumers to accept certain changes in the wine sector, it is necessary to
increase their level of resilience. Further research is needed to facilitate this but
informing and educating consumers can increase their resilience. As an avenue for
future research, we will use data from wineries to demonstrate which of the singleway and multi-way packaging options is the most sustainable in the long term. In the
light of the sustainability results, we will conduct consumer research among
Hungarian consumers on their attitudes towards different types of packaging.
References
Ecoinvent. (2022). Ecoinvent Database V.3.4. Swiss Centre for Life Cycle Inventory, CH.
http://www.ecoinvent.org/database (accessed 1 January 2023.)
ECTA. (2011). Guidelines for measuring and managing Co2 emission from freight transport operations
https://www.ecta.com/wp-content/uploads/2021/03/ECTA-CEFIC-GUIDELINE-FORMEASURING-AND-MANAGING-CO2-ISSUE-1.pdf (accessed: 1 January 2023.)
Ferrara, C., & De Feo, G. (2020). Comparative life cycle assessment of alternative systems for wine packaging in
Italy. Journal of Cleaner Production, 259, 120888. https://doi.org/10.1016/j.jclepro.2020.120888
Ferrara, C., Zigarelli, V., & De Feo, G. (2020). Attitudes of a sample of consumers towards more sustainable wine
packaging alternatives. Journal of Cleaner Production, 271, 122581.
https://doi.org/10.1016/j.jclepro.2020.122581
Forbes, S. L., & Wilson, M. M. (2018). Resilience and response of wine supply chains to disaster: the Christchurch
earthquake sequence. The International Review of Retail, Distribution and Consumer Research, 28(5), 472489. https://doi.org/10.1080/09593969.2018.1500931
Gomes, T. S., Visconte, L. L., & Pacheco, E. B. (2019). Life cycle assessment of polyethylene terephthalate
packaging: an overview. Journal of Polymers and the Environment, 27(3), 533-548.
https://doi.org/10.1007/s10924-019-01375-5
B. Eisinger Balassa, R. Koteczki, B. Lukács, Á. Csiba-Herczeg: Comparative Analysis of
the Use of Wine Pouch Based on Sustainability and Consumer Resilience Aspects
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Hearnshaw, E. J., & Wilson, M. M. (2013). A complex network approach to supply chain network
theory. International Journal of Operations & Production Management, 33(4), 442-469.
https://doi.org/10.1108/01443571311307343.
Nesselhauf, L., Deker, J. S., & Fleuchaus, R. (2017). Information and involvement: The influence on the acceptance
of innovative wine packaging. International Journal of Wine Business Research, 29(3), 285-298.
https://doi.org/10.1108/IJWBR-08-2016-0026
Orlowski, M., Lefebvre, S., & Back, R. M. (2022). Thinking outside the bottle: Effects of alternative wine
packaging. Journal of Retailing and Consumer Services, 69, 103117.
https://doi.org/10.1016/j.jretconser.2022.103117
Ponstein, H. J., Meyer-Aurich, A., & Prochnow, A. (2019). Greenhouse gas emissions and mitigation
options for German wine production. Journal of Cleaner Production, 212, 800-809.
https://doi.org/10.1016/j.jclepro.2018.11.206
Ruggeri, G., Mazzocchi, C., Corsi, S., & Ranzenigo, B. (2022). No More Glass Bottles? Canned Wine and
Italian Consumers. Foods, 11(8), 1106. https://doi.org/10.3390/foods11081106
Spence, C. (2016). Multisensory packaging design: Color, shape, texture, sound, and smell. Integrating the packaging
and product experience in food and beverages, 1-22. https://doi.org/10.1016/B978-0-08-1003565.00001-2
Stojanović, Đ., Ivetić, J., & Veličković, M. (2021). Assessment of international trade-related transport
CO2 emissions—A logistics responsibility perspective. Sustainability, 13(3), 1138.
https://doi.org/10.3390/su13031138
Wikström, F., Williams, H., Verghese, K., & Clune, S. (2014). The influence of packaging attributes on
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Cleaner Production, 73, 100-108. https://doi.org/10.1016/j.jclepro.2013.10.042
Wild, P. (2021). Recommendations for a future global CO2-calculation standard for transport and
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https://doi.org/10.1016/j.trd.2021.103024
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BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
CHALLENGES IN ESG RATINGS:
UNDERSTANDING ESG RATING
DISAGREEMENT AND ITS EFFECTS
ON FINANCIAL DECISION MAKING
HELENA NAFFA, FANNI DUDÁS
Corvinus University of Budapest, Budapest, Hungary
helena.naffa@uni-corvinus.hu, fanni.dudas@uni-corvinus.hu
Abstract The most widely applied indicators for sustainability
are the Environmental, Social, and Governance (ESG)
indicators, commonly used in academia and practice. However,
these metrics lack standardization, resulting in potential
discrepancies in performance assessments from different ESG
rating agencies, referred to as ESG rating disagreement in the
literature. Using ESG ratings from three different data providers
for a sample of firms in the MSCI All Country Index for 2020,
we calculated the ESG rating disagreement between
Sustainalytics, Refinitv, and MSCI ESG scores. We applied
quantile regression and provided evidence of a positive
relationship between ESG rating disagreement and firm financial
performance. Our findings contribute to a better understanding
companies’ ESG performance and the relationship between
ESG performance and financial performance.
DOI https://doi.org/10.18690/um.epf.3.2023.59
ISBN 978-961-286-736-2
Keywords:
ESG rating
disagreement,
quantile regression,
sustainability,
sustainable finance,
resilience
JEL:
C58, G15, G24
540
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Introduction
Sustainable finance is one of today’s important fields in economics. The best-known
sustainability indicators are the Environmental, Social, and Governance indicators,
collectively ESG indicators, which quantify the sustainability performance of
companies or countries. According to Svanberg et al. (2022), measuring
sustainability is one of today’s most significant challenges for the finance industry:
assessing a company’s sustainability with validity and accuracy. Sustainability is an
elusive factor that cannot be measured in one dimension. ESG indicators are
standardized sustainability performance assessments provided by third-party market
providers, such as MSCI, Bloomberg, or Sustainalytics, which are applied in
investment processes by investors.
Despite their wide adaption, ESG ratings are receiving criticism about their
disagreement, confirmed by evidence in the literature. Companies can get
significantly disagreeing performance assessments from different rating agencies,
which causes several problems in investor practice and examining ESG indicators
and corporate performance (Jacobs & Levy, 2022). In Amel-Zadeh and Serafeim’s
(2018) study, the practitioner’s perspective is clearly described in using ESG data:
they examined the barriers to ESG data use in the investment decision process,
among other ESG data-related questions. Based on their results, the investors
believe comparing reported information across firms is the biggest challenge to using
ESG information for investment decision-making.
So far, the ESG-related literature has concentrated on the relationship between the
financial and ESG performance of the companies (Naffa & Fain, 2020). Several
studies separately examine the relationship between environmental (E), social (S),
and governance (G) factors (Berlinger et al., 2022; Keresztúri et al., 2022), while
Kotró and Márkus (2020) researched the relationship between the risk of corporate
bonds and ESG scores. In addition to companies, sustainability aspects and
expectations have also appeared at the regulators, so it is necessary to change the
previous practices at this level as well; this was researched by, among others, Gyura
(2020) and Mihálovits and Tapaszti (2018). The ESG rating disagreement is less
researched; researchers have started studying this area recently. This paper aims to
present the relevant literature on ESG rating disagreement and bring empirical
evidence on ESG rating disagreement by calculating the ESG rating disagreement
H. Naffa, F. Dudás: Challenges in ESG Ratings: Understanding ESG Rating
Disagreement and its Effects on Financial Decision Making
541.
on a sample of the MSCI All Country Index using ESG data from Sustainalytics,
Refinitiv, and MSCI. We also examined the effect of ESG rating disagreement on
financial decision-making with quantile regression.
This paper is structured as follows: first, we present in detail the relevant literature
in connection with ESG rating disagreement, followed by the presentation of the
research design, where we present in detail the ESG data used, as well as present the
empirical results. Finally, we summarize the study.
2
Literature Review
In the literature, several researchers have examined the issue of ESG disagreement
in recent years. Some researchers, such as Berg et al. (2022), Capizzi et al. (2021),
and Chatterji et al. (2016), described the definition of ESG disagreement and the
phenomenon itself. Billio et al.’s (2021) study focused not only on ESG rating
disagreement and its investigation but also examined the impact of disagreement on
ESG portfolio performance, such other studies as Gibson Brandon et al. (2021), Liu
(2022), who examined the relationship of ESG rating disagreement on the financial
performance and ESG disclosure of companies. The theoretical background of the
ESG rating disagreement and the related issue is provided by Avramov et al. (2020),
and Avramov et al. (2022) researched in detail, supporting their results with empirical
models.
One of the studies on this topic is the study of Chatterji et al. (2016). They described
that ESG ratings are essential in assessing companies’ sustainable performance. They
approached the disagreement by measuring the convergent validity of ratings by
examining the pairwise tetrachoric correlations between the six indexes. They
documented a need for more agreement across social ratings from six wellestablished raters. According to their results, it is mainly because of the absence of
a common theorization and lack of commensurability. Billio et al. (2021) also
analyzed the phenomenon of ESG rating disagreement and examined if it affects
financial performance. They found a lack of commonality in defining ESG
characteristics, attributes, and standards in defining E, S, and G components. They
found that heterogeneity in rating criteria can lead agencies to have opposite
opinions on the same evaluated companies and that agreement across those
providers is substantially low. Their empirical results showed no impact on financial
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
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performances; however, the ESG rating disagreement disperses the effect of
preferences of ESG investors on asset prices.
Gibson Brandon et al. (2021) examined the relationship between ESG rating
disagreement and stock returns. They used ESG data from seven different providers
to assess ESG rating disagreement. Then they used a different panel regression
model to analyze the relationship between ESG rating disagreement and stock
returns. They calculated ESG rating disagreement based on investment practice,
using the standard deviation of the available ESG ratings from the seven different
data providers for a given firm at a given time. They calculated the disagreement
measure for the total ESG rating and separately for the E, S, and G dimensions.
Their findings suggest that stock returns positively relate to ESG rating
disagreement, suggesting a risk premium for firms with higher ESG rating
disagreement. This relationship is mainly based on the disagreement about the
environmental dimension.
Berg et al. (2022) also focused on the ESG rating disagreement; however, they
focused on the sources of the disagreement. They examined the ESG rating
disagreement based on six prominent ESG rating agencies. They described the rating
disagreement and mapped the different methodologies onto a common taxonomy
of categories. Their results revealed that the sources of the ESG rating disagreement
are the scope, measurement, and weight. Their results suggest that measurement
contributes 56% of the divergence, scope 38%, and weight 6%.
3
Methodology
In our study, we conducted our empirical investigations on a global sample. Based
on the MSCI All-Country Index, our sample included 2,752 companies. We built
our database for the year 2020 from various sources. We accessed the companies’
financial data via Bloomberg, using Refinitiv, Sustainalytics, and Bloomberg for the
ESG data. We proxied the companies’ financial performance with the one-year
return and the maximum drawdown. Among the control variables were various
financial indicators of the companies, such as market capitalization, ROA, long and
short-term debts, Tobin Q ratio, volatility, and the Amihud illiquidity ratio. To
calculate ESG rating disagreement, we used ESG data from three providers in our
work, Refinitv’s ESG score, Sustainalytics’ ESG Risk score, and MSCI’s ESG
H. Naffa, F. Dudás: Challenges in ESG Ratings: Understanding ESG Rating
Disagreement and its Effects on Financial Decision Making
543.
ratings. Using these three ESG data, we calculated the ESG rating disagreement
based on the work of Avramov et al. (2022). The calculation process is shown in
Equations 1 and 2.
�𝐸𝐸𝐸𝐸𝐸𝐸 𝑅𝑅𝑔𝑔𝑡𝑡𝑟𝑟𝑛𝑛𝑔𝑔𝑖𝑖𝐴𝐴 − 𝐸𝐸𝐸𝐸𝐸𝐸 𝑅𝑅𝑔𝑔𝑡𝑡𝑟𝑟𝑛𝑛𝑔𝑔𝑖𝑖𝐵𝐵 �
� = 𝐸𝐸𝐸𝐸𝐸𝐸 𝑅𝑅𝑔𝑔𝑡𝑡𝑟𝑟𝑛𝑛𝑔𝑔 𝑑𝑑𝑟𝑟𝑠𝑠𝑔𝑔𝑔𝑔𝑟𝑟𝑒𝑒𝑒𝑒𝑟𝑟𝑒𝑒𝑛𝑛𝑡𝑡𝑖𝑖𝐴𝐴𝐵𝐵
√2
(1)
where 𝐸𝐸𝐸𝐸𝐸𝐸 𝑅𝑅𝑔𝑔𝑡𝑡𝑟𝑟𝑛𝑛𝑔𝑔𝑖𝑖𝐴𝐴 company i is the ESG score given by rating company A,
𝐸𝐸𝐸𝐸𝐸𝐸 𝑅𝑅𝑔𝑔𝑡𝑡𝑟𝑟𝑛𝑛𝑔𝑔𝑖𝑖𝐵𝐵 company i is the ESG score given by rating company B, and
𝐸𝐸𝐸𝐸𝐸𝐸 𝑅𝑅𝑔𝑔𝑡𝑡𝑟𝑟𝑛𝑛𝑔𝑔 𝑑𝑑𝑟𝑟𝑠𝑠𝑔𝑔𝑔𝑔𝑟𝑟𝑒𝑒𝑒𝑒𝑟𝑟𝑒𝑒𝑛𝑛𝑡𝑡𝑖𝑖𝐴𝐴𝐵𝐵 ESG rating disagreement for company i.
∑𝑛𝑛𝑗𝑗 𝐸𝐸𝐸𝐸𝐸𝐸 𝑟𝑟𝑔𝑔𝑡𝑡𝑟𝑟𝑛𝑛𝑔𝑔 𝑑𝑑𝑟𝑟𝑠𝑠𝑔𝑔𝑔𝑔𝑟𝑟𝑒𝑒𝑒𝑒𝑟𝑟𝑒𝑒𝑛𝑛𝑡𝑡𝑖𝑖𝑋𝑋𝑋𝑋
�𝑛𝑛 = 𝐴𝐴𝑑𝑑𝑒𝑒𝑟𝑟𝑔𝑔𝑔𝑔𝑒𝑒 𝐸𝐸𝐸𝐸𝐸𝐸 𝑟𝑟𝑔𝑔𝑡𝑡𝑟𝑟𝑛𝑛𝑔𝑔 𝑑𝑑𝑟𝑟𝑠𝑠𝑔𝑔𝑔𝑔𝑟𝑟𝑒𝑒𝑒𝑒𝑟𝑟𝑒𝑒𝑛𝑛𝑡𝑡𝑖𝑖
(2)
Where 𝐸𝐸𝐸𝐸𝐸𝐸 𝑅𝑅𝑔𝑔𝑡𝑡𝑟𝑟𝑛𝑛𝑔𝑔 𝑑𝑑𝑟𝑟𝑠𝑠𝑔𝑔𝑔𝑔𝑟𝑟𝑒𝑒𝑒𝑒𝑟𝑟𝑒𝑒𝑛𝑛𝑡𝑡𝑖𝑖𝑋𝑋𝑋𝑋 the disagreement between X and Y ESG
ratings of company i is 𝐴𝐴𝑑𝑑𝑒𝑒𝑟𝑟𝑔𝑔𝑔𝑔𝑒𝑒 𝐸𝐸𝐸𝐸𝐸𝐸 𝑟𝑟𝑔𝑔𝑡𝑡𝑟𝑟𝑛𝑛𝑔𝑔 𝑑𝑑𝑟𝑟𝑠𝑠𝑔𝑔𝑔𝑔𝑟𝑟𝑒𝑒𝑒𝑒𝑟𝑟𝑒𝑒𝑛𝑛𝑡𝑡𝑖𝑖 the average of the
pairwise ESG rating disagreement for company i. The smallest value for this variable
means that the three ESG service providers agree on their assessment. The largest
value shows a large difference or large differences between the individual
classifications.
We used quantile regression for the empirical analysis. While the OLS regression
only shows the investigated relationship between the variables in relation to the
average values, in the case of the quantile regression, it also shows the arbitrary
quantiles of the conditional distribution of the dependent variable. With quantile
regression, we can determine how much the effect of the independent variable
differs in some parts of the conditional distribution of our dependent variable
(Hajdu & Hajdu, 2013).
Based on this, we examined the following equations.
𝑄𝑄𝜃𝜃 �𝑀𝑀𝑔𝑔𝑀𝑀. 𝑑𝑑𝑟𝑟𝑔𝑔𝑑𝑑𝑑𝑑𝑜𝑜𝑑𝑑𝑛𝑛𝑞𝑞𝑖𝑖 �𝑋𝑋𝑖𝑖 � = 𝛽𝛽0𝜃𝜃 + 𝛽𝛽1𝜃𝜃 𝐴𝐴𝑑𝑑𝑒𝑒𝑟𝑟𝑔𝑔𝑔𝑔𝑒𝑒 𝐸𝐸𝐸𝐸𝐸𝐸 𝑟𝑟𝑔𝑔𝑡𝑡𝑟𝑟𝑛𝑛𝑔𝑔 𝑑𝑑𝑟𝑟𝑠𝑠𝑔𝑔𝑔𝑔𝑟𝑟𝑒𝑒𝑒𝑒𝑟𝑟𝑒𝑒𝑛𝑛𝑡𝑡𝑖𝑖 +
𝛽𝛽2𝜃𝜃 𝐸𝐸𝑟𝑟𝑧𝑧𝑒𝑒𝑖𝑖 + 𝛽𝛽3𝜃𝜃 𝐿𝐿𝑒𝑒𝑑𝑑𝑒𝑒𝑟𝑟𝑔𝑔𝑔𝑔𝑒𝑒𝑖𝑖 + 𝛽𝛽4𝜃𝜃 𝑇𝑇𝑜𝑜𝑇𝑇𝑟𝑟𝑛𝑛 𝑄𝑄𝑖𝑖 + 𝛽𝛽5𝜃𝜃 𝑅𝑅𝑅𝑅𝐴𝐴𝑖𝑖 + 𝛽𝛽6𝜃𝜃 𝐿𝐿𝑟𝑟𝐿𝐿𝐿𝐿𝑟𝑟𝑑𝑑𝑟𝑟𝑡𝑡𝑦𝑦𝑖𝑖 +
𝛽𝛽7𝜃𝜃 𝑉𝑉𝑜𝑜𝑙𝑙𝑔𝑔𝑡𝑡𝑟𝑟𝑙𝑙𝑟𝑟𝑡𝑡𝑦𝑦𝑖𝑖 + 𝜀𝜀𝜃𝜃𝑖𝑖
(3)
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𝑄𝑄𝜃𝜃 �𝑅𝑅𝑛𝑛𝑒𝑒 − 𝑦𝑦𝑒𝑒𝑔𝑔𝑟𝑟 𝑟𝑟𝑒𝑒𝑡𝑡𝐿𝐿𝑟𝑟𝑛𝑛𝑞𝑞𝑖𝑖 �𝑋𝑋𝑖𝑖 � = 𝛽𝛽0𝜃𝜃 + 𝛽𝛽1𝜃𝜃 𝐴𝐴𝑑𝑑𝑒𝑒𝑟𝑟𝑔𝑔𝑔𝑔𝑒𝑒 𝐸𝐸𝐸𝐸𝐸𝐸 𝑟𝑟𝑔𝑔𝑡𝑡𝑟𝑟𝑛𝑛𝑔𝑔 𝑑𝑑𝑟𝑟𝑠𝑠𝑔𝑔𝑔𝑔𝑟𝑟𝑒𝑒𝑒𝑒𝑟𝑟𝑒𝑒𝑛𝑛𝑡𝑡𝑖𝑖 +
𝛽𝛽2𝜃𝜃 𝐸𝐸𝑟𝑟𝑧𝑧𝑒𝑒𝑖𝑖 + 𝛽𝛽3𝜃𝜃 𝐿𝐿𝑒𝑒𝑑𝑑𝑒𝑒𝑟𝑟𝑔𝑔𝑔𝑔𝑒𝑒𝑖𝑖 + 𝛽𝛽4𝜃𝜃 𝑇𝑇𝑜𝑜𝑇𝑇𝑟𝑟𝑛𝑛 𝑄𝑄𝑖𝑖 + 𝛽𝛽5𝜃𝜃 𝑅𝑅𝑅𝑅𝐴𝐴𝑖𝑖 + 𝛽𝛽6𝜃𝜃 𝐿𝐿𝑟𝑟𝐿𝐿𝐿𝐿𝑟𝑟𝑑𝑑𝑟𝑟𝑡𝑡𝑦𝑦𝑖𝑖 +
𝛽𝛽7𝜃𝜃 𝑉𝑉𝑜𝑜𝑙𝑙𝑔𝑔𝑡𝑡𝑟𝑟𝑙𝑙𝑟𝑟𝑡𝑡𝑦𝑦𝑖𝑖 + 𝜀𝜀𝜃𝜃𝑖𝑖
4
(4)
Results
The relationship between ESG rating disagreement and corporate financial
performance was examined using quantile regression. Table 1-2 shows the slopes of
the conditional distribution of the various financial performance proxies fitted to
different percentiles in order. In Table 1, where maximum drawdown was the
dependent variable, the first column shows the companies with the lowest value, i.e.,
the most resilient 5 percent, showing the effect of ESG rating disagreement on
maximum drawdown. In Table 2, the first column (p 5 %), in contrast to the
previous one, shows the impact of ESG rating disagreement on one-year return and
so on for the worst-performing companies. When maximum drawdown was the
dependent variable, there was no clear trend in the coefficients, and the coefficient
was significant only at the 95% percentile. This means that for companies with the
highest maximum drawdown value, there is a negative relationship between ESG
rating disagreement and maximum drawdown, i.e., if the uncertainty surrounding
the company’s ESG score increases by one unit, the maximum drawdown decreases
by 0.164 units.
Table 1: Relationship between ESG rating disagreement and maximum drawdown, quantile
regression
ESG rating disagreement
Bootstrap st. error
Control variables
Pseudo R 2
N
p (5%)
-0.013
0.023
Yes
0.09
2752
p (25%)
-0.003
0.019
Yes
0.1528
2752
(3)
p (50%)
-0.015
0.031
Yes
0.1782
2752
p (75%)
0.040
0.036
Yes
0.2132
2752
p (95%)
-0.164*
0.068
Yes
0.2969
2752
Note: Estimation procedure: Quantile regression, Dependent variable: Maximum drawdown, Control variables:
Market capitalization(ln), Long and short-term debts (ln), Tobin Q ratio, ROA, Amihud liquidity ratio (ln), 1-year
volatility, * p < 0.10, ** p < 0.05, *** p < 0.01.
Source: Authors' research.
In the case of the one-year return, we can already observe increasing coefficients as
we move from the 5% percentile to the 95%. In this case, the coefficient of ESG
rating disagreement was significant and had a positive sign in three cases. This means
H. Naffa, F. Dudás: Challenges in ESG Ratings: Understanding ESG Rating
Disagreement and its Effects on Financial Decision Making
545.
that the uncertainty around the company’s ESG score increases the performance of
those located at the top of the conditional distribution of the company’s financial
performance.
Table 2. Relationship between ESG rating disagreement and one-year return, quantile
regression
ESG rating disagreement
Bootstrap st. error
Control variables
Pseudo R 2
N
p (5%)
2.421
6.479
Yes
0.220
2752
p (25%)
5.108
5.563
Yes
0.092
2752
(4)
p (50%)
8.273*
4.604
Yes
0.038
2752
p (75%)
19.549**
7.908
Yes
0.022
2752
p (95%)
51.886*
27.142
Yes
0.079
2752
Notes: Estimation procedure: Quantile regression, Dependent variable: One-year return, Control variables: Market
capitalization(ln), Long and short-term debts (ln), Tobin Q ratio, ROA, Amihud liquidity ratio (ln), 1-year volatility,
* p < 0.10, ** p < 0.05, *** p < 0.01.
Source: Authors' research.
5
Discussion and Conclusion
Based on the results of quantile regressions, the relationship between ESG rating
disagreement and corporate financial performance is not even; it is not the same
throughout the entire conditional distribution. At the same time, the direction of the
relationship is visible, even if the ESG rating disagreement coefficients are not
significant in all cases. If the ESG rating disagreement increases, the company’s
financial performance also moves positively.
Our results are consistent with the work of Gibson-Brandon et al. (2021), who
explained the results with the theories of heterogeneous beliefs and Knightian
uncertainty. On the one hand, based on the heterogeneous beliefs theory, the ESG
rating disagreement is priced into the stock returns in addition to the market risk
exposure of the shares. Based on this explanation, if we consider the ESG evaluation
of several rating companies and thus want to get a complex picture of the sustainable
performance of the given company, then a possible ESG rating disagreement means
increasing uncertainty regarding the ESG performance of the given company. Thus
investors perceive it as a separate source of risk, which entails a risk premium if the
investors are risk averse. In addition, Gibson-Brandon et al. (2021) also argued with
Knightian uncertainty in their explanation, which in this case means uncertainty
about the ESG performance of the given company, i.e., ESG rating disagreement.
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Knightian uncertainty generally states that we do not know all the factors related to
a possible event; there is a certain degree of uncertainty related to the given event,
which we cannot quantify against the identified risks. Viale et al. (2014) applied this
theory to stock returns and concluded that uncertainty is priced into stock returns.
Therefore, ESG rating disagreement is a proxy for the uncertainty related to
companies’ ESG performance, which appears as a positive premium in stock
returns, and our results support this.
Our study may help academics, investors, financial advisors, policymakers and
regulators, and firms better understand that beyond the sustainability performance
captured by average ESG ratings. It is recommended to look behind the aggregated
scores and set up a set of criteria according to investor preferences, based on which
we can say that a company is sustainable and we can compare more company
performance.
Acknowledgment
Helena Naffa and Fanni Dudás are grateful for the funding from National Research, Development and
Innovation Office - NKFIH, K-138826.
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548
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LOCAL GOVERNMENT FINANCING
AND SUSTAINABLE DEVELOPMENT:
THE CASE OF ALBANIA
MARIEL FRROKU
University of Tirana, Faculty of Economics, Tirana, Albania
mariel.frroku@unitir.edu.al
Abstract Local government is one of the most important pillars
of good governance of a society, an important indicator to
express the essential role it has in the sustainable development
(SD) of a country. The reforms undertaken in Albania in terms
of increasing the fiscal and functional capacity of local
government, connect it more and more with all components of
SD. The use and maximization of the capacities of the local
government in order to improve the basic goals of SD, is
supported not only by the theoretical connection of functions
but also by the experience of developed countries with a deep
decentralization. In Albania, the local government receives
revenues in the form of central government transfers and its
own. These revenues are used by the local government to finance
public services that have a direct impact on the lives of citizens
but also to improve the quality of life. Both forms of local
government revenue are at full discretion to be used by local selfgovernment units and to improve measurable indicators of
increasing the quality of public services and financing sustainable
development.
DOI https://doi.org/10.18690/um.epf.3.2023.60
ISBN 978-961-286-736-2
Keywords:
local government,
public economics,
public finance,
sustainable
development,
fiscal
decentralization
JEL:
H71, H72, H77
550
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
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Introduction
After the 1990s in Albania, important reforms were undertaken to modernize local
government, which aimed to bring governance as close as possible to the citizens.
Over the course of three decades, important reforms and steps have been taken
dedicated to local government such as: i) the adoption of the Constitution of the
country in 1998, which sanctioned the organization and functioning of local
government; ii) approval by parliament of the European Charter of Local SelfGovernment, in 1999; iii) territorial administrative reforms, as well as iv) laws and
bylaws on fiscal decentralization and local public finances (Albania, 2016-2020).
Decentralization in general and fiscal decentralization in particular, are an issue
under constant discussion in almost all countries of the world (Dabla-Norris, 2006).
Strengthening the financing scheme and increasing the role of local government in
the implementation of many functions, is an important premise to promote the
country's economic growth and sustainable development in all components of
sustainable development.
In addition to more effectively managing local service provision related with goals
of sustainable development, the local government units should be better placed to
design and implement regional development programming (Imami et al., 2018). The
stronger monitoring and evaluation capacity that might be expected from these units
could likewise help with the “SDG localization”, via the expanded use of SDG
targets and indicators in local development planning (UN, 2021).
The territorial administration reform introduced large changes in the local
governance landscapes in Albania, including providing broader competencies for
local economic development, service provision, territorial planning, environmental
management, land management, transportation, welfare, social care, and civil
protection, and local information management (Toska & Bejko, 2019). In this
respect, support for local government accountability in the following areas seems
particularly important:
− Local public finance management. After the implementation of the Law
on Local Self-Government Finances, local financing has start to fully
implement the decentralized competences and expectations associated
with the administrative-territorial and decentralization reforms.
M. Frroku: Local Government Financing and Sustainable Development: The Case
of Albania
551.
− Streamlining local government structures to better reflect their distinct
functions, performance targets, and human resources.
− Introduce local government performance standards to that can be applied
across territorial administrations in the country, to guide and inform
practices, norms and values and further enhance local governance
approaches.
− Review the roles of local government in regional development, particularly
in providing technical, planning, and coordination functions to support
more effective territorial administration.
All the steps taken for local government in Albania in the framework of horizontal
and vertical decentralization have created advantages in increasing the quality of
implementation of SDGs by local government.
2
Literature Review
In public finance decisions, political risk is often the primary risk when assessing
developing world opportunities (World Bank, 2002). At the local level, financial
management faces the challenges of many risks which have a direct impact on the
sustainable development of public policies. Many studies have been conducted with
the pillars of sustainable public policy development, but the link between local
government funding and sustainable development is an area not covered by
analytical studies that help policymakers (UN, 2021).
Various studies have emphasized that real fiscal decentralization is very important
for local government. By foreign and domestic authors, as well as by international
institutions such as; The World Bank, OECD and the International Monetary Fund
mention that Albania has made progress in fiscal decentralization (OECD, 2021),
but there is still much to do. Increasing fiscal autonomy remains a challenge for the
future as it is an important aspect of sustainable local development.
All studies determine that at the local government level, measures to further depoliticize public finance management are needed to strengthen public-sector
accountability (UN, 2019). Measures in the following areas are recommended in
support of this objective:
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−
−
−
−
3
Strengthening the cultures, ethics, and values on using the public founds,
that characterize modern public institutions—particularly as concerns
Economy-Efficiency-Effectivity public money using, transparency, and
avoidance of even the appearance of conflicts of interest need significant
attention.
Acceleration the use of harmonized, results-oriented public finance
management monitoring systems at local levels. Monitoring systems of
public finance generally needs to focus on activity-, budget- and/ or outputbased reporting, characterized by differing forms and procedures, and in
some cases requiring multiple reporting of the same information.
Introduce comprehensive public finance management in local level
approaches within the civil service, which is professional and helps political
decision to make better decisions with effects in live of citizens.
Streamline and consolidate mechanisms for coordination, planning and
reporting on public finance management.
Methodology
This study is based on primary and secondary data collected by author in official
sources of the Ministry of Finance and Economy for 61 Municipalities in the
Government Financial Information System (GFIS Treasury System), official
information on fiscal indicators of local units provided by local self-government
units and by INSTAT for the period 2016-2020. The data are processed by the
author of the paper in order to be placed in the necessary format of the analysis of
the relationship between funding sources and expenditures for the purposes of
sustainable development.
As part of the study, in the paper is analyzed the importance that the elements of
the financing scheme (of revenues) will take towards sustainable development (some
of the SDGs at the local level). In this paper is examine the impact of factors such
as: i) General Unconditional Transfer (GUT), ii) Unconditional Sectorial Transfer
(UST) and iii) Own Revenue (OWR) (from local taxes and fees) to several
components of sustainable local development (some SDGs at the local level). The
SDGs that will be the subject of the study are: i) Quality of Education (E), ii)
Sustainable Communities and Cities (CC), and iii) Climate Change (CLCH).
M. Frroku: Local Government Financing and Sustainable Development: The Case
of Albania
553.
Through the multiple linear regression model, the aim will be to determine the
strength of the relationship between local government financing variables and
expenditures for financing the components of sustainable local government
development.
3.1
Model specification
The main goal of Sustainable Development Goal (SDG) is to influence with public
policies in Quality of Education, Sustainable Cities and Communities and Climate
change. To study the relation between public finance policies in local level with
SDG-se is created a model of multiple linear regression in SPSS Statistics.
This relation is a good indicator for measuring sustainable development as a results
of public finance management in local level. A high level of correlation signifies a
better level of development as a result of a well public finance management of local
units, whereas low correlation implies weak level of development of SDG-s and local
government unfunded. Financial inclusion is measured by the value of General
Unconditional Transfer (GUT), Unconditional Sectorial Transfer (UST) and Own
Revenue (OR). Based on the discussion the following model was developed. The
model to be used is expressed mathematically as thus:
SDE + SDCC + SDCLCH = ƒ (GUT + UST + OR)
(1.1)
The econometrics model is written as:
SDE + SDCC + SDCLCH = 𝛼𝛼 + 𝛽𝛽1GUTit + 𝛽𝛽2 USTt + 𝛽𝛽3 ORit + eit
(1.2)
To adjust for disparity in unit and measurement so that it can conform to the
homoscedastic assumption as clearly stated in the multiple linear regression linear
regression model. Where is constant, 𝛽𝛽1, 𝛽𝛽2 and 𝛽𝛽3 are the coefficient of the
independent variable in our case the 3 sources of revenues, while other variables
remain as defined earlier. In determining the level of relationship in both variables,
the study used different econometric techniques. The study used both Error
Correction Model and Fully Modified Ordinary Least Square (FMOLS) to ascertain
both the short-run and long-run relationship respectively among the variables. The
math- empirical expression is represented as; 𝛽𝛽1 > 0, 𝛽𝛽2 > 0 and 𝛽𝛽3 > 0 implying
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that a unit increase in the independent variables will lead to increase in SDG-s by
the value of the coefficient of the respective independent variable.
4
Research Results
In order to determine the level of connection between the indicators of local
government financing and expenditures at the program level according to the goals
of sustainable development, the authors have compiled some statistical data of the
multiple linear regressive relation. The result will summaries four estimated models,
which are the REM standard model, three generalizes least square (GLS) in
estimating coefficient covariance. In this study we are focus on the three main tables
you need to understand your multiple regression results, assuming that your data has
already met the eight assumptions required for multiple regression to give you a valid
result.
This study confirms a strong and direct link between the sources of local
government financing in Albania and the three important pillars of sustainable
development through ANOVA statistical indicators greater than the standard
statistical level. It has also been shown that an increase in local government funding
sources will have a direct impact on the increase in expenditures that go directly to
achieving the objectives of sustainable development.
4.1
Statistic test of variables
By using the SPSS Statistics, we have generated quite a few tables of output for a
multiple regression analysis. In this section, we show only the three main tables to
understand the results from the multiple regression procedure, assuming that no
assumptions have been violated.
The Table 1, of the econometric model is the Model Summary table, where is
reported the strength of the relationship between the model and the dependent
variable. With this table we provide the R, R2, adjusted R2, and the standard error
of the estimate, which can be used to determine how well a regression model fits the
data:
M. Frroku: Local Government Financing and Sustainable Development: The Case
of Albania
555.
F Change
3389.759
Sig. F
Change
.986
df2
9223.37203
df1
.986
R Square
Change
.986
Std. Error of the
Estimate
.993a
Change Statistics
Adjusted R Square
R Square
1
R
Model
Table 1: Model Summary 1 table
3
57
<.001
Source: Author's calculation in SPSS Statistics, 2021;
Based on the analysis of the above indicators we understand that the indicator "R"
or otherwise multiple correlation which measure the quality of the prediction of the
dependent variable; our case the sustainable development Goals. As it mentions in
the table, a value of 0.993, in this example, indicates a good level of prediction. This
indicator clearly expresses the level of forecast that the link of these indicators will
give on the impact of financial management at the local level on the acquisition of
important indicators of sustainable development. On the other side, R2 value which
is the proportion of variance in the dependent variable that can be explained by the
independent variables (technically, it is the proportion of variation accounted for by
the regression model above and beyond the mean model). You can see from in our
study the value of 0.986 that our independent variables explain 98% of the variability
of our dependent variables which are the expenditures of 61 local government units
for every goal.
The F-ratio in the ANOVA Table 2 tests whether the overall regression model is a
good fit for the data. The Table 2 shows that the independent variables statistically
significantly predict the dependent variable, F (4,95) = 3389.759, p < .001 (i.e., the
regression model is a good fit of the data).
Table 2: ANOVAa2
Model
Sum of Squares
10741917017039.210
Regression
60209713977.997
1
Residual
10802126731017.207
Total
Source: Author's calculation. in SPSS Statistics, 2021;
1
2
Predictors: (Constant), OWR, UST, GUT
Dependent Variable: SDE, SDCC, SDCLCH
Predictors: (Constant), OWR, UST, GUT
df
3
57
60
Mean Square
3580639005679.737
1056310771.544
F
3389.759
Sig.
<.001b
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The Table 2 with ANOVA results shows that our study confirms on this study the
strong link of forecasting that local government expenditures have for the purposes
of sustainable development to the main sources of local government funding.
5
Discussion and Conclusion
Based on the Literature Review on this issue, it results that theoretically there is a
strong connection between local government financing and sustainable
development. From the research of literature and cases of different countries it
results that, mainly in developed countries there is a strong connection between local
government financing and sustainable development. This connection is mainly
found in western countries with stable democracies and sustainable economic
development and potential. Within this group of countries that focus on
environmental development, the link between local and regional funding and
sustainable development is stronger.
The study shows that in Albania currently there has a low level of fiscal
decentralization related to the objectives of sustainable development, despite the fact
that the relationship between them financial management and SDG-s in the
econometric study is strong. An increase in the future level of local government
revenues not only from central government transfers but also its own resources
would progressively increase the impact of local government on the quality of
implementation of sustainable development goals.
The study highlights the need for policymakers in Albania to design and develop real
and complete decentralization processes associated with financial needs and
investment in human resources in order to increase the absorption power of
competencies from local communities and good local governance in favour of
increasing local community’s welfare.
References
Albania (2016-2020). Annual Report on local budget implementation. Tirana.
Dabla-Norris, E. (2006). The Challenge of Fiscal Decentralization in Transition Countries. IMF: Comparative
Economic Studies.
EU (2021. Sustainable Development in the European Union: Monitoring Report on Progress Towards
the SDGs in an EU Context. European Union: Brussel.
M. Frroku: Local Government Financing and Sustainable Development: The Case
of Albania
557.
Imami, F., Bejko, A., Shutina, D. (2018). Challenges of Regional Development in Albania. Annual Review
of Territorial Governance In Albania. Journal of Western Balkan Network on Territorial Governance 1(1),
8-23.
OECD (2021). Mobilizing Institutional Investors for Financing Sustainable Development. OECD:
Paris.
Toska, M., Bejko, A., (2019). Decentralization and Local Economic Development in Albania. Annual
Review of Territorial Governance in the Western Balkans, Journal of Western Balkan Network on Territorial
Governance, 1(1), 53-68.
UN (2019). Local and Regional Governments Report to the 2019 Towards and Localization of the
SDG. New York: United Nations
UN (2021). Financing for Sustainable Development Report 2021. New York: United Nations.
World Bank (2002). Financing for Sustainable Development. An input to the World Summit on
Sustainable Development. Environment Department, Division of Technology, Industry and
Economics, Fiscal Affairs Department, pp. 10-16. Washington, D.C.: World Bank Group.
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IDENTIFICATION AND
SUSTAINABILITY STUDY OF LMS
FOR TEACHING AND LEARNING OF
FOREIGN LANGUAGES
VESNA CACIO VUKMIR, SIMONA STERNAD ZABUKOVŠEK,
TJAŠA ŠTRUKELJ
University of Maribor, Faculty of Economics and Business, Maribor, Slovenia
vesna.cacio@student.um.si, simona.sternad@um.si, tjasa.strukelj@um.si
Abstract Educational learning management systems (LMS) are
essential in foreign language learning. With the help of
information technology, companies and educational institutions
have substantially transformed their learning process. This was
caused by global competition, Covid -19 virus pandemic and
environmental concerns. The paper aims to investigate LMS
used for teaching and learning languages and their impact on the
natural environment. In general, an eco-friendly approach will be
an important reason teachers and learners choose this or another
LMS. The first part of our paper addresses identifying and
categorising the LMS used for teaching and learning foreign
languages. Secondly, we give an overview of existing studies
related to their environmental impact. We discuss the mainly
positive environmental results. As the number of existing studies
appears to be limited, an in-depth study regarding the use, the
environmental impact, and the acceptance of LMS for teaching
and learning foreign languages would be for the users and the
developers an important step further.
DOI https://doi.org/10.18690/um.epf.3.2023.61
ISBN 978-961-286-736-2
Keywords:
foreign language,
learning
management
systems (LMS),
sustainability,
software,
competitiveness,
learning,
teaching
JEL:
M15, M53
560
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Introduction
Modern companies are placing much more importance on sustainability since their
consumers are interested in brands devoted to protecting the environment. Smart
businesses are taking new steps to attract these customers and new employees, and
they need to comply with conducting an eco-friendly business model approach
expectations (Mellon, 2022). Global competition forces organisations to continue to
increase operational efficiency. This is done by cutting costs by reducing office space
and limiting the mobility of employees by enabling online work from home. The
Covid-19 pandemic has enhanced the changes in foreign language learning and
teaching approach, pushing language learning processes from the physical world to
the online world. Therefore, LMS for videoconferencing, among them Zoom,
Webex, Microsoft Teams, Google Meet, etc., have become essential (Sternad
Zabukovsek et al., 2022). They are important because of teachers' constant,
interactive engagement with students, and they provide the right conditions for
language improvement (Camilleri et al., 2022).
2
Theoretical Background
2.1
Language LMS categorised by functionalities
Learning management systems (LMS) are becoming more sophisticated and practical
for learning and teaching foreign languages. They are classified into twelve
categories: systems for managing learning content, communication, live or virtual
learning, social network, blogs, presentations, sharing learning resources, creating a
website, creating online tutorials, web search engines, dictionaries and utilities. The
most popular content management systems (LMS/CMS) include Blackboard,
Drupal, Joomla and Moodle.
The following are used to conduct virtual meetings: Zoom, Microsoft Teams, Illuminate,
Livestream, and Google Meet (Son, 2011). Teams and Zoom services are visibly
attributed (to the availability of features related to learning and to the design and
usability). Zoom has some technical weaknesses, for audio-video is user-friendly.
These platforms are similar, and they tend to borrow useful features from one
another and are practical for online teaching with good quality functions (Kic-Drgas,
et al., 2022).
V. Cacio Vukmir, S. Sternad Zabukovšek, T. Štrukelj: Identification and Sustainability
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561.
LMS as communication tools include Gmail, Skype, Google Meet, Windows Live
Messenger, and Yahoo Messenger. A good example is Skype which is still widely
used for live chat and video conferencing. Zoom and Microsoft Teams are also
powerful tools for video conferencing that combine real-time chat, content sharing
and video. Each has its unique advantages. Regarding online classroom solutions,
Zoom and Microsoft Teams have reached quite a high level, enabling automated live
captioning and breakout rooms. Zoom's maximum event duration is 24 hours,
which can support 500 participants, whereas Microsoft Teams' is limited, only 4
hours. However, both LMS are constantly changing and adapting to the needs of
language learners (Son, 2011). All these video conferencing systems can be installed
on a computer or mobile phone and run in web browsers (Correia et al., 2020).
As a great LMS for foreign languages, if appropriately and pedagogically adapted,
are social networks, such as Facebook, My Space, LinkedIn and Twitter. Innovative
pedagogy has also been successfully integrated into their teaching approach blogs
and wikis. These tools can enable learner autonomy to develop at many language
levels (A1-C2). In addition, they have a special potential for collaborative and
situated learning, taking advantage of carefully designed instruction and considering
students' backgrounds (Reinhardt, 2019). They are Blogger, Edmodo, LiveJournal,
and WordPress.com.
Visualisation has become an important part of learning languages because it has been
proven by prior research that it cuts down time and increases productivity by making
data easier to understand for the learners, and it makes it easier for the teacher to
interpret raw data (Brath et al., 2023). Visualisation presentation tools are Slides,
Animoto and Slide Rocket. These offer innovative ways of presenting language
materials. Resource sharing LMS is understood as one of the most valuable tools on
the web. These include Google Docs/Drive, Dropbox, Voice Thread, Picasa, My
Podcast, Slide Share and YouTube.
IT skills are also important in foreign language practice in formal and informal
environments. Ningsih et al. (2022) state that smartphones, mobile phones and
tablet computers, have emerged as the most common mobile technology for
language learning practices. Some mobile applications include WhatsApp
Messenger, Edmodo, Google Classrooms, online quizzes and web browsers and are
a common practice in higher education institutions, used internally and externally in
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EFL classrooms. Task-based learning and communicative language learning are the
most effective common teaching approaches.
Moreover, website builder sites are another useful LMS. For example, Google Sites
provides teachers and students with simple and easy ways to create foreign-language
websites. Online content creation tools such as Content Generator, SMILE and ESL
Video allow teachers to develop language exercises for students. Web search engines
include Ask.com, Bing, Google and Yahoo Search. Nevertheless, the web is
potentially helpful for language studies since it provides examples of contextualized
and authentic language and is easily searchable, although uncontrolled, exhibiting
different features from the written and spoken texts (Wu et al., 2009).
Also, dictionaries are language reference LMS, including Dictionary.com, Your
Dictionary.com and Longman Dictionary of Contemporary English (LDOCE). And
finally, valuable aids for language learning activities are: Calculate Me, Calendar Fly,
Doodle, Currency Converter, Moviemaker, Google Earth, Lesson Writer, Story
Bird, Mind Master, SurveyMonkey etc. (Son, 2011). Digital storytelling derives its
power by weaving together images, music, narrative and voice, giving deep
dimension and vivid colour to characters, situations, experiences, and insights
because stories are now multimedia. These stories can include voice-overs, sound
effects, music for your ears, and video and still images for your eyes, but the creative
power comes from how the two are woven together (Rule, 2010).
Jackson et al. (2022) present features and integrated apps in MS Teams that help
language learners develop their language skills. The integrated YouTube app allows
a teacher to publish a link and will enable students to avoid diversion video viewing
teams. Screen sharing feature helps a teacher to share a screen with students through
which they can listen to audio recordings and watch the videos played. Group rooms
are available to lead discussions and assignments. Video conferencing helps to
conduct speaking activities and discussions among students. Flipgrid allows students
to upload the recorded video so that teachers and other students can comment, so
a speaking task is transformed compared to traditional classes. Ed puzzle helps the
teacher combine videos and questions in the same application. Speech Coach is a
feature that enables a teacher to give individual feedback privately on words,
intonation, and repetitive language. Such type of feedback on human speech is
impossible to obtain without technology. PDFs or DOC files for the student to read
V. Cacio Vukmir, S. Sternad Zabukovšek, T. Štrukelj: Identification and Sustainability
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563.
specific content as e-books replace printed books. Glosses for Education offer
teachers to create a reading group. Reading progress helps students get detailed
feedback on their reading fluency, as on mispronunciations, repetitions and
omissions. Chat is a feature that helps students to share their opinions and answers.
Discussion forums help a teacher start a thread to discuss a topic with students,
replacing oral discussion. OneNote allows teachers and students to write, draw,
attach pictures and even voice and video recordings. It has some functional changes
that can transform tasks as written assignments. Whiteboard can be used to write
assignments with functional changes – colouring, highlighting, pinning notes, and
writing.
Some universities have attempted to use freely available applications such as Zoom,
Microsoft Teams, Google Meets, Facebook Messenger and Skype for teaching
students. In addition, various social media such as YouTube, Twitter and Facebook
have become popular among new learners. Facebook, as one of the most popular
social networking sites, allows users to share and exchange profiles, photos and
videos with others. Therefore, is a valuable tool for teaching various languages (Giri
et al., 2022).
Teaching language subjects using LMS nevertheless has got limitations. The most
obvious is the internet and data connection, followed by marking tasks and tests,
plagiarism, poor interaction, and proper materials. Teaching language through LMS
sometimes has a negative impact on the students and the learners' learning process,
e.g., they can find their internet data expensive. There is a lack of proper sustainable
professional training. It is challenging to decide on the most suitable materials and
platforms. All in all, even though LMS can be used to communicate, the experience
cannot be the same as live interaction (Son, 2011).
2.2
Theoretical background of acquiring languages online and
sustainability of LMS
According to relevant literature study, the term sustainable development was initially
concerned with the environmental aspect. It was stated that sustainable development
incorporated two major concepts: the concept of "needs" and the concept of
constraints imposed by the current state of technology and social structure on the
ability of the environment to meet present and future requirements. It has become
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a crucial transitional marker that has sparked an industrial explosion in the fields of
development and sustainability. People have started to recognise that instead of
focusing exclusively on the environmental sector, there is a need to see and sustain
this globe as a whole unity. So, in 2015, the definition of sustainable development
was expanded to include respect for all life, human and non-human, and natural
resources, as well as incorporating issues like poverty reduction, gender equality,
human rights, education for all, health, human security, and intercultural dialogue.
In addition, sustainability tackles environmental concerns and the education system
itself to develop a comprehensive and requisitely integrated system. Since UNESCO
has recognised that education is essential to sustainable development, the idea of
education for sustainable development (ESD) is then widely introduced to the global
community as a tool to achieve sustainable development goals (SDGs). ESD is
education that helps learners make knowledgeable decisions and take responsibility
for environmental integrity, economic viability, and just society for present and
future generations while valuing cultural diversity. It also commits to educating the
next generation about global concerns and how to make a difference by themselves.
It has been accepted that the principles of sustainable development ought to be
taught through various disciplines and integrated into the available subjects only via
a new special subject (Gayatri et al., 2023).
To ensure a sustainable teaching and learning environment in different contexts,
teachers should use class designs considering distance learning, ensuring sufficient
online or virtual space for interactive communication. This maintains class quality
and develops a sustainable teaching and learning model that promotes students'
help-seeking. Establishing opportunities to develop a sense of public responsibility
is also better. Additionally, giving feedback on assignments should be considered the
effectiveness of the timing. In an online class, interactive communication is limited
to class hours. Preparing teaching materials for an online application is preferable
even if classes are delivered face-to-face (Ashida et al., 2022).
According to Barolo (2019), video meetings are an important feature of acquiring
language online, practically, through work experience. They may reduce the
influence of a regular business meetings on the ecosystem. The CO2 footprint is
reduced by substituting only one online business meeting and not travelling by plane
or other means of transport, thus reducing costs. Moreover, avoiding travel and
having a video conference positively impacts the environment and significantly
V. Cacio Vukmir, S. Sternad Zabukovšek, T. Štrukelj: Identification and Sustainability
Study of LMS for Teaching and Learning of Foreign Languages
565.
reduces costs. That means e-learning of corporate foreign language is good for the
planet and for business.
Furthermore, Hanna et al. (2022) state that we can indirectly improve language skills
while we teach speaking, business, and computer skills. Because many beforementioned LMS are used for video conferencing, and these applications are used on
mobile and PC, the measurements have been performed, on phone and PC, and the
environmental impact of LMS has been compared in terms of Carbon Footprint,
across different user frameworks, as well as across these two platforms. The findings
state that the top four LMS for foreign language learning with the lowest CO2 impact
is Google Meet, Microsoft Teams, Skype and Zoom (Derruder, 2021). Also, a global
search volume study reveals that video conferencing has become environmentally
highly beneficial and has taken an important position in global market shares (Digital
Information World, 2023).
3
Methodology
The current study is observational and non-experimental, so the objective is to use
the descriptive approach to the theory and concepts. Using the method of
compilation, the positions of various authors regarding the selected research
problem were summarised in the findings of LMS's impact on the environment.
With the help of the comparative method, we compared similar phenomena of LMS
for language learning and teaching and found similarities and differences between
them. Using the method of analysis and synthesis, we logically connected the
findings from practice and theory to each other according to the influence of LMS
on the environment through qualitative methods, which include observations
described in words and literature reviews that explore concepts and theories through
competitiveness, environmental impact and in social responsibility in the
continuation.
4
Results and Discussion
Learning and teaching foreign languages via LMS is essential in sustaining human
relationships. It works as a signifier of social commitment to international
collaboration. Hence, teachers should incorporate SDGs into their LMS-supported
classes, so students can actively produce and use language for real-life problem-
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solving. This paper has explored a conceptual study of LMS and its sustainable
development integration. Through the integrated framework and feasible
recommendations, it contributes to the theory that must provide practical
implications for the sustainability of LMS language education practices by targeting
public image, global competition, international communication, social responsibility,
environmentally respectful businesses, and negative consequences of online
teaching. Digital literacy and sustainability are, therefore, crucial for the sustainable
development of education and business. Research is needed on how LMS for
teaching languages are impacting sustainability. This study inventoried LMS for
teaching languages and reviewed the few found articles on this kind of sustainability
while also considering the possible negative impacts. Nevertheless, a further detailed
study is needed to research this compelling domain.
5
Conclusion
This paper focused on the sustainability impact of language learning and teaching
LMS. To identify the issues, we conducted a thorough review of the literature. The
research results showed that environmental issues are important in the online foreign
language acquisition field, which was emphasised during COVID-19. The authors
of this paper have outlined some ideas that can be used as a theoretical background
for further in-depth qualitative research to make LMS better and more
environmentally friendly for foreign language teaching and learning.
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568
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
NEXUS AMONGST REMITTANCES
AND INEQUALITY IN WESTERN
BALKAN COUNTRIES:
GLOBAL PANDEMIC CRISIS VS.
FINANCIAL CRISIS
ARJAN TUSHAJ,1 ELONA DUSHKU,2 VALENTINA SINAJ1
University of Tirana, Faculty of Economics, Tirana, Albania
arjantushaj@feut.edu.al, valentina.sinaj@unitir.edu.al
2 Central Bank of Albania, Tirana, Albania
elonadushku@gmail.com
1
Abstract This paper examines the impact of remittances on
income inequality measured through Gini index, particularly,
during the adverse external shocks, global financial crisis of 2008
and global pandemic crisis of Covid -19, in Western Balkan
countries. Data highlight the fragile economic progress of these
countries through fostering the income inequality during the long
transition. However, migrants’ remittances sustained to remain a
significant source of foreign income in Western Balkan
countries. The empirical results demonstrated a U-shape
relationship between remittances and inequality related to
Western Balkan countries, thus remittances have contributed on
increased inequality. Meanwhile, the linear relationship amongst
remittances and inequality demonstrated the negative impact of
remittances towards inequality. Additionally, we found that
remittances reduced significantly the inequality during pandemic
crisis of Covid-19, serving as a shock absorber during adverse
shock, but the remittances demonstrated the non – significant
and positive impact on inequality during recent global financial
crisis. We suggest that the policy makers should adopt regarding
effective income distribution to reduce income inequality.
DOI https://doi.org/10.18690/um.epf.3.2023.62
ISBN 978-961-286-736-2
Keywords:
remittances,
inequality,
adverse global
shocks,
global financial
crises,
global pandemic
crises
JEL:
F24, I32, C52
570
1
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Introduction
Globally, the remittances reached $689 billion during 2019 (World Bank, 2019)
demonstrating the principal source of income related to numerous developing
countries. Ratha and Plaza (2011) emphasized that the remittance flows incline to
be steadier and more countercyclical flow compare to the capital flow. In addition,
remittances confirmed to be more resilient during the financial crisis of 2008.
Blanchet et al. (2019) investigated the development of income inequality for 38
European countries during 1980 – 2017 through the harmonized methodology. He
confirmed that inequalities enhanced at most of European countries both at the top
and bottom of distribution, particularly among 1980 and 2000. His results
highlighted the inequality’s gap among Europe and USA, but it was lower and raised
much less in Europe compare to the USA. Meanwhile it will be continued the
significant income disparity among European countries and it was associated with
fragile improvement of European-wide income redistribution.
Elouardighi and Somun-Kapetanovic (2009) analyzed the convergence process of
income inequality amongst five Balkan countries during 1989-2008 through the
comparison of the situation in the European Union of 27 countries. Their results
demonstrated the real convergence process amongst Balkan countries. Meanwhile,
the income and inequality convergence were higher during 2000s according to EU27, but the greater part of convergence demonstrated during the second half of the
1990s according to Balkan countries. They highlighted the continuous and
comprehensive development gap amongst Balkan and European Union countries.
This paper examines the relationship amongst income’s inequality and remittances
through comparative analysis among four Western Balkan countries (Albania,
Kosovo, Montenegro, Serbia) during diverse shocks, particularly, financial crisis of
2008 and global pandemic crisis of Covid-19. The paper is organized into five
sections. Second section presents related literature review on the link between
remittances and income inequality. Third section give on overview on data and
applied methodology. Then fourth section continues with empirical results and
discussion referring to the panel regressions. The last section present some
concluding remarks.
A. Tushaj, E. Dushku, V. Sinaj: Nexus Amongst Remittances and Inequality in Western
Balkan Countries: Global Pandemic Crisis vs. Financial Crisis
2
571.
Literature Review
Diverse theoretical and empirical emphasized the significance of external and
internal negative shocks related to their effects on the income inequality, particularly
in developing countries.
Tokhirov (2021) examined the effect of international remittances on income
inequality according to the post-communist region using the static and dynamic
panel models related to 27 countries during 1991 – 2014. They found the U-shaped
amongst the international remittances and income inequality referring to most of
these countries. Meanwhile, they emphasized when remittances calculate more than
20% of GDP, they intensified the economic inequality.
Bajra (2021) examined the influence of remittances towards the economic growth
and inequality within the Western Balkans. He found that the remittances have
contributed to the income inequalities despite of converging to decline the share of
remittances in a country’s economy over the years. His empirical results related to
the effect of remittances demonstrated no strong support towards the economic
growth and inequality through testing the endogeneity of remittances.
Kóczán and Loyola (2018) investigated the remittances’ effect according to the
inequality in Mexico using the household-level data. They examined the remittances’
effect during the 1994 Mexican Peso crisis and the Global Financial Crisis. They
found that remittances can contribute to decrease the income inequality in the home
country and to absorb shocks hitting the poorest.
Petreski and Jovanovic (2013) examined the impact of remittances on poverty and
inequality in North Macedonia using two household surveys, particularly 2008 and
2012, after global financial crisis. They found the simultaneous effect of remittances
to reduce the poverty and inequality before and after the crisis, meanwhile the
inequality-reducing effect has demonstrated mainly in 2012, despite of increasing
inequality during 2008.
Koechlin and León (2006) examined the inclusive empirical results related to the
relationship amongst the international remittances and income inequality for 133
diverse countries during 1960 - 2003. They found a non-monotonic linkage amongst
572
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
them through simple cross-country regressions using ordinary least squares,
instrumental variables and using dynamic panel data approach. They examined an
inequality-increasing effect related to the remittances towards the income inequality,
but they demonstrated the U curve shape amongst these variables referring to
diverse stage of migration.
3
Data and Methodology
As we mentioned above our aim is to investigate the impact of international
remittances on inequality 5 countries of Western Balkan region such as Albania,
Kosovo, Montenegro, North Macedonia and Serbia during 2008-2020 period. Also,
we have explored the effect of recent global financial crisis and pandemic crisis of
COVID-19 according to the inequality. The main source of data refers to World
Bank and Table 1 demonstrates the description of main variables and their statistics
for all five Western Balkan countries during the period of 2008-2020.
Meanwhile, Table 2 demonstrates the dynamics according to the dependent and
independent variables related to each country during 2008 until 2020. Data confirm
the differences amongst countries in terms of their economic performances and
development. Referring to the data, we observe that remittances account on average
10% of GDP for all countries in Western Balkan region, except North Macedonia.
It proves the lowest percentage of remittances to GDP, less than 4.2%.
To explore the relationship amongst inequality and international remittances in
Western Balkans we have followed the approach proposed by Koechlin and León
(2006) and Tokrihov (2021). Both authors have considered the nonlinear link
between remittances and inequality, thus we estimated the following regression
referring to their approach:
2
+ 𝛽𝛽3 𝑙𝑙𝑜𝑜𝑔𝑔𝐸𝐸𝑙𝑙𝑙𝑙_𝑟𝑟𝑔𝑔𝑔𝑔𝑖𝑖𝑡𝑡
𝑙𝑙𝑜𝑜𝑔𝑔𝐸𝐸𝑟𝑟𝑛𝑛𝑟𝑟𝑖𝑖𝑡𝑡 = 𝛽𝛽0 + 𝛽𝛽1 𝑅𝑅𝑒𝑒𝑟𝑟𝑖𝑖𝑡𝑡 + 𝛽𝛽2 𝑅𝑅𝑒𝑒𝑟𝑟𝑖𝑖𝑡𝑡
+ 𝛽𝛽4 𝑙𝑙𝑜𝑜𝑔𝑔𝐸𝐸𝑙𝑙𝑙𝑙_𝑟𝑟𝑔𝑔𝑔𝑔_𝑟𝑟𝑛𝑛𝑡𝑡𝑖𝑖𝑡𝑡 + 𝛽𝛽5 𝑀𝑀3𝑖𝑖𝑡𝑡 + +𝛽𝛽6 𝑙𝑙𝑜𝑜𝑔𝑔𝑙𝑙𝑒𝑒𝑟𝑟𝑜𝑜𝑟𝑟𝑟𝑟𝑔𝑔𝑟𝑟𝑦𝑦𝑖𝑖𝑡𝑡
+ 𝛿𝛿1 𝑑𝑑𝐿𝐿𝑟𝑟𝑟𝑟𝑦𝑦1 + 𝛿𝛿2 𝑑𝑑𝐿𝐿𝑟𝑟𝑟𝑟𝑦𝑦2 + 𝜀𝜀𝑖𝑖𝑡𝑡
(1)
where the error component is 𝜀𝜀𝑖𝑖𝑡𝑡 = 𝛼𝛼𝑖𝑖 + 𝐿𝐿𝑖𝑖𝑡𝑡 and 𝐿𝐿𝑖𝑖𝑡𝑡 ~𝑟𝑟𝑟𝑟𝑑𝑑𝑖𝑖(0, 𝜎𝜎 2 ), for each
country, i=1,..,5 and t=1,2,…n.
A. Tushaj, E. Dushku, V. Sinaj: Nexus Amongst Remittances and Inequality in Western
Balkan Countries: Global Pandemic Crisis vs. Financial Crisis
573.
Table 1: Description of main variables
Variable
Gini index
Rem_GDP
Rem_GDP^2
GDP growth
GDP per
capita
M3 as % of
GDP
Democracy
Index
Description
The Gini index measures the extent to
which the distribution of income or
consumption among individuals or
households within an economy deviates
from a perfectly equal distribution. A
Gini index of 0 represents perfect
equality, while an index of 100 implies
perfect inequality.
Remittances as a percentage of GDP,
where remittances comprise personal
transfers and compensation of
employees.
Remittances as a percentage of GDP
squared
Annual percentage growth rate of real
GDP.
GDP per capita is gross domestic
product divided by midyear population.
GDP is the sum of gross value added by
all resident producers in the economy
plus any product taxes and minus any
subsidies not included in the value of
the products. It is calculated without
making deductions for depreciation of
fabricated assets or for depletion and
degradation of natural resources. Data
are in constant 2015 U.S. dollars.
M3 as % of GDP, where broad money
is the sum of currency outside banks;
demand deposits other than those of
the central government; the time,
savings, and foreign currency deposits
of resident sectors other than the
central government; bank and traveler’s
checks; and other securities such as
certificates of deposit and commercial
paper.
Composite index measured as the sum
of civil and political rights.
Source: Word Bank (2023), average of all countries.
Mean
St. dev
Source
34.86
4.72
WB
10.11
4.60
WB
123.25
99.87
WB
2.20
3.63
WB
4846.33
1227.23
WB
55.92
14.32
WB
6.12
1.39
FIW
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE BY SUSTAINABLE ECONOMY AND BUSINESS –
TOWARDS THE SDGS.
Table 2: Stylized fact related to Western Balkan countries during 2008-2020
2008
2009
2010
2011
AL
KS
MN
NM
SB
30.00
31.80
41.20
42.80
39.90
30.00
31.80
41.20
42.80
39.90
30.00
33.30
41.20
40.20
39.90
30.00
27.80
41.20
39.40
39.90
AL
KS
MN
NM
SB
14.48
20.20
6.56
4.10
6.79
14.26
21.06
7.29
4.05
10.30
13.30
18.84
10.04
4.12
9.85
12.04
15.66
11.21
4.14
8.04
AL
KS
MN
NM
SB
3,298.48
2,621.42
6,205.79
4,230.73
5,270.96
3,432.17
2,731.38
5,833.63
4,207.80
5,147.57
3,577.11
2,843.38
5,982.17
4,339.96
5,206.09
3,678.05
2,997.22
6,168.82
4,433.89
5,354.20
Source: Word Bank (2023)
2012
2013
2014
2015
2016
Gini index
29.00
29.00
34.60
32.80
33.70
29.00
26.30
27.30
26.50
26.70
41.20
39.00
38.80
39.00
38.50
38.10
36.20
35.20
35.60
34.50
39.90
39.50
40.50
40.50
38.80
Remittances as % of GDP
11.52
10.03
10.74
11.34
11.01
15.34
15.71
15.53
15.43
14.75
12.42
12.21
11.83
11.58
10.99
4.04
3.48
3.23
3.05
2.73
8.19
8.32
7.85
8.50
7.88
GDP per capita (constant 2015 US$)
3,736.34 3,780.70 3,855.76 3,952.80 4,090.37
3,021.37 3,163.46 3,279.04 3,520.77 3,739.18
5,995.75 6,202.48 6,306.99 6,517.16 6,707.82
4,408.30 4,530.68 4,687.30 4,861.55 4,994.56
5,343.58 5,524.97 5,462.74 5,588.98 5,805.90
2017
2018
2019
2020
33.10
29.00
36.90
34.20
36.20
30.10
29.00
36.80
33.00
35.00
30.80
29.00
36.80
33.00
34.50
30.80
29.00
36.80
33.00
34.50
10.08
15.49
10.77
2.78
8.13
9.62
15.68
10.69
2.72
8.78
9.56
15.81
10.54
2.52
8.23
9.69
18.61
12.59
3.34
7.25
4,249.80
3,890.20
7,023.40
5,043.69
5,959.52
4,431.54
4,009.11
7,381.77
5,184.69
6,261.53
4,543.39
4,219.08
7,684.15
5,386.20
6,567.91
4,410.46
3,990.97
6,515.51
5,067.21
6,552.09
A. Tushaj, E. Dushku, V. Sinaj: Nexus Amongst Remittances and Inequality in Western
Balkan Countries: Global Pandemic Crisis vs. Financial Crisis
575.
As explanatory variables we have included remittances, level of GDP per capita, and
ratio of M3 as % of GDP as a measure of financial development and democracy
index as a measure of political and civil right. We included two dummy variables in
regression referring to recent global financial crisis and pandemic crisis of COVID19 due to examine the impact of two core external shocks related to the inequality.
The dummy variables take the value of 1 according to year 2008 and 2020 and zero
value others.
4
Results and Discussion
We decided to exclude North Macedonia from the sample due to the lower
percentage of remittances referring to GDP, approximately 3.4%. The estimated
results related to the rest of Western Balkan countries are demonstrating in Table 3.
We have presented the diverse specification based on panel least square regression.
Estimated results confirm a U-shape relationship amongst inequality and
remittances, therefore an increase of remittances beyond a threshold will
significantly reduce income inequality measured through Gini index (column1).
Meanwhile, we have included the economic performance indicator measured
through real GDP per capital and level of GDP per capita at begin of 2008. Also,
we have included financial development indicator measured through ratio of M3 to
GDP. Estimated results (table 3, column 2&3) show a positive and significant results
of initial GDP per capital on inequality, while we did not find a significant results
according to the economic development. In addition, we found a positive impact of
financial development on inequality, which it demonstrates that higher financial
development of these countries has contributed on the deepening of inequality.
However, we found a negative and significant impact of the democracy index on
inequality, which show that improved political and civil rights contributed to the
reduction of inequality. Otherwise, the estimated results according to the interaction
amongst dummy crisis variables and remittances demonstrated that remittances have
significantly reduced inequality and have served as a shock absorber during
pandemic crisis of Covid-19 (table 3, column 4-6). Meanwhile, we did not find any
significant results about the interaction term between remittances and financial crises
dummy. These results display the divergence amongst two external shocks.
576
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Table 3: Estimated results based on different specifications
Remit
Remit2
1
-0.084
2
-0.071
3
-0.059
(0.004)
(0.003)
(0.000)
0.002
0.002
0.002
(0.042)
(0.030)
(0.001)
0.240
0.350
(0.016)
(0.000)
0.009
-0.145
(0.946)
(0.123)
0.002
0.005
(0.204)
(0.000)
GDP_cap_intit
GDP_capit
M3it
Democracy_indexit
Dummy_Fin_crises*Re
m
4
-0.053
(0.002
)
0.002
(0.004
)
0.331
(0.000
)
-0.113
(0.253
)
0.004
(0.001
)
-0.369
(0.000
)
Obs.
Adj-R2
6
-0.061
GMM
-0.132
(0.000)
(0.001)
(0.048)
0.002
0.002
0.004
(0.000)
(0.001)
(0.087)
0.340
0.328
0.624
(0.000)
(0.000)
(0.000)
-0.098
-0.081
-0.450
(0.298)
(0.405)
(0.018)
0.005
0.005
0.009
(0.000)
(0.000)
(0.004)
-0.378
-0.368
-0.378
(0.000)
(0.000)
(0.000)
0.002
0.001
(0.307
)
(0.527)
Dummy_Covid Rem
Constant
5
-0.065
4.182
1.970
2.774
(0.000)
(0.002)
(0.000)
52
52
52
2.610
(0.000
)
52
0.427
0.700
0.866
0.866
-0.005
(0.058)
2.458
-0.004
(0.090)
2.381
(0.000)
(0.000)
52
52
0.873
0.872
44
P-Jstat
(0.11)
Source: Authors' calculations by Eviews 7 (Note: Values in bracket present p-value)
To overcome the problem of endogeneity amongst our variables, we have presented
the estimated results (column 7) based on GMM 1 approach. Whereas as instrumental
variables we have used the lagged value of depend and independent variables. The
estimated results demonstrate the nonlinearity effect of remittances on inequality.
Thus, we confirm a U-shape relationship amongst inequality and remittances, so
higher remittances above a threshold will significantly reduce income inequality
measured through Gini index. Due to the impact of other control variables, we
The dynamic models with panel data have two main assumptions: the error terms are uncorrelated and the
dependent variables are completely exogenous. If the error terms are correlated, the estimates obtained may be
inconsistent, for its elimination we use the Generalized Method of Moments (GMM) to evaluate the models,
referring to Arellano and Bond (1991).
1
A. Tushaj, E. Dushku, V. Sinaj: Nexus Amongst Remittances and Inequality in Western
Balkan Countries: Global Pandemic Crisis vs. Financial Crisis
577.
found that higher economic development and higher democracy index have
contributed on the reduction of inequality. While higher financial development has
contributed on deepening of inequality of these countries.
5
Conclusion
We have explored the nexus between income inequality measured through Gini
index and international remittances within Western Balkan countries, except North
Macedonia. We have investigated particularly the non-linear relationship amongst
inequality and remittances through incorporation the interaction effects of
remittances towards inequality during recent global financial crisis and pandemic
crisis of Covid - 19. Empirical data on inequality of particular countries approve that
their fragile economic progress has fostered the income inequality converging to the
macroeconomic circumstances of them during 2008-2020. However, remittances
have continued to be an important foreign income, an average at 10 % of GDP.
Estimated results based on OLS and GMM estimations confirm a U-shape
relationship amongst inequality and remittances as ratio of GDP. These results
highlight that remittances have significantly reduce inequality in Western Balkan
countries. Our results show that economic development and democracy have
negatively affected inequality. Also, additional enhancement of economic
performance and political and civil rights reduced inequality in Albania, Kosovo,
Bosnia-Herzegovina and Serbia. While we found that financial development
demonstrates an opposite effect, through increasing inequality. Results demonstrate
that remittances have contributed on reducing inequality and might have served as
an absorber mostly for vulnerable households, particularly during the pandemic
crisis of Covid-19. Referring to these results we suggest that the policy makers
should enact the appropriate policies related to the effective income distribution in
order to reduce income inequality during the external shocks. Due to this crucial
consequence, the income redistribution policies should be monitored in the future
within Western Balkan countries.
References
Arellano, M., & Bond, S. (1991). Some Tests of Specification for Panel Data: Monte Carlo Evidence
and an Application to Employment Equations. Review of Economic Studies 58, 277-297.
578
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BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Bajra, U. (2021). The interactive effects of remittances on economic growth and inequality in Western
Balkan countries. Journal of Business Economics and Management 2021, 22(3),757–775.
https://doi.org/10.3846/jbem.2021.14587
Blanchet, T., Chancel, L., & Gethin, A. (2019). How unequal is Europe? Evidence from distributional
national accounts, 1980–2017. Working Paper, April 2019.
El ouardighi, J., & Somun-Kapetanovic, R. (2009). Convergence and Inequality of income: the case of
Western Balkan countries. The European Journal of Comparative Economics, 6(2), 207-225.
Kóczán, Z., & Loyola, F. (2018). How Do Migration and Remittances Affect Inequality? A Case Study
of Mexico. IMF Working Paper.
Koechlin, V., & León, G. (2006). International remittances and income inequality: An empirical
investigation. Working Paper, No. 571, Inter-American Development Bank, Research
Department, Washington, DC.
Petreski, M., & Jovanovic, B. (2013). Do Remittances Reduce Poverty and Inequality in the Western
Balkans? Evidence from Macedonia. MPRA Paper No. 51413.
Ratha, D., & Plaza, S. (2011). Harnessing Diasporas. Finance & Development, September, 48(3).
Tokhirov, A., Harmáček, J., & Syrovátka, M. (2021). Remittances and inequality: the post-communist
region. Prague Economic Papers, 30 (4), 426–448. https://doi.org/10.18267/j.pep.776
World Bank (2019). World Development Indicators. CD ROM. Washington, DC, United States: World
Bank.
DIGITAL TRANSFORMATION
IN HEALTHCARE: AN ANALYSIS
OF TELEMEDICINE AND
PUBLIC POLICY
LARISA MIHOREANU,1 DANIEL-GABRIEL DINU,2
ANDREEA STOIAN KARADELI3
Bucharest University of Economic Studies, Faculty of Administration and Public
Management, Bucharest, Romania
larisa.mihoreanu@amp.ase.ro
2 Bucharest University of Economic Studies, Business Administration Doctoral School,
Bucharest, Romania
daniel.dinu90@gmail.com
3 Univ. of Texas Rio Grande Valley, College of Liberal Arts, Dept. of Public Affairs and
Security Studies, Texas, United States of America
1
Abstract Technology advancements and the rising need for
more accessible, effective treatments drive a digital change in the
healthcare sector. Adopting telemedicine enables remote
consultations and treatments as essential elements of transition.
The paper examines opportunities and challenges that
telemedicine currently brings in healthcare ascertaining how
public policy may encourage the use of telemedicine and best
practices adoption to ensure efficacy, starting with a literature
review on telemedicine status quo-definition, services provided,
their advantages and disadvantages. The telemedicine current
practices within healthcare industry are examined considering
adoption rates, obstacles’ use and economic effects. The paper
also concentrates on the public policy role encouraging the
telemedicine use, the legal and regulatory frameworks controlling
it, policies and incentives promoting it too. The final of the paper
outlines the best ways to deploy telemedicine, the use of
technology for electronic health records, remote monitoring
tools together with patients' participation and their education's
significance. Overall, the paper grants a thorough examination of
both opportunities and difficulties that telemedicine currently
presents for healthcare, the role of public policy in promoting its
adoption, and the implementation of best practices to ensure its
effective use.
DOI https://doi.org/10.18690/um.epf.3.2023.63
ISBN 978-961-286-736-2
Keywords:
telemedicine,
healthcare,
digital
transformation,
public policy,
best practice
JEL:
I00, L38, D80, L86
580
1
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
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Introduction
The COVID-19 pandemic imposed unprecedented pressure on healthcare realm,
worldwide, causing saturated systems, logistical non-conformities, medical staff
shortages, inadequate public management and ineffective crisis-related public
policies (Pfefferbaum & North, 2020). This situation has revealed vulnerabilities in
the public systems and called for innovative transformations to build resilience and
promote better management of future crises. While further research is needed, this
paper argues that smarter design of public policies can support the development of
resilient human resources backed by technological adoption.
The impact of the recent pandemic has been far-reaching, affecting entire society
besides the health sector. According to WEF’s Global Risks Report 2021 (Schwab
& Zahidi, 2021), perturbations generated the cancellation of important international
events and significant economic losses in most industries. In response to the
overwhelming demand for healthcare services, the sector has been forced to
mobilize and innovate beyond its traditional boundaries, leveraging existing
resources to save lives and mitigate economic losses. To better manage future crises,
public policies should focus on building resilient human resources through the
incorporation of technological advancements.
The COVID-19 pandemic has placed a significant strain on healthcare systems
globally, leading to high alerts and full resource utilisation for emergency responses.
The coordination and effective functioning of health systems have become critical
international concerns to address the demand for medical services. This atypical
crisis has required swift changes in various areas, including operation patterns,
service prioritisation and care delivery, to combat the pandemic and restrain its
consequences. With healthcare administration and patients gained experience in
managing COVID-19, the focus still remains on reducing the pandemic devastating
effects and providing higher quality to all services.
2
Literature Review
Telemedicine (TM) refers to the remote delivery of healthcare services (Sood et al,
2007) using telecommunication and digital technologies (Tedros, 2020). Over the
years, TM use has increased being effective in providing remote care to patients with
L. Mihoreanu, D.-G. Dinu, A. Stoian Karadeli: Digital Transformation in Healthcare: An
Analysis of Telemedicine and Public Policy
581.
chronic conditions, enabling access to specialised care and reducing the burden on
healthcare facilities (Martinez et al., 2006) and the pandemic accelerated its adoption
and integration into healthcare systems (Mihoreanu et al., 2022). Moreover, TM has
the potential to improve health outcomes and patient satisfaction while reducing
healthcare costs (Khan et al., 2021), expanding access to services and promoting care
continuity.
The adoption of TM addressed some of the challenges faced by healthcare systems
during the COVID-19 pandemic when it helped maintain social distancing, reduced
the risk of infection, provided care to patients in quarantine or self-isolation
(Gordon & Catalini, 2018), supported the management of the surge of patients
seeking care.
The last pandemic has highlighted pre-existing weaknesses in the healthcare systems:
repetitive routine, bureaucratic administration, ineffective workflows, lack of
standardisation and deficient process optimisation. TM is included in telehealth (TH)
but differs from it: it represents a broader application of technologies to support
health services, a challenging solution with potential to standardise and automate
tasks, referring to the remote exchange of medical information and/or services
between patients and clinicians via electronic technology, a new coming
complementary structure in the practice of medicine. Conceptually, TM relies on
medical doctors rather than other healthcare professionals and is intended to:
provide clinical support, improve health outcomes by overcoming geographical
barriers, and use medical support instruments with patients to operationalise ICT
(Hoffman, 2020). Tedros (2020) considers the TM purpose, mission and medical
support as essentials instruments which only complements the classical medicine
allowing for the provision of remote clinical services in critical situations where
patients are isolated due to illness or physical/geographical unavailability (Tanțău et
al., 2014). It can help reducing the spread of infection and prevent unnecessary visits
to overcrowded or in crisis health facilities.
Despite the success of TM practice in other countries, its implementation in
Romania has been limited: teleconsultations were used at 30% in the first pandemic
year, less than the European mean of 39% due to various obstacles - methodological,
financial, praxeological, regulatory issues together with concerns over liability for
malpractice, issues related to reimbursement of medical service providers,
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technological challenges, patient access to technology and training in using devices
(Argyres et al., 2022). With a new regulatory framework as a unique opportunity to
promote the use of TM services, the Romanian health authorities continue the
efforts to facilitate the implementation of e-healthcare.
3
Analysis of the Digital Transformation in Healthcare
The adoption of technology has improved patient outcomes, increased efficiency
and care quality. Digital transformation changes the societal fundaments, including
the healthcare sector: facilitating adoption of electronic health records (EHRs),
enabling providers to access patient data remotely, sharing information across
different facilities, improving patient safety, reducing medical errors, and
streamlining healthcare processes. Increased collaboration will improve care
coordination and reduce medical errors. Furthermore, TH emerged as a critical
component of digital transformation in healthcare, enabled remote consultations,
telemonitoring and TM (Bashshur et al., 2016). Innovation for medical devices,
wearable sensors, has spurred allowing to monitor continuously patients’ current
health parameters, facilitating early detection of health problems (see Figure 1).
Figure 1: Theoretical aspects box
Source: Authors' elaboration adapted after Norman and Skinner (2006), Walker et al. (2005); Argyres
et al. (2022) & Jiang et al. (2017)
L. Mihoreanu, D.-G. Dinu, A. Stoian Karadeli: Digital Transformation in Healthcare: An
Analysis of Telemedicine and Public Policy
583.
RPM is combining digitally transmitted health-related data to improve patient care.
Although it dates from the 90s, this concept was revived with COVID-19 pandemic,
in order to treat chronic conditions (cardiovascular disease, diabetes, obesity, cancer
care, speech language pathology, mental health, paediatric conditions etc). High
cholesterol, hypertension, weight management, insulin resistance, receiving
chemotherapy- liked issues were addressed to improve health-related outcomes and
reduce unnecessary health care costs. A systematic review on RPM (Farias FAC,
2020) shows increasing publications number between 2015-2018 (43%), with
Wireless devices or smartphone apps being the most popular strategy (75.7%), with
17.6% of studies employing tele-education and 24.6% employing teleconsultation
measures. Romania still has the opportunity to set up an e-Health system strategy
development and optimise both data flow and actors’ interaction, using a single
electronic health records system across health system with EU funding.
4
Methodology
Methodological aspects box is outlined in Figure 2.
Figure 2: Methodological aspects box
Source: Authors' elaboration.
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The current methodology comprises a four-stage investigation, delineated as follows:
firstly, to ascertain the current state of knowledge pertaining to the medical care
dispensed through telemedicine and the prevailing conceptual framework in the
global and national domains of telemedicine during the pandemic; secondly, to
design and administer a questionnaire to gather the opinions of physicians with
respect to the use of telemedicine as a modality for healthcare delivery; thirdly, to
analyze the accumulated data; and fourthly, to delineate the advantageous facets of
the utility of telemedicine and its pragmatic constraints.
5
Results and Discussion
To draw better the TM significance, a survey has been applied between 01.02.2021–
01.03.2022, for active healthcare professionals in Romania: aged 24 and above,
affiliated to different various healthcare facilities - solo practice, private clinics,
public and private hospitals, medical laboratories, and dental offices. Of all
respondents, 89.9% were female. All age categories were present: 31-40 years
(33.7%), 41-50 years (28.8%), 51-60 years (19.5%), 24-30 years (11.8%), and over 60
years (6.2%). Consultants/academics (46.9%) proved the most prevalent, specialist
doctors (34.5%), residents (13.8%), and dentists (4.8%). Over 75% of respondents
primarily provided in-person medical care. 90% of them declared they used modern
ICT tools to improve patient communication. 90.6% of doctors relied mainly on
phone communication, while 80.3% used mobile chat applications, text messages
(59.6%), emails (52.4%), video calls (25.5%), or other methods (6%) (Figure 3).
With respect to TH services, 73.3% of doctors reported individual consultations and
appointments as the primary mode of communication with patients; mail, couriers
and messenger followed (28.6%). 8.2% used a dedicated TH platform – for patients.
3.8% of respondents preferred the groups’ discussions (Figure 4).
Concerning the provision of telehealth services, a significant majority of physicians
(73.3% or 305 respondents) indicated that patient communication and interaction
occurred through pre-scheduled individual consultations or appointments. The use
of mail, courier services, and messenger accounted for 28.6% of responses. Notably,
a mere 8.2% (34 physicians) employed a dedicated platform designed for this specific
purpose, namely a patient portal. Discussion groups constituted a further 3.8% of
responses (see Figure 4).
L. Mihoreanu, D.-G. Dinu, A. Stoian Karadeli: Digital Transformation in Healthcare: An
Analysis of Telemedicine and Public Policy
Phone
377
90,6%
Text message (SMS)
59,6%
E-mail
52,4%
Video call
25,5%
Mobile chat applications
(WhatsApp, Instagram, Facetime)
Other
585.
248
218
106
334
80,3%
25
6,0%
Figure 3: Distribution of electronic means of communication used in providing healthcare.
Source: Mihoreanu et al. (2022).
A patient portal (platform for this purpose)
Individual medical appointments /
consultations
Patient discussion groups (group sessions)
Other (post office, courier services)
34
8,2%
305
73,3%
16
3,8%
119
28,6%
Figure 4: Distribution of electronic communication methods used for providing medical
assistance.
Source: Mihoreanu et al. (2022).
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The majority of research participants identified the following benefits of providing
medical services via telemedicine: • direct contact with the non-displaced/ difficult
to move or isolated patient at home (75.7% or 315 doctors); • medical assistance for
patients from hard-to-reach geographical areas (71.4% or 297 doctors); • quick and
valuable access to specialists and to all information necessary for the optimal
development of the medical act and the indicated therapy (66.6% or 277 doctors); •
real-time monitoring of the patient’s health evolution (63.7% or 265 physicians), as
shown in Figure 5.
Provides valuable fast patient access to
specialists and information
66,6%
Patient care may be provided in hard-toreach geographical areas
71,4%
277
297
315
Provides direct contact with the
bedridden patient, difficult to move or… 75,7%
Monitors in real time the evolution of the
state patient health
Other
265
63,7%
27
6,5%
Figure 5: Benefits’ distribution of providing medical services through TM
Source: Mihoreanu et al. (2022).
The assessment of the utility of telemedicine in healthcare provision was undertaken
from the perspective of physicians, who serve as the essential providers of healthcare
within the system. In the realm of healthcare, medical professionals assume the
responsibility of evaluating and determining the usefulness of delivering specific
health services, whereas competent authorities assess the standards of healthcare
quality in relation to patients' needs, rather than relying on patient self-assessment.
Patients' satisfaction with received healthcare services comprises an element
grounded in their assessment of non-medical factors, such as communication,
information, and their relationships with medical unit staff.
L. Mihoreanu, D.-G. Dinu, A. Stoian Karadeli: Digital Transformation in Healthcare: An
Analysis of Telemedicine and Public Policy
587.
The extent of the need for medical services during the pandemic and the recognition
of the assistance provided by telemedicine are evidenced by data obtained from a
solitary academic institution, which recorded an escalation in the number of medical
services delivered from less than 100 consultations per day to over 2200
consultations per day during a monitoring duration exceeding 24 days. Telephonic
and video calls were the most prevalent modalities of communication employed.
Telemedicine (TM) offers several advantages, including cost-effectiveness, increased
accessibility to health services for diverse categories of beneficiaries, and the
potential to alleviate the persistent public health problem of health professional
shortages.
6
Conclusion
TM is an essential component of a resilient reform: improves accessibility and
quality, addresses new challenges for healthcare system beyond pandemic and
provides benefits for all actors involved. Some challenges are still to overcome:
ensure data security and privacy, provide adequate support and training to patients
and staffs, driving further innovation and health improvement.
The future of digital transformation is promising with increased investment and
interest in artificial intelligence and its tools. As healthcare continues to evolve,
digital transformation will better define its role in integrating: the healthcare
education of both patients and professionals, better access to all services, a higher
quality of care and ensuring treatment continuity at all times.
References
Argyres, D., Hung, A., Pérez, L. & Tolub G. (2022, July 26). Digital health: An opportunity to advance health
equity. McKinsey & Company. https://www.mckinsey.com/industries/life-sciences/ourinsights/digital-health-an-opportunity-to-advance-health-equity.
Bashshur, R.L., Shannon, G.W., Bashshur, N. & Yellowlees, P.M. (2016). The Empirical Evidence for
Telemedicine Interventions in Mental Disorders, Telemed J E Health, 22(2), 87-113. doi:
10.1089/tmj.2015.0206.
Farias, F.A.C., Dagostini, C.M., Bicca, Y.A., Falavigna, V.F. & Falavigna, A. (2017) Remote Patient
Monitoring: A Systematic Review, Telemed J E Health, 26(5), 576-583. doi:
10.1089/tmj.2019.0066. Article PMID 31314689.
Gordon, W. & Catalini, C. (2018). Blockchain Technology for Healthcare: Facilitating the Transition
to Patient-Driven Interoperability, Computational and Structural Biotechnology Journal, 16, 224-230.
doi:10.1016/j.csbj.2018.06.003.
588
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BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Hoffman, L.C. (2020). Shedding Light on Telemedicine & Online Prescribing: The Need to Balance
Access to Health Care and Quality of Care, Am J Law Med, 46(2-3), 237-251.
doi:10.1177/0098858820933497.
Jiang, F., Jiang, Y., Zhi, H., Dong, Y., Li, H., Ma, S., Wang, Y., Dong, Q., Shen, H. & Wang, Y. (2017).
Artificial intelligence in healthcare: past, present and future, Stroke Vasc Neurol., 2(4), 230-243.
doi:10.1136/svn-2017-000101.
Khan, Z.A., Zahoor, A., Afzal, I., Butt, U., Siddiqui, A.M., Khan, Z., Shah, I.A. & Shah, J.A. (2021).
Evaluation of Patient Perception and Satisfaction Toward the Use of Telemedicine During
Pandemic of Novel Coronavirus in Pakistan, Telemed J E Health, 27(10), 1174-1179. doi:
10.1089/tmj.2020.0343.
Martinez, M.E., Ward, B.W. & Adams, P.F. (2015 Jul). Health Care Access and Utilization Among
Adults Aged 18-64, by Race and Hispanic Origin: United States, 2013 and 2014. NCHS Data
Brief, 208(7), 1-8. Article PMID: 26222388.
Mihoreanu, L., Gabără-Pașcu, E.I.P., Dinu, D.G., Karadeli-Stoian, A. & Stanciu, L. (2022). How
telemedicine can sustain the romanian transformational reform, J Info Sys & Op Man, 16(2),
169-183.
Norman, C.D. & Skinner, H.A. (2006). eHealth Literacy: Essential Skills for Consumer Health in a
Networked World, J Med Internet Res, 8(2), e9. doi: 10.2196/jmir.8.2.e9.
Pfefferbaum, B. & North, C.S. (2020). Mental Health and the Covid-19 Pandemic, N Engl J Med,
383(6):510-512. doi: 10.1056/NEJMp2008017.
Schwab, K. & Zahidi S. (2021). The Global Risks Report 2021. World Economic Forum (WEF).
https://www.weforum.org/reports/the-global-risks-report-2021.
Sood, S., Mbarika, V., Jugoo, S., Dookhy, R., Doarn, C.R., Prakash, N. & Merrell, R.C. (2007). What is
telemedicine? A collection of 104 peer-reviewed perspectives and theoretical underpinnings,
Telemed J E Health, 13(5), 573-590. doi: 10.1089/tmj.2006.0073.
Tanțău, A., Vizitiu, C. & Văleanu, V. (2014). The Responsibility of Telemedicine Focused
Organizations in regards to creating Compliant end Users Products and Services, Amfiteatru
Economic, 16(35), 108-122.
Tedros, A.G. (2020, March 11). Director-General's opening remarks at the media briefing on COVID19 - 11 March 2020. World Health Organization (WHO). https://www.who.int/directorgeneral/speeches/detail/who-director-general-s-opening-remarks-at-the-media-briefing-oncovid-19---11-march-2020.
Walker, J., Pan, E., Johnston, D., Adler-Milstein, J., Bates, D.W. & Middleton, B. (2005). The value of
health care information exchange and interoperability, Health Aff, 24(1), W5-10-W5-18.
doi:10.1377/hlthaff.w5.10.
WOMEN PARTICIPATION
IN THE LABOR FORCE:
THE CASE OF ALBANIA
LOREDANA SULEJMANI
University of Tirana, Faculty of Economy, Tirana, Albania
loredana.sulejmani@unitir.edu.al
Abstract Despite the increase in the labour force of women and
the focus given of gender equality, women still do not have the
same opportunity as men to participate in economic activity. Yet,
after 7 years where 193 countries pledged to achieve SDG goals,
including gender equality goal, there are still 20 percent less
women than men participating in the work force on average
globally, and there are major disparities between genders in pay
and educational opportunities. These disparities are particularly
high in developing countries such as Albania, where even though
statistics on women's employment have improved recently, they
still fall short of the average for EU nations. The findings suggest
that the most important factors determining the labor force
participation of women are social norms, social support, and
education. In this aspect, the economy of Albania has much
potential to further increase economic development by
empowering women. The aim of this paper is to assess the extent
of gender inequality and estimate the determinants of labor force
participation of women, as it is fundamental for policymakers in
developing successful and sustainable fiscal policies that tackle
down these differences. An important limitation of this paper is
the insufficiency of gender-disaggregated data.
DOI https://doi.org/10.18690/um.epf.3.2023.64
ISBN 978-961-286-736-2
Keywords:
equal opportunity,
SDGs, labour
market
participation,
female
participation,
gender inequality
JEL:
J16, J21, J31
590
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE.
Introduction
One of the most important issues currently facing the job markets is gender
inequalities. Women are significantly less likely than males to engage in the labor
force globally, and once they do, they are also less likely to find employment than
men. Their access to quality employment opportunities remains restricted especially
in developing countries such as Albania. Historically, women have faced significant
barriers to full participation in the labor force due to societal and cultural norms that
have perpetuated gender-based stereotypes and discrimination. The importance of
women participation in labor force lies in the fact that it can benefit both individuals
and society as a whole in a variety of ways, according to United Nation, which
included the gender equality goal in the sustainable development goals to be reached
within the year 2030. Women who work, typically enjoy higher degrees of economic
independence, better health, and more social and political influence. Also, increasing
the number of women in the labor force can promote economic growth and lower
poverty (United Nations, 2015).
Women's participation in the labor force has been driven by a range of factors,
including changes in societal attitudes towards women and work, increased access
to education and training, and government policies aimed at promoting gender
equality. However, despite the progress, women still face significant challenges in
the labor force, including lower pay and fewer opportunities for advancement. There
is still a significant gender pay gap, and women continue to be underrepresented in
leadership positions across industries. To address these challenges, there is a need
for continued efforts to assess and address gender equality in the labor force and to
support women in their human capital accumulation.
2
Theoretical Background
The participation of women in the labor force has been a topic of interest for many
researchers and policymakers. Over the years, there have been various studies
conducted to analyze the factors that influence women's participation in the labor
force. According to the World Bank, 2022 the global labor force participation rate
for women has maintained a steady pattern over the last three decades reaching
46.2% in 2021, compared to 71.7% for men.
L. Sulejmani: Women Participation in the Labor Force: The Case of Albania
591.
According to Blau and Kahn (2017), the gender wage gap has decreased in most
countries, and women's labor force participation rates have increased. However,
there are significant variations in women's labor force participation rates across
regions and countries. In general, women's participation in the labor force tends to
be lower in developing countries compared to developed countries. Within
countries, women's participation rates vary by age, education level, marital status,
and other factors. Numerous studies have identified various factors that influence
women's participation in the labor force (Sachs et al., 2022).
Kabeer (2017) notes that education is a key factor that influences women's
participation in the labor force. More educated women are more likely to work and
participate in the labor force and hold occupations with better salaries. Women's
engagement in the job force can be significantly impacted also by family obligations.
According to (Henau et al., 2019) women who are responsible for caring for children
or older family members may have more difficulties when trying to enter the
workforce, particularly if they lack access to affordable eldercare or childcare. These
findings are in accordance with the report of International Labor Organization
(Matthew et al., 2016).
Strong social norms may exist in some countries that discourage women from
working outside the home, especially in professions where men predominate
(OECD, 2020). Women's engagement in the work force may also be impacted by
legal considerations and social policies. Women's participation in the labor sector
can be encouraged by laws and policies that uphold women's rights and offer equal
opportunity to men and women such as offering gender-responsive fiscal policies
(ILO, 2021). The literature review for the case of Albania supports all the above
findings and suggests that the factors that affect women participation in labor market
are education, marital status, patriarchal society, and government policies in form of
social support (Miluka & Tsushima, 2017; Ekonomi et al., 2019).
3
Methodology
National statistics from public national institutions and national and international
reports on gender equality were some of the key documents that this research study
consulted in conducting its analyses. To explore the many elements of gender
discrepancy, the study is based on a mixed method approach which combines
qualitative and quantitative methodologies. The paper reviews the most recent
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international and micro national literature on this subject in order to be able to
undertake an in-depth study of the factors that contribute to the women
participation in labor force in Albania. Statistics on labor market were drawn from
the annual Labor Force Survey conducted from Institution of Statistics of Albania
(INSTAT, 2022) which uses the same methodology to estimate the indicators (labor
force participation rate, employment, etc.) as Eurostat.
4
Results
The data on working-age population and the labor force participation rate in
Albania, for the last fifteen years, are presented in Figure 1. The chart provides
information on the progress over time of the components of the working-age
population, composed from the labor force (employed and unemployed) and the
economically inactive population, which includes all economically disengaged
individuals in society. During the last 15 years, the working-age population has
included about 2/3 of the entire population of the country. 63.6% of the workingage population - about 1.3 million individuals - are included in the labor force, while
the remaining part is the economically inactive population.
Although apparently the number of women in the working age of 15+ years is
greater than men, the labor force participation rate by gender shows that women
participate less than men in the labor market. As shown in the graph, these
differences are important and persistent over time. During the last 8 years, the gap
between the rate of participation in the labor force between men and women has
decreased, without going below 15%.
1400000
1200000
1000000
800000
600000
400000
200000
0
67,2
80
70
60
52,6
50
40
30
20
10
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
WAP Male
WAP Female
LFPR Male in %
LFPR Female in %
Figure 1: Working Age Population (WAP) and labor force participation rate (LFPR)
Source: INSTAT (2008-2022).
L. Sulejmani: Women Participation in the Labor Force: The Case of Albania
70
60
50
40
30
20
10
0
593.
59,5
46,4
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Male
Female
Figure 2: Employment rate by gender, age 15+ (%)
Source: INSTAT (2008-2022).
While the data in Figure 2 show that in Albania during the last 15 years, the gap
between men and women in the proportion of employees remains relatively constant
in 14.4 percentage points with about 153 thousand more men on average.
There is a harmonized dynamic between economic growth trends and rates of
employment. In the short term, it seems that economic growth precedes the decline
in the rate of employment. The sudden drop in the labor force participation and the
level of employment in 2013-2015 reflects the slowdown economic of the country
in the period 2011-2014 (because it happens exactly two years after the period),
during which economic growth recorded the lowest values of these 15 years, with
an average of 1.3%. During the recession, it is important to note that, female
individuals are affected more than their male counterparts. For the year 2012, the
rate of employment for male fell by 9%, while as that of female fell by 12%. This
pattern is repeated in 2020, where as a result of the economic decline from the Covid
Pandemic, the employment rate of men decreased only by 13% while that of women
by 17%, showing once again their vulnerability.
Women compound the largest weight of the economically inactive population:
almost only half (52.6%) of the total number of Albanian women of working age
15+ is included in the workforce of work. Meanwhile, for men of working age 15+,
inclusion in the labor force is about 67.2%. These figures highlight the tendency of
Albanian women to avoid long periods of being unemployed and looking for it,
remaining in economic inactivity in the absence of secure employment.
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The structure of the population outside labor market as shown in Figure 3 is
dominated by pupils/students (33.3%) but only 28.1% of inactive female aged 1564 follow secondary/tertiary education in comparison to 42.2% of male individuals.
Along with the statistics of 30.3% of female fulfilling their domestic tasks (family
care, etc.) compared to just 0.9% male, this graph shows where the priorities of
female individual lie and the reason of the low participation rate in labor force. Social
norms, social support, and education are among the most important factors
determining the labor force participation of women.
One of the major obstacles to developing gender equality in Albania are society's
conservative gender norms that make men and women to think differently about
traditional gender roles. Women's rights and gender non-discrimination legislation
and policies are not well known, and this includes many people and women
themselves.
Female
30,3
28,1
Male
0,9
42,4
Total population
19,5
33,3
0
20
40
60
Pupil/Student
Fulfilling domestic tasks
In retirement/early retirement
Permanently disabled
Discouraged
Other inactive
80
100
Figure 3: Structure of the economically inactive population aged 15-64 years old by sex, 2021
Source: INSTAT (2008-2022).
Inside the household, gender duties are clearly segregated. According to one in three
women polled in 2021, women should focus on domestic duties while men should
pay attention to their jobs and leadership opportunity (Observatory for Youth and
Children Rights, 2021). More than 80% of Albanian respondents to the country's
one and only Time Use Survey in 2011 stated that is normal for women to typically
do the laundry, iron clothes, clean the house, prepare meals, and wash dishes
(Albania Time Use Survey, 2010-2011), The number of hours spent on housework
was correlated with gender and personal-level income. Education had an important
L. Sulejmani: Women Participation in the Labor Force: The Case of Albania
595.
impact on public perception. More educated respondents were less likely to mention
a traditional gender-based division of labor within the home. Furthermore,
household duties were reported to be completed in fewer hours by respondents with
at least a tertiary degree compared to those with only a secondary diploma. In
addition, women become inactive due to unmet childcare needs.
In Albania, there is no social support for children apart from relatively expansive
and problematic public nursery for children. As a result, having more children makes
it more expensive for women to remain in the workforce, necessitating the need for
social help from the government for mothers with children in need of care, notably
in the form of accessible, inexpensive child care or on-site/work child care. Fewer
than 40% of respondents said they receive no childcare assistance or support. The
most usual child support reported from 1 in 4 responders was support from their
parents or their partner parents. Only 1% of the responders were able to afford
babysitters. This explain in part the decision of female to not participate in labor
market and to be inactive by fulfilling their domestic tasks providing approximately
four times more unpaid care as male do in raising their children (UNDP, 2016).
As shown in Figure 4 and 5, education explain the differences that exist in labor
force participation rate for the year 2021 but the pattern is consistent throughout
the last 15 years even though it fails to explain in length the differences in wage. The
labor force participation rate of female with tertiary education aged 15+ is 74.2%
compared to 78.3% of their male counterparts resulting in a trivial gap of only 4%.
While as for male and female this gap is significantly great at 24.4% in favour of male
individuals compared to the total gap 15%. Occupational stereotypes limit women’s
and girls’ choices in education and job places because they work primarily in
industries with lower earnings, such as manufacturing, agriculture, health and social
services, all sectors characterised by lower wages. In the formal sector, men are paid
4.5% more than women in 2021, a significant decrease from previous high values of
10.7%.
Women in Albania continue to work primarily in agriculture (40% against 28.8% of
men) and Public Administration, Community, Social and other Services and
Activities (22.9% against 13.6% of men). On the other hand, men are concentrated
in Trade, Transportation, Accommodation and Food, and Business and
Administrative Services (30.3% against 20.3% of women) (INSTAT, 2022).
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE.
30
25
20
15
10
5
0
100
80
60
40
20
0
Total
Primary education Secondary education Tertiary education
Total population
Male
Female
Gap
Figure 4: Labor force participation rate by education, age and sex, 2021 (%)
Source: INSTAT (2008-2022).
12
10
8
10
6
4
2
0
2014
10,5
7
6
2015
2016
10,7
10,1
6,6
2017
2018
2019
2020
4,5
2021
Gender Pay Gap
Figure 5: Gender Pay Gap (%), 2014-2021
Source: INSTAT (2008-2022).
5
Discussion and Conclusion
Women remain underrepresented in the labor market in Albania. In 2021, 52.6% of
women were present in labor force, whereas men’s presence stood at 67.2%. In other
words, there is still a gender participation gap in the labor market of 14.6 p.p., which
has only slightly decreased in the last 15 years. Women are increasingly well
qualified: more women than males graduate from universities. But women don't feel
as free to choose their educational path and career opportunities and don't have the
same job prospects as men because of inexistent social support for childcare and
society social norms which segregate household duties by gender. The latter is also
the main reason for the inactivity of female aged 15+ years with 30.3%. Education
L. Sulejmani: Women Participation in the Labor Force: The Case of Albania
597.
affects not only the perception of the figure of female as housewife and the
participation rate in labor force but even the gender gap in participation in labor
force which decreases with the increase in years of education obtained. Education
tries to explain also the differences in gender pay as women choose stereotype
occupation such as manufacturing, agriculture, health and social services, all sectors
characterised by lower wages.
The paper suggests that in order to improve economic justice and to achieve gender
equality in Albanian labor market several fiscal policy measures should be taken to
tackle gender inequalities. Women's leadership should be strengthened to reduce
labor market segregation and to give women more negotiating power in the home
when it comes to financial decisions in order to promote decent employment and
equitable payments. Gender equality and non-discrimination should be promoted,
while putting a high priority on affordable and inclusive education with greater focus
on education fields that brings higher value added. It is also requisite to develop
gender-responsive fiscal policy that aim to lighten the burden of childcare.
References
Blau, Francine D., & Lawrence M. Kahn (2017). The Gender Wage Gap: Extent, Trends, and
Explanations. Journal of Economic Literature, 55(3), 789-865. Retrieved from
https://pubs.aeaweb.org/doi/pdfplus/10.1257/jel.20160995
Ekonomi, M., Sala, V., Mandro, A., Gjermeni, E., Duka, R., & Lena, O. (n.d.). Gender Inequalities in Pay.
An Albanian Case. Gender Alliance Development Centre (GADC). Retrieved from
https://www.gadc.org.al/media/files/upload/Gender_Inequalities_Pay.pdf
Henau, D. J., Budlende, D., Filgueira, F., Ilkkaraçan, I., Kim, K., & Rafael Mantero. (2019). Investing
in Free Universal Childcare in South Africa, Turkey and Uruguay. United Nation Women
Discussion Paper Series No. 28. New York: UN Women. Retrieved from
https://www.unwomen.org/sites/default/files/Headquarters/Attachments/Sections/Librar
y/Publications/2019/Discussion-paper-Investing-in-free-universal-childcare-in-South-AfricaTurkey-and-Uruguay-en.pdf
Institute of Statistics of Albania. (n.d.). Employment and unemployment from Labor Force Survey. Retrieved
from https://www.instat.gov.al/en/themes/labour-market-and-education/employment-andunemployment-from-lfs/
Institution of Statistics of Albania (INSTAT). (2011 December). Albania Time Use Survey 2010-2011.
INSTAT supported by the United Nations Population Fund (UNFPA) and UN. Tirana: Pegi.
Retrieved from http://www.instat.gov.al/media/3585/albanian_time_use_survey_20102011.pdf
International Labour Organization (ILO). (2021). Empowering Women at Work. Government Laws and
Policies for Gender Equality. Retrieved from https://www.ilo.org/wcmsp5/groups/public/--ed_emp/---emp_ent/---multi/documents/publication/wcms_773233.pdf.
Kabeer, N. (2017). Women’s economic empowerment and inclusive growth: labour markets and
enterprise development. UK’s Department for International Development (DFID) and the
International Development Research Centre (IDRC). Retrieved from
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https://www.lse.ac.uk/gender/assets/documents/research/choice-constraints-and-thegender-dynamics-of-lab/Women%27s-economic-empowerment-and-inclusive-growth.pdf
Matthew, L., Esim, S., Maybud, S., & Horiuchi, S. (2016). Providing Care through Cooperatives. International
Labour Organization with the cooperation of Cooperatives Unit (COOP) and Gender. Equality and
Diversity Branch (GED), Geneva. Retrieved from
https://www.ilo.org/wcmsp5/groups/public/---ed_emp/---emp_ent/--coop/documents/publication/wcms_457286.pdf
Miluka J., & Tsushima, R. (2017). To Participate or not to Participate: Unfolding Women’s Labor Force
Participation and Economic Empowerment in Albania. 13th International Conference of
ASECU: Social and Economic Challenges in Europe 2016-2020, 371-382. Durres, Albania.
Retrieved from www.asecu.gr/files/13th_conf_files/13th-conf-asecu-proceedings.pdf
Observatory for Youth and Children Rights. (2021). Perceptions of violence against women and girls. Observatory
for Youth and Children Rights in cooperation with United Nations Women. Retrieved from
https://observator.org.al/wp-content/uploads/2021/04/Perceptions-on-violence-againstWomen-and-Girls-in-Albania_Comparative-summary-Baseline_Midterm-Review_Endline2021.pdf
Sachs, D. J., Lafortune, G., Kroll, C., Fuller, G., & Woelm, F. (2022). Sustainable Development Report.
University of Cambridge, Cambridge University Press. Retrieved from
https://s3.amazonaws.com/sustainabledevelopment.report/2022/2022-sustainabledevelopment-report.pdf
The Organization for Economic Cooperation and Development (OECD). (2020). Analysis of
Development Assistance Committee Members’ Policies in Support of Women’s Economic Empowerment.
OECD, Development Co-operation Directorate. Paris: OECD Publishing. Retrieved from
https://www.oecd.org/dac/2022-dac-members-women-economic-empowerment.pdf
United Nations (UN). (2015). Transforming our world: the 2030 Agenda for Sustainable Development. Retrieved
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toward Gender Equality in Albania. Retrieved from
https://www.undp.org/albania/publications/public-perceptions-and-attitude-towardsgenedr-equality-albania
CONSUMPTION AND
PRODUCTION RELATIONSHIP WITH
THE ENVIRONMENT:
AN IN-DEPTH ANALYSIS FOR THE
ALBANIAN ECONOMY
FJONA KURTESHI
University of Tirana, Faculty of Economy, Tirana, Albania
kurteshifjona@gmail.com
Abstract With the world population increasement rates and the
greedy nature of humans, the levels of production and
consumption will be continuing to increase globally. We should
be aware that the quality of life of one individual depends on the
degree to which the planet is protected and utilized. Production
activities and, albeit indirectly, consumption processes are
directly linked to the scarcity of natural resources and
environmental impacts. In fact, it is consumption, final or
intermediate, the fundamental causal factor and driver of change
in production activities, making the focus of EU environmental
policies on sustainable consumption and production to evolve
from a cleaner production through sustainable products to a
more holistic approach to sustainable consumption and
production. This paper aims to study theoretical and practical
aspects of the relation between consumption and production and
environmental pollution while taking in consideration one of the
main sustainable development goals that urge to reduce our
ecological footprint by changing the way we produce and
consume goods and natural resources. For the case of Albania,
the analyse suggests a positive relationship between the quantity
and the type of what is produced and consumed, and the types
of waste generated, despite limitation in data imported.
DOI https://doi.org/10.18690/um.epf.3.2023.65
ISBN 978-961-286-736-2
Keywords:
consumption,
production, waste,
environment,
sustainable
development
JEL:
E21, E23, Q53
600
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Introduction
As stated in the United Nations Report (2022), unsustainable patterns of
consumption and production are root causes of the triple planetary crises of climate
change, biodiversity loss and pollution. The same report indicates that our reliance
on natural resources is increasing, rising over 65% globally from 2000 to 2019,
meaning that the total amount of materials directly used by an economy to meet the
demands for goods and services from within and outside a country reached the value
of 95.1 billion metric tons globally.
The main driver for this seems to be the growth of population and consumption.
The world population is increasing fast, that said based on the number of years in
decline that the world population needs to increase by one million. To make it worse,
the level of consumption (measured in constant 2015 US$), for the exact same
periods of time, has been increasing even faster. As for Albania, the level of
GDP/capita and of consumption/capita measured in constant currency, have been
rising year after year, meaning that the levels of production and consumption per
capita have done the same (World Bank Data, 2023).
In less than two decades starting from 2000, total domestic material consumption
(DMC) rose by more than 65% globally, amounting to 95.1 billion metric tons in
2019 as reported by United Nations (2022). Paradoxically to SDG No. 2 to end
hunger, huge amounts of food go lost or wasted. Only in 2020, 13.3% of the world’s
food was lost after harvesting and before reaching retail markets and 17% of total
food available to consumers is wasted at household, food service and retail levels.
Food that ends up in landfills generates 8-10% of global greenhouse gas emissions,
worsening the environmental footprint of food production and consumption. In
Albania specifically, according to a survey by Preka et al., (2020), food waste is
prevalent with most wasted foods to be bakery and dairy products. For the case
of Albania, as stated in the Sustainable Development Report 2022 by Sachs et al.
(2022), SDG No. 12 still remains a change for Albania, but it is on track.
F. Kurteshi: Consumption and Production Relationship with the Environment: An In-depth
Analysis for the Albanian Economy
2
601.
Theoretical Background
European Environment Agency (2010) cites that the consumption of goods and
services in developed countries is a major driver of global resource use and
associated environmental impacts, whereas production activities across economic
sectors are directly responsible for the majority of the environmental impacts caused
by the economy.
Natural resource use, indicated by DMC, has high environmental relevance as an
indicator of potential environmental pressure on a domestic territory. These
materials used on the input side are either emitted back to the environment as waste
and emissions or contribute to the increase of the national physical stock with
potential flows of waste and emissions in the future according to United Nations
Environment Programme (2021).
Turener (2011) in his analyse for the Australian economy highlights the significant
and detrimental impacts of consumption on the environment. His modelling shows
that the practice of buying ever more ‘things’ and discarding them is undermining
natural resources to such an extent that an economic and societal collapse is likely if
substantial changes are not made. In order to reach a sustainable economic system
when considering consumpttion, it is required a stabilised or lower population,
reduced household consumption along with shorter working weeks, large material
and energy efficiency improvements, and investment in ‘green’ infrastructure.
As production and consumption processes are often proven to be related with the
environmental degration, EU has evolved its policies from a focus mainly on cleaner
production, through sustainable products to a more holistic approach to sustainable
consumption and production (European Commission, 2019). The Circular
Economy Package was introduced in 2015 and it is focused on minimization of
waste generation, considering that natural resources are depleting at a fast pace with
the world population increasing rapidly.
Kolesnik and Merkulina (2021) in their analysis of the Russian economy conclude
that the main vector of functioning of the domestic waste management industry
should be aimed at reducing the negative impact of production and consumption
waste on the environment, including on humans, which requires the introduction of
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
environmental management systems and standards at enterprises operating in this
industry, based on the concept of a closed-loop economy.
According to European Environment Agency (2021), the National strategy on
integrated solid waste management 2020-2035 of Albania, prioritises three main
waste types: construction and demolition waste, packaging, and electrical and
electronic ecquipments. Waste management is one of Albania’s biggest
environmental challenges (Totoni et al., 2021) and its practices are still dominated
by a linear collect-and-dispose approach according to GIZ (2021).
3
Methodology
The methodology used to analyse the relationship between production,
consumption, and waste in Albania is based on quantitative indicators and the data
used are at the macroeconomic level. Annual data are collected from INSTAT,
where for the DMC and waste, data are collected for the 2010-2020 and 2013-2021
time periods, respectively, depending on their availability. In Albania, data on waste
have started being collected since 2013, making it relatively difficult to analyse their
relationship with other variables for extended periods.
Here, DMC is a territorial (production side) indicator, which reports the amount of
materials that are used in a national economy, taking in account domestic extractions
and the physical trade balance of these natural resources. DMC describes the
physical dimension of economic processes and interactions and can also be
interpreted as long-term waste equivalent. The analyse is made for DMC/capita level
and its components (calculated as percentage to the total by the author), as it is
considered as an environmental pressure indicator referring to United Nations
Environment Programme (2021).
As for the waste, total generated waste constitutes the theoretical total amount of
waste generated by human activity in the respective year. This indicator refers to the
waste managed in areas where this activity is carried out as a public service to the
community and the quantity of waste managed by the residents because waste
treatment is not provided by public services. The analyse is made based on data on
managed (typical family and industrial) and unmanaged waste in nominal values to
F. Kurteshi: Consumption and Production Relationship with the Environment: An In-depth
Analysis for the Albanian Economy
603.
show their trend over time, where for managed waste, the analyse is made using
weighs of the categories compounding it and of treatment waste methods.
4
Results
Regarding the use of natural resources, Albania supports its production mainly on
two typical categories: biomass and non metalic minerals. For all the period
examined, the weight of non metalic is higher than that of biomass, except for the
last year where values reach 41.8% and 43.7% respectively. Other materials that are
consumed domestically in Albania are fossil energy materials/carriers, which have
shown a decreasing trend on the last years and the metal ores (gross ores), which
have had an increasing trend, both reaching the weight of 7.1% in 2020. Despite the
structure of the DMC/capita, what matters most is the level of the variable. Till the
year 2016, the DMC/capita has been increasing continuously, while in the recent
years, this variable shows an improvement of the situation, as in accordance with the
Sustainable Development Report of 2022. As DMC is directly related to production
process, the figure shows that Albania suffers from non-sustainable production.
15,00
60,0%
7,02 7,15 7,23
7,96 7,85
9,07
41,8%
45,7%
45,9%
9,94
46,4%
61,5%
57,2%
52,0%
54,8%
50,5%
50,1%
80,0%
49,9%
100,0%
Metal ores (gross ores)
10,00
7,57 8,00
Non metalic minerals
7,86
6,80
40,0%
0,0%
Fossil energy
materials/carriers
Other
43,7%
39,2%
39,5%
42,1%
31,9%
34,0%
39,1%
38,1%
41,2%
40,8%
5,00
41,6%
20,0%
Biomass
0,00
DMC/Capita
20102011201220132014201520162017201820192020
Figure 1: DMC/capita Level and DMC/capita Compound by Category, 2010-2020
Source: INSTAT (2023) and author’s calculations.
As for the waste produced by human activity in Albania, it results that the waste
being managed has been consideraly greater than that of the unmanaged waste, even
though in 2015 and 2016 the total amount of waste generated increased rapidly due
to the administrative territorial reform implemented in the country, reaching 91.6%
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
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in 2021. The largest share of managed waste in Albania is of typical family waste
compared to industrial waste, as shown in the Figure 2, with the lowest percentage
in 2014 with 79.0%.
2019
2020
955790
1173730
1523256
1201590
1500000
1137594
2000000
1536105
2500000
1817266
3000000
2211936
2492414
Again, regarding the total managed waste, or urban waste, Figure 3 clearly shows the
large weight of organic waste throughout the entire period under consideration,
where it is noted that especially starting from 2018, their weight reaches values
around 60% of the total waste generated. This is an indicator that too much food
and other organic products are not being produced and consumed efficiently. Next
categories weighing more to the total are that of plastic, paper and paper-board and
glass respectively, reaching 8.7%, 8.5% and 4.6% in 2021. The data for these
categories can be seen as related to packaging, showing the non-friendly approach
of the consumer to nature. From the Figure 3, it is noticeable that for the first two
years of the period, e-waste marked significant values, specifically 9.0% and 8.1%,
while for the following period, the weight of this type of waste has been relatively
low, as one the three main waste types prioritized to be prevented by the
Governance. Relatively important weights seem to have solid waste with the greatest
values of all the time in 2016 with 11.9% of the total waste generated.
1000000
500000
0
2013
2014
2015
2016
2017
2018
Typical family waste managed
Industrial waste managed
Waste unmanaged
Total generated waste
Figure 2: Waste (in tons), 2013-2021
Source: INSTAT (2023).
2021
50,0%
6,3%
8,5% 8,7%
7,6% 9,0%
7,2% 8,5%
8,9%
7,7%
5,5%
7,7% 9,2%
7,4%
16,8%
7,9% 10,0%
9,9%
8,7% 9,1%
60,0%
14,0%
70,0%
12,0%
80,0%
9,6%
90,0%
605.
9,5%
11,9%
8,2%
3,7%
100,0%
3,0%
F. Kurteshi: Consumption and Production Relationship with the Environment: An In-depth
Analysis for the Albanian Economy
40,0%
51,4%
49,6%
45,9%
61,2%
58,4%
58,5%
58,7%
10,0%
50,2%
20,0%
41,0%
30,0%
2013
2014
2015
2016
2017
2018
2019
2020
2021
0,0%
Organic waste
Wood
Paper, paper-board
Glass
Plastic
Textile
Metal
Hazardous waste
Electrical and electronic tools
Solid
Other
Hospital wastes
70,00%
79,00%
80,23%
77,96%
76,41%
77,48%
77,70%
41,19%
80,00%
63,40%
90,00%
50,60%
100,00%
16,50%
Figure 3: Managed Waste Compound, 2013-2021
Source: INSTAT (2023).
Combustion for
elemination
41,19%
60,00%
50,00%
Combustion for energy
Recycle
40,00%
18,49%
2015
2016
2017
2018
18,79%
17,40%
2013
18,12%
17,24%
2014
0,00%
18,72%
15,18%
10,00%
Deposits in landfills
21,60%
20,00%
24,00%
30,00%
2019
2020
2021
Deposits outside landfills
Figure 4: Managed Waste Compound by Treatment, 2013-2021
Source: INSTAT (2023) and author’s calculations
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As to the waste treatment, the annual data for Albania indicate for a non-sustainable
management waste system. Most of the waste generated is deposited in landfills,
maintaining the values of around 80% in the recent years. Deposits outside landfills
seems to be an old method of waste treatment, where it reached the value of 41.19%
or over 970 thousand tons in 2015 and only 0.21% or 1811 tons in 2021. The most
advanced waste treatment method in Albania, the recycle one, is not yet largely
implemented, with percentages around 15%-24% over the years (Figure 5). Nor the
compound weighs, neither the compound nominal values, do not show for a specific
trend of the use of recycle principles in being friendly with nature.
5
Discussion and Conclusion
The analyse suggests that it should not only taken care about the quantity of
production and consumption increasing, but more importantly on what types of
resources are used in the production processes and on what type of goods are
therefore produced and/or consumed. Even though being on track, DMC/capita
levels continue to be relatively high, demonstrating that Albania must work in
direction to efficient use of natural resources and make the production more
sustainable and not that reliable on scarcities.
On the other hand, considering that even though most of the waste generated in
Albania is managed, there are many categories of waste that can be reduced or even
prevented, such as those related to the loss or spoilage of food or packaging. This
can be said, considering in addition the fact that their treatment methods are still in
undeveloped stages and not in accordance with the '3R' or '5R' and no longer with
‘9R’ principles.
This paper is an added proof that suggest each of the economic agents should take
care about how much and in what way they use natural resources, transforming their
relationship with the environment and aiming to increase resource efficiency. A
zero-waste culture is crucial to be created and preserved in Albania.
References
European Commission. (2019). Report from the Commission to the European Parliament, the Council, the
European Economic and Social Committee and the Committee of the Regions on the implementation of the
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Analysis for the Albanian Economy
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and the environment. Luxembourg: Publications Office of the European Union. ISBN
978‑92‑9213‑154‑8.
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https://www.eea.europa.eu/soer/2010/europe/consumption-and-environment.
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https://www.eea.europa.eu/themes/waste/waste-prevention/countries/albania-wasteprevention-country-profile-2021/view.
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https://www.giz.de/en/worldwide/62845.html.
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on the circular economy. IOP Conference Series: Earth and Environmental Science, 666. DOI
10.1088/1755-1315/666/2/022064
Preka, R., Berjan, S., Capone, R., Bilali, H., Allahyari, M. S., Debs, P., Bottalico, F., & Mrdalj, V. (2020).
Household food wastage in Albania: Causes, extent and implications. Future of Food: Journal on
Food, Agriculture and Society, 8 (1). DOI 10.17170/kobra-202002281029
Sachs, J. D., Lafortune, G., Kroll, C., Fuller, G., & Woelm, F. (2022). Sustainable Development Report 2022.
Cambridge: Cambridge University Press. DOI 10.1017/9781009210058
Totoni, L., Vrugtman, L., & Angjeli, D. (2021). Waste management in Albania: An opportunity to demonstrate
commitment to EU integration. Institution for Democracy and Mediation. Retrieved from
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608
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
BUSINESS SCHOOLS
DEVELOPMENT SUSTAINABILITY
THROUGHOUT STRENGTHENING
THE THIRD SECTOR AND CIVIL
SOCIETY CAPACITY
ZORAIDA MENDIWELSO-BENDEK
Lincoln International Business School, Lincoln, United Kingdom of Great Britain and
Northern Ireland
zbendek@lincoln.ac.uk
Abstract The purpose of this contribution is to discuss how
business schools can facilitate Community-based research
processes to make more effective citizens’ participation in
decision-making processes and strengthen third sector and civil
society capacity. Research finding show that business schools
have the potential to strengthen the third sector and the capacity
of civil society to play a key role developing sustainability.
Sustainable Development Goals (SDGs) aim at tackling
important social challenges of our times, among them peace,
justice and strong institutions [SDG 16], making clear that the
2030 Agenda for Sustainable Development is focused on
decision-making with particular emphasis in the participation of
vulnerable and marginalized communities. Citizens are
constantly balancing their power and are increasingly concerned
to understand the structures and processes that enable them to
participate effectively in decision-making processes.
Strengthening civil society through the review of the structures,
processes to enable effective and respectful attitudes is
recognized. It offers means to improve citizenship competences
for their effective participation in the construction of the public
domain. Finally, it proposes attention on the organizational
learning of the third sector and civil society organizations.
DOI https://doi.org/10.18690/um.epf.3.2023.66
ISBN 978-961-286-736-2
Keywords:
civil society,
third sector
capacity,
community-based
research,
active citizenship
learning,
business schools,
social sustainability
JEL:
A13, H41, I23
610
1
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Introduction
This paper presents social responsibility in the frame of the economy and business
in general based on research developed in a business school supporting Third Sector
organisations concerned with community development and social transformation.
Community organization has emerged as a policy concern, especially by clarifying
how can research – and research-based evidence contribute to the development of
strategic responses to these potential opportunities and structural social
transformations (Mayo et al., 2013). Social transformations are at the center of
enabling citizens who are not against democracy and have not lost confidence in
the political class and in their institutions (Castells, 2020). How can citizens enable
their effective participation in the process of decision-making?
As civil society becomes stronger its demands on the state increases, something
which requires a better organisation of both the state and civil society something
that means mutual constitution. The self-organisation of civil society needs of a
social context that respects democratic principles, which are widely explained in
Political Theory; and also, are necessary to understand the processes of selforganisation, that have been the concern of systems thinking and cybernetics.
Increasingly social work has approached the contemporary theories of knowledge
democracy that emphasize the importance of ‘co-construction of knowledge’,
respect for the knowledge-creating powers of local people and local organizations,
and those arguing for trans-disciplinarity and sustainability in higher education. But
demonstrating that Community Based Research (CBR), whether independent of a
university or in collaboration with university-based scholars, is complex and can
influence positively the learning of both theory and practice (Tandon, 2016).
This contribution presents firstly, reflections about civil society self-organization and
in what ways it relates with social transformations in democratic processes, secondly,
discusses CBR methodology as a co-production process to develop community
capacity building processes, thirdly, it brings research finding and finally, it concludes
with remarks about challenges and dilemmas of this kind of research.
Z. Mendiwelso-Bendek: Business Schools Development Sustainability Throughout
Strengthening the Third Sector and Civil Society Capacity
2
611.
Theoretical Background: Civil Society Self-organization
Citizens are the elementary components constituting the agents of our democracies.
Their competencies, values and resources are essential in securing principles like
freedom, human dignity and social justice and solidarity. Clearly requires that all can
have the opportunity to become active citizens, which means eliminating any
economic or social barrier to the participation of disadvantaged groups (Kymlicka,
2002). It requires an understanding of these processes of constitution and mutual
influence between democratic structures, organizations and citizens possibilities to
be agents.
Active citizenship, community organizing and development have emerged as topical,
if highly controversial, policy concerns over the past decade and therefore the
question is how can research provide support to organisations facing these
challenges? Drawing upon the learning approaches developed by Paulo Freire
(Freire, 1972) to understand structures of power, by articulating, disarticulating and
rearticulating community journeys we can start creating a new empowerment
process.
Civil Society (CS) organization has not been given, in fundamental ways, enough
attention. Self-organisation of CS implies that certain groups are more able than
others to obtain help from the state and this is, in most cases, owing to organisational
competence. Thus, it is essential to help to improve the competences of those who
are less successful. It is not sufficient in civil society to say ´organise yourselves and
go out to work’, the state must also provide the assistance that associational life
requires, above all protecting the weakest (Walzer, 2002). To transform it into a more
active contributor to social processes could improve the way in which our
democratic societies function, as it will offer a more effective balance to state
institutions.
To do something about this problem requires an understanding of the relationships
between the state and civil society. The state should enable effective processes of
self-organisation in the civil society. The public domain is the primary connector
between people and power. The Theory of Civil Society reveals powerful means of
enhancing democracy and social solidarity (Young, 2000).
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We use the idea of organisation as a closed network of people in interaction more
than an institution legally established; an organisation can emerge from
institutionally distributed resources sharing focus on the same policy (Beer, 1979;
Espejo, 2000). Citizenship is a property that emerges from the way we relate to each
other. As human beings we give meaning to our existence in a relational process
something that occurs in a permanent negotiation of individual and collective
meaning creation (Mendiwelso-Bendek, 2002).
In particular, this paper emphasises citizenship as a property that emerges from the
way we relate to each other. As human beings we become fulfilled by relating to
others, something that must occur through permanent negotiation (MendiwelsoBendek 2002, 190). Citizenship is observed as a stable construction that emerges
from the way in which we relate to each other and which we build in our momentto-moment communications. To understand the idea of citizenship as a stable
construction in addition to status, feeling or competence, it is necessary to point out
that we as citizens are producing the contexts, we belong to at the same time of
being constituted by these contexts (Espejo, 2000). It is an observation of ourselves
in concrete relations. It is a systemic observation. The systemic observer acts inside
and outside the action. From this perspective we simultaneously observe ourselves
as actors and observers, in a circular causality (von Foerster 1982, 808). In this
relationship between action and observation, observation and accion can be
improved. Observation of our interactions such as observation that achieves enough
stability to maintain the system independent of particular actors and time, produces
observational closure (De Zeeuw, 1995). Observational closure allows us to identify
the patterns of the interactions and we can observe individual and collective
interests simultaneously, independent of time. Especially the observer is observing
the consequences of his/her actions in the dimension of the whole. When a
collective achieves observational closure the natural variations of individual action
are contained by the collective’s stability; this is a social system with particular
(emergent) properties (Espejo, 2000). This requires a systemic horizon, which
implies understanding the consequences of our actions on all those potentially
affected by our actions, which means the ethics of the action and at the same time
to the ethics of the consequences of our actions. We are adding the ethic of
responsibility to the ethic of action, according to Cortina (1998).
Z. Mendiwelso-Bendek: Business Schools Development Sustainability Throughout
Strengthening the Third Sector and Civil Society Capacity
3
613.
Participatory Action Learning and Research Approach
This research is underpinned by Participatory Action Research (PAR) which has
roots in the works of Fals Borda (1990) and Freire (1972). It draws on direct
interaction with citizens outside academia and constitutes the basis for the
articulation of ‘science and society’ used by the European Union Horizon 2020
programme. In alignment with CBR principles, this research is applying learning and
research-based methodological approach that starts from citizens’ own perspectives,
expectations, issues and knowledge. Citizens are actively involved, as actors and
researchers, in the formulation of research questions, determining the tools, and
developing the project. The research projects offer a space for academics and
citizens that enables open, ongoing, participative research to generate learning,
evaluation, and impact. It generates a mutual co-learning process, academic
researchers and citizens co-creating knowledge and practices to improve learning
structures and to articulate decision making processes. Participatory evaluation is
essential part of the whole process and is embedded in each stage. This is enabling
meaningful public participation and democratization of knowledge. All outputs and
publications are making visible the contribution and participation of all those
involved in the project.
Specific area is allocated to constructed conversations attending civil society selforganising processes. Attending the complexity of civil society self-organising
community processes, community-based research naturally is engaging in coproduction knowledge and practice. Increasingly work has approached the
contemporary theories of knowledge democracy that emphasize the importance of
‘co-construction of knowledge’, respect for the knowledge-creating powers of local
people and local organizations, and those arguing for trans-disciplinary and
sustainability in higher education, demonstrating that can benefit the learning of
both the theory and practice (Rajesh et al., 2016). Lincoln Business School research
has been working with third sector and community organisations, local groups for
community development, engagement and empowerment, especially aiming to
connect with vulnerable, disadvantage and marginalized ones (Mendiwelso-Bendek,
2015; Herron & Mendiwelso, 2018).
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
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Constructing conversations forms an important part of our participatory research
approach and builds on earlier Conversation Theory (Pask, 1976). extends this to
further discussing the relationship between communication, conversations, and
knowledge to help the conceptualization and understanding “what takes place when
effective communication occurs, the process of coming to know where one
participant in a conversation can be said to understand another participant’s
“knowledge”.
In our work, the creation of opportunities for conversations of various forms is
central. These are not any conversations, but “…conversations that observe, analyse
and reflect about community and authorities’ organizational practices, processes and
structures. These are conversations of civil society about barriers, opportunities and
learning in processes that influence decision making processes” (MendiwelsoBendek, 2015, 909).
4
Findings
Our community research and learning programme has been focused in a local city
where the City Council, local residents and community project programmes and the
University have been developing active learning and action spaces with community
groups (including young parents, aging groups and newly-arrived communities) to
help contribute to shaping local community plans and to develop community
capacity. In the urban context the city has also seen rapid changes to its population
demographics, with inward migration that has brought international students and
also isolated communities. The City Council has repeatedly sought to create
mechanisms to engage local residents in ongoing constructed conversations to help
shape agendas and impact on the creation of the formal local plans and has worked
with researchers as part of this wider activity (Herron & Mendiwelso-Bendek, 2010;
2018).
It is found that for active citizenship it is necessary not only to increase stakeholders'
competencies but also make effective those organisational structures relevant to the
policy issues of concern. However, and this is a key reason to increase people's
competencies, these structures are the outcome of self-organising processes shaped
by those who are better organized, with more resources and in positions of power
(Espejo & Mendiwelso-Bendek, 2011).
Z. Mendiwelso-Bendek: Business Schools Development Sustainability Throughout
Strengthening the Third Sector and Civil Society Capacity
615.
The point that has being emphasized is that there are major challenges for civil
society in the current context, whatever the policy makers suggest to the contrary,
in terms of the potential opportunities to be grasped. In this increasingly marketized
policy framework, organisations concerned with community development need to
be more effective than ever, bidding for resources and tendering for contracts, but
without losing sight of their distinctive values and missions in the process (Mayo et
al., 2013; 2019).
5
Conclusions
Citizens are constantly balancing their limits of power and are increasingly concerned
to understand the structures and processes that enable them to participate effectively
in decision-making processes. Strengthening civil society through the recognition
of the need to review the structures, processes and enable effective and respectful
attitudes is recognized. Third sector organisations, as key players in the area, have an
enormous journey to develop organisational learning capabilities to play effective
action and impact dealing with the current social challenges.
Agents can enable their self-organisation through their own resources and creativity
or through the support of external agents, such as researchers, NGOs, government
agencies, private trusts, philanthropy or others forms of support. Accepting that selforganisation is inherent to the complexity of social processes, the challenge for us is
to work out how to make these self-organising processes more effective. How can
citizens of a community improve the quality of their own interactions? How can
these citizens co-create desirable values in their interactions with external enablers,
such as organisations and policy-makers?” (Mendiwelso-Bendek & Espejo, 2015,
114).
Community-university research supporting self-organising works with groups and
community organisations generate different forms of practices and knowledge and
the ability to reflect on that knowledge in a process of ‘constructed conversations’
(Mendiwelso-Bendek & Herron, 2010; Mendiwelso-Bendek, 2015).
Sustainable Development Goals (SDGs) aim to tackle important social challenges
of our times, among them peace, justice and strong institutions [SDG 16], making
clear that the 2030 Agenda for Sustainable Development is focused on decision-
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
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making with particular emphasis in the participation of vulnerable and marginalized
communities. SDG target 16.7 aims to “Ensure responsive, inclusive, participatory
and representative decision-making at all levels”; and the Rio+20 Conference
outcome document - the “Future We Want”- paragraph 14 recognizes that
“opportunities for people to influence their lives and future, participate in decisionmaking and voice their concerns are fundamental for sustainable development”.
It is necessary to enable an effective organisation of Third Sector Organisations and
civil society structures, to produce meaning and solid research evidence for social
policies development in the journey of social transformation.
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618
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
CUSTOMER GENETIC DATA FOR
BUSINESS: EMPOWERING YOUR
GENES FOR SUSTAINABLE
PRODUCT DEVELOPMENT
IVELINA IVANOVA-KADIRI
University of Economics – Varna, Varna, Bulgaria
ivelina.kadiri@ue-varna.bg
Abstract Recent advancements in genomics have opened up
new opportunities for businesses to incorporate customer
genetic data into their product and service offerings. From
personalized beauty products to individualized music playlists,
companies are using genetic data to provide hyper-personalized
experiences for their customers. In addition to enhancing
customer satisfaction, genetic marketing can also lead to more
sustainable and eco-friendly business practices by enabling
companies to target their products and services more precisely
with fewer resources. However, the use of genetic data also
presents challenges related to privacy, ethics, and regulation. This
paper aims to explore the opportunities and challenges of
integrating customer genetic data for sustainable product
development and smart consumption, while also addressing the
ethical and regulatory issues that arise with the use of genetic data
in marketing.
DOI https://doi.org/10.18690/um.epf.3.2023.67
ISBN 978-961-286-736-2
Keywords:
genetic data,
DNA-data,
genetic marketing,
product
development,
sustainable
development
JEL:
M31, O33
620
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Introduction
Future survival of businesses depends on the efficient integration of sustainable
technologies in marketing and product development. Customer behavior is driven
by technology, which accelerates innovation to address sustainability challenges (GilGomez et al., 2020; Drucker & Maciariello, 2008; Bianchi et al., 2022). Customer
knowledge is also critical for market survival and growth, and genetic marketing can
enable precision targeting and gene-based segmentation considering three categories
of factors: (i) environmental factors, (ii) family factors and (iii) customer’s genome
(Daviet et al., 2022). Recent studies in this field reflect the impact of direct-toconsumer genetic testing (DTC-GT), which have shown to be of a poor predictive
value (Martins et al., 2022), and yet it gave rise to novel business models and new
market niches on genomic testing market. At the same time, genetic data protection,
cyber security and ethical issues in using genetic data for business purposes become
even more important with the rise of AI and machine learning. Results from the
Genomic Data Governance Survey conducted in the US in 2018 (Briscoe et al.,
2020) showed that 50.5% of the American consumers would sell their DNA for $95.
However, the potential of integrating customer genetic data into sustainable product
development and consumption practices remains largely unexplored.
This paper aims to address this research gap by exploring the potential of using
customer genetic data to drive sustainable product development and consumption
practices in businesses. It also highlights the need for better governance of human
genetic data to ensure ethical and responsible use. By promoting transparency, data
protection, and informed consent, businesses can leverage customer genetic data in
a way that benefits both the consumer and the company. As genetic marketing and
personalized product development become more common, it is essential to establish
clear guidelines and regulations to protect consumer privacy (Deliverska, 2013;
Daviet et al., 2022) and prevent discrimination based on genetic information.
2
Consumer Genomics and the New Business Models
Genetic testing has become more accessible to the general public due to significant
research and development investments, resulting in genomics becoming a mass
market in recent years. Ultima Genomics (2022) claimed to offer sequencing of
whole genomes at $100, compared to the price of $100 million only two decades
I. Ivanova-Kadiri: Customer Genetic Data for Business: Empowering Your Genes for
Sustainable Product Development
621.
ago. While businesses recognize the transformative potential of genomics (National
Human Genome Research Institute, 2021), the accumulation of genetic databases
occurs within political, economic, and cultural contexts that reshape them (Burgess,
1999) by bringing forward transformation in consumer behavior patterns and
therefore, new business models to respond to these new patterns. Genomics-as-aservice model (GaaS) pushed the emergence of DTC-GT triggered by three types of
motivation (Vanhala et al., 2013) for purchase: curiosity, medical needs, or lifestyle
factors. GaaS model include comprehensive genomic tests, genomics as part of
individual health planning, services based on comprehensive genomic tests, medical
precision tests, and restricted trait tests. Yet, a new business model emerged in 2018,
in which an individual's genotype is used as a base input for producing personalized
material products and services. Panasonic's Genome House project (2019) is such
an example, creating living spaces tailored to customers' "DNA preferences".
Panasonic's business model places genetic makeup at the core of product
development and utilize the human genome as a critical input resource.
3
Behavior Genetics as a Marketing Tool
Behavioral genetics uses quantitative and molecular genetic methods to study the
influence of genes on behavior. The field dates back to the work of Sir Francis
Galton in the 19th century, who initiated the "nature vs. nurture" debate (Chabris et
al., 2015). Behavioral genetics applies a variety of research techniques based on twin
studies to learn about the genetic and environmental influences on human behaviour
by comparing the traits of biologically and non-biologically related family members
(Baker, 2004) to estimate genetic and environmental contributions to behavior.
Recent studies in this field suggest that genetic factors may influence entrepreneurial
behavior and innovation, as well as specific personality traits related to
entrepreneurship, such as risk-taking and willingness to face uncertainty (Kuechle,
2019; Zhao & Seibert, 2006; Kihlstrom & Laffont, 1991; Casson, 1983). Certain
proteins linked to these personality traits are affected by genes, and neuropeptides
like oxytocin and vasopressin can impact prosocial behavior. Environmental factors
can enhance or suppress gene expression, leading to changes in behavior, which is
the area of study of epigenetics (Conway & Slavich, 2017). A novel discipline in this
field, sociogenomics studies how social and environmental factors interact with an
individual's genes and gene expression. It investigates how genes dictate our social
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BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
relationships (Beard, 2017) and, for example, whether friends and spouses tend to
have similar genetic signature.
However, linking a specific gene to a particular trait is challenging due to the
complex nature of the human genome. Gene expression is regulated through
polymorphism, which can make it difficult to draw definitive conclusions from
research findings (Charney, 2017). Despite the challenges, behavioral genetics has
made progress in understanding the influence of genetics on behavior. For example,
the "adventure gene" is associated with dopamine production and has been linked
to novelty-seeking behavior (Ebstein et al., 1996). However, the complexity of gene
expression and regulation means that it is difficult to make definitive conclusions
from research findings alone. Nonetheless, the development of new technologies
and the continued expansion of genetic testing availability provide exciting
opportunities for further exploration into the relationship between genetics and
behavior.
4
Sustainable Product Development With Genetic Data
Traditional consumer-centric marketing theory is challenged to revise consumercentric marketing theory and practice in support of sustainable business operations
(Dholakia et al., 2020; Drucker & Maciariello, 2008). Those require systematic
innovation and sustainable consumption. On the other hand, innovation and
customer knowledge management are essential for meeting customer expectations
and improving marketing results, with R&D having a significant impact on a
product's resource footprint (Fuchs et al., 2022). Integration of innovative
technologies increases chances of success (Muriithi, 2022), backed by a proven
positive correlation between innovation, customer involvement, and marketing
results (Fidel et al., 2015). Consumers are increasingly adopting circular consumption
practices, prioritizing sustainability while primary reasons for not adopting a more
sustainable lifestyle are still related to cost, lack of interest in the issue of
sustainability and not having enough information (Deloitte-UK, 2022). Thus, it is
crucial for businesses to consider sustainability in product development.
Sustainable marketing is about creating and delivering value to customers in a way
that preserves natural and human capital (Martin & Schouten, 2014; Peattie & Belz,
2010). It requires a long-term focus and the integration of social and environmental
I. Ivanova-Kadiri: Customer Genetic Data for Business: Empowering Your Genes for
Sustainable Product Development
623.
criteria into conventional marketing processes. Ecodesign, which seeks to fulfill
environmental requirements based on SDGs into product development, is a key to
a sustainable business strategy (Schäfer & Löwer, 2021; Fuchs et al., 2022). Customer
genetic data may be utilized in developing personalized medicine and public health
strategies, while behavior genetics can help create goods and marketing efforts that
promote sustainable behavior. Epigenetics has the potential to support smart
consumption of goods and services by identifying environmental factors that affect
gene expression and creating customized dietary and health interventions. On the
other hand, sociogenomics may serve as a tool in developing products that
encourage sustainable consumption practices through targeted marketing efforts
based on genetic and environmental data.
DNA data is a door-opener for nascent customer hyper-segmentation metrics based
on hyper-personalization. Machine learning and artificial intelligence now make it
possible to identify patterns in consumer behavior and link them to individual
genetic markup or cluster of markups in a more precise way. Thus, genetic data may
serve as a marketing tool in precision retail (Daviet et al., 2022) and has the power
to navigate consumers and educate them to consume smarter in terms of scarce
resources and climate changes. For example, companies may develop hyperpersonalized products based on individual genetic markup, which would minimize
carbon footprint and waste. By integrating customer genetic data as a game changer
in product development strategy and corporate social responsibility policies,
businesses may improve their brand positioning and support global green transition
towards a more sustainable future. However, ethical concerns regarding the use of
genetic data, such as potential for discrimination and invasion of privacy should not
be overlooked.
5
Genetic Data Privacy and Business Ethics
Incorporating customer DNA-data into a business strategy still raises eyebrows
when speaking about data privacy and ethics. Legal framework around the world
treats genetic data differently or depending on the specific company’s privacy policy,
as in the US. Within the European Union, genetic data falls under the scope of
GDPR as part of the personal data, and therefore it is protected by law (Consumer
Federation of America, 2020). Genomic data management is considered by
bioinformatics as big data problem (Reali et al., 2018), which suggests effective
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BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
regulatory and software tools for safe storage and sharing to prevent maleficent
deeds. With the rise of synthetic DNA technology as a promising data storage
solution due to its high-density data storage capacity, longevity, and durability,
analogically, it raises significant ethical concerns regarding privacy, security, and
potential misuse of sensitive information stored in DNA. Human DNA data has
several key features which make it so challenging to handle: (i) immediate
identification by a small sample of customer’s DNA; (ii) ability to provide
information about customer’s relatives without their knowledge or consent, and (iii)
genetic data does not change over time (Daviet et al., 2022). Customer DNA data as
big data may be subject to cyberattacks and discriminatory practices as warrantless
surveillance, restricted access to health or other social resources, restricted entry into
a country (Deliverska, 2013; O’Doherty et al., 2021) and other intentional and
unintentional harms. Primary dangers identified by consumers while providing their
genetic data are: (i) denied employment, (ii) provision of unacceptable offers from
health insurance companies based on customer’s genetic predispositions to diseases,
(iii) risk of discrimination in job search and (iv) risk of "identity theft" and of cloning
without explicit consent (Briscoe et al., 2020). Moreover, recent studies showed that
DTC-GT reports, offered by key market players are not supported by solid scientific
evidence and may undermine consumers’ trust in general medicine (Delfanti, 2011).
Therefore, it is crucial to develop strong ethical guidelines and policies to regulate
the use of genetic data for business purposes and protect consumer’s privacy rights
to promote sustainable product development and to ensure customers that their
DNA is safely stored and governed.
6
Conclusion
Authenticity is the top competitive advantage in content management. Genomics
can create personalized products and services based on customers' genetic makeup,
enabling hyper-personalization. Genomic marketing uses genetic data for profiling
and one-to-one segmentation, revolutionizing product development by creating
products and services sui generis. Achieving full sustainability is theoretically
impossible due to the exponential increase of entropy over time (Ljungberg, 2007;
Schäfer & Löwer, 2021). However, businesses can contribute to sustainability by
promoting smart consumption and demand for sustainable products and services
and positively affect society and the environment. Dr. Francis Collins, director of
the National Institutes of Health (NIH), said that "genetics loads the gun, and
I. Ivanova-Kadiri: Customer Genetic Data for Business: Empowering Your Genes for
Sustainable Product Development
625.
environment pulls the trigger." Businesses, as a part of that environment, have a
unique opportunity to promote sustainability by educating consumers in smart
consumption, encouraging demand for sustainable products and services, and
ultimately pulling the trigger in a positive way with the help of genetic data.
Future research could explore new marketing fundamentals that reflect novel models
of RFM segmentation to identify new purchasing behavior patterns, observation and
analysis of CLTV of DTC-GT consumers and developing a framework for
innovation management of DNA-based products and services. All of these would
support sustainable product development practices to align with the SDGs,
particularly SDG 12: Responsible Consumption and Production. One approach to
that might be Schumpeter’s creative destruction (1950), which describes the process that
sees new innovations replacing existing ones that are rendered obsolete over time to
tackle innovative practices in response to intense environmental changes. In all
cases, genetic data governance should be adequate addressed by legal bodies to
ensure consumers’ privacy data is well protected, which genetic data extends also to
their relatives.
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628
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
DEVELOPMENT OF TOURISM
SECTOR THROUGH SMALL AND
MEDIUM-SIZED ENTERPRISES: THE
CASE OF ALBANIA
ANISA FESHTI
University of Tirana, Faculty of Economics, Tirana, Albania
anisafeshti@yahoo.com
Abstract Small and Medium-sized Enterprises (SMEs) are
considered the main actors of national and regional development
because of their important role in the modern economy. SMEs
are job creators and contributes to the competitive state of the
market leading to better satisfaction of consumer’s need.
Tourism is the world’s largest industry, making a major
contribution to the economies of most countries. Its
multiplicative effect generates income from goods and services
consumption by tourists and taxes on businesses in the tourism
industry, provides employment in services related to tourism and
creates jobs in the tertiary sector. The Covid-19 marked a major
turning point in its development, intensifying the effects because
tourism is a labour-intensive industry and most companies in the
sector are SMEs. The aim of this paper is analysing the economic
dimensions of sustainability for tourism SMEs, as vital actors for
enhancing innovation, competitiveness, entrepreneurship and
establishment of an effective innovation system for developing
countries. In conclusion tourism brings positive impact on the
local economy and entrepreneurial development in particular. As
regard, will be given some recommendation on measures and
actions which have to be taken by the competent authorities for
further stimulation of SMEs taking in consideration the
sustainability goals.
DOI https://doi.org/10.18690/um.epf.3.2023.68
ISBN 978-961-286-736-2
Keywords:
tourism,
sustainability,
sustainable
development,
small and mediumsized enterprises,
Albania
JEL:
F63, L25, Z32
630
1
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Introduction
Tourism is considered an important socio-economical phenomenon which is
characterized by dynamic development, resulting in many positive direct as well as
indirect economic effects. As an industry that generates income from goods and
services consumption by tourists as well as from taxes, this industry provides
employment in services related to tourism and also contributes to create jobs in the
tertiary sector by having a multiplicative effect. In this context, are of great
importance the small and medium tourism enterprises which dominate in the tourist
destinations because they provide direct contact with tourists and encourage tourists
for spending in a local community. In this regard, the main objective of this paper is
to analyze how SMEs can affect the development of tourism in Albanian context
taking in consideration the sustainability principles.
2
Literature Review
Tourism has become a worldwide industry and the competition between tourism
destinations in the world is increasing. In the global context, tourism serves as an
important facilitator for providing employment opportunities and supporting
countries’ economic growth (UNWTO, 2022). This is because where tourism
activity emerges, new opportunities for jobs and economic activity emanates.
Tourism is also an opportunity for host community to participate in urban growth,
infrastructure overhaul and planning, rural development, environmental restoration,
coastal protection and cultural heritage preservation.
The tourism sector is mostly composed of small enterprises and micro-businesses
(Mair et al., 2016). Based on the positive advantages of tourism, it is of much interest
on analyzing the effect of small businesses in the tourism industry. In today’s age of
globalization and technology, SMEs, and especially those focused on the tourism
sector, face new challenges to be successful in the increasingly complex operating
environment within which they encounter unpredictable events at the economic,
social and institutional aspects. This is because tourism has proved to be one of the
most vulnerable sectors because of economic or financial, health, climate, energy,
environmental, political issues, etc. The orientation towards sustainability, both at
programmatic, strategic level and at the level of projects, represents a success factor
A. Feshti: Development of Tourism Sector Through Small and Medium-sized Enterprises:
The Case of Albania
631.
in the development of tourism, through its multiplier effect highlighted in the related
fields (Manolescu et al., 2019).
Looking at more recent studies of resilience in tourism with a focus on private
businesses, Badoc-Gonzales et al. (2022) suggest that tourism SMEs are particularly
vulnerable to systemic shocks. Existing research suggests that resilience can explain
a SME’s ability to recover a pre-existing condition after an exogenous shock/crisis,
and that SMEs are highly dependent on the resilience of the whole system in which
they are embedded (Pal et al., 2014). Resilience is necessary though not sufficient to
attain sustainability (Espiner et al., 2017), but achieving tourism sustainability
necessitates tourism resilience as an important factor (Saarinen & Gill, 2019).
SMEs are the engine of the national economy, because they contribute in raising the
living standards of society by stimulating the economic activity, the diversity of
products offered to consumers and creating new jobs. Dynamism, flexibility,
adaptability, mobility and their innovative potential are considered to be essential for
the harmonious development of the economy and may ensure the cohesion of the
economic structure, good economic growth and, of course, creation of new jobs.
Furthermore, SMEs’ easy access and exit of the markets renders economies more
flexible and competitive. However, they face different difficulties which come at
two levels. In least developed economies, and in some transition and developing
economies deficiencies in both the macroeconomic and microeconomic
environments pose challenges: high budget deficits and unstable exchange rates and
legal, regulatory and administrative environment poses major obstacles to access of
SMEs specially to financing. In more advanced developing countries, where there is
reasonable progress in the fundamental institutions, SME may still face challenges
in accessing formal finance in the form of bank loans, guarantees, venture capital,
leasing and so on.
According the World Travel & Tourism Council, most businesses operating in the
tourism sector are also small ones - 80% according to the latest estimate. The
contribution of tourism in the economic development on regional and local levels is
due to its multiplier effect on the other sectors. There are celebrated cases
internationally where small businesses have created an identity for a destination that
has subsequently been harnessed by local municipalities. In this regard, tourism
offers opportunities to open up businesses which would ultimately benefit the
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
destination region and its people. As a result, tourism SMEs can also be a source of
innovation and help shape destination development.
An economy based on tourism must take into consideration the “sustainable” with
the “development” aspects. SMEs operate as a catalyst for local economic
development and therefore their sustainable development is vital not only to it, but
also as a vehicle for physical and electronic infrastructure investment and popular
uptake, and in providing larger frameworks for managing and maintaining prosperity
from the natural resource.
However, the reality can be more complex based on the fact that sustainability is
becoming a necessity due to changing perspectives around the world. In this regard,
the destination-hosting environment must first be environmentally sustainable.
However, no matter the size and structure of a company, debate still exists as to
whether sustainability efforts are economically justifiable. With this notion, it
becomes essential that a company can see strong economic benefit to implementing
these new environmentally friendly processes. In this regard, sustainability is
important for tourism SMEs for some main reasons:
1. Economic sustainability: The development of a healthy economy can serve
people’s needs and improve their living standards while avoiding future
economic crises or stagnation and protecting future generations.
2. Social sustainability: Through social sustainability are provided chances for all
members of society to be equal, thereby reducing the risk of social conflict
or war.
3. Environmental sustainability: It is vital to encourage sustainable development
through a circular economy, which aims to maximize the use of natural
resources while also conserving and improving the quality of life.
4. Helps improve brand and competitive advantage: Tourism businesses can improve
their brand’s reputation, develop trust with partners and the social
community by demonstrating concern and respect for environmental and
social considerations.
5. Attract investments and funds: Many financial and investment experts have
found that organizations with sustainability plans are likely to attract
investors more than those who do not have one.
A. Feshti: Development of Tourism Sector Through Small and Medium-sized Enterprises:
The Case of Albania
633.
The benefits of tourism sustainable development must be expressed in the form of
a positive long-term impact for all stakeholders: local communities, governments,
investors, tourists, the environment, etc. During the recent years, SMEs have faced
major disruptions and unprecedented challenges such as the armed conflicts in Syria
and Ukraine, the global financial crisis in 2008 and the COVID-19 pandemic. In
conflict situations, internal / external tourist flows change dramatically, causing
macroeconomic imbalances. In order to best manage this difficulties, resilience and
adaptability are crucial for leading them through continuous cycles of change. Thus,
in order to achieve the long-term efficiency, effectiveness and competitiveness of
tourism and to strengthen the resilience of the sector, solutions must be identified
to neutralize the factors that can generate sectoral crises and to minimize their
effects, but also is needed the adoption of some appropriate practices for crisis
management. Under these conditions the results obtained will be: improved image
of tourism destination (safety and security), increased economic performance of tour
operators and the business value, increased operational efficiency, increased societal
and environmental protection.
3
Methodology
This paper follows a qualitative research approach. Its point of view presents the
idea that SMEs have an important role in the overall economic development of a
country. It aims to analyse the economic dimensions of sustainability for tourism
SMEs, based on a qualitative research method. In this regard, it provides some
descriptive data on the number of SMEs, reflecting their importance in the Albanian
economy (taking in consideration that tourism sector is mainly composed by SMEs).
4
The Case of Albania
Tourism is currently a significant contributor to the socioeconomic development of
the country, which effects the entire society in many ways by being one the most
prominent service sector. According to the Bank of Albania, the income of tourists
for the 6 months of 2022 is calculated at around 1.13 billion euros, which highlights
its importance in Albanian economy. Tourism is an industry sector that is generally
composed of SMEs which play a prominent role in the socioeconomic development
of a country especially to the developing ones like Albania. Their role in economic
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE BY SUSTAINABLE ECONOMY AND BUSINESS –
TOWARDS THE SDGS.
634
2019
Year
Micro (1-9
96,924
employed)
Small
5,736
(10-49
employed)
Mediumsized
1,251
(50-249
employed)
SMEs
103,911
(1-249
employe)
Large
179
(250+
employed)
Total 104,090
Source: Instat (2023)
Value added
Investments
Turnover
(mln All)
Number of
employed
Number of
enterprises
Indicators
Table 1: Data on enterprises 2019 – 2021
2020
2021
2019
2020
2021
2019
2020
2021
2019
2020
2021
2019
2020
2021
95,558
97,022
196,403
186,400
191,250
474,255
481,945
582,764
27,863
25,815
30,723
130,770
121,554
147,002
5,674
5,608
114,451
111,347
111,318
729,171
673,675
810,182
78,938
62,475
63,942
143,274
142,153
184,030
1,173
1,227
122,330
114,767
121,002
583,552
555,661
702,931
58,150
55,151
38,240
147,422
142,847
174,155
102,405
103,857
433,184
412,514
423,570
1,786,978
1,711,281
2,095,877
164,951
143,441
132,904
421,466
406,554
505,186
169
174
97,669
91,472
95,669
476,774
436,518
556,363
76,870
50,438
41,104
160,617
142,026
159,031
102,574
104,031
530,853
503,986
519,240
2,263,752
2,147,799
2,652,240
241,821
193,880
174,008
582,083
548,580
664,217
A. Feshti: Development of Tourism Sector Through Small and Medium-sized Enterprises:
The Case of Albania
635.
growth has been quite satisfactory and there can be little doubt that small and
medium-sized enterprises play an important part in destination competitiveness
(www.oecd.org).
In 2021, Albania’s 103,857 small and medium-sized enterprises represented 99.8%
of all enterprises in the economy. Their contribution to employment in the business
sector slightly increased by 2.68 % as compared to 2020. Meanwhile, the investment
has decreased by 7.24 %, although the value added has been increased by 24 %,
emphasizing once again the important impact they have on the economy. In this
regard, Tourism being a multidimensional sector that belongs to many subsectors,
more SMEs are needed to be established in this sector to flourish this dynamic
industry, especially based on the fact that Albania is an economy dominated by
services.
SMEs which are traveler-friendly, nature-friendly and community-friendly are the
best promoter of sustainable tourism. In this regard, by being traveler-friendly SMEs
create an attractive environment with comfortable facilities for tourists by offering
them opportunities to explore and discover the local nature and culture. These SMEs
must aim to produce zero waste in order to be nature-friendly. Being communityfriendly involves close communication with locals on all aspects of the tourismrelated business, employing local staff where possible and constantly looking for
ways to promote the local culture. As long as the local people benefit from the
tourism business, any SME is likely to be warmly welcomed into the local community
and contribute to the tourism development.
5
Discussion and Conclusion
Tourism applies in all economies, it is essentially international in focus, is
information intensive, covers a range of directly and indirectly associated businesses,
and often has low entry barriers by creating business opportunities for small
entrepreneurs in various tourism-related business activities, including in local
agricultural, manufacturing, services and construction-related businesses.
It is an industry sector that is generally composed of SMEs which play a prominent
role in the socioeconomic development of the country especially to the developing
ones like Albania. In this context especially important are small and medium tourism
636
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
enterprises which dominate in the tourism destinations according to their number,
originating a variety of benefits for them by providing direct contact with tourists
and by encouraging tourist for spending in a local community. The prospect of
SMEs in this sector is huge through which development of entrepreneurship,
enhancement living standard of the local rural people, and poverty reduction by
engaging more people in the industry is possible. So, well-developed tourism SMEs
is a prerequisite to attain higher growth of tourism. So further studies should be
carried out on small tourism businesses in order to identify any support needed by
them. Despite the case, future studies should also look into the different impact of
foreign and local tourism on small business performance.
The development needs of SMEs must be considered as a system, which operates
in relation to yet more complex systems of sustainable environments, sustainable
technologies, sustainable cultures and sustainable economies. The sustainability of
an economy depends on the introduction of appropriate production, distribution,
and consumption to promote environmental sustainability, as well as on economic
growth. This is why SMEs, that often constitute the backbone of any economy,
should adapt this concept and embed it into their daily functioning and should view
sustainability not as a burden, but an opportunity to better promote their business.
In so doing, sustainable SMEs will attract the rapidly growing consumer group who
are willing to pay more for environmentally-friendly products and services. In this
regard, a good start for small businesses stepping towards sustainability is to consider
environmental certification.
It is of great interest to encourage the cooperation between SMEs, because the more
these SMEs communicate and interact, the more are they likely to satisfy their
customers. Such success leads to cuts in transaction costs (economics of scale),
sharing resources, and openly discussing further strategies of cooperation. This can
be achieved through joint workshops where can be presented the benefits of a
“supply chain” consisting in the SMEs that can be included in offering a set of
services that are complementary to each other.
In a fast-changing business, political and social world, SMEs need to become better
prepared to tackle sudden economic and political shocks, building the resilience
needed to navigate an uncertain future. But, there is little empirical evidence on how
organizations, especially SMEs, may achieve degrees of resilience.
A. Feshti: Development of Tourism Sector Through Small and Medium-sized Enterprises:
The Case of Albania
637.
The resilience of tourism implies the adoption of political and economic measures
to improve the response capacity of governments and to prevent the negative effects
of crises. In this regard, government have a role to play in:
−
−
−
−
Improvement of legislation in terms of accelerating the creation of SMEs.
Alignment of Albanian legislation in the field of SMEs with European
standards.
Review of fiscal legislation in terms of enhancing tax transparency and
easing the tax burden
Creating support programs, particularly in terms of financial and technical
assistance to increase the competitiveness of SMEs towards regional
markets, European and international markets.
References
Albania Enterprise Survey. (2019). www.enterprisesurvey.org
Bank of Albania. (2023). https://www.bankofalbania.org/
Badoc-Gonzales, B.P., Mandigma, M.B.S. & Tan, J.J. (2022). SME resilience as a catalyst for tourism
destinations: a literature review. Journal of Global Entrepreneurship Research 12, (pp. 23–44).
https://doi.org/10.1007/s40497-022-00309-1
Biswas, Ch., & Mamun‐Or‐Rashid, M. (2018). The Role of Tourism Entrepreneurship Businesses in
the Economic Development: An Overview. International Journal of Business and Tehnopreneurship,
8(2), (pp.167-176). Retrieved from: https://www. researchgate.net/publication/343714029.
Xhafka, E., & Avrami, E. (2015). The SME in a Globalized Economy. Challenges of the Albania’s SME
in the Optic of Small Business Act. European Journal of Economics and Business Studies. Retrieved
from: https://revistia.com/files/articles/ejes_v1_i1_15Eralda_ Xhafka.pdf.
Espiner, S., Orchiston, C., & Higham, J. (2017). Resilience and sustainability: a complementary
relationship? Towards a practical conceptual model for the sustainability–resilience nexus in
tourism. Journal of Sustainable Tourism, 25(10) (pp. 1-16). doi: 10.1080/09669582.2017.1281929.
Ljunggren, G., Nilsson, M., & Stein, T. (2022). Small and Medium-Sized Tourism Enterprises’
Response
to
COVID-19.
Retrieved
from:
https://lnu.divaportal.org/smash/get/diva2:1728162/FULLTEXT01.pdf
Institute of Statistics. (2023). http://www.instat.gov.al/
Saarinen, J., & Gill, A.M. (2019). Tourism, resilience, and governance strategies in the transition towards
sustainability: Governance Strategies in the Transition towards Sustainability in Tourism. doi:
10.4324/9781315162157-2.
Mair, J., Ritchie, B., & Walters, G. (2016). Towards a research agenda for post-disaster and post-crisis
recovery strategies for tourist destinations: a narrative review. doi:
10.1080/13683500.2014.932758.
Manolescu, I. T., Percic, S., & Talmaciu, M. (2019). Declarative vs. operational in the orientation of the
non-reimbursable financing programs of investments towards sustainability. Retrieved from:
https://www.researchgate.net/publication/344414257
638
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BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Talmaciu, M., & Manolescu, I.T. (2021). Enhancing competitiveness and resilience of tourism in crises
condition. Experiences from Eastern Partnership countries. CES Working Papers, 8(4).
Retrieved from: https://ceswp.uaic.ro/articles/CESWP2021_XIII4_TAL.pdf
Organisation for Economic Co-operation and Development. www.oecd.org
Pal, R., Torstensson, H., & Mattila, H. (2014). Antecedents of organizational resilience in economic
crises—An empirical study of Swedish textile and clothing SMEs. International Journal of
Production Economics, 147(B), (pp. 410-428). doi: 10.1016/j.ijpe.2013.02.031.
Othman, P., & Rosli, M.M. (2010). The Impact of Tourism on Small Business Performance: Empirical
Evidence from Malaysian Islands. International Journal of Business and Social Science, 2(1). https://
www.ijbssnet. com/journals/Vol._2_ No._1%3B_January_2011/2.pdf
Dimoska, T., Tuntev, Z., & Nikolovski, B. (2015). The relationship between small and medium-sized
enterprises, tourism and economic development. Journal of Process Management New Technologies,
3(1),
https://www.researchgate.net/publication/
283327018_THE_RELATIONSHIP_BETWEEN_SMALL_AND_MEDIUM
SIZED_
ENTERPRISES_ TOURISM_ AND_ ECONOMIC_DEVELOPMENT
United Nations World Tourism Organization. (2022). https://www.unwto.org/
World Travel & Tourism Council. (2023). https://wttc.org
CAN THE CONCEPT
OF THE COMMON GOOD
BE THE FOUNDATION OF
ETHICAL MARKETING?
MARÍA ELENA RODRÍGUEZ BENITO
Pontifical University of Salamanca, Salamanca, Spain
merodriguezbe@upsa.es
Abstract Marketing is currently immersed in a
reconceptualization that allows it to adapt its role in an ethical
and sustainable economy. From the criticisms of marketing, it is
inferred the need for an ethical support for marketing that so it
is clear about the ends and not confuse it with the means and
that allows a new relationship with people, that transcends their
dimension as consumers and treats them as citizens. In this
article, we analyze both from a theoretical perspective and
qualitative research with marketing professionals whether the
concept of the common good is a valid ethical foundation for
marketing, as well as whether it is adequate to respond to the
current socioeconomic paradigm. By virtue of what was
observed in our research, the common good is adequate to guide
marketing at the time of change that it is experiencing to adapt
to the new social demands towards the company. We believe it
is appropriate because it brings together characteristics that
resolve the criticisms of marketing observed by consumers and
professionals, especially its short-termism that leads it to confuse
means with ends and the reduction of people to the role of
consumers. Consequently, we conclude this article with a
definition of marketing for the common good.
DOI https://doi.org/10.18690/um.epf.3.2023.69
ISBN 978-961-286-736-2
Keywords:
common good,
ethical marketing,
common good
marketing,
sustainability,
sustainable
economy
JEL:
M3, M30, M31
640
1
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Introduction
Marketing has been criticized for prioritizing profit over the interests of consumers,
despite its potential to address cultural paradoxes such as poverty, injustice, and
environmental problems (Kotler et al., 2010). To address this negative perception,
there is a growing need for an ethical foundation for marketing that prioritizes the
common good and establishes a new relationship between companies, citizens, and
consumers. This involves recognizing consumers as citizens with rights and
responsibilities beyond their role as consumers (Sheth & Sisodia 2005, 160).
Marketing should represent the interests of consumers within the company, not just
represent the company to consumers. To achieve this, marketing needs an ethical
foundation that prioritizes the common good and fosters a sustainable relationship
between companies, citizens, and consumers. This article aims to explore if the
concept of the common good serves as a basis for ethical and sustainable marketing,
our working hypothesis.
The article will examine the theoretical concepts related to this research question,
including the concept of the common good, ethical marketing, and the relationship
between marketing and the common good. By exploring these key concepts, the
article seeks to provide guidance for marketers committed to ethical and sustainable
practices and contribute to a deeper understanding of the role that marketing can
play in promoting the common good.
2
Theoretical Background
2.1
The common good
The concept of the common good has been of philosophical and political interest
since antiquity, and its definition and application have varied according to the social,
political, and cultural context. It is rooted in the recognition of human beings as
social creatures who seek a good that extends beyond the individual realm.
According to Aristotle and Aquinas, living in a community is not only necessary but
also essential for human happiness (Murphy, 2018). In modern times, the concept
has been linked to individual and human rights and emphasizes the political
conditions in which individuals can achieve their personal ends. While the concept
M. E. Rodríguez Benito: Can the Concept of the Common Good be the Foundation of
Ethical Marketing?
641.
has been criticized as vague and open to political manipulation (Jaede, 2017), it is
currently experiencing renewed interest as it seems adequate to face global
challenges.
Definitions of the common good are partial and temporary, never static or universal
(Dahl & Soss, 2014). Based on the contemporary utility of the term, we can define
it as the one that seeks conditions so that the members of a community can achieve
their individual purposes, while generating a whole in the community through
relationships or aggregates that allows us to achieve exclusive intrinsic goods of a
community (Murphy, 2005). It refers to the contextual conditions that contribute to
human wellbeing, such as prosperous communities and environmental sustainability
(Haugh & Doherty, 2022).
We can construct a common good identifying the common interest that people have
as citizens (Pettit, 2004, 169) We can also face the common good from universalism,
defining it as a global concept that includes shared community values, including
respect for dignity and human rights and the promotion of social, economic and
environmental well-being (Melé, 2009; Kotler, 2019).
There has been a tendency to identify the common good with a value in vogue, such
as social justice or sustainability today, but the common good is a concept that,
paradoxically, tends to become empty of content when it is identified with a
particular value or right.
As a summary of the different contemporary trends, we can say that the common
good is a concept whose legitimacy arises from social co-creation and not from a
higher authority; process-oriented, not merely a shared social code; actionable,
looking for the application and based on the promotion of social justice, equal
opportunities, the protection of human rights and citizen participation in decisionmaking.
2.2
Ethical marketing
Ethical marketing addresses the ethical challenges associated with relationship
marketing, technology, and the globalization of companies (Nill & Schibrowsky,
2007). It involves balancing moral principles with economic considerations in the
642
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
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development of marketing strategies and actions to achieve individual and social
well-being and to get marketing to recognize and develop shared utilities (Kadirov
& Varey 2014, 193).
The roots of the marketing concept lie in the 1970s, with a clear ethical orientation
that limited corporate behaviour (Kotler, 1977; Spratlen, 1972; Dawson, 1980).
However, ethical marketing has evolved over time, with various approaches
proposed in the 1990s, including virtue ethics (Williams & Murphy, 1990),
deontological, pluralist, dialogic ethics (Nill & Shultz, 1997), from the ethics of care.
As of the economic crisis of 2008, ethical marketing experienced a new impulse and
new directions emerged, such as sustainability, issues related to health and safety, or
the treatment of consumers most disadvantaged (Murphy & Martin, 2016).
There are two main approaches to ethical marketing: instrumental, that examines
how marketers behave in different ethical situations and normative, that identifies
the ideal ethical practices that they should follow (Laczniak & Murphy, 2014). The
challenge with ethical marketing is determining what is understood by ethical
(Bufalini, 2003). To address this dilemma, different positions have been taken,
ranging from hyper-norms to professional self-regulation. Since the economic crisis
of 2008, ethical marketing has experienced renewed interest, with sustainability,
health and safety issues, and the treatment of disadvantaged consumers becoming
important considerations.
Nowadays we can define ethical marketing as the one whose objective is to combine
moral principles with economic principles in a balanced way in the formulation of
its strategies and actions, getting marketing to recognize and develop shared utilities.
It is marketing “practices that emphasize transparent, trustworthy and responsible
personnel and/or organizational marketing policies and actions that exhibit integrity
as well as fairness to consumers and other stakeholders” (Murphy et al, 2005, XVIII).
In practice, ethical marketing ranges from companies focused solely on economic
benefit to those whose primary aim is consumer satisfaction (Smith & Quelch 1996,
Sciarelli 2006). Shared values, such as honesty, responsibility, justice, respect,
transparency, and citizenship, have been established as a common basis for ethical
marketing professionals (AMA, 2020). Ethical marketing typically contributes to a
M. E. Rodríguez Benito: Can the Concept of the Common Good be the Foundation of
Ethical Marketing?
643.
more culturally sensitive and socially conscious business culture (Tranver et al.,
2021).
3
Methodology
To examine our research hypothesis, which states that the common good concept
provides adequate philosophical support for ethical & sustainable marketing, we
used qualitative conceptual analysis in this study. After presenting a theoretical
framework that included concepts such as ethical marketing and the common good,
we explored, based on secondary data, definitions and frameworks related to the
practice of ethical marketing and the application of the common good in economics
and marketing. We used content analysis to analyze various definitions and
approaches to the relationship between marketing and the common good and
identify relevant patterns or themes. These patterns, themes, and keywords helped
us conceptualize marketing for the common good.
4
Results
The relationship between marketing and the common good is relevant because both
concepts implicitly address human needs. The most accepted definitions of
marketing emphasize the concept of value creation, contribution, and transmission
to consumers. The common good is considered a guiding ethical principle in macromarketing, which uses distributive justice as a tool for implementation. Critical
marketing has analyzed the relationship between marketing and the common good
for consumers and society to demystify ideological approaches underlying marketing
practices and propose new possibilities and visions.
We analysed 13 articles published between 2000 and 2020 that establish a
relationship between marketing and the common good. We compiled a table of
definitions of marketing and the common good based on the key ideas of the articles
(see Table 1).
In the contributions analysed we find that when related with the common good,
sustainability and ethical values appear in almost all definitions. The relationship
between marketing and the common good is relevant because both concepts
implicitly address human needs. The most accepted definitions of marketing
644
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
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emphasize the concept of value creation, contribution, and transmission to
consumers.
Table 1: Summary definitions of marketing and the common good
Author
Mick, 2007
Mish and Miller, 2013
Pittz et al, 2019
Sherry 2013, Saren 2007,
Tadajewski and Brownlie 2008;
Zwick and Cayla 2011
Kotler et al, 2010
Moreno Martínez and
Margounato, 2011)
Kotler (in Fernandez and
Seijo 2010)
Sarkar and Kotler (2018)
Baptista and Suarez (2010)
Melé (2002)
Gaski and Etzel (2013)
Sherry (2013)
Urbany (2013)
Sherry (2013)
Hardt and Negri (2009)
Key Idea
The maximum potential of marketing is in the good common
(in addition to socio-ecological obligations and public
appreciation).
A sustainable aggregate marketing system allows resources to
be managed to satisfy needs and wants while being
constrained by social forces and natural resource limits.
Common good as a guiding ethical principle and distributive
justice as a tool.
May marketing be humanized and broaden its vision.
Marketing must be focused on human beings and must
recognize the global humanity as a subject of rights and
deserving of the common good.
Conjunction of 3 objectives: the well-being of people, the
satisfaction of consumer needs and the profit of the
company.
Activist brands: their activity protects and serves good
common.
Marketing and the common good implicitly satisfy human
needs.
Philosophical anthropology, property rights, the nature of
the company, business sense, obligations, corporate
responsibilities, other responsibilities and the resolution
of conflicts of interest.
Treat customers fairly while maintaining product quality,
charging reasonable prices, providing adequate service and
launching appropriate and truthful messages about their
offers (Marketing Mix for the common good).
A geocentric and econocentric orientation that seeks the
systemic common good and not individual satisfaction.
Marketing as clarity: Companies are obliged to create a
better world and society, which challenges marketing to
establish a relationship between the company and the client
based on honesty and dignity.
Lasting happiness (eudemonia) as a common good and a
marketing utopia.
These definitions have a systemic approach and are not based on the objectives of
the companies. Humanity and not only customers must be the focus of companies'
marketing. Even in the most operational definitions, such as the marketing mix
(Gaski & Etzel, 2013), they include ethical values and references to sustainability.
M. E. Rodríguez Benito: Can the Concept of the Common Good be the Foundation of
Ethical Marketing?
645.
The most accepted definitions of marketing emphasize the concept of value
creation, contribution, and transmission to consumers. The common good is
considered a guiding ethical principle in macro-marketing, which uses distributive
justice as a tool for implementation. The relationship between marketing and the
common good for consumers and society help demystify ideological approaches
underlying marketing practices and propose new possibilities and visions.
5
Discussion and Conclusion
When analyzing the definitions, we find that it is a contextual common good,
adapted to today's society. On the one hand, they try to avoid the common criticisms
of marketing regarding the generation of needs and short-termism, and on the other,
they try to integrate universal values. They also include complete humanity as a
subject, something that also occurs in the latest definition of marketing from the
American Marketing Association (AMA, 2017).
As a conclusion, we can say that, according to the current literature, the concept of
the common good can provide a philosophical basis for ethical marketing, as well as
sustainable marketing.
Based on our analysis, we propose a definition of marketing for the common good:
Marketing for the common good is the philosophy, processes and organizational
activities that aim to cover real needs of society and facilitate collective happiness by
creating value and seeking, through commitment to honesty, justice, sustainability
and human dignity, a triple positive impact on the economy, society and the
environment.
Due to the limitations of this work, we have had to put aside social and business
dimensions that derive from an ethical and sustainable approach to marketing. In
future research, both quantitative and qualitative we want to addresss challenges
associated with the common good as the ethical support for marketing include the
lack of agreement on the concept and potential tensions between ethical
considerations and business objectives. Also, we will create a model that includes all
this references and offer an actionable path for marketing professionals.
646
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
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American
Marketing
Association
(2017).
Marketing
definition.
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from
https://www.ama.org/the-definition-of-marketing-what-is-marketing/
Baptista, A. F., & Suárez, C. S. (2010). Ethical marketing as the foundation of the common good in
human organizations. Clío América, 4(7), 116-132.
Bufalini, P. (2003). Il marketing etico: come i comportamenti etici dell'impresa possono diventare un fattore di
competitività. AGRA.
Dahl, A., y Soss, J. (2014). Neoliberalism for the common good? Public value governance and the
downsizing of democracy. Public Administration Review, 74(4), 496-504
Gaski, J. F., y Etzel, M. (2013). How marketing serves the common good. Marketing and the Common
Good: Essays from Notre Dame on Societal Impact, pp. 81-92. Routledge.
Hardt, M. and Negri, A. (2009). Commonwealth. Cambridge: Harvard University Press.
Kotler, P. (2010). The prosumer movement. In Prosumer Revisited (pp. 51-60). VS Verlag für
Sozialwissenschaften.
Haugh, H. M., & Doherty, B. (2022). Social entrepreneurship and the common good. In
Entrepreneurialism and society: consequences and meanings (vol. 82, pp. 89-114). Emerald publishing
limited.
Jaede, M. (2017). The Concept of the Common Good (PSRP Working Paper No. 8). Edinburgh: Global Justice
Academy, University of Edinburgh.
Kadirov, D., & Varey, R. J. (2014). Wisdom as Excellence in Commitment to the Humanistic Marketing
Practice Paradigm. In Humanistic Marketing (pp. 192-203). Palgrave Macmillan.
Kotler, P., Kartajaya, H., y Setiawan, I. (2010). Marketing 3.0: From products to customers to the human spirit.
John Wiley y Sons.
Kotler, P. (2019), Defining the Common Good. In Advancing the Common Good: Strategies for Businesses,
Governments, and Nonprofits, ed. Praeger, 3–24.
Melé, D. (2002). Not only stakeholder interests. The firm oriented toward the common good.
Rethinking the purpose of business. Interdisciplinary essays from catholic social tradition, 190-214.
Mick, D. G. (2007). The end (s) of marketing and the neglect of moral responsibility by the American
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Mish, J., y Scammon, D. L. (2010). Principle-based stakeholder marketing: Insights from private triplebottom-line firms. Journal of Public Policy & Marketing, 29(1), 12-26.
Moreno Martínez, M., & Margounato, M. O. (2011). Marketing for Human Beings: An Ethical Hope.
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Muñoz-Martín, J. (2013). Business ethics, Corporate Social Responsibility (CSR) and Creation of
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Murphy, T. (2018). Bien común = Common good. EUNOMÍA. Revista en Cultura de la Legalidad, 14,
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Murphy, P. E., Laczniak, G. R., Bowie, N. E., y Klein, T. A. (2005). Ethical marketing.
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BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
FUTURE WAYS IN SUSTAINABLE
ECONOMIC HIGHER EDUCATION
BOTOND GÉZA KÁLMÁN
Kodolányi János University of Applied Sciences, Department of Business and
Management, (Institute for Sustainable Economy), Orosháza, Hungary
kalman.botond.geza@kodolanyi.hu
Abstract The purpose of this study is to examine the question
of whether the current form of economic higher education meets
the goals of sustainable education. In order to do this, author
examined whether university students studying economics
perform better in a special financial field, in their answers to the
question of borrowing. For this purpose, author analysed the
results of his own previous questionnaire survey using statistical
methods. Among the questions in the questionnaire was selected
those that examine theoretical and practical knowledge related to
loans. The results show that the level of theoretical and practical
financial knowledge of Hungarian higher education students can
still be improved. In order to do this, the basic knowledge should
be generally taught in the financial courses in higher education,
while more specific knowledge should be differentiated. A
limitation of the research is that it only examined Hungarian
university students, it may be worthwhile searching for foreign
students with another query. Its originality, on the other hand, is
the demonstration that in sustainable higher education, in
addition to the introduction of new educational content and
methods, students shall also acquire the ability of lifelong
learning.
DOI https://doi.org/10.18690/um.epf.3.2023.70
ISBN 978-961-286-736-2
Keywords:
sustainability,
higher education,
financial
knowledge,
lifelong learning,
economics
JEL:
A22, G53, Q01
650
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE.
1
Introduction
The purpose of this study is to examine what sustainability in education means in
terms of learning content and methods. The ever-accelerating scientific and technical
development and increasingly frequent crises require adaptation. Education is one
of the most important areas of the sustainability issue, as this sector lays the
foundation for our future. As a result of Industry 4.0, the output requirements of
higher education have changed. This study focuses on a special area, financial
behaviour and decision-making.
2
Theoretical Background
The economic crisis of 2008 and its effects on everyday people focused the attention
of specialists on several key areas. Such an area is, for example, financial literacy,
knowledge and efficient management of everyday finances (Kershaw & Webber,
2004). The financial knowledge and behaviour of university students was already a
question in early research (Chen & Volpe, 1998; Danes & Hira, 1987). Later research
(Altıntaş, 2009) showed that teaching investment skills can remarkably increase the
financial knowledge of participating subjects. Studies have also been published in
the literature on the relationship between the major studied by the students and the
level of financial knowledge (Chemlíková & Svoboda, 2017). Jain & Jain (2018)
described that students of economic courses perform 5-35 percentage points better
in everyday questions compared to other majors. There is a correlation between the
ability to plan long-term and university studies, too (Treger & Wendel, 2021). In
such situations, the role of education comes to the fore (Horowitz et al., 2021). After
reviewing the literature, author formulated the below hypotheses.
H1.
H2.
H3.
University students studying economics have better theoretical
knowledge and practical skills related to loans than their peers studying
other subjects.
The development of differentiated financial education programs in
higher education is recommended for students studying in different
majors
In addition to financial programs, lifelong learning (LLL) skills and
competencies must be established in higher education, preparing
students to follow future changes and keep their knowledge up-to-date
B. Géza Kálmán: Future Ways in Sustainable Economic Higher Education
651.
The performance of higher education is also part of the Global Competitiveness
Index of the World Economic Forum (Schwab, 2020). The university rankings used
and recognized worldwide (QS, 2020; THE, 2022) can also be understood as
indicators of competitiveness. Competitive attractive and valuable study programs
attract more students and promote collaboration between the economic sector and
higher education (Mian et al., 2020) This promotes the sustainability of both sectors.
In the rest of the article, it will first describe the research methodology, then the
study will be concluded by drawing conclusions and summarizing the results
obtained.
3
Methodology
The study is based on own previous research conducted in 2019-2020 among
university students. This research also became the basis of author’s PhD dissertation.
The research took place in two phases. The first survey took place in the fall of 2019,
and the second survey took place in the fall of 2020. The most important event
between the two periods was the COVID-19 pandemic, with the effects of which
was the model of the economic crisis situation. This study now analyses a small part
of this research based on new aspects. The current goal was to find out whether
students of economics majors know more about credit-related theoretical and
practical knowledge than their fellow students studying in other majors. The
questionnaire used for the original research is a self-developed, voluntary and
anonymous paper-based questionnaire. This form allows the highest response rate
and the least biasing effect (Dillman & Smyth, 2014; Ilieva et al., 2002; Lavrakas,
2008). After data cleaning and coding, the answers to the questionnaires were
processed using statistical methods, used IBM-SPSS, MS-Excel and Jamovi
programs for this purpose. In this study, the mainly used methods are descriptive
statistics. With the help of these, it is possible to compare the theoretical and
practical knowledge and skills of university students in different courses related to
credits. 1004 respondents filled out the questionnaire during the first survey, and
1155 respondents during the second survey. On both survey nights, approximately
50% of the respondents were students studying vocational education in economics,
the proportion of law students was almost 25%, and the same proportion of
respondents included humanities, pedagogy and art students.
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Results
Based on the analysis of the entire questionnaire, the students were classified into
three groups (Figure 1). In addition to the group of students majoring in economics
and the group of law students who performed equally with them, the students of the
liberal arts-pedagogy-art majors were placed in the third group. An average of 15%
of the respondents had credit when filling out the questionnaire. This ratio did not
change significantly between the first and second survey. Among humanitiespedagogy-art students, there was an observable increase of 4 percentage points in
the proportion of students with loans, while the change in the group of law students
is in the opposite direction, they show a decrease of 2 percentage points.
Proportion of respondents
Students with loan
20%
15%
13%
16%
14%
ECO
13%
LAW
1ST PHASE
HUM/EDU/ART
2ND PHASE
Figure 1: Proportion the students loan payable
Source: Author's calculations.
Examining the typical approach (Figure 2), regardless of the university major,
students primarily approach finance from a theoretical perspective. The practical
approach characterizes only about a quarter of the students in the entire sample. It
can be observed that, as a result of the crisis, in the second phase, the practical
activity of economics students decreased, while that of lawyers increased. A
particularly interesting result is that the students of the humanities-pedagogy-art
majors produced the greatest increase (10 percentage points). This suggests that
these students were forced to manage their finances better and more actively as a
B. Géza Kálmán: Future Ways in Sustainable Economic Higher Education
653.
result of the changes due to the crisis. The withdrawal of law students from financial
matters indicates that they recognized the dangers of wrong decisions and typically
reacted to new problems with a risk-averse attitude.
Another question is, that to which part of the practice the interviewees performed
best in. As a result, the most important thing for all respondents, regardless of their
university major, is to know the total amount to be repaid at the end of the loan
term, and the size of the repayment instalments when taking out the loan.
25%
23%
20%
23%
27%
30%
75%
77%
80%
77%
73%
70%
LAW
HUM/EDU/ART
ECO
LAW
HUM/EDU/ART
ECO
Prportion of Respondents
Dominant Approach to Finances
1ST
2ND
THEORETICAL
PRACTICAL
Figure 2: Dominant Approach to Finances
Source: Author's calculations.
Then author examined how students who currently have loans answered the
theoretical and practical questions about loans. The most unfavourable of the results
is that these students cannot list the items that determine how big the repayment
instalment will be. They don't even know what their creditor's financial situation is
and what resources they use to ensure their own financial situation. These
deficiencies can be seen in all groups of students, regardless of the major they study.
Another result worth paying attention to is that 70% of students who do not have
credit are aware of the role of credit brokers, that is, that with the help of credit
brokers we can save time and costs and have the opportunity to find the most
favourable loan for us. Unfortunately, those students who currently have loans to
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pay did not use a loan broker at all before making their loan decision. This is true
even for students studying economics.
Another pivotal question is a basic mathematical operation already expected at the
skill level in high school: interest calculation (Figure 3). In this, the economics
students met the expectations, 99% of them answered that they know how to
calculate interest. This ratio is the same between students majoring in economics
with and without credit. In the entire sample, the same ratio was 90% in the first
phase and 87% in the second phase.
The reason for the difference is primarily the lower performance of law students,
for whom the performance of those with loans did not even reach 50% at the time
of the first inquiry. Among both law students and humanities-pedagogy-art students,
the proportion of those who knew the method and process of interest calculation
was higher than among students without credit.
Proportion of "Yes"
Contains APR all of expenses?
91%
89% 91%
96% 97%
90% 90%
73%
72%
59%
LOAN
NOT LOAN
LOAN
ECO
NOT LOAN
LAW
PHASE 1
LOAN
61%
54%
NOT LOAN
HUM/EDU/ART
PHASE 2
Figure 3: Calculating Interest
Source: Author's calculations.
On the other hand, law students are the best at knowing the Total Loan Interest
Ratio (APR). This is true even when we examine law students with loans and even
when we focus on law students without loans (Figure 4). The probable reason for
this result may be that the law student can answer the question correctly based on
their legal knowledge. Economics students are not significantly behind law students,
B. Géza Kálmán: Future Ways in Sustainable Economic Higher Education
655.
but unfortunately, economics students who have loans perform worse. Students
majoring in humanities-pedagogy-art perform the worst, with 55-75% of correct
answers. At the same time, among them, the biggest increase occurred as a result of
the crisis: among students with loans: it was found an improvement of 14 percentage
points. This indicates that they feel the consequences of the crisis to be the most
threatening, so they try to minimize their risks.
Proportion of "Yes"
Contains APR all of expenses?
91%
89% 91%
96% 97%
90% 90%
73%
72%
59%
LOAN
NOT LOAN
LOAN
ECO
NOT LOAN
LAW
PHASE 1
LOAN
61%
54%
NOT LOAN
HUM/EDU/ART
PHASE 2
Figure 4: APR Knowledge
Source: Author's calculations.
5
Discussion and Conclusions
The economic effects of crises affect not only states and companies, but also
individual people. The knowledge that an individual can use in practice is of
paramount importance. As a result of crises, reserves often run out and people are
more often forced to take out loans to overcome everyday financial difficulties.
These skills must be learned and taught. And the most suitable environment for
education is education in the school system. In this study, it was investigated how
efficiently this happens in higher education, where there is the last opportunity to
teach usable financial knowledge before entering the labour market. It was paid
special attention to the students in economics, as they should also perform better
than their peers in other majors due to their specialization.
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According to results, 15% of students have loans to pay. This data is much more
favourable than the latest international statistics, because in these 55% of students
have to pay some kind of loan (Forbes, 2022). As a result of the crisis, the number
of people taking out loans increased slightly, by 4 percentage points, among students
of humanities-pedagogy-arts majors. This represents an opposite change compared
to literature data, which indicated a 5-8% decrease (Berg, 2021). The direction of the
change correlates with the decrease among law students, but in terms of its
magnitude, the decrease according to the literature is higher than the 1 percentage
point value was measured. The 2 percentage point increase among students studying
economics is a good indicator that these students are aware of the risks of taking out
a loan, so they only choose this option carefully.
The approach to the credit question is primarily theoretical, only a quarter of the
students approach the problem from a practical perspective. This indicates that
teaching of practical tasks should be improved (Faisal et al., 2022; Grijalvo et al.,
2022). Although educational methods are being modernized, this does not mean a
higher level of knowledge at the same time. This statement is well justified by the
issue of interest calculation. As expected, almost all economics students know how
to calculate interest. Among students studying in other majors, on the other hand,
this ratio is only 47-91%. Humanities-pedagogy-arts students are the least informed
about the APR (Annual Percentage Rate), students of economics and law know
more than them.
In the light of the above findings, it can be said that the hypothesis H1 was only
partially confirmed. Economics students only perform best in certain areas, but in
general the performance of law students is similar. Students of humanities, pedagogy
and art programs are most at risk. Therefore, hypothesis H2 is accepted on the
condition that differentiated education programs must include basic knowledge
(interest calculation, importance of APR) for all specializations. However, the H3
hypothesis was fully confirmed. Sustainability in higher education can therefore be
realized in two parallel ways: by incorporating new knowledge and methods, and by
teaching the ability of independent LLL.
A limitation of the research is that it only examined Hungarian university students,
it may be worthwhile to search for foreign students with another query. Its
originality, on the other hand, is the demonstration that in sustainable higher
B. Géza Kálmán: Future Ways in Sustainable Economic Higher Education
657.
education, in addition to the introduction of new educational content and methods,
students must also acquire lifelong learning skills.
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Berg, E. (2021). How the Pandemic Could Affect the Rise in Student Debt (p. 14). The Pew Charitable Trusts.
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Chemlíková, B., & Svoboda, M. (2017). Is the Financial Literacy Level of Finance and Law Students the Same?
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m_content=28665
SOCIALLY RESPONSIBLE
TOURIST BEHAVIOUR IN THE
GORIČKO NATURE PARK
MIRAN GRAH, SONJA SIBILA LEBE, BORUT MILFELNER
University of Maribor, Faculty of Economics and Business, Maribor, Slovenia
miran.grah@student.um.si, sonjasibila.lebe@um.si, borut.milfelner@um.si
Abstract The aim of this paper is to empirically evaluate a
conceptual model which uses socially responsible behaviour
(SRB) as its central component. Past research has focused
primarily on social responsibility consequences, but little is
known about the impact of a destination’s image on SRB. We
conducted an opinion poll to test our structural model shaped to
measure the SRB. Our sample were visitors to the Goričko
Nature Park in Slovenia. After testing the content validity,
convergent validity, discriminant validity and reliability of
constructs, results show that a) the destination image is an
important precursor to three perceived SRB dimensions
(economic, social, environmental), and b) that SRB dimensions
have a positive impact on visitor satisfaction, intention to revisit
the destination, and to spread a positive wordof-mouth. Results
provide a comprehensive view of SRB, which proves the
important role of the tested constructs as well as the cause, and
the consequence for/of SRB.
DOI https://doi.org/10.18690/um.epf.3.2023.71
ISBN 978-961-286-736-2
Keywords:
destination image,
socially responsible
behaviour,
visitor satisfaction,
revisit intention,
Goričko nature
park
JEL:
Z32
660
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Introduction
Corporate social responsibility (CSR) has become a central concern in the business
world. CSR-oriented organisations are aware of the interdependency between their
employees, environment, community, business partners, and good management, and
thus responsibly sum up their decisions and activities to sustainable development,
including the health and well-being of the society, and transparent and ethical
behaviour, all in accordance with applicable legislation and operating norms, and
implement all requirements and norms in their relations (Mulej et al., 2017).
Perceived socially responsible behaviour (SRB) is result of three dimensions and a
set of interrelated constructs. Our model is adapted and upgraded from perceived
sustainability models for tourist behaviour designed by Kim, Thapa and Kim (2017).
Although models were developed to measure individual constructs (e.g. tourist
satisfaction, revisit intention) related to perceived sustainability (Kim et al., 2017),
we have not found factors influencing the SRB. Among the antecedents of factors
influencing SRB, our research includes the destination image; among the
consequences, we included visitor satisfaction, revisit intention, and positive word
of mouth (WOM).
Based on the above, the main aim of our research was to investigate whether the
destination image affects the perceived SRB in the GNP, and which are the
consequences of the perceived SRB in the destination.
2
Conceptualization of Socially Responsible Behaviour and Related
Constructs
The concept supposed to influence the SRB is the destination image; it is considered
to be the element that makes the differentiation between tourism destinations
possible, and an important criterion in the decision-making process which
destination to choose (Lee et al., 2014). The concept “destination image” consists of
people's beliefs, ideas, and impressions about the destination (Chaulagain et al.,
2019).
M. Grah, S. Sibila Lebe, B. Milfelner: Socially Responsible Tourist Behaviour in the
Goričko Nature Park
661.
Destination image has not yet been extensively researched in relation to the SRB.
Papadimitriou et al. (2015) argue that tourists form behavioural intentions towards
a destination based on general perceptions. Some other authors expose the
subjective perception of tourists (including choice of destination) (Chaulagain et al.,
2019; Chen & Tsai, 2007). The destination image – as perceived by potential
customers – is crucial for their post-trip evaluation and their future behaviour
(Zhang et al., 2014). On this basis, we propose the first three hypotheses:
H1: The perceived image of the Goričko Nature Park (GNP) has a positive effect
on socially responsible behaviour of visitors.
H2: The perceived image of the GNP has a positive effect on environmental SRB.
H3: The perceived image of the GNP has a positive effect on economic SRB of
visitors.
Customer satisfaction is a frequently researched concept (Keshavarz & Jamshidi, 2018;
Milfelner et al., 2010). It may derive from SRB. Some research (Chu, 2002) is based
on Oliver's (1997) expectation dis/confirmation theory, defining satisfaction as the
degree up to which a product (or service) satisfies the customer's pre-purchase
expectations. Satisfaction thus reflects the difference between consumer’s
prepurchase expectations, and the after- purchase evaluation (Milfelner et al., 2010).
The concept of sustainability with the triple bottom line model (Elkington, 1994)
strives to minimise negative social, environmental, and economic impacts of the
organisation; it became an important component of the CSR, as it shows that such
approach enables the organisations to also achieve economic goals (Latapí Agudelo
et al., 2019).
CSR and sustainable development are interdepending, and do not function without
each other (Lawrence, 1993). Literature review shows that all three sustainable
development dimensions (social, environmental, and economic) have a positive
effect on tourist satisfaction (Basak et al., 2021). Therefore, we propose the next
three hypotheses:
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BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
H4: Perceived social responsibility of the GNP (as a tourism destination) has a
positive effect on visitors’ satisfaction with the destination.
H5: Perceived environmental responsibility of the GNP (as a tourism destination) has
a positive effect on visitors’ satisfaction with the destination.
H6: Perceived economic responsibility of the GNP (as a tourism destination) has a
positive effect on visitors’ satisfaction with the destination.
The intention to revisit can also be a result of SRB; it is therefore crucial for tourism
organisations as repeated visitors cost less than attracting first time visitors (Xu et
al., 2021); further, Chen and Tsai (2007) argue that revisit intentions involve
“visitor's judgement of the likelihood” to revisit the destination.
In their research model, Kim, Thapa and Kim (2017) confirm the significant impact
of sustainable development on revisit intention. Similarly, Su and Huang (2018) note
that a destination’s CSR has a positive effect on tourist satisfaction, which, in turn,
has a positive effect on the revisit intention. We therefore set the following three
hypotheses:
H7: Perceived social responsibility of the GNP has a positive impact on the revisit
intention.
H8: Perceived environmental responsibility of the GNP has a positive impact on the
revisit intention.
H9: Perceived economic responsibility of the GNP has a positive impact on the revisit
intention.
WOM plays an active role in destination promotion among relatives and friends
(Quan et al., 2021): it is considered an important source of information (Chao et al.,
2021). WOM can create a favourable image of a destination and increase its visibility
(Chao et al., 2021).
M. Grah, S. Sibila Lebe, B. Milfelner: Socially Responsible Tourist Behaviour in the
Goričko Nature Park
663.
Literature shows a significant relationship between different types of behavioural
intentions and WOM in the tourism context. Even more, CSR has a direct impact
on customer’s willingness to buy and is related to customer loyalty (Lee et al., 2012).
Such consequences are manifested through consumer behaviour (e.g. WOM). We
tested the positive WOM consequences with these final three hypotheses:
H10: Perceived social responsibility of the GNP has a positive effect on positive
destination WOM.
H11: Perceived environmental social responsibility of the GNP has a positive effect
on positive destination WOM.
H12: Perceived economic social responsibility of the GNP has a positive effect on
positive destination WOM.
3
Methodology
Measuring instrument
Based on the literature review, we first selected and adapted the questionnaire items.
6 items for the SRB were adopted from Sánchez-Fernandez et al., (2019) and 8
further items from Kim et.al (2017). The six items applied for the field of visitors
satisfaction, and the four items applied for assessing the destination image were
based on scales previously used by Milfelner et al. (2010). Items measuring the revisit
intention were adopted from Tosun et al., (2015) and Wang and Hsu (2010). Finally,
for WOM, three items were based on the measurement instrument constructed by
Kim et al. (2017). Individual statements were measured using a 5-point Likert scale
(1 = not agree at all; 5 = fully agree). Visitor satisfaction was assessed using a 5-point
scale with values reaching from "very dissatisfied" to "very satisfied". In the next
step, the indicators and relevant definitions were reviewed by two tourism- and one
marketing experts. In addition, five potential visitors to the GNP assessed the scales.
Sample selection and description
Data was collected by printed self-completion questionnaires in the GNP. A total of
422 questionnaires were completed. 49 were excluded due to missing data. 373
questionnaires were valid and completed by 41% male and 59% female respondents.
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64.3% or 240 respondents visited the destination for the first time. The majority was
aged 31 to 40 (30.0%), followed by those aged 41 to 50 (22.5%), and those aged 51
to 60 (20%). 13.4% of respondents were aged 61 or older. Respondents aged under
30 (10.7%) represented the smallest share.
Dimensionality, reliability, and validity of constructs
We used the software AMOS (version 27) to perform a confirmatory factor analysis
(CFA) and assess the validity of our measures. CFA shows the multidimensionality
of one scale (SRB). In total, four items were eliminated one after another according
to the modification and fit indices. The final model contained 12 indicators for the
SRB, 5 indicators for the perceived image, 4 indicators for visitor satisfaction, and 3
indicators for revisit intention and for WOM. The measurement model converged
with an acceptable fit (χ2 563.289; df = 301; RMSEA = 0.048; TLI = 0.978; NNFI
= 0.988; CFI = 0.990 and GFI = 0.904.).
All indicator loadings exceeded the value of 0.7. Composite reliabilities reached a
value of 0.9 and exceed the proposed 0.6 threshold, meaning that measuring
instruments are well operationalized. Similarly, results of convergent validity for all
constructs (AVE coefficients ranging from 0.841 to 0.989) show that coefficients
are suitable and satisfy the criterion that the coefficient should exceed 0.5
(Diamantopoulos & Siguaw, 2000).
4
Results
The parameters in the structural model were estimated using the ML estimation
procedure. The model showed good fit to the data: χ2(276) = 540.292; GFI= 0.900;
RMSEA=0.051; CFI= 0.989; TLI=0.987; IFI=0.989. All indices, except χ2, which
was characteristic, were distributed within appropriate intervals.
Results confirm that the destination image has a positive and strong influence on the
economic dimension of SRB (γ3 = 0.746; p<.001), on its social dimension (γ1 = 0.889;
p<.001), as well as on its environmental dimension (γ2 =0.633; p<.001). The
hypotheses H1, H2 and H3 are confirmed.
M. Grah, S. Sibila Lebe, B. Milfelner: Socially Responsible Tourist Behaviour in the
Goričko Nature Park
665.
The SRB’s social dimension influence on visitor satisfaction (β1 = 0.671; p<.001), on
their revisit intention (β2 = 0.844; p<.001), and positive WOM (β3 = 0.855; p<.001)
was positive, strong, and statistically significant, therefore hypotheses H4, H7 and
H10 are confirmed.
The SRB’s environmental dimension has a much weaker influence on visitor
satisfaction (β4 = 0.111; p<.001) and on revisit intention (β5 = 0.057; p<.01), as the
social one yet still a positive influence. As it is statistically significant, hypotheses H5
and H8 are confirmed as well. The SRB’s environmental dimension path to positive
WOM was not statistically significant (β6 = 0.008; p>.05), we therefore reject the
hypothesis H11.
The influence of SRB’s economic dimension on visitor satisfaction (β7 = 0.136;
p<.001), on revisit intention (β8 = 0.126; p<.001), and positive WOM (β9 = 0.147;
p<.001) have a weaker, yet still positive and statistically significant influence, thus
hypotheses H6, H9 and H12 are confirmed, too. Results are presented in Figure 1.
Socially
responsible
behaviour
Destinati
on image
γ1=.88
Social
Visitor
satisfacti
β1=.67
β4=.11
β7=.13
β2=.84
γ2=.63
γ3=.74
β5=.057
Environme
ntal
Economi
Intention
to visit
β8=.12
β3=.85
β6=.008*
β9=.14
* - path significant at p<.001
** - path significant at p<.01
*** - path not significant at p.>05
Figure 1: Structural model and standardized regression paths
Source: Authors' compilation.
WOM
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Discussion and Conclusion
The SRB model used in this research applied at the GNP, which was developed by
the authors by upgrading the existing models, presents a new research perspective.
The SRB concept assumes a variable with a positive and strong influence on the
perceived SRB and that the discussed central concept affects some variables as well.
We conclude that the destination image influence on perceived SRB is positive and
strong. This indicates that the destination image contributes to strengthening the
visitor SRB in a destination. Destination managers must thus be aware that
perceived SRB is a multidimensional construct, where economic, social, and
environmental dimensions are crucial.
Research results also reveal that the social dimension of SRB has a positive and
strong influence on (i) visitor satisfaction, (ii) positive WOM, and (iii) revisit
intention. Research by other authors (Basak et al., 2021; Kim et al., 2017) shows
similar findings.
Previous research (Jasrotia et al., 2021) reports that the economic dimension of
sustainable development usually does not affect tourists’ satisfaction, while our
research, exploring the impact of the SRB’s economic dimension on (i) visitor
satisfaction, (ii) revisit intention, and (iii) positive WOM shows a weak, yet positive
influence.
The interlinkage-analysis between the constructs also showed that the SRB’s
environmental dimension is affecting visitor satisfaction and their revisit intention,
while it is not affecting the WOM. This can be explained by the fact that the majority
(64.3%) were first time visitors to GNP, and thus could have no place attachment.
5.1
Limitations of the study and recommendations for further research
As the results relate only to the GNP visitors they cannot be generalised beyond the
scope of our research. Nevertheless, the conceptual model developed in this study
allows further verification by including additional factors, e.g. positive and negative
emotions, perceived value, or memory of travel. Qualitative research methods (in-
M. Grah, S. Sibila Lebe, B. Milfelner: Socially Responsible Tourist Behaviour in the
Goričko Nature Park
667.
depth interviews) should be considered in addition to quantitative research: this
could reveal more causes and consequences of SRB.
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BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
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Tourism management, 40, 213-223.
BALANCING EXPLORATION AND
EXPLOITATION IN
ORGANIZATIONS: THE ROLE OF
ORGANIZATIONAL DESIGN,
LEADERSHIP STYLE AND
EMPLOYEE PERSONALITY
ALEŠA SAŠA SITAR,1 SABINE BERGNER,2
KATARINA KATJA MIHELIČ,1 MIHA ŠKERLAVAJ,1, 3
ALJOŠA VALENTINČIČ,1 AJDA MERKUŽ1
University of Ljubljana, School of Economics and Busines, Ljubljana, Slovenia
alesa-sasa.sitar@ef.uni-lj.si, katja.mihelic@ef.uni-lj.si, miha.skerlavaj@ef.uni-lj.si,
aljosa.valentincic@ef.uni-lj.si, ajda.merkuz@ef.uni-lj.si
2 Universität Graz, Institut für Psychologie, Graz, Austria
sabine.bergner@uni-graz.at
3 BI Norwegian Business School, Oslo, Norway
miha.skerlavaj@ef.uni-lj.si
1
Abstract This study examines the relationship between macro(organizational design), meso- (leadership behavior) and micro-level
(employees’ personality) organizational characteristics and the
individual’s ability to manage the exploration–exploitation duality
(balancing of exploring new and exploiting existing paths). This
study aims to reveal how employees’ ability to manage this duality
can be enhanced and how these characteristics interact with each
other. It is a work in progress, focused on building theoretical
background and applying a new research design. An experiment is
planned on two samples of Master students with a business
background from Austria and Slovenia, using an experimental
vignette methodology. Outcomes of this research will enable
department and human resource managers to provide conditions at
work for employees to balance their intention to explore new
avenues while at the same time exploiting existing ones, as both
behaviors are necessary to trigger organizational innovation and
growth. This study will contribute to the organizational
ambidexterity literature by recognizing the contextual and
interactive role of macro-, meso- and micro-level organizational
antecedents of individuals’ ambidextrous behavior.
DOI https://doi.org/10.18690/um.epf.3.2023.72
ISBN 978-961-286-736-2
Keywords:
exploration–
exploitation
duality,
organizational
design,
leadership style,
individuals’
personality,
experiment
JEL:
M12, O31
670
1
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Introduction
In the business world, organizations face an apparent dilemma. On the one hand,
they have to cut costs and push efficiency to stay competitive, applying “exploitative
behavior” strategies. On the other hand, organizations also have to meet trends and
be innovative so that they do not fall behind their competitors in the future, applying
“explorative behavior” strategies (Zacher et al., 2016). These are rather opposing
behavior strategies, which are difficult to combine and yet it is vital to balance them
to secure the organization’s future. Notably, the balancing act between exploring and
exploiting has always been a challenge; however, due to a more global business
world, which comes along with increasing environmental uncertainties and more
technical advancements, it has become even more important for organizations in
recent years (Birkinshaw et al., 2016).
This paper is a work in progress as part of a bilateral research project between
Slovenia and Austria, 1 which focuses on the balancing act of explorative and
exploitative behavior to enhance the innovation, and thus secure the future, of
organizations. Its goal is twofold. First, the study examines the question of to what
extent organizational structure, leadership style and employee personality affect the
balance between exploration and exploitation in an organization. As organizational
structure represents the macro level in organizations while leadership style
represents the meso and personality the micro level, this paper will also contribute
to the questions regarding which level – macro, meso or micro – most strongly
affects the exploration–exploitation balance. Second, the study aims to reveal
combinations of organizational structure, leadership style and employee personality
that make it particularly easy to balance exploration and exploitation behavior.
Overall, the insights of this study will be valuable for processes regarding
organizational learning and development as well as personnel selection. This paper
focuses on building a theoretical background and proposing a research design for
the project.
Research results are part of research activities of the bilateral Project BI-AT/23-24-033, co-financed by the
Slovenian Research Agency (ARRS) and Austria's Agency for Education and Internationalization (OeAD) under
the Programme for Scientific & Technological Cooperation (WTZ).
1
A. S. Sitar et al.: Balancing Exploration and Exploitation in Organizations: The Role of
Organizational Design, Leadership Style and Employee Personality
2
671.
Theoretical Background
The maintenance and growth of organizations partly depend on the employees’
ability to balance the duality between exploration and exploitation activities (PertusaOrtega et al., 2021).
The ability to explore new avenues while at the same time exploiting existing ones is
termed “ambidexterity.” It represents “the capability of individuals to perform
contradictory activities and switch between different mindsets and action sets”
(Bledow et al., 2009, 322). Organizations that foster employee ambidexterity remain
more adaptive to external and internal changes, appear more flexible in times of
crisis and are particularly successful when representing the nonmanufacturing
industry (Junni et al., 2013; Luu et al., 2019).
Organizational design, also referred to as organizational structure/architecture, is
defined as a configuration of relationships with respect to the allocation of tasks,
responsibilities and authority (Jones, 2004). It shapes the actions of employees,
thereby directing their activities (Davis et al., 2009). Organizations can be more or
less structured – meaning that they show high or low formalization, standardization,
centralization and steep hierarchy (Burns & Stalker, 1966; Davis et al., 2009).
Research offers a number of ideas on how to implement ambidexterity on an
organizational level, e.g., by implementing structural, sequential or contextual
solutions (e.g., O'Reilly III & Tushman, 2013; Raisch & Birkinshaw, 2008).
However, little is known about how organizational structure impacts employee
ambidexterity (Pertusa-Ortega et al., 2021).
Transformational leadership is part of Bass and Avolio’s (1994) full-range model of
leadership and comprises idealized influence, inspirational motivation, intellectual
stimulation and individualized consideration. Research shows that transformational
leadership relates to individual, group and organizational performance (Hoch et al.,
2018; Judge & Piccolo, 2004; Waldman et al., 2001). Even though the organizational
effects of transformational leadership are well researched, up to now no insights
exist on whether transformational leadership impacts employee ambidexterity.
Based on the circumstance that employees led by transformational leaders feel more
inspired, intellectually stimulated and encouraged to go new ways, it is expected that
transformational leadership positively relates to employee exploration behavior.
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However, when it comes to the question of whether transformational leadership also
relates to employee exploitation behavior, expectations are less clear.
Personality traits are important drivers of organizational success on the micro level
(Barrick et al., 2001). Personality traits are a central reason for why different
individuals act differently in the very same situations. They can be divided into
cognitive traits and socio-emotional traits (Kanape & Bergner, 2015). General
mental ability (GMA) as a cognitive trait denotes a very general mental capability
that involves, for example, the ability to reason, plan, solve problems, think
abstractly, comprehend complex ideas, learn quickly and learn from experience
(Kanape & Bergner, 2015). Research on the importance of GMA on employee
ambidexterity is nearly nonexistent, with the exception of Good and Michel’s (2013)
simulation study, which revealed that individuals with higher cognitive abilities more
easily balance explorative and exploitative behavior.
With respect to socio-emotional traits, most attention has been directed at the Big
Five model of personality, which comprises the five traits Openness,
Conscientiousness, Extraversion, Agreeableness, and Emotional Stability (Costa &
McCrae, 1992). Research on the link between the Big Five and ambidexterity is scant.
First results reported by Keller and Weibler (2014) demonstrate that more open
individuals engage more strongly in exploration tasks. In contrast, more
conscientious employees are significantly more engaged in exploitation tasks than
their less conscientious colleagues. It is expected that GMA and openness enhance
an employee’s exploration behavior while conscientiousness enhances exploitative
behavior. With regard to the remaining traits (extraversion, agreeableness, emotional
stability) no specific expectations can be derived from research. From the above
reasoning we propose the following in a rather explorative manner:
Proposition: Specific combinations of organizational structure, transformational
leadership and personality traits are positively related to employees’ ambidextrous
behavior.
A. S. Sitar et al.: Balancing Exploration and Exploitation in Organizations: The Role of
Organizational Design, Leadership Style and Employee Personality
3
673.
Methodology
To address the project’s aims an experiment is planned with the three factors 1)
organizational design, 2) leadership style and 3) employee personality. As all factors
will have two levels, a 2 (high/low structure) x 2 (high/low transformational) x 2
(high/low personality score) between-subjects design is planned. The dependent
variables will be the employees’ exploitation and exploration behavior. The sample
will consist of Master students with a business background from the University of
Graz and Ljubljana. Including students from both countries will increase the
sample’s diversity and will thus result in it being more representative. To estimate
the sample size a power analysis was performed, where the alpha level (α=0.05), the
power (80%) and the expected effect sizes were taken into account. Based on
research conducted by Al-Atwi et al. (2021), we expect a medium-sized interaction
between organizational structure and ambidexterity. We also expect a medium-sized
interaction between transformational leadership and ambidexterity, based on
Weibler and Keller’s (2014) research, and a medium-sized interaction between most
personality traits of interest and ambidexterity (e.g., extraversion; Good & Michel,
2013). The power analysis revealed a required sample size of N = 158. We aim to
collect data of 200 participants to obtain equal sample sizes per condition and thus
comply with recent recommendations (Lonati et al., 2018).
Once the experiment is set up, pretested and preregistered, students will be recruited
through classes and will be able to sign up for the experiment with a given time slot.
As is common in organizational research, the experimental vignette methodology
will be used (Finch, 1987). According to suggestions on vignette studies provided by
Aguinis and Bradley (2014), we will develop vignettes for so-called “paper people”
studies. This means that study participants will be presented with a short and
pretested, carefully constructed description (=vignette) of an organization and leader
they need to imagine they work for. The description of the organization and leader
will be systematically varied. After that, participants will be asked to complete an
exploration/exploitation task, which allows their level of ambidexterity to be
measured (e.g., What might be the most acceptable way to deal with a product that
needs a makeover?). The study participants’ GMA and Big Five personality traits will
be measured via respective questionnaires (e.g. the Wonderlic Personnel Test, NEOPI-R).
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
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Expected Outcome, Discussion and Conclusion
This research will contribute to research and practice on ambidexterity. First, the
study will reveal in what way organizational structure/design affects employee
ambidexterity. Based on research outlined above (Sitar & Škerlavaj, 2018), we expect
that tightly structured organizations enhance exploitative behavior while loosely
structured ones enhance exploration behavior. Second, we will be the first to test the
relationship between transformational leadership and employee ambidexterity. We
assume transformational leadership increases employee exploration because
transformational leaders foster new ways of work and innovation – which are
prerequisites of exploration. Third, this study will be the very first to study the link
between employee cognitive ability and ambidexterity and it will also be among the
first attempts to see how ambidexterity is related to the Big Five traits of employees.
Fourth, this study is set up to reveal how organizational structure, leadership and
personality interact in terms of employee ambidexterity. As research is scant to
nonexistent regarding these questions our project will enrich the literature with
unique insights on how to foster ambidexterity.
Regarding practice, two main implications are expected. First, the study will provide
us with insights on how to foster individual ambidexterity. This insight can be used
in human resource management or organizational learning to set up organizations
where employees find the best circumstances to be both explorative and exploitative.
Second, learnings from the study findings will inspire managers and leaders on how
to change policies to help employees increase ambidextrous behavior. Doing so
would be advantageous for contemporary organizations facing disruptions.
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Barrick, M. R., Mount, M. K., & Judge, T. A. (2001). Personality and performance at the beginning of
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Davis, J. P., Eisenhardt, K. M., & Bingham, C. B. (2009). Optimal structure, market dynamism, and the
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Finch, J. (1987). The vignette technique in survey research. Sociology, 21(1), 105–114.
Good, D., & Michel, E. J. (2013). Individual ambidexterity: Exploring and exploiting in dynamic
contexts. The Journal of Psychology, 147(5), 435–453.
Hoch, J. E., Bommer, W. H., Dulebohn, J. H., & Wu, D. (2018). Do ethical, authentic, and servant
leadership explain variance above and beyond transformational leadership? A meta-analysis.
Journal of Management, 44(2), 501–529.
Jones, G. R. (2004). Organizational theory, design, and change: Text and cases (4th ed.). Prentice Hall.
Judge, T. A., & Piccolo, R. F. (2004). Transformational and transactional leadership: A meta-analytic
test of their relative validity. Journal of Applied Psychology, 89(5), 755–768.
Junni, P., Sarala, R. M., Taras, V. A. S., & Tarba, S. Y. (2013). Organizational ambidexterity and
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Kanape, A., & Bergner, S. (2015). Individual differences and educational leadership. In K. Beycioglu
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Keller, T., & Weibler, J. (2014). Behind managers’ ambidexterity: Studying personality traits, leadership,
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
CSR-PERFORMANCE RELATIONS
FROM THE HOLISTIC POINT OF
VIEW: APPLICATION OF CAUSAL
LOOP DIAGRAMS
DEJANA ZLATANOVIĆ, VIOLETA DOMANOVIĆ,
ЈЕLENA NIKOLIĆ
University of Kragujevac, Faculty of Economics, Kragujevac, Serbia
dejanaz@kg.ac.rs, vterzic@kg.ac.rs, jnikolic@kg.ac.rs
Abstract The increasing relevance of Corporate Social
Responsibility (CSR) for sustainable development, reinforced by
the pandemic and resulting crisis, requires adequate measures of
various CSR activities in business operations. Various measures,
such as investments in CSR, social costs, CSR index, and ESG
index can be identified within the literature. Previous research is
mostly focused on partial CSR-performance relation so that
integration of these CSR-performance relations into the wider
framework is missing. Causal Loop Diagrams (CLDs) as the
tools of System Dynamics are selected to integrate these relations
into a holistic framework. Given the results of previous research,
a CLD representing CSR-performance relations has been
created. Some positive and negative links were identified, as well
as positive and negative feedback loops which can help predict
the company′s future behaviour: social costs stimulate net
income, which positively influences ROA, EPS, and market
value, while investments in CSR lead to lower net income.
DOI https://doi.org/10.18690/um.epf.3.2023.73
ISBN 978-961-286-736-2
Keywords:
CSR,
CSR indicators,
CSR-performance
relations,
holistic framework,
CLDS
JEL:
M10, M15
678
1
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Introduction
Corporate Social Responsibility (CSR), which has become imperative in the
conditions of the pandemic, has a different impact on the efficiency of the business
operations. According to the stakeholder theory, the company should respect the
goals and interests of all stakeholders. Shareholders will certainly be more interested
in financial performance, while other stakeholders will be more interested in social
responsibility performance, which has three m main dimensions, such as
environmental, social, and corporate management. This is especially important for a
company in order to sustain in the long term in the contemporary business
environment, characterised as extremely turbulent, unpredictable, uncertain and
complex, which was the case in the pandemic caused by COVID-19. It is inevitable
for the companies to take care of their employees, environment, local and wider
social community, as well as corporate governance practices. The question is how
the investment in environmental, social and governmental activities is going to
reflect on financial and market performance.
Numerous studies confirm the positive impact of CSR activities, measured through
certain CSR indicators on business performance (Barauskaite & Streimikiene, 2020;
Radu & Smaili, 2020; Bassetti et al., 2020; Broadstock et al., 2020; Albuquerque et
al., 2020; Huang, 2021), while some others indicate negative influence (Kim et al.,
2020; Demers et al., 2020; Shaikh, 2022). Still, these studies are predominantly
focused on the isolated effects of some CSR indicators on performance. Their
integration requires appropriate holistic tools. To overcome the identified research
gap, we used Causal Loop Diagrams (CLDs) as the relevant holistic tools of System
Dynamics to demonstrate various CSR-performance relations, mutual CSR
indicators relations as well as mutual performance relations. The main goal of the
paper is to emphasize the main decision-making point which can help predict future
effects of CSR activities on business performance. The main research question is
how CLDs can help predict future effects of CSR activities on business
performance.
The paper is structured as follows. After the introduction, literature review related
to the main research results indicating the impact of CSR indicators on performance
is identified. The methodology is then briefed. The main results, as well as
D. Zlatanović, V. Domanović, Ј. Nikolić: CSR-performance Relations from the Holistic
Point of View: Application of Causal Loop Diagrams
679.
discussion, follow. Finally, the main conclusions, implications and future research
are presented.
2
Literature Review
Proponents of the concept of social responsibility emphasize that CSR activities
increase value for shareholders by aligning their goals with those of all stakeholders
to increase customer loyalty and employee satisfaction and build a favourable
corporate image. In contrast, critics point out that companies try to serve the
interests of stakeholders at the expense of shareholders by allocating resources
outside of their core business, resulting in lower profits.
Barauskaite and Streimikiene (2020) analyse the benefits and drawbacks of CSR
based on a systematic literature review and develop a conceptual framework for
linking CSR with financial performance. The authors point out that the companies,
which perform socially responsible activities, can achieve a competitive advantage
due to creation of a good image and reputation in the public and generate more
profit and return on investment. Radu and Smaili (2020) examined how companies
balance financial and ESG performance. Using cluster analysis, the authors
identified three patterns of corporate performance, which they labelled as financial,
balanced, and social responsibility performance. Most companies focused on
financial performance (47.6%) and significantly less on ESG performance. The
companies that focused on balanced performance (25.7%) had better financial,
social, and environmental performance than the average level of the sample. Finally,
companies that focused only on social responsibility performance (26.7%) had the
lowest financial performance and the best social and environmental performance.
The sample included 241 companies in Canada in the period from 2014 to 2018,
that is, in the period before the pandemic.
Investments in environmental protection can require a significant cost to the
company, which can lead to a negative relationship between environmental
performance and short-term accounting measures such as the rate of return on assets
- ROA (Kim et al., 2020). However, regarding the market performance measures,
which respect future cash flows and profitability (for example, Tobin's q), it can be
stated that environmental performance increases the value of the company (Kim et
al., 2020). This is because better environmental performance can increase a
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company's value by reducing compliance costs, generating net savings, and reducing
the risk of environmental lawsuits, all of which put the company in a better position
to respond to tightening regulations. Bassetti et al. (2020) examined the impact of
environmental performance on economic performance. The results of the research
show that environmental performance, measured in terms of environmental
orientation and innovation, positively affects the rate of return on the company's
assets and capital. Rates of return depend on the capacity of green businesses to
generate the same revenue streams as non-green businesses, but with less capital. In
other words, green businesses tend to become more efficient in generating future
wealth.
Broadstock et al. (2020) examine the relationship between ESG performance and
market performance in the context of a pandemic-induced financial crisis. The
authors find that ESG performance mitigates financial risk and is positively and
significantly correlated with excess returns during the COVID-19 pandemic. This
conclusion points to the fact that companies that appreciate ESG performance
become more resistant to the crisis caused by the COVID-19 pandemic. R.
Albuquerque et al. (2020), also support the fact that companies that respect
environmental and social performance have greater resilience to the pandemic. The
authors focus on the US stock market and find higher returns, lower volatility, and
higher rates of business gain for companies with higher ES ratings in the first quarter
of 2020. Some authors find a neutral or even negative relationship between ESG
performance and company efficiency under pandemic conditions. Namely, Demers
et al. (2020) conclude that the impact of ESG on market performance is not
significant in the first quarter of 2020, while it becomes significant and negative
during the market recovery in the second quarter of 2020.
Huang (2021) investigated the relationship between ESG activities and company
performance and found that there was a positive, statistically significant, but
economically moderate relationship, which is in line with theoretical expectations.
Bose et al. (2022) examine the impact of COVID-19 on changes in firm value and
take firm sustainability performance as a mediator. The authors find a less negative
impact of COVID-19 on the value of firms with better sustainability performance.
Companies that pay attention to ESG performance experienced fewer declines in
value during the pandemic.
D. Zlatanović, V. Domanović, Ј. Nikolić: CSR-performance Relations from the Holistic
Point of View: Application of Causal Loop Diagrams
681.
Shaikh (2022) estimates that the appreciation of ESG performance leads to a decline
in ROA and ROE and thus to a lower market value of the company. The
environmental dimension harms accounting and market performance, while the
social dimension has the opposite effect, that is, it significantly affects profitability.
The dimension of corporate governance reveals a positive impact on business
efficiency and the company's market value. Thus, the results of empirical research
show that sustainability practices and financial performance are significantly related.
Table 1 shows the selected research results of many authors. Namely, there are
selected those CSR and financial performance measures, which are introduced into
the Causal Loop Diagram.
Table 1: Researh review on the relationship between CSR and financial performance
Authors
Year
Relationship
CSR measure
CSR index
based on
surveys
Investments in
CSR
Ahemd, Islam and
Hasan
2012
Positive
Babalola
2012
Negative
Kanwal, Khanam,
Nasreen and
Hameed
2013
Positive
Social costs
Mentor
2016
Negative
ESG indeks
Zakari
2017
Positive
Social costs
Financial Performance
Measure
Return on assets, earnings
per share
Net income
Return on assets, net
income
Market value of the
enterprise, Earnings per
share
Net income, earnings per
share
Source: Adapted from Barauskaite and Streimikiene, (2020).
3
Methodology
Taking into account the variety of the above-mentioned CSR-performance relations,
we indicate the relevance of their integration into a wider framework. It requires the
application of appropriate holistic tools. Therefore, Causal loop diagrams as the
tools of System Dynamics have been selected to show how various CSR indicators
affect business performance as well as how they are interrelated. One of the main
theoretical features of SD is feedback. An information feedback system exists
whenever the environment leads to decisions resulting in actions. Such actions in
turn affect the environment and thus future decisions (Forrester, 1972, 14). The
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basic theoretical assumption of System Dynamics as a relevant functionalist systems
approach to management reads as follows: the system's behaviour is preliminarily
caused by its structure.
Accordingly, to anticipate the future effects of socially responsible behaviour of the
organizations, some tools for representing feedback structure are necessary
(Zlatanović et al., 2022). Consequently, causal loop diagrams (CLDs), showing the
orientation of feedback as well as the key variables and their mutual interactions,
have been used. Variables are related by causal links represented by adequate arrows.
Relations that produce a change in the same direction (rising or falling) are marked
with a positive sign in the causal loop (Nikolić et al., 2018). The positive feedback
link means that "if the cause increases, the effect also increases above what it would
otherwise have been. Also, if the cause decreases, the effect decreases below what it
would otherwise have been. Opposite to that, the negative feedback link means that
if the cause increases, the effect decreases below what it would otherwise have been;
and if the cause decreases, the effect increases above what it would otherwise have
been"(Sterman, 2000, 139). As Nikolić et al. (2018) emphasize ″a positive feedback
loop is known as a ‘positive loop’ (marked as +), or as a ‘reinforcing loop’ (marked
‘R’). A negative feedback loop is known as a ‘negative loop’ (marked as -) and as a
‘balancing loop’ (marked ‘B’). So, each relation is characterized by a certain polarity″,
i.e. the direction of effect that the influencing variable has on the influenced variable
(Lane, 2008). CLDs can contribute to the ease of communication between decisionmakers by helping decision-makers exchange and discuss the set of causal
assumptions. In addition, simulation models representing the system's future
behaviour can be derived from CLDs.
4
Results
According to the above presented CSR-performance relations, i.e. the research
results demonstrating the positive or negative impact of CSR activities on
performance, the following Causal Loop Diagram, connecting various CSR
indicators and their impact on business performance, as well as mutual relations
between business performances, is presented (Figure 1). The Causal Loop Diagram
is based on the research results presented in the Table 1.
D. Zlatanović, V. Domanović, Ј. Nikolić: CSR-performance Relations from the Holistic
Point of View: Application of Causal Loop Diagrams
683.
As it is shown in Figure 1, positive links exist between the following: CSR index and
Return on Assets (ROA), social costs and net income, as well as social costs and
earnings per share. At the same time, negative links exist between ESG index and
the market value of the enterprise, the ESG index and earnings per share, as well as
investments in CSR and net income. Additionally, we point to the following mutual
relations between business performance, such as positive link between net income
and ROA, earnings per share as well as share price; the positive link between share
price and market value of the enterprise; while a negative link is identified between
ROA and market value of the enterprise.
+
Investments in
CSR
-
Social
costs
+
+
R
+
+
Market value of the
enterprise
B
Net income
B
-
Return on
assets (ROA)
+
+
CSR index
B
Share price
+
-
ESG index
Еarnings per share
Figure 1: CLD representing CSR-performance relations
Source: Authors' elaboration.
Also, the link between social costs and investements in CSR is marked as positive.
So, one can conclude that the loop connecting social costs, investments in CSR, and
net income is marked as a negative or balancing loop (B), since social costs positively
influence investments in CSR which then negatively affect net income. Positive or
reinforcing loop (R) can be identified between net income, earnings per share, share
price and market value of the enterprise, while negative, i.e. balancing loop exists
between net income, ROA and market value of the enterprise. Also, the negative
loop is identified between CSR index, ROA and market value of the enterprise, as
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well as between ESG index, the market value of the enterprise, and earnings per
share.
5
Discussion and Conclusion
Various researchers come to the conclusion that some CSR activities measured
through CSR indicators improve organizational performance. However, previous
research is mostly focused on partial, isolated studies of CSR-performance relations.
The above indicates the relevant knowledge gap which we tend to overcome with
this research. Therefore, a holistic framework representing various CSRperformance relations, mutual CSR indicators relations as well as mutual business
performance relations have been introduced. Originality of the research is derived
from methodological features and it is reflected in enabling the methodological tool
for predicting future CSR performance. The presented systemic framework
illustrating feedback loops enables decision-makers to focus on the key decisionmaking points and predict the future effects of CSR activities on business
performance.
Based on these findings, some practical implications can be proposed. First,
enterprises should encourage social costs as they stimulate net income, which
positively influences ROA, earnings per share, share price, and market value of the
enterprise. On the other hand, enterprises should carefully consider investments in
CSR as they lead to lower net income. Analogous to that, the ESG index negatively
affects the market value of the enterprise and earnings per share.
Taking this into account, the paper′s primary contribution is related to
methodological support in decision-making about various CSR activities. However,
the findings are based on the previous research results, not on our own empirical
research results. It can be seen as the key limitation of the paper which can be
eliminated in the future research. Still, this framework can be a good base for
decision-makers regarding CSR-performance relations.
D. Zlatanović, V. Domanović, Ј. Nikolić: CSR-performance Relations from the Holistic
Point of View: Application of Causal Loop Diagrams
685.
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Sterman, J. (2000). Business Dynamics: Systems Thinking and Modelling for a Complex World. Boston: Irwin
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Zlatanović, D., Mulej, M. & Ženko, Z. (2022). Corporate Social Responsibility Considered with Two
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SMART EDUCATION FOR
CORPORATE SUSTAINABILITY
REPORTING
PETER GLAVIČ,1 HELENA LEVIČNIK,1 AIDA SZILAGYI,2
THOMAS SCHÖNFELDER,3 JARMILA BILIKOVA,4
PAVEL RUZICKA,4 EUGENIA ATIN,5 OIHANA HERNAEZ,6
IBON ZUGASTI6
University of Maribor, Maribor, Slovenia
peter.glavic@um.si, helena.levicbnik@um.si
2 CNPCD, Timișoara, Romania
aidaszilagyi@cnpcd.ro
3 Atmoterm SA, Opole, Poland
schoenfelder@atmoterm.pl
4 ENVIROS, s.r.o., Praha, Czech Republic
jarmila.bilikova@enviros.cz, pavel.ruzicka@enviros.cz
5 Prospektiker, Parque Tecnológico Zamudio, Zamudio, Spain
e.atin@prospektiker.es
6 Prospektiker, Parque Empresarial Zuatzu, San Sebastian, Spain
o.hernaez@prospektiker.es, i.zugasti@prospektiker.es
1
Abstract “The European Green Deal” (EGD) is an integral part
of the EU’s strategy to implement the United Nations Agenda
2030. Companies with more than 500 employees are required to
include non-financial reporting (NFR) on their operational,
social, and environmental data. In 2023, the Corporate
Sustainability Reporting Directive (CSRD) extends reporting to
all companies over 250 employees and certain SMEs, which will
be required to report on nonfinancial aspects of their business
since 2024–2028. The number of companies, subject to reporting
will quadruple. Managers and responsible employees will have to
cope with new challenges. Erasmus+ project Smart Education
for Corporate Sustainability Reporting (SECuRe) is filling a gap
in VET programmes dealing with knowledge in sustainability
reporting, building up a common approach for VET teachers
and learners across the EU to respond to the requirements of the
future job market. The project started with a knowledge
repository, a questionnaire about stakeholder’ needs and wishes,
and state-of-the-art in reporting. Job profiles and training course
with 6 learning units were prepared. An interactive e-learning
platform, a gamification approach, and experimental online
training will bring the final contents of the course.
DOI https://doi.org/10.18690/um.epf.3.2023.74
ISBN 978-961-286-736-2
Keywords:
corporate
reporting,
e-learning,
EU directive,
education,
sustainability
JEL:
I29, M53, Q56
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE.
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1
Introduction
The Brundtland Commission defined sustainable development but did not provide
guidance on how to implement action (Baumgartner and Rauter, 2017). Many
concepts have been developed that address corporate sustainability and consider the
triple bottom line (people, planet, profit), including corporate sustainability
reporting. However, mainstreaming corporate sustainability, e.g., with the circular
economy concept, can lead to different results depending on whether the company
selects SDG targets or indicators (Opferkuch et al., 2022).
For this reason, many authors have emphasised the need for alignment of different
reporting frameworks (Kücükgül et al., 2022). Mandatory disclosure of information
is usually accompanied by an increase in its credibility and a focus on a wide range
of stakeholders, not just shareholders (Ioannou and Serafeim, 2017). As a result,
companies also tend to disclose more social and environmental information
(Madaleno and Vieira, 2020). A need has emerged for companies to communicate
their sustainability in corporate reports also in a graphic way with symbols (Bovea et
al., 2021). The next step in corporate sustainability reporting is a paradigm shift from
standardised disclosures to an understanding of sustainability as a way to stay within
the planet's boundaries (Shaer and Hussainey, 2022; Erlandsson et al., 2023). The
creation of new job profiles with corresponding competencies can support the
implementation of sustainability concepts in the value chain (Walińska and
Dobroszek, 2021).
The EU launched the ambitious initiative “The European Green Deal” (EGD) as
an integral part of the United Nations Agenda 2030 and its sustainable development
goals (SDGs). Reliable, comparable, and verifiable information plays an important
part in enabling consumers to make more sustainable decisions and reduces the risk
of ‘greenwashing’. As a part of the EGD initiatives, large companies are required to
report against a standard methodology and to assess their impact on the
environment. In current practice, the Non-Financial Reporting Directive (NFRD,
EP&CD 2014) lays down the rules on disclosure of non-financial information by
companies and is fully transposed in all EU Member States (including partners’
countries – Czech Republic, Poland, Romania, Slovenia, Spain). However, as the
reporting obligation applies to companies with over 500 employees, only, the
proportion of businesses disclosing non-financial information is low. Moreover,
several problems were identified, regarding companies’ capacity in delivering such
P. Glavič et al.: Smart Education for Corporate Sustainability Reporting
689.
reports; various analyses reveal that in many cases, information is provided at a
general level and/or data are incomplete and non-comparable.
In 2022, the EU reached an agreement to replace the NFRD with the Corporate
Social Reporting Directive (CSRD) that extends its scope to companies with over
250 employees and certain SMEs that will be required to report on nonfinancial
aspects of their business since 2024–2028 (EP&CD, 2022). The number of
companies, subject to the mandatory reporting will thus increase from 11 700 to
approximately 50 000 (EC, 2023). The managers and responsible employees will
have to cope with new challenges.
The project Smart Education for Corporate Sustainability Reporting (SECuRe) is
dealing with knowledge in sustainability strategy and reporting and builds up a
common approach for vocational education and training (VET) across the EU to
respond to the requirements of the future and maintain a flexible job market.
The project started with a knowledge repository, an online database that
systematically captures, organizes, and categorizes knowledge-based information,
helping learners to connect with information and expertise globally. State-of-the-art
reviews in partner countries, and a questionnaire, returned by 77 stakeholders,
presenting their needs and wishes. Based on the analysis phase, the SECuRE
Manager job profile has been built, aligning the learning outcomes in terms of
knowledge, skills and competencies. The training course with 6 learning units was
prepared: 1) European legislation and sustainability standards, 2) sustainability
management, 3–5) environmental, social, and corporate dimensions, 6) sustainability
reporting. An interactive e-learning platform with gamification approach, several
multiplier events, a pilot application, experimental online training together with
other activities will bring the final contents of the course.
2
Theoretical Background
EU law requires all large companies to disclose information on their risks and
opportunities arising from social and environmental issues, and the impacts of their
activities on people and the environment. This helps investors, civil society
organisations, consumers, and other stakeholders to evaluate the sustainability
performance of companies. Under the NFRD, large companies must publish
information related to: a) environmental matters, b) social matters and treatment of
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employees, c) respect for human rights, d) anti-corruption and bribery, and e)
diversity on company boards.
Guidelines on NFR were published by European Commission (EC, 2017, 2019) to
help companies disclose environmental and social information. These guidelines are
not mandatory, and companies may decide to use international, European, or
national guidelines according to their own characteristics or business environment.
On January 2023 the CSRD entered into force. This directive modernises and
strengthens the rules about the social and environmental information that
companies must report. A broader set of large companies, as well as listed SMEs,
will now be required to report on sustainability.
New rules will ensure that investors and other stakeholders have access to the
information they need to assess investment risks arising from climate change and
other sustainability issues. They will also create a culture of transparency about the
impact of companies on people and the environment. Finally, reporting costs will
be reduced for companies over the medium to long term by harmonising the
information to be provided.
The first companies will have to apply the new rules for the first time in the financial
year 2024, for reports published in 2025. Companies subject to the CSRD will have
to report according to European Sustainability Reporting Standards (ESRS). The
CSRD also makes it mandatory for companies to have an audit of the sustainability
information that they report. In addition, it provides for the digitalisation of
sustainability information. The rules introduced by the NFRD remain in force until
companies must apply the new rules of the CSRD.
The EU taxonomy (EC, 2023) is a classification system, establishing a list of
environmentally sustainable economic activities. It could play an important role to
help the EU scale up sustainable investment and implement the EGD providing
companies, investors, and policymakers with appropriate definitions for which
economic activities can be considered environmentally sustainable. In this way, it
will create security for investors, protect private investors from greenwashing, help
companies to become more climate-friendly, mitigate market fragmentation and
help to shift investments where they are most needed. The Taxonomy Regulation
P. Glavič et al.: Smart Education for Corporate Sustainability Reporting
691.
establishes 6 environmental objectives: 1) climate change mitigation and 2)
adaptation, 3) sustainable use and protection of water and marine resources, 4)
transition to a circular economy, 5) pollution prevention and control, and 6)
protection and restoration of biodiversity and ecosystems.
3
Methodology
The first part of the methodology consists of literature search which is collected in
the Knowledge Repository (KR). It is an online database that systematically captures,
organizes, and categorizes knowledge-based information. KR has a user-friendly
structure and is included in the web site of the project as an open access, to establish
an active link between the project and the users’ community.
The second part of methodology includes partners’ overviews of the situation in
their countries regarding the state-of-the-art in the usage of NFRD, and preparative
activities for the CSRD introduction. Stakeholder needs and barriers were collected
by applying a questionnaire with at least 15 respondents from each partner country.
The developed course will be tested, evaluated, and improved in several consecutive
steps: a) 5 multiplier events, one in each country with at least 20 participants, b) joint
staff event Train the trainers with 15 participants, c) Course pilot application, and d)
Experimental online training – final test with 80 individuals.
4
Results
4.1
State-of-the-art review
Overviews from partner countries indicate that most large companies are publishing
annual NFR information, either nationally or as a member of an international group.
The following trends in Environmental, Social, and Governance (ESG) reporting
have been observed for the companies included in the survey:
−
−
Reporting companies have a clear preference for communicating ESG
information via a separate report.
There is a growing interest in using recognized reporting standards like the
Global Reporting Initiative (GRI).
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−
−
Only for few reports an opinion is issued by an independent verifier. In
most cases, the opinion is of limited assurance and relates to a narrow set
of indicators.
Concerns about climate change are increasing at the local level with targets
for reducing greenhouse gas (GHG) emissions. But only a few companies
are reporting at the local level on the risks associated with climate change.
The results show that companies are increasingly following the Task Force on
Climate-related Financial Disclosure (TCFD) by accepting their recommendations
(TCFD, 2022).
4.2
Questionnaire results
To understand the state of knowledge in companies, the needs, and the main barriers
of companies, a questionnaire with 37 open and closed questions was sent to
stakeholders in each partner country. 77 of them responded. Most of them were
managers or experts on sustainability issues from large companies and SMEs. The
environmental dimension and sustainability management are the most frequently
reported issues, while the social and governance dimensions are less frequently
reported. 52 % of the companies are not familiar with the CSRD guidelines.
Customers are the most important stakeholder, followed by company owners,
stakeholders, investors, or banks. 43 % of companies are not required to report nonfinancial data, and 55 % of them do not have a person responsible for sustainability
reporting. The most important constrains in corporate sustainability reporting are
missing knowledge (30 %), and lack of data (25 %).
4.3
Training course contents
The course is addressing the area of VET, and combines academic perspective with
hands-on practical work, giving the participants the knowledge, skills and experience
they need to develop a career in sustainability and specifically in being able to
develop sustainability management and reporting services. The training content is
designed to give participants the opportunity to develop clear alternatives for
professional organizations to secure a sustainable future in economic,
environmental, and social terms.
P. Glavič et al.: Smart Education for Corporate Sustainability Reporting
693.
Six learning units are being developed. Each one starts with expected learning
outcomes – knowledge, skills, and competences. The learning outcomes are
structured in accordance with the standards outlined in the European Qualifications
Framework, EQF and the European credit system for vocational education and
training, ECVET. Each learning unit has a value of 5 ECTS (European Credit
Transfer and Accumulation System).
The four main topics of the course are including:
1) Sustainability management (characteristics, strategy, business models).
Sustainability and environmental protection are already at the foreground of
economic and political debate, after spending decades on the periphery of
public and corporate concerns. The capabilities to complete sustainability is
increasingly regarded as a sign of a well-managed organization. As the private
sector shifts toward more sustainable practices, we are getting closer to
reaching a critical mass that can have a significant impact on the global
economy. Sustainability management can also be defined as economic
production and consumption that reduces environmental impact while
increasing resource conservation and reuse.
2) Environmental dimension (use of resources, pollution, climate change).
Companies are expected to provide detailed information on their
environmental policies, strategies, targets, and performance, as well as risks
and opportunities related to environmental issues. The environmental
dimension of ESG reporting is becoming increasingly important as
businesses and investors recognize the importance of sustainability and the
need to mitigate the impact of human activities on the planet. The learning
unit introduces basic knowledge regarding natural capital and its actual
status, how to manage natural resources and biodiversity and why it is
important; what are the key elements of climate change, its risks, and
opportunities, how business can assess their emissions, and plan for climate
change mitigation and adaptation. Further, the overall business impact on
the environment is presented by using specific indicators. Finally, the unit
presents the key requirements of environmental reporting and how to assess
the overall environmental performance.
3) Social dimension (diversity and equality, consumer protection, human rights).
Human rights, cultural and other fundamental rights and freedoms represent
a substantial part of SDGs as well as the European Social Charter and future
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EU sustainability legislation. Business enterprises can profoundly impact the
human rights of employees, consumers, and communities wherever they
operate. These impacts may be positive, such as increasing access to
employment or improving public services, or negative, such as polluting the
environment, underpaying workers, discriminating gender, racial or social
groups, or forcibly evicting communities.
4) Corporate governance dimension (management structure, employee relations). It
refers to the relations between the company's management, its board,
shareholders and broader stakeholders, as well as the way in which the
company's goals are achieved, the structure of its bodies and the guiding
principles (internal policies) directing all of its operations – from
compensation, risk management, and employee treatment to financial
results, reporting, and dealing with impact on the climate, environment,
human rights, etc. Corporate governance that calls for upstanding and
transparent company behaviour leads a company to make ethical decisions
that benefit all its stakeholders.
5
Discussion and conclusion
Step-by-step guide on how to integrate sustainability in a company outlines the key
components, objectives, and goals of an effective and efficient reporting system
focused on sustainability. The goal of such a guide for a sustainable reporting system
is to provide a roadmap for companies to enhance their sustainability reporting,
improve the transparency and credibility of their sustainability practices, and to
create a more sustainable future for all.
Sustainability reporting is the essential aspect of corporate responsibility and sustainable
development. It enables companies to identify and manage risks and opportunities,
build trust and reputation, align with the SDGs, and contribute to sustainable
development. As the demand for sustainable products and services continues to
grow, companies that report on their sustainability performance will be better
positioned to meet the needs of their stakeholders and succeed in the long-term.
Standardization and digitalization of data ensure that it is accurate, consistent, and
reliable. Standardization helps to establish a common set of rules and guidelines for
collecting, storing, and reporting data, while digitalization improves the efficiency
P. Glavič et al.: Smart Education for Corporate Sustainability Reporting
695.
and effectiveness of data management. However, digitalization also has its own set
of challenges, such as ensuring the security of the data and the significant investment
in technology, personnel, and processes.
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Sustainability, 13(13), 7139.
696
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
CONTRIBUTION OF INDUSTRY 4.0
TO SUSTAINABLE DEVELOPMENT
ZLATKO NEDELKO,1 MARKO LAITILA,2
MUSTAFA GHULAM,3 VOJKO POTOČAN1
University of Maribor, Faculty of Economics and Business, Maribor, Slovenia
zlatko.nedelko@um.si, vojko.potocan@um.si
2 Centria University of Applied Sciences, Kokkola, Finland
marko.laitila@centria.fi
3 Norwegian University of Science and Technology – NTNU, Faculty of Economics
and Management, Aalesund, Norway
guma@ntnu.no
1
Abstract The main purpose of this paper is to discuss how
implementation of Industry 4.0 principles in organizations
contributes to sustainable development. Based on desk research
of literature, several contributions of Industry 4.0 to sustainable
development are outlined. We discussed the issue of monitoring
of Industry 4.0 contributions to sustainable development in the
context of existing models for assessing Industry 4.0
implementation level. The paper provides fertile ground for
further examination in this field and development of relevant
model for assessment Industry 4.0 implementation level, while
also considering Industry 4.0 contribution to sustainable
development.
DOI https://doi.org/10.18690/um.epf.3.2023.75
ISBN 978-961-286-736-2
Keywords:
Industry 4.0,
sustainable
development,
maturity
assessment
models,
SDG-17,
models for
assessment
JEL:
L21, L30, L60,
M14
698
1
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Introduction
The importance of social responsibility in organizations has grown significantly in
recent years (Potocan & Nedelko, 2021). In the last period, there has been a lot of
talk about sustainable development, which can be supported by implementing the
principles of Industry 4.0 in organizations (Ching et al., 2022; Sierra-Henao et al.,
2020).
The central purpose of sustainable development phenomena is to establish such a
way of functioning of individuals and all entities in society, with special emphasis on
organizations, which will enable a decent life for the generations that come after us
(Elkington, 2004).
The principles of Industry 4.0 have been intensively implemented in organizations
in the last decade, mainly with the aim of improving productivity, operations in
general, reducing costs, automating operations, and gaining other advantages
(Črešnar et al., 2022; Dabić et al., 2023). Naturally, there is a strong tendency towards
research that would connect the concepts of sustainable development and Industry
4.0 (Sierra-Henao et al., 2020).
In this context, there are sporadic studies that mainly represent the expected
contributions of Industry 4.0 to sustainable development (Ching et al., 2022;
Mukhuty et al., 2022; Varela et al., 2019). But, despite the increased interest from
researchers on examining the impact of Industry 4.0 on sustainable development
(Ghobakhloo et al., 2021; Khan et al., 2021), relatively little is still known about how
these benefits can be measured and monitored in practice.
We will emphasize several benefits how implementation of the Industry 4.0
principles in organizations can contribute to sustainable development. We will
further discuss how we can measure the level of contribution of the implementation
of the principles of Industry 4.0 to sustainable development, within the framework
of known models for evaluating the level of implementation of Industry 4.0 in
organizations. We will provide some starting points for further work and model
development.
Z. Nedelko, M. Laitila, M. Ghulam, V. Potočan: Contribution of Industry 4.0 to
Sustainable Development
2
699.
Literature Review
Digitalization has become an important part of the daily operations of organizations
in the last decade. In the beginning, the researchers paid attention mainly to the
development of the concept of Industry 4.0 (Zhou et al., 2015), which was followed
by a large share of research that examined the effects of the implementation of the
Industry 4.0 concept in the practice of the organizations. For example, through case
studies (Otles & Sakalli, 2019) and in connection with lean and six sigma concepts
(Wagner et al., 2017; Yeen Gavin Lai et al., 2019).
Industry 4.0 for organizations brings productivity improvement, cost reduction,
energy consumption reduction, etc. At the beginning, the implementation of the
principles of Industry 4.0 was mainly in the manufacturing sector (Tortorella &
Fettermann, 2018), but later the implementation also started in the service sector, as
well in public administration (Ghobakhloo et al., 2021). The monitoring of changes
in productivity due to the implementation of Industry 4.0 principles was often
highlighted (Dabić et al., 2023; Fragapane et al., 2022; Tortorella & Fettermann,
2018).
Due to the emergence of new challenges related to the implementation of Industry
4.0 in organizations, researchers began to point out the importance and relevance of
soft factors in the implementation of Industry 4.0 in the organization (Črešnar et al.,
2022; Schneider, 2018). One such challenge is the contribution of Industry 4.0 to
sustainable development.
Sustainable development is a key concept in the framework of ensuring the welfare
of society and its members. Concern for sustainable development or the socially
responsible operations of the organization is today strongly articulated in various
documents, whereby it is the most exposed in recent times United Nations 2030
Agenda for Sustainable Development Goals (SDGs -17). This agenda allow us to
judge how much the organization contributes to sustainable development (Mukhuty
et al., 2022).
There are few sporadic attempts that outline the association between the
implementation of Industry 4.0 and its effects and contribution to sustainable
development (Ching et al., 2022; Ghobakhloo et al., 2021; Khan et al., 2021).
700
7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
In order to make implementation easier and to know the state of the organization’s
digitalization level, many models for assessing the level of Industry 4.0
implementation have been developed. These models reveal to us the dimensions of
digitalization of organizations through various aspects. For instance, commonly used
are models developed by Fraunhofer institute and University of Warwick (Agca et
al., 2017; Črešnar et al., 2022). We also know the model, where management tools
are used in the assessment of Industry 4.0 implementation level (Črešnar et al., 2020).
Seen through the prism of assessing the level of Industry 4.0 implementation in
organizations, the most frequently used models do not directly and to a lesser extent
indirectly include items related to the sustainable development. For instance, we can
find in those models increased productivity, lead times, real-time tracking, etc.
After reviewing the existing models for assessing the level of implementation of
Industry 4.0, it soon becomes clear that the existing models do not contain or to a
very small extent, items that would enable us comprehensive assessment of the
contribution of Industry 4.0 to sustainable development, within the framework of
assessments of the level of implementation of Industry 4.0 in organizations.
Therefore, in the following section, we will present a series of contributions of
Industry 4.0 to sustainable development, which will represent items to complement
the existing assessment models.
3
Industry 4.0 and its Contribution to Sustainable Development
Industry 4.0 can contribute to sustainable development in several ways:
1. Increased efficiency and productivity: Industry 4.0 technologies, such as Internet
of Things (IoT), artificial intelligence (AI), and big data analytics, can enhance the
efficiency and productivity of manufacturing processes, reducing the amount of
energy and raw materials required to produce goods.
2. Reduced waste: Smart manufacturing processes enabled by Industry 4.0
technologies can reduce waste by optimizing material usage, minimizing rejected
products, and decreasing the consumption of energy and water.
Z. Nedelko, M. Laitila, M. Ghulam, V. Potočan: Contribution of Industry 4.0 to
Sustainable Development
701.
3. Improved traceability and transparency: Industry 4.0 technologies can enable
greater traceability and transparency in supply chains, empowering consumers and
stakeholders to make informed decisions about sustainable products and ethical
sourcing.
4. Lower carbon footprint: Smart factories enabled by Industry 4.0 technologies can
reduce their carbon footprint through the use of renewable energy sources, energyefficient equipment, and reduced energy consumption.
5. Support for circular economy: Industry 4.0 technologies can support the shift
towards a circular economy by enabling more efficient and effective resource
management, recycling, and repurposing of materials.
6. Innovation in sustainable products: Industry 4.0 can foster innovation in
sustainable products by providing new design and production capabilities enabled
by digital technologies, such as additive manufacturing and virtual prototyping.
7. Sustainable supply chain management: Industry 4.0 technologies can enable better
supply chain management, reducing transportation emissions, optimizing logistics
and reducing waste along the supply chain.
8. Improved water management: Industry 4.0 technologies can help monitor and
manage water consumption in factories and identify opportunities for reduction or
reuse of water, contributing to sustainable water management.
9. Safety and health benefits: Industry 4.0 technologies can improve worker safety
and health through the use of automated processes, wearable devices, and virtual
training, reducing workplace accidents and injuries.
10. Social responsibility: Industry 4.0 technologies can enhance social responsibility
by promoting ethical and sustainable practices in production, increasing
transparency and accountability, and improving working conditions for employees.
702
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
Discussion and Conclusions
It can be concluded that there is an extremely large amount of literature on the topic
of sustainable development, which has been intensively developed in the last two or
three decades. But the connection between the implementation of Industry 4.0 and
sustainable development is still weak. Even more, models for assessing the level of
Industry 4.0 implementation do not include items that would enable a
comprehensive assessment of Industry 4.0 implementation, while also taking into
the consideration the sustainable development dimension. However, we can find a
lot of indirect links where, based on the assessment of individual criteria regarding
implementation of Industry 4.0, we can decide what the contribution could be or
impact on sustainable operations. But this is not enough for a comprehensive
evaluation of the contribution of Industry 4.0 to sustainable development.
The listed contributions of Industry 4.0 to sustainable development are thus a
starting point for creating criteria for assessment (e.g. KPI) of the impact of Industry
4.0 on sustainable development. The existing models for assessing the level of
implementation of Industry 4.0 principles would thus need to be complemented
with the items measuring "sustainable development". This would give us a more
comprehensive picture of the level of implementation of Industry 4.0, while also
considering sustainable development goals of the society.
One of the most important directions of further research will be the development
of a comprehensive model for assessing the level of implementation of Industry 4.0,
which will also include items that will enable the assessment of the level of
contribution of Industry 4.0 to the sustainable functioning of organizations.
The central limitation of this paper stems from a purely theoretical study of the
contribution of Industry 4.0 to the achievement of sustainability goals.
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Sustainable Development
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7TH FEB INTERNATIONAL SCIENTIFIC CONFERENCE: STRENGTHENING RESILIENCE
BY SUSTAINABLE ECONOMY AND BUSINESS – TOWARDS THE SDGS.
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7TH FEB INTERNATIONAL
SCIENTIFIC CONFERENCE:
STRENGTHENING RESILIENCE BY
SUSTAINABLE ECONOMY AND
BUSINESS – TOWARDS THE SDGS
ZLATKO NEDELKO, ROMANA KOREZ VIDE (EDS.)
University of Maribor, Faculty of Economics and Business, Maribor, Slovenia
zlatko.nedelko@um.si, romana.korez@um.si
Abstract Sustainability is an increasingly important mechanism
for the resilience and competitiveness of economies and
businesses in a dynamic and unpredictable global environment.
The SDGs guide the implementation of sustainability in many
areas of the social, economic and environmental activities of
individuals, organizations and societies. The recent global health
crisis, climate change and international geopolitical turmoil
increases the importance of sustainability for societies and
organizations and make it imperative to transform corporate
business models towards sustainability. These developments are
triggering changes in harmful socio-economic trends and the
determinants of global competitiveness of economies and
businesses. The contributions of these Proceedings address the
current economic and business challenges facing countries and
businesses in the era of the new development paradigm, and cut
across all fields of economics and business sciences.
DOI https://doi.org/10.18690/um.epf.3.2023
ISBN 978-961-286-736-2
Keywords:
sustainability,
resilience,
competitiveness,
global
environment,
SDGs
Zsuzsanna Gyori