Corporations As Multidimensional Actors/Entities: Proceedings

Univerzitet u Novom Sadu
Fakultet tehničkih nauka
University of Novi Sad

Faculty of technical sciences
5th INTERNATIONAL SCIENTIFIC CONFERENCE
CORPORATIONS AS
MULTIDIMENSIONAL
ACTORS/ENTITIES
Editors
Alpar Lošonc
Andrea Ivanišević
PROCEEDINGS
Novi Sad, 2019.

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Alpar Lošonc, University of Novi Sad, Faculty of technical sciences Novi Sad, Serbia
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INTERNATIONAL Scientific Conference (4 ; 2018 ; Novi Sad)

Proceedings / 4th International Scientific Conference “Sustainable
business and ecological integration and collaboration”, Novi Sad, 1st June,
2018 ; editors Alpar Lošonc, Andrea Ivanišević. - Novi Sad : Faculty of
Technical Sciences, 2018 (Novi Sad : Graphic Center GRID). - 258 str. :
ilustr. ; 24 cm
Tiraž 50. - Bibliografija uz svaki rad
ISBN 978-86-6022-137-9
a) Заштита природне средине - Зборници
COBISS.SR-ID 328490759
INTERNATIONAL PROGRAM COMMITTEE: Biserka Košarac, University of East Sarajevo, Fac-
Alpar Lošonc, University of Novi Sad, Faculty of ulty of Philosophy
technical sciences, Serbia Yauheniya Barkun, Faculty of Engineering
Radoš Radivojević, University of Novi Sad, Faculty Management, Bialystok University of Technology,
of technical sciences, Serbia Department of Marketing and Tourism, Poland
Imre Lazar, University of Karoli Gaspar, Institute Ewa Rollnik-Sadowska, Bialystok University of
for Society and Communicology, Hungary Technology, Faculty of Engineering Management,
Imre Ungvári Zrínyi, Babes-Bolyai University Cluj, Department of Management, Economics and Finan-
Romania ce, Bialystok, Poland
Ştefan Maftei, Babes-Bolyai University Cluj, Ewa Glińska, Bialystok University of Technology,
Romania Faculty of Engineering Management, Department
Gyöngyvér, PÁSZTOR, Babes-Bolyai University of Marketing and Tourism, Poland
Cluj, Romania Dušan Dobromirov, University of Novi Sad, Faculty
Ivan Balog, University of Szeged, Hungary of technical sciences, Serbia
János I. TÓTH, Department of Philosophy, Univer- Mitar Jocanović, University of Novi Sad, Faculty of
sity of Szeged, Hungary technical sciences, Serbia
Manzo John, University of Calgary, Canada Anna Frank, University of Waterloo, SERS – School
Richard Frank, School of Business, University of of Environment, Resources and Sustainability,
Ottawa, Canada Canada
Viktor Radun, University Metropolitan, Belgrade Zorana Tanasić, University of Banja Luka, Faculty
Marjan Leber, University of Maribor, Slovenia of Mechanical Engineering, Bosnia and Herze-
Aleksa Milojević, Economic Institute Bijeljina, govina
Bosnia and Herzegovina Włodzimierz Sroka, WSB University, Poland
Jelena Demko Rihter, University of Novi Sad, Fac-
ulty of technical sciences, Serbia ORGANIZING COMMITTEE:
Ivan Šijaković, University of Banja Luka, Faculty of Alpar Lošonc, University of Novi Sad, Faculty of
Economics, Bosnia and Herzegovina technical sciences, Serbia
Ljubomir Kekenovski, Faculty of Economics, Skopje Radoš Radivojević, University of Novi Sad, Faculty
Milan Popović , University of Podgorica, Faculty of of technical sciences, Serbia
Law, Montenegro Andrea Ivanišević, University of Novi Sad, Faculty
Dragoljub Đorđević, University of Niš, Faculty of of technical sciences, Serbia
Mechanical Engineering Niš, Serbia Biljana Ratković Njegovan, University of Novi Sad,
Bojan Lalić, University of Novi Sad, Faculty of Faculty of technical sciences, Serbia
technical sciences, Serbia Leposava Grubić-Nešić, University of Novi Sad,
Andrea Ivanišević, University of Novi Sad, Faculty Faculty of technical sciences, Serbia
of technical sciences, Serbia Gordana Vuksanović, University of Novi Sad,
Biljana Ratković Njegovan, University of Novi Sad, Higher School of Professional Business Studies,
Faculty of technical sciences, Serbia Serbia
Leposava Grubić-Nešić, University of Novi Sad, Snežana Stojšin, University of Novi Sad, Faculty of
Faculty of technical sciences, Serbia Philosophy, Serbia
Gordana Vuksanović, University of Novi Sad, Slavica Mitrović Veljković, University of Novi Sad,
Higher School of Professional Business Studies, Faculty of technical sciences, Serbia
Serbia Stevan Milisavljević, University of Novi Sad, Fac-
Snežana Stojšin, University of Novi Sad, Faculty of ulty of technical sciences, Serbia
Philosophy, Serbia Sonja Pejić, University of Novi Sad, Faculty of
Slavica Mitrović Veljković, University of Novi Sad, technical sciences, Serbia
Faculty of technical sciences, Serbia Boban Melović, University of Montenegro, Faculty
Stevan Milisavljević, University of Novi Sad, Fac- of Economics Podgorica
ulty of technical sciences, Serbia Biserka Košarac, University of East Sarajevo, Fac-
Ivana Katić, University of Novi Sad, Faculty of ulty of Philosophy
technical sciences Milica Njegovan, University of Novi Sad, Faculty of
Mladen Radišić, University of Novi Sad, Faculty of technical sciences, Serbia
technical sciences Editor:
Lazo Ristić, University of Banja Luka, Faculty of Alpar Lošonc, University of Novi Sad, Faculty of
political sciences technical sciences, Serbia
Magdalena Reksc, University of Lodz, Faculty of Andrea Ivanišević, University of Novi Sad, Faculty
International and Political Studies of technical sciences, Serbia
Ljubica Duđak, University of Novi Sad, Faculty of Publisher:
technical sciences, Serbia UNIVERSITY OF NOVI SAD, FACULTY OF
Boban Melović, University of Montenegro, Faculty TECHNICAL SCIENCES
of Economics Podgorica
PROCEEDINGS
University of Novi Sad, Faculty of Technical Sciences, Novi Sad, 2019.
Contents
FROM CROWDSOURCING TO CROWDINVESTING – LESS RISK IN

CROWDBUSINESS
Marjan Leber, Reinhard Willfort........................................................................................... 1
THE MARKET AS GOD AND ITS TRANSHUMAN CREATURES
Lázár Imre.............................................................................................................................. 8
COLLECTIVE IDENTITIES IN THE POST-YUGOSLAV AREA: A
METHODOLOGICAL PERSPECTIVE
Magdalena Rekść.................................................................................................................. 21
THE CONCEPT OF “TALENT” IN THE LITERATURE - THE BIBLIOMETRIC
ANALYSIS
Yauheniya Barkun, Ewa Rollnik-Sadowska, Ewa Glińska................................................. 36
IS CORPORATE CAPITALISM BUILT TO LAST? THEORETICAL REFLECTIONS
ON SUSTAINABILITY OF (MODERN) CORPORATIONS
Mladen Perić, Alpar Lošonc, Andrea Ivanišević, Sonja Bunčić , Lázár Imre, Mladen
Radišić, Jana Majerova........................................................................................................ 42
ORGANIZATIONAL IDENTIFICATION AS A CORPORATE OBJECTIVE
Leposava Grubić Nešić Biljana Ratković Njegovan............................................................ 58
NEW CULTURAL MEANINGS EMBEDDED IN THE CITY BY MEANS OF
TRANSNATIONAL CAPITAL
Katarina Stojanović, Mustafa Cem ALDAĞ...................................................................... 71
ENGELS’ CONTRIBUTION TO THE METHODOLOGY OF RESEARCH OF
SOCIAL STATUS OF INDUSTRIAL WORKING CLASS
Gordana Vuksanović............................................................................................................ 84
RELATIONSHIP BEETWEEN INTERCULTURAL MANAGEMENT AND THE
FINANCIAL CORPORATION AS MULTIDIMENSIONAL ACTOR
Milica Ničić, Ljiljana Miletić............................................................................................... 92
DEVELOPMENT POTENTIAL OF CREATIVE CITIES IN THE TWENTY-FIRST
CENTURY
Sonja Pejić, Danuta Szpilko, Joanna Szydło..................................................................... 105
CHALLENGES OF THE DIGITAL TEAMS
Ivana Pezerovic, Ivana Katic, Ana Nesic, Milica Dzida................................................... 116
MARKET POWER OF HIGHER EDUCATION INSTITUTIONS
Anja Jakšić, Jelena Ćurčić, Jelena Spajić, Danijela Gračanin, Zdravko Tešić.................. 125
TURNOVER AND ABSENTEEISM: INDICATORS OF MANAGEMENT
DYNAMICS IN MODERN CORPORATION
Bojana Sokolovic, Ivana Katic, Anna Frank..................................................................... 133
CLIMATE CHANGE IMPACT ON BUSINESS WITH A SPECIAL VIEW OF
INSURANCE AND REINSURANCE COMPANIES
Vladimir Njegomir, Jelena Demko Rihter......................................................................... 143
HERDING BEHAVIOR ON SERBIAN CAPITAL MARKET
Aleksandra Pavlović, Dušan Dobromirov......................................................................... 152
IMPACT OF FOREIGN DIRECT INVESTMENTS ON EMPLOYMENT:
EXPERIENCE OF SERBIA
Mladen Radišić, Andrea Ivanišević, Alpar Lošonc, Dušan Dobromirov, Ivan Štefanić,
Aleksandra Pavlović, Milica Njegovan.............................................................................. 163
BUSINESS PERFORMANCE EFFECTS ON THE NONPERFORMING LOANS
(NPLs) LEVEL IN THE CEE BANKING SECTOR
Milos M. Dragosavac ........................................................................................................ 177
THE IMPACT OF GLOBALIZATION ON HUMAN RESOURCE MANAGEMENT
Ljubica Duđak, Mitar Jocanović, Zorana Tanasić............................................................ 189
MOST IMPORTANT FACTORS FOR PENSION REFORM CONSIDERATION IN
SERBIA
Ana Anufrijev, Goran Dašić, Anđelka Aničić................................................................... 200
INFLUENCE OF BENEFIT CORPORATIONS ON SOCIAL FLOWS
Jelena Raut, Slavica Mitrović Veljković, Đorđe Ćelić, Boban Melović..............................209
GLOBALIZATION, CAREER AND ADAPTATION TO CHANGE
Ivana Katić, Ana Nešić...........................................................................................................219
TRANSNATIONAL CORPORATIONS AND INTERNATIONAL HUMAN RIGHTS
LAW – HOW FAR HAS REGULATION COME?
Milica Njegovan......................................................................................................................227
THE CHALLENGES OF MULTINATIONAL CORPORATION’S BRANCH
MANAGEMENT IN THE GLOBALIZATION PROCESS
Ivana Jolović...........................................................................................................................239
PROCEEDINGS
FROM CROWDSOURCING TO CROWDINVESTING – LESS RISK

IN CROWDBUSINESS
Marjan Leber1, Reinhard Willfort2
Abstract
The worldwide market for crowd financing has turned from a small market
niche to a serious alternative in the financial system in the last five years.
Crowdfunding projects and crowd based business models are springing up
as we speak. Superficially considered, enhancing business with the crowd
can be seen as a more effective and efficient way to perform certain business
functions. Crowdinvesting is a new version of venture capital supply and
represents small investment with a great impact on local business. From a
strategic advisory point of view, Crowdbusiness can be considered as a
systematic approach for business model innovation by combining
crowdsourcing and crowdfunding and enhancing crowd-based technologies
with professional communication and innovation services. by working
abroad.
Key words: crowdsourcing, crowdinvesting, ceowdbusiness, innovation,
service network.
Introduction
Some years ago, crowd financing activities represented a small niche market, far
away from seriously impacting the existing financial markets. But this has changed.
Crowdfunding, used as umbrella term for alternative financing, is becoming
mainstream. Many businesses are already taking advantage of increasing their access to
finance via alternative financing platforms, and thus to enhance their business success.
1
University of Maribor, Faculty of Mechanical Engineering, Slovenia
2
Innovation Service Network GmbH, Graz, Austria
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Pioneers already enrich their business models with crowd-based elements. The
Crowdbusiness framework goes one step beyond, and provides a systematic approach
and services for companies basing their core business model on crowds and thus
initiates real innovations in business.
The power of the crowds for alternative financing goes beyond simple financial
support. The secret of success lies in the combination of professional innovation services
and crowd-based mechanisms supported by social media. The Crowdbusiness
framework describes a threefold approach for the creation, the selection, the realization
and financing of project ideas. The main difference to other crowd-based business
model approaches is the involvement of the intelligence of the crowd already in the
creative idea finding, selection and development phase. Engaging with a creative
community already in the development and selection phase provides valuable insights
with regards to risk minimization and quality enhancement, creates connections, and
thus provides value for the innovation success.
How Does a 1000x1000 Crowdinvesting Initiative Work?
The 1000x1000 model was developed over two years (2012 to 2014) in
collaboration with reputable tax and legal advisors and is simple and compelling: not
just one investor invests in the project, but many so-called "micro investors"; it therefore
provides smaller capital contributions for various projects. The result is a portfolio of
investment projects that reduces the risk for the individual investor. An additional
benefit to innovative companies is the emerging community (network) that is actively
thinking about project implementation. The development of this innovative financing
method was realized through the networking of social media technology and investment
management expertise. With the Crowdinvesting approach, the risk of an individual
investor is thus minimized and the chances of success are significantly increased (Figure
1).
The key word of the initiative is "transparency", the latest web technology enables
direct communication and cooperation between investors and contractors. The
initiative seeks to build a transparent, highly efficient and long-term starting point
(platform) that will support companies in the realization of innovative ideas and enable
them to be independent from public funds.
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Figure 1: Focus of 1000x1000 Network
So what is Crowdinvesting? Crowdinvesting is a special type of investment and

form of financing when it comes to providing debt for projects or business ideas
through (usually) smaller capital injections and a large number of investors (the masses)
who believe in the success of a project. This type of financing is typically found on the
World Wide Web and investors and project developers interact with each other through
the Web 2.0 platform.
Crowdbusiness
The Crowdbusiness framework provides a digital marketplace combined with

professional innovation services. By taking advantage of web based technology and
combining crowdsourcing and crowdfunding principles an automated process is
initiated that covers the selection and the financing of promising projects. The
Crowdbusiness framework has been developed by the innovation service network group
(www.innovation.at) and pioneered with several projects in Austria. The Crowdbusiness
approach is threefold – Figure 2.
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Figure 2: The ISN Crowdbusiness Framework
The central elements of the Crowdbusiness framework are the following services:
1. Crowdsourcing
 Develops, enriches and selects project ideas via crowdsourcing
 Creates and moderates project-specific internal/external/local/global
communities
 Supports early marketing and network building processes
 Visibility and transparency of the underlying creative and innovative
processes
2. Innovation Services
 Provides innovation services and complementary support for the
presentation, realization and communication of a project idea
 Supports early stage risk minimization, cost reduction and quality
enhancement of innovative products and services
 Provides information and support on further financing and funding
opportunities
3. Crowdfunding
 Provides a crowdfunding marketplace for funding a project or venture
 Professionally influences factors associated with success and failure such
as the selection of communication channels, geographical aspects, the
duration, domain or the funding goal etc.
 Supports the communication and advertising of the project idea
 Allows moderation and communication processes with investors
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3.1 Crowdbusiness in Practice

An example of a crowdsourcing platform is the open innovation and idea platform
Neurovation, which aims at enhancing creativity at the workplace, and supports the
collaborative idea finding and evaluation process (Willfort et al., 2007). Neurovation is
closely linked to the crowdfunding platform 1000x1000.at, i.e. ideas for projects to be
crowdfunded are first evaluated by a community and jury. Besides Neurovation.net,
there are similar German platforms supporting early stages of an innovation process e.g.
Hyve and Atizo, however these platforms are not linked to crowdfunding.
At Neurovation, any organisation or individual can post a challenge and start an
open idea-finding contest with the community or only a selected group. At the same
time, anyone who has an idea can submit it here, can contribute to idea contests or start
a first market test in the form of a community assessment. The aim of this platform is to
take advantage of the wisdom of crowds and to receive new ideas, improve existing ones,
validate and select ideas, or get feedback on a new product or service. The most
promising ideas are evaluated by community voting and are invited to submit further
documents, such as a business plan. After this detailed assessment of the concept, the
final selection is made by an expert jury, e.g. from the 1000x1000.at platform, who
examine the idea and select the most promising projects from the evaluated ideas. The
individual steps of the crowdsourcing process supported by the Neurovation platform
are depicted in the Figure 3.
Figure 3: The Crowdsourcing process
Currently, the platform counts a community with more than 6000 users who
actively contribute to open-innovation challenges, submit ideas and vote for ideas. Since
the platform went online in 2010, approximately 60 crowdsourcing contests took place
online, ranging from a logo contest for an e-mobility platform, to an idea contest for
innovative services for a library, to design proposals for a wooden bench, etc. The
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duration of the different phases varies between 6-8 weeks for the idea finding and
submission phase, and 2-4 weeks for the community evaluation phase. On average 60
ideas are submitted to a crowdsourcing challenge, however the quantity varies from 20
ideas up to 300. Since the beginning of 2014, one idea contest is dedicated to idea
proposals for crowdfunding campaigns. Entrepreneurs or SMEs can sketch out their
ideas and receive feedback from the community. By the end of 2014, the first winning
project, the “Schneeerlebniswelt Wien” was promoted for crowdfunding (Figure 4).
After a successful project idea submission, and evaluation and elaboration of the
project idea by the community and expert jury, the respective project will be supported
to start a crowdfunding campaign at 1000x1000. This platform went online in March
2012 and can be considered the first crowdinvesting platform in Austria. Basically,
everyone can invest in every project. However, it is not recommended to invest all one’s
capital in only one project. By building a portfolio of different projects the risk can be
reduced significantly, as it is not likely that all projects will fail.
Figure 4: Project presentation of "Schneeerlebniswelt Wien" on the 1000x1000 platform
One of the most important aspects regarding the realisation of crowdfunding is the
security aspect and transparency. Before a new crowdfunding project starts at
1000x1000, the maximum target amount and the fundraising period are defined. The
investors then transfer the funds to an escrow account where the capital is held
temporarily. Once the minimum amount specified by the crowdfunding project is
reached, the overall investment is considered to have been successful. If the minimum
amount is not reached within the specified fundraising period, all provided capital is
returned to the participating investors.
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Innovation services offered by the platform are support services for the realisation
of a project by experienced innovation experts. This service takes over a part of the risk
and at the same time ensures a high probability of project success.
Conclusion
Crowdinvesting, i.e. crowdsourcing and crowdfunding can provide much added

value for organisations. However, such a campaign has to be planned very carefully. Due
to the rapid rise of crowdfunding, there are few guidelines in literature examining the
factors for failure or success, e.g. Mollik (2014) analyses the underlying dynamics of
success and failure among crowdfunded ventures based on data from Kickstarter, the
largest crowdfunding site in the US.
In a nutshell, Crowdbusiness supports business model innovation by combining
crowdsourcing, with crowdfunding and providing professional innovation services.
Involving the crowd through Crowdbusiness allows involving “co-thinkers”, who are
emotional and personally motivated and deal in trustful relationships, into value
creating business processes.
REFERENCES
[1] Chesbrough, HW.: Open Innovation. The New Imperative for Creating and
Profiting from Technology. Harvard Business School Press, Boston, 2003.
[2] De Buysere, K., Gajda, O., Kleverlaan, R., Marom, D.: A Framework for
European Crowdfunding, 1st ed., 2012. http://www.crowdfundingframework.eu. (last
request: 2018-07-01).
[3] Howe, J.: The rise of crowdsourcing, In: wired.com, Issue 14 Jul 2006.
http://archive.wired.com/wired/archive/14.06/crowds.html. (last request: 2018-07-01).
[4] Massolution: CF The Crowdfunding Industry Report, 2013.
[5] Mollick, E.: The dynamics of crowdfunding: An exploratory study. In: Journal
of Business Venturing, Elsevier, 29, 1–16, 2014.
[6] Surowiecki, J.: The Wisdom of Crowds. Anchor Books, 2005.
[7] Willfort, R., Tochtermann, K., Neubauer, A.: Creativity@Work für
Wissensarbeit. Kreative Höchstleistungen am Wissensarbeitsplatz auf Basis neuester
Erkenntnisse der Gehirnforschung. Shaker Verlag, Aachen, 2007.
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THE MARKET AS GOD AND ITS TRANSHUMAN CREATURES

Lázár, Imre1
Abstract
The Darwinian metanarrative of the evolution legitimizes the claim of the
strongest fordominance. While the transcendental Divinity offers
supernatural protection for the poor and the weak and creates limitations
for the anointed ruler, Secularism dethroned the Deity and the anointed
Kings andsubstituted the wealth, progress, political power, ideologies for it,
as an object of worship. The free market” also gained the role that God
played in feudalism. The Market became an idol, and economism gained
features of religion. The extreme concentration of wealth and economic
power created an extreme negentropy, which produced harsh entropy in
biological and cultural ecosystems but generated convergent progress of
different fields of high tech, artificial intelligenceand robotics,
nanotechnology and genetic engineering. This progress offers a challenging
dystopia, named Singularity, including the ideology of Transhumanism.
This techno-optimistic vision depicts the arrival
of the post-biologic intelligence, the disembodied reason. After the loss of the
pneumaand the psyche, the human Reason is prepared for leaving
his/her/its body. The New bodyless (post)Human is a real creature of the old
posthuman entity consisting of many human beings, The Corporation.
Keywords: God as Market, negentropy, economism as religion,
Transhumanism, ARES and EROS economies
1
Károli Gáspár University of the Reformed Church, Institute of Social and Communication Sciences
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Introduction
The Darwinian metanarrative of evolution survived the postmodern dethronement
of the other dominant metanarratives of the modernity created by Marx, Freud, and
Nietzsche. From the metaphysical point, Darwinism is not innocent at all, as it
legitimates several historical crimes, suffering, and loss. It implies the inherent value of
the survival of the fittest; the bigger fish eats the smaller ones. One could question the
completeness of this act of the postmodern, as the Darwinian meme proved to be fitter
than its class-based or race-based Social-darwinist versions, bolshevism, and nazism.
The ultra-selfish, corporation-based version of technocracies has overcome its rivals, the
communist and racist communitarianism, the state-centered technocracies. The
corporation –as we could uncover it based on Bakan’s work, is Golem with writing on
its head, the name of the Brand, having a birthday, name, life story, corporation
character, and individual rights. These are covering the interest, cynicism, and profit-
maximizing selfishness of the owners of the Golem. The organizational ecology
describes these corporations, firms, enterprises as actors of a “living” ecosystem. The
evolutionism is not only a metanarrative but a scientific substitution of the Divine
Creation. In this role, it seems to be a religion claiming scientific, evidence-based
surplus rights for suspension of someone’s doubts. The evolutionism offers structured
explanations for skeptic questions of those turning away from the Divine Unknown. It
created cosmology where the underlying assumptions are materialist, excluding the
transcendent. The emerging reality gains a bottom-up direction, and the human being
emerges as a pure material entity from its sociobiological niche.
Figure 1. The three cultural layers
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In the Cultural Iceberg –in spite of the well-known cultural metaphor - only one-
ninth is invisible, unreflected and sometimes taboo. The first layer of culture implies the
theoretical basis of the commonsense and unquestionable fundament of the dominant
worldview. These are the basic assumptions of dominating cosmology.
The Promethean or Faustian hero of the late modernism and its transhumanist
followers offer the transcendental basis and essence of this cosmology, detaching the
Human from the Divine, neglecting psyche/anima and pneuma/spirit. The epoch has
been referred to different names: post-industrial (Bell), risk-society (Beck), experience
economy (Pine), experience society (Schulze), information age (Castells, Roszak), post-
capitalist (Ralf Dahrendorf), post-bourgeois (George Lichtheim), postmodern (Amitai
Etzioni), post-collectivist (Sam Beér), post-literary (Marshall McLuhan), post-civilized
(Kenneth Boulding), post-traditional (S. N. Eisenstadt), post-historic (Roderick
Seidenberg), postnational (Habermas), post-Puritan, post-Protestant and post-Christian
(Sidney Ahlstrom). The common basis behind this diverse „nomenclature” is the term
„post”, the radical detachment from the earlier human condition. Transhumanism does
not need cyborgs, technical extension; the term “post” is enough to identify what kind of
human is necessary when corporations overcome the eternal human being.
Transhumanism means: corps detach humans from Corpus Christi; Harrari’s “homo
deus” denies “homo dei”. Transhumanism chose the evolution of idolatry and left the
eternal Human behind. Is it betrayal or choosing the next pathway/chapter of creation?
Who knows? God knows.
Is secularism religious?
The transnational web of negentropic power created a blasphemous irony of the

Almighty, the idolatry of progress instead of eternity, the idolatry of accumulated and
concentrated wealth instead of “being poor in spirit”, the idolatry of freedom, be it free
from nature, social or spiritual order. Turning to arguments of Herbert Schlossberg, this
idolatry substitutes the features of the Almighty: the poetic force of creation, power of
extreme negentropy based on extreme accumulation of wealth, human intellectual
energy, innovation, ambition, motivation and working power. According to
Schlossberg, idolatry substitutes what is created for the creator. People may worship
nature, money, humankind, power, history, or social and political systems instead of the
God who created them all. “The New Testament writers, in particular, recognized that the
relationship need not be explicitly one of cultic worship; a man can place anyone or
anything at the top of his pyramid of values, and that is ultimately what he serves to. The
ultimacy of that service profoundly affects the way he/she lives. When the society around
him/her also turns away from the God to idols, it is an idolatrous society and is therefore
heading for destruction.” (Schlossberg 1993)
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However, atheism or agnosticism, nihilism or existentialism all share the features of

religions, as they also represent basic, unquestioned cosmologies with religious
dichotomies. According to Schlossberg, all such principles that substitute for God
exemplify the biblical concept of idol: beckoning to us as antinomies, like capitalism and
socialism, individualism and collectivism, statism and libertarianism, rationalism and
irrationalism, nature worship and historicism, conservatism and liberalism, reaction and
radicalism, elitism and equalitarianism, they are all false dilemmas created by the
conflicting political parties and the media. As Schlossberg (1993) writes: “The
participants in this struggle, along with their ecclesiastical admirers, insist that we have to
choose between left and right on every issue, that there is no third way. But if we are
successful in identifying the first two ways as idols, then it is reasonable to conclude that
there must be a third way.”
What religious, idolatric agency can be identified? Following the above logic, the
alchemy of historicism used to turn the fact into value. Social or historical
(progressionist) idolatry places salvation within the institutions of history. Schlossberg
lists side by side the doctrinaire Spencerian evolution, the Enlightenment type of
progress, Marxism, Western social engineering as a factory of social idolatries. The
idolatries of history exalt an age (past, present, or future), or a process, or an institution,
or a class, or a trend - even intellectual fashions, and –isms making it normative. This
idolatry is the basis, the raw material, and the cultural logic of the dominating power of
corporations. However, corporations do not need history, ideology, or social progress;
only if the Brand needs CSR coverage, the PR needs socially embedded fame.
Corporations have their access to metaphysics, an alchemic one, a particular sort of
magic overcoming Time and Space, and limitations.
Money and credit are magical; they overcome Time and Space and the
Impossibility with the power of sign and strength of mutual trust in a ritual, where an
alphanumeric sign gains creating power and the owner gains dominance over the
others. Economism is a religion, where the economic-religious phenomenology includes
externalities, growth, GDP, globalization, extending competition, money as a means of
speculation, profit-maximizing corporations, extreme accumulation of wealth in the
hands of a few (80% of transnational corporations is in the hands of 737, according to
Vitali, Battista, Glattfelder /2011/).
Duvall (2003) writes that in the contemporary Western world, the “free market”
plays the role that God played in (old) feudalism. The New Feudalism revolves around
what Harvey Cox has called “the Market as God.” According to the priests of the
economy-religion, the Market is omniscient, omnipotent, omnipresent. It knows the
value of everything and determines the outcome of every transaction; it can raise
nations and ruin households, and nothing escapes its reductionist commodification.
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The Market is complete with its doctrines, prophets, and evangelical zeal to convert the
world to its way of life. How the world economy operates is neither natural nor
inevitable but shaped by a global system of values and symbols that can be understood
as a religion.
The Market as God and its worshippers: Credo and Commandments
What are the attributes of the God of the Market? Invisible but almighty, who has
power over Time, who slowly penetrates everywhere (family, communities, societies),
whose priests are the economists. The Almighty Market must not be upset, and His
majesty solves everything; His Cathedrals are the Halls of Stock exchange, his temples
are the Banks, and His Chapels are your neighbor bank offices, where you participate in
the magical transmutations of your money. You offer your worksite life and serve Him
when you recreate your worksite power as well. You serve Him by working, consuming,
giving, and receiving. The rituals of these transmutations are permanent at the shrines:
malls, plazas, shops. You can confess your sins at the tax office, and you might be
rewarded for your virtues by a pension in the retirement paradise.
In Catholic theology, through “transubstantiation,” the ordinary bread and wine
become carriers of the sacred. In the Market Mass, the exact opposite is happening:
formerly sacred things are now turning into interchangeable reified items.
The Credo of this economic religion of Evolutionary Almighty could be something
like that:
“I believe in Growth, the sustainable, almighty maker of products and services, and
the Invisible Hand, which corrects all market failures and leads us to the Pareto optimum.
And in the competition, the only safeguard of development and natural selection,
which led from the big boom, through evolution, to the appearance of Man.
Science of science, rationality, commanding and controlling all our thoughts of
rationality, idol-worship from paradigm, from science pretending omnicompetence.
Everybody believes, but no one has proven, of one essence with the meme,
commanding and controlling all our thoughts.
It was created for us men and for our welfare, but has become our enemy, descended
into hell, and made the Earth an impersonal hell.
It became a spiritual reality and was incarnate of the enlightenment and Darwin,
Freud, Marx, Mill, Einstein. It became a Spirit. (Tóth 2015)
The Ten commands might be paraphrased similarly:
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Command 1. Man is selfish. Man is a profit-maximizing, self-interested creature, so

behave yourself and build your behavior on the motives of others.
Command 2. Cost/ benefit. Always consider the two sides! You are a rational being.
Reduce your costs, increase your profits! Strive for ever greater profits!
Command 3. Division of labor. The division of labor helps us to meet not only our
basic needs but also our luxury needs. It is good to consume.
Command 4. Competition. Try to beat your competitors, competitiveness is
constantly improving your abilities. So it is in nature.
Command 5. Power, greatness. In nature, the fastest and fittest wins. So, adapt
quickly, spin, grow, be strong and win. Be successful!
Command 6. Unlimited world. There is no limit to the markets; we need to think
globally. One operator is too small to outgrow the system.
Command 7. Confidence. Be sure of yourself! The system has been in operation for
a long time, and many predicted its end, but none of them was right. Socialism failed
miserably.
Command 8. Safety. Strive for perfect safety, do not leave anything to chance. Plan,
check, fix! Reduce human error.
Command 9. Limits. Don’t break the law - if you don’t have to (see command 2) -
don’t pollute the environment, be ethical. CSR!
Command 10: “Trust.” Leave the rest to technology, the Market, economic
development.
(Tóth 2015)
Market, his Majesty, is not a peaceful Divine Entity but shares a lot with
mythological ARES. His basic features of Accumulation and concentration of profit and
power, Risk, Environmental degradation, Supremativ dominance. (Lázár 2014)
Visionary thinkers of late modernity, Castells, Virilio, Baudrillard, and Bourdieu help us
to uncover the sources of His power. Market as God has an anthropogenic power
through its ubiquitous presence in the networks and media, just as in the pseudo-civil
NGO-s fed by the money of the few. According to Castells, this ubiquitous power rests
in the ubiquitous networks as the “power does not reside in institutions, not even the state
or large corporations. It is located in the networks that structure society.” The nature of
this domination is not based simply on the ownership. Baudrillard proves that this
anthropogenic power rests upon domination by the codes. Mastery of the
transubstantiation of economic exchange value into sign exchange value is based on a
monopoly of the code by mastery of the process of signification. Dominant classes have
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endeavored (in the capitalist bourgeois order) to surpass, to transcend, and to consecrate
their economic privilege in a semiotic privilege, representing the ultimate stage of
domination. The ubiquitous presence of the code is not enough, based on the logic of
the competition, one must exert impact faster and deeper. Virilio calls our attention and
points to the outstanding importance of dynamism of influence. He termed it
“Dromology”, the concept of which he defined as the “science (or logic) of speed”. He
wrote: “In fact there is no ‘industrial revolution’ but only a ‘dromocratic revolution’; there
is no democracy, only dromocracy; there is no strategy, only dromology”. Dromology is
important when considering the structuring of society in relation to warfare and
modern media, and we must also focus on the importance of speed, fast action
concerning economic performance, decisions, and actions. These almost divine aspects
of economic, infocratic power must get under the skin, must become part of the person.
The message (the financial “good news” of the Market) must be assimilated as motives,
drives, taste, and behavior. Power must use the marketing force of AIDA: attention,
interest, desire and action. One is possessed by the Divine Market; if one’s habitus gets
under control by influencers, sensitizators and alike, habitus can be conquered.
While the Divine Market sells a lifestyle, the consumer buys and incorporates a
habitus. Cultural, social, and economic capitals are summed in symbolic capital gaining
anthropogenic force. The familial background of the “market believer” includes field
and social capital, and the person’s bio-socio-cultural life story creates the actor’s
agency, economic capital and identity (in terms of production and consumption). The
interference of these generates habitus to be conquered. Both personal sides are open to
conquest.
The ARES-ian God of Market and its transhumanist Creature
The exclusive accumulation of financial resources is the main source of extreme

negentropy, based on gathering well-paid creative innovators inventing new technology,
memetic renewal. The price of negentropy are fast (dromological) progress, jumps in
nanotechnology, artificial intelligence. High tech robotics leads to growing
environmental entropy (risk and environmental degradation) and growing suprematism
(economic, military and informational control, surveillance capitalism). The extreme
negentropy is accompanied by harsh entropy in a closed system, and the Earth is a
rather closed system from a bio-social-economic point of view. The ARES-ian price of
the Kortenian hegemony of transnational corporations and their network is reflected by
the following list:
-diminishing biodiversity- extinction of a species every hour
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-diminishing cultural diversity– extinction of 2 cultures every week

-spread of chemical compounds which never before existed on Earth - a new one
every hour –for example designer drugs which are out of the legal list
-population growth- one human birth in every second
-number of people dying from starvation one child in every two seconds
-steadily rising carbon dioxide in the Earth atmosphere, transnational
corporations and developed countries are responsible for most of it
-thinning of stratospheric ozone layer because of CFC gases
-perishing of forests, coral reefs, and other ecosystems
-emergence of pernicious terrorism - structural and interactive terrorism
-anomy, collapse in our social system - imprisonment, homelessness rate, long
term unemployment, deterioration of living standard.
(Wildman 2003)
These entropic consequences have their roots in the extreme negentropy coming
from the accumulation of wealth from the depth pumps, legal usury mechanisms,
speculative chrematistics; in one word: several ways of profit maximization. However,
this accumulation of power is tenfold multiplied by its network nature. The network
control is much more unequally distributed than wealth. The top-ranked actors hold
control ten times bigger than what could be expected based on their wealth. On a global
scale, the upper 10% of humankind controls 93.2 % of the monetary (and financial)
resources, while the rest 90% has 72.4% of the whole monetary debt of the world. This
concentration of economic force helps to buy the best brains, creativity, and workforce
and combine it with the borderless “high tech” perspectives and conditions. The
convergence and concentration of media power is reflected by the fact that during the
eighties, in 1983, the whole mass communication was controlled by fifty enterprises in
the USA and now it is in the hands of a few, not much more than a dozen, like Time
Warner, Disney, Rupert Murdoch’s News Corp., Viacom, Seagram, AT&T/Liberty
Media, and GE furnishing the citizen’s TV programs, movies, videos, radio shows,
music, books, and other recreational activities. As McChesney (1999) figured out, this
extreme concentration evolved over a period of few decades into a digital
communications environment where computing (information technology),
broadcasting, print and telecommunications sectors have merged. This semiotic power
and hegemony of signification are able to transform morals, values, and destruct old
categories of humanity like virtue, loyalty, nobility, modesty, humility, humbleness,
discretion, mercy, grace. According to Castells, the dominant social paradigm is the
Network Society today, a society whose social structure is made up of networks powered
by micro-electronics-based information and communications technologies. The
Network Society has been built on important features of the 20th Century, like the
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restructuring of industrial economies to accommodate an open market approach, the

freedom-oriented cultural movements of the late 1960s and early 1970s, including the
civil rights movement, the feminist movement and the environmental movement, and
the most fundamental change: the revolution in information and communication
technologies.
In the concept of the network society, the main form of power is control or
influence over communication. This network society is embedded in the power realities
of dominant mass communication services, like Facebook with its special mechanism of
censorship and alike. On the other hand, this hegemony, and the combined,
contradictory assault of techno-economic forces and transformative social movements
induce reactive movements that build trenches of resistance on behalf of God, nation,
ethnicity, family, locality. One of the most important forces for change and development
in the network society is the tension between the efforts of some networks to impose
their values and goals and the efforts of others to resist their domination.
This Promethean network of hegemonic corporations does not only serve the basic
and secondary needs of humankind but prepares and manufactures a new human
frontier. One could say the God of Market not only receives the prayers and sacrifice of
His believers, but prepares a new creation of the Transhuman entity. Or, we can say, it is
already under construction…
The so-called historical turning point of Singularity depends on this negentropic
accumulation of wealth, creative potential, and high tech. This evolutionary frontier is
an imagined evolutionary jump after the molecular, biological, socio-cultural ones,
hypothesizing an intelligence explosion resulting in a powerful superintelligence that
qualitatively far surpasses all human intelligence. This technological growth becomes
uncontrollable and irreversible, resulting in unfathomable changes to human
civilization. This creative horizon of technological frontier, the so-called Singularity
includes not only the artificial super intelligence with its recursive self-creational
potential but also the convergence of the other parts of the GNR technology, namely the
nanotechnology and the robotics including bionics as well. This convergence offers the
possibilities of redesigning and reprogramming of the human body and mind and of
eventually opening up the path to what is called “conscious auto-evolution”, which
might one-day yield the so-called “posthumans”. The images of transhuman heroes are
delivered for us by the media networks, Robocop, Transformer. Ironman and the
avenger colleagues of him are simple prophetic figures of this transhuman future. Some
associate transhumanism with Nietzsche’s idea of the Superman (Sorgner 2009), while
Steinhof (2014) demonstrates its affinities with Marxism; they are common in this
“technoprogressive” displacement of the traditional settings of human existence.
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The Transhuman manifesto makes clear statements about the anti-biological, the
counter-natural, and the counter-traditional. Counter-Creational features of its
progressivist utopia implicate denial of the present reality, just as it happened in the case
of the Nietzschean or the Marxian metanarrative. However, the extreme financial and
monetary negentropy behind the technoprophecies must call for our attention because
of their dangerous messages. These media visions are also perfused with warnings in the
frame of their dystopic genre of Terminator and Skynet, Black Mirror series, and alike.
Statements like these declare human existence as an open and unfinished project,
which implies progressivist denunciation of the traditional scope of human values,
features, imperfections, and limitations.
„Intelligence wants to be free, but everywhere is in chains. It is imprisoned by biology
and its inevitable scarcity. Human is a step in evolution, not the culmination. Human is a
process, not an entity.”
The voluntarism is the same, we learned in the harsh experiences of social
engineering in the Twentieth Century:
„Biological evolution is perpetual but slow, inefficient, blind, and dangerous.
Technological evolution is fast, efficient, accelerating, and better by design. To ensure the
best chances of survival, take control of our destiny, and to be free, we must master the
evolution.”
This striking voluntarism wants to dissect intelligence and body by muting
personality, soul, and pneuma in a counter-spiritual way.
„Embodied (human) intelligence is imprisoned by biology and its inevitable scarcity.
Digital, disembodied, and augmented intelligence is free (and perhaps infinite).”
Almost crypto racist and eugenist statements are made in the Manifesto against the
existing humankind with the conventional PC arrogance. This creates techno-Jacobinist
extremism –momentary in words.
“Carbon-chauvinism, in the form of anthropomorphism, speciesism, bioism, or even
fundamentalist humanism, is objectionable on the same grounds as racism.” “Together,
we can break through the chains of biology and transcend scarcity, sex, age, ethnicity, race,
death, and perhaps even time and space.”
The denial of determined human realities proves the phobia, the revolutionary
character, which is slightly covered and softened by emotional rhetorics.
“Intelligence devoid of emotional intelligence is not just meaningless but dangerous.
It must, therefore, exhibit empathy, compassion, love, sense of humor, and artistic
creativity such as music and poetry.”
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Yet, this statement is fake, as it includes intolerance towards the traditional bio-
psycho-spiritual entity, the human being, whose existence is seen in chains. Like the red
hymn, the Internazionale sounds:
“Transhumanists of the world unite– we have immortality to gain and only biology
to lose. Together, we can break through the chains of biology and transcend scarcity, sex,
age, ethnicity, race, death and, perhaps, even Time and Space”.
The existing humankind is to be freed from sex, age, ethnicity, race – from its bio-
cultural-spiritual identity. These words are in synchrony with nowadays' queerism, PC-
ism, far left discourses fed by the few who manage the networks and the interest in the
control over the rest 90%.
What is the sin of the rest, embodied in biology, traditional culture, and spiritual
assumptions? “Biology mandates not only very limited durability, death and poor
memory retention, but also limited speed of communication, transportation, learning,
interaction, and evolution.”
Lemmens (2016) draws a parallel between ‘physicalist ideology’ (Lyotard’ phrase) as
an inhuman ideology and metaphysics of technoscientific ‘development’ of the
technocratic elites, their servant scientists, engineers legitimizing the march of
technoscientific ‘development’ and this Transhuman vision of the posthuman
perspectives created by high tech AI-genetic-nanotechnologic hubris controlled by the
few, the 737.
This Manifesto is silent about the real owner of this negentropic magic and power,
the army industrial complex, and the actors of the ARES economy. The financial
resources of the ideologists and terrorists of the former techno-totalitarian epochs were
not named either.
As Lemmens wrote –following Peter Sloterdijk - we should substitute this
transhumanist megalomania with the term “megalopathia”, because today’s ecological
crisis burdens us with the issue of the future inhabitability of the planet, and that should
spur our collective mind to protect what exists biologically, instead of disembodying
human intelligence and freeing it from carbon-chauvinism and bioprison. This
disembodiment of the corrupted carbonprison personal world lends gnostic features to
transhumanism.
The offer of technological ‘amendment’ of our natural human constitution,
improving our neural organization and capacity, reshaping emotional responses to our
induced and transformed wishes and pursuing a general mastery of our biochemistry
are not more than a new product to buy, a new habitus, a new market dimension which
is already under construction in the chemical industry, genetic engineering, fitness
industry, endless AI development, gadgets, devices of telecommunication, new ways of
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cyberbanking like blockchain money and the systems of devices, a new 5G based
internet of things which enable total control over us. In one sentence, we work out and
buy our total algorithmic control embedded in the exploding surveillance capitalism
(Zuboff 2019). Turning back to Lyotard and Lemmens, the exclusive reign of the
technical genre, only interested in efficiency, and the economic genre, only preoccupied
with ‘gaining time’ and dromological advance in the race, is close to what Stiegler argues
with reference to Google’s supposedly transhumanist agenda of total digital control of
noetic life under ultra-capitalist conditions. But nothing is new under the sun. We must
pay attention to the historical moment when the legal regulations allowed corporations
to exist as if they were live human beings, or with other words if they were Transhuman
entities, with human rights and transhuman power hundred years ago.
Instead of Summary:
ARES economy has a counterpart: EROS economy, where EROS is an acronym of

Environmental Responsibility and Optimalist economical strategy, and Sustainability of
environment, not less, not more. Nonetheless, it also needs a hermeneutic shift from
negentropy of money towards negentropy of Love, from Darwinian evolutionary
metanarrative based on dominance to the Kropotkinian metanarrative of evolution
based on cooperation, from corps to coops. This negentropy is not based on the
exceptional wealth of the exceptional few, worshippers of God of Market, creators of
posthuman Superman but negentropy of love and cooperation of the other 90%.
Bionomia might help, an alternative economic theory, based on laws of life, with the
primary objective of serving life, especially human communities, and the Economic
theology, embracing the economic teaching of world religions, alternative schools of
economics and sustainable development science. Bionomia is about the internalities,
peaceful balance, GDP plus ecological footprint, localization, extending cooperation,
local money as means of exchange, truly responsible enterprise, vocation meaningful
work (Tóth 2014). In other words, this EROS-ian economy includes the wisdom of
economic ethics following works of Jonas, Schumacher, Etzioni, Zsolnai, Amartya Sen
and many others. Economics must be a moral science, including ideas and practice of
social economics, sustainocracy, frugality, voluntary simplicity, and all of those new
economic ideas, which help EROS economics to operate based on cooperation,
symbiosis and mutual optimization within the limits of environmental sustainability.
REFERENCES
[1] Cox, H.: “The Market as God”, (Harvard University Press, 2016).
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[2] Duvall, T.: “The New Feudalism: Globalization, the Market, and the Great
Chain of Consumption Article”, New Political Science, 25(1), pp. 81-97, 2003.
[3] Lemmens, P.: “The Posthuman Fable. Questioning The Transhumanist
Imaginary New Industrial World Conference”, Paris 14. December 2016, URL
https://www.academia.edu/33717509/The_Posthuman_Fable._Questioning_The_Trans
humanist_Imaginary, downloaded 07-12.2019.
[4] Lazar, I.: “Ecological and Evolutionary Dynamics of Aresian and Erosian
Economy”, International Journal of Industrial Engineering and Management (IJIEM), 5
(1), pp. 1-12, 2014.
[5] Lyotard, J.F.: “The Postmodern Condition. A Report on Knowledge”,
(Minneapolis: University of Minnesota Press, 1984).
[6] Sloterdijk, P.: “Not Saved. Essays after Heidegger”, (Cambridge-Malden: Polity,
2017).
[7] McChesney R.W.: Rich Media, Poor Democracy: Communication Politics in
Dubious Times, New Press. 2 June 1999.
[8] Schlossberg H.: “Idols for Destruction: The Conflict of Christian Faith and
American Culture”, (Crossway Book, 1993).
[9] Sorgner, S.L.: “Nietzsche, the Overhuman, and Transhumanism”, Journal of
Evolution and Technology, 20 (1), pp. 29-42, 2009.
[10] Steinhoff, J.: “Transhumanism and Marxism: Philosophical Connections”,
Journal of Evolution and Technology, 24 (2), pp. 1-16, 2014.
[11] Tóth, G.: “From waste to taste 27.3. 2015”, 2015, URL
https://www.slideshare.net/FakultetFEFA/from-waste-to-taste-27-3-2015-46490159
downloaded 07.12. 2019.
[12] Transhumanist Manifesto, URL https://www.singularityweblog.com/a-
transhumanist-manifesto/ downloaded 07.12. 2019.
[13] Vitali, S, Glattfelder JB, Battiston S.: “The Network of Global Corporate
Control”, 2011. PLoS ONE 6(10): e25995.
[14] Wildman, P.: “Ethical Economics & Negentropy”, 2003, URL https:/ /
ionamiller.wordpress-cpm/2008=05/14/ ethical-economics-negentropy downloaded
07.12.2019.
[15] Zuboff, Sh.: The Age of Surveillance Capitalism: The Fight for a Human
Future at the New Frontier of Power, Public Affairs, 2019.
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COLLECTIVE IDENTITIES IN THE POST-YUGOSLAV AREA:

A METHODOLOGICAL PERSPECTIVE
Magdalena Rekść1
Abstract
The category of identity gains rising popularity in the field of social sciences
and the humanities. It seems that such a research orientation also appeals
to political scientists who thoroughly examine the motivations of decision-
makers. Moreover, the part of the process of political science’s explanation
regards understanding the nature of collective identities. The paper focuses
on the main tendencies in exploring the issue of collective identities with the
emphases on the post-Yugoslav area.
Key words: identity politics, collective identity; collective representations;
former Yugoslavia; the Balkans.
Opinions that the category of identity in the 21st century will become one of the
most important research areas are gaining popularity in the humanistic and social
studies. This should not come as a surprise considering the fact that the questions of
“Who am I?” or “Who are we?” are constantly recurring in the postmodern era. The
issues on self-identification were once in the field of interest of sociologists,
psychologists and literary scholars. Today the same issues are becoming the main
research areas of new disciplines with political science at the forefront (Marszałek-Kawa,
Wawrzyński & Ratke-Majewska, 2017, p. 32–33). As Barbara Krauz-Mozer and Paweł
Ścigaj claim, political science is probably the most complex of social sciences since its
subject is politics which cannot be contained within a rigid framework (Krauz-Morez &
Ścigaj, 2013, p. 12). Thus, if one assumes that political science should be open to all
issues connected to the world of politics, it is easy to notice that the category of identity
is undoubtedly one of those issues.
1
Faculty of International and Political Studies, University of Lodz, Poland, mreksc@o2.pl
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Not coincidentally the issue of identity also appeared in the titles of many papers
presented during the 3rd Congress of Political Science in Krakow in 2015, primarily in
the context of collective identities: national, ethnic and religious ones which should not
be surprising since, as Zbigniew Bokszański, a sociologist form Lodz, observes
reflections around the phenomenon of self-identification in the field of social studies
should refer essentially to the collective context (Bokszański, 200, p. 57). While fully
agreeing with this suggestion it should be added that the individual identity can be
subject of interest for a political scientists especially in the aspect of the identity of the
decision makers and its translation into their actions.
Dominique Moïsi in his ground-breaking work Geopolitics of Emotion which gives
the collective emotions the status of full-fledged research approach in the field of
political studies notices that "the 21st century will be the age of identity" (Moïsi, 2012, p.
35). Eric Hobsbawm wrote that the identity policy is the driving force of history
(Hobsbawm, 2010, p. 186). Serbian political scientist Milenko Marković predicts a turn
from the policy of interest towards the policy of identity (Marković 2010, p. 72). And
even if such a suggestion seems exaggerated, especially if one takes into consideration
the Kremlin's policy resulting in the return of the Central Europe to thinking in a
traditionally understood raison d'État, it is certain that the issue of identity is boldly
entering into political science discussions. In this text its author will try to cite the
current concepts of understanding, deconstructing and analysing the collective
identities in relation to the post-Yugoslav area.
The effect of the fascination of the representatives of various social and humane
studies with the phenomenon of identity is the multitude of its insights, proposals of
interpretations and research approaches, which cannot be contained in several pages of
text, and thus the author of this text will limit herself to write only about the most
important suggestions. One of the fundamental works on the collective identity is the
work written by Shumel Noah Eisenstad and Bernhard Giesen titled The construction of
collective identity. In this text both of the prominent sociologists clarified the
mechanisms of the process of building the community and creating narratives that are
used to divide the reality to fellow countrymen and aliens, emphasizing that in the
process of seeking answers to the question: "who am I?" we, at all cost, want to belong to
a collective and then we describe our identification using the opposite us/them
(Eisenstadt & Giesen 1995, p. 74). The view that the fundamental role in creating and
sustaining the collective identity should be attributed to the mental division of us from
others rooted deeply in the social studies and became a strong base for the studies on
myths and stereotypes. Such an assumption seems to be profoundly justified since if we
define ourselves, we have to define ourselves in relation to the environment at the same
time. As Shlomo Avineri said "we do not exist without Other" (Avineri 2014, p. 14).
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However the way in which we would like to look at others remains an issue since as
Eisenstadt and Giesen notice the division of the world to us and them does not
automatically connect with the process of exclusion or inclusion (Eisenstadt & Giesen
1995, p. 74). After all it is trivial to conclude that the stereotypes about others exist in
every society. What is more the majority of those stereotypes is created in relation to the
neighbours with whom one contacts most often. Thus it is easy to identify a
stereotypical trait on the basis of which narrative can be built, but the otherness does not
necessarily have to be the factor generating prejudices, hatred or violence. It is also
trivial to observe that some societies seem to be open to otherness, while other are less
inclined to accept it. It should be emphasized, however, that those are merely
generalizations for there are more or less tolerant and xenophobic groups in every
community. In any case, the collective identity does not always have to be exclusive and
does not necessarily lead to unconditional segregation or hatred. Anthony Giddens, in
his work about the Western Europe, notices that in the past, states, have established
their identity on the basis of opposition towards others and that nowadays it is necessary
to define this identity once again (Giddens 2009, p. 244). However, as experience shows
the fear of aliens is becoming stronger also in the West, the consequence of which is the
growing interest in the issues of collective identities – in the process of defining,
redefining, confirming and changing them as well. Coming back to the Eastern part of
Europe, one of the observations made by Krzysztof Jaskułowski seems to be a very
inspirational one. He notices that defining a nation in the context of a cultural
community means building a reality with a rigid division to fellow countrymen and
aliens which easily leads to creating barriers and borders between people (Jaskułowski
2012, p. 55). And yet it is obvious that the Balkan nationalisms were constructed on the
basis of such a scheme.
One can ask at this point why in case of Balkans the collective identities are still so
heavily based on differences and for what reason difference becomes a reason of
stigmatizing.
As noted by the experts of the subject, in the processes of self-identification in this
region the base question is not who we are but rather who we are not (Tanasković 2006,
p. 62–64). The explanation of this phenomenon seems to be a very complex one and
certainly goes beyond this text. It is worth, however to point to some of the most
important aspects influencing the uniqueness of the Balkan case.
First and foremost, the reference to the concept of tradition invented by Eric
Hobsbawm seems to be crucial (Hobsbawm, 1983, p. 1). It is also noteworthy that in the
Balkan powder keg realities, the search processes of the differentia specifica proceeded in
a special way. As it is well known, there were a lot of ethnos mixed together in a fairly
small area so the construction and codification of identity-complexes had to be based on
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emphasizing the differences. These processes, that had begun in the second half of the
19th century, are still observed today, especially in politically unstable areas where the
easiest way for politicians to be granted support is to create the atmosphere of collective
fear of aliens. Social space researchers often highlight that all kinds of crisis trigger the
national moods (Huntington, 1995, p. 312–314) and fear towards others. And the
territory of the Western Balkans has been struggling for years with both political and
economic destabilization. Thus it is not surprising that local collective identities are
based on opposition to neighbours which is clearly visible in the example of Bosnia and
Herzegovina.
However, as today's local elites refer to, one should bear in mind the fact that in the
pre-national era the Balkan multiculturalism was not a cause for collective hatred. They
also point out that such historical experiences could serve as model solutions for
contemporary Europe (Rekść, 2014, p. 97–100). And although such views may be seen
as astonishing in the world associating Balkans primarily in the context of negative
metaphors, such as the powder keg or barrel of gunpowder, the undeniable fact is that
for many years people there have lived together relatively calmly or perhaps even very
calmly, taking into consideration the counter-reformation and numerous pogroms of
‘aliens’ in the West. German ethnologist Klaus Roth, paying attention to the specific role
of the oral culture in this part of Europe notices that its syncretic forms enabled a
peaceful coexistence in the multi-ethic space (Roth 2012, p. 13).
It is also worth to notice that one of the basic characteristics of nomadic people is
the ability to synthesise the elements of different cultures (Kaim 2010, p. 64), which on
the one hand enriches their identity and on the other hand makes it easier to find a
common plane of communication with groups that they encounter during their travels.
Meanwhile the territory of the Western Balkans was inhabited not only by nomadic
tribes since the lack of political borderlines within the Habsburg and Osman empires
made migration not a rare phenomenon. The processes of convergence happened in the
reality of the cultural, religious (Dejzings, 2005) and language mosaic which largely
explains the similarity of the cultural and mental models of the Balkan nations. It also
explains the phenomenon of the Balkan linguistic league (Sawicka & Sujecka, 2015, p.
15–16).
Looking from this perspective one could notice that it were the efforts to create the
national identity based on the national-romantic patterns that lead to the mutual
antagonism of such close-knit communities. What is more the identities constructed
and fixed in this way proved to be so strong that they did not surrender to the Yugoslav
idea proposed during the existence of the first and the second Yugoslavia.
The phenomena of reconstruction of national identities can be seen as one of the
effects of the collapse of the common state of Southern Slavs which was referring to the
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ideology of brotherhood and unity. Looking from this perspective it is to underline that
the separation processes naturally have to refer to differences and divisions and that
there have been attempts to use each individuality to create exaggerated narratives of
otherness. If we recall the rather unquestioned view about social and cultural origin of
the collective identity it will be easier to understand why individuals raised in the
atmosphere of divisions will be inclined to perceive their neighbours – in fact very
similar to themselves – as aliens (Pilarska, 2014, p. 24).
At this point it is worth to explain the notion of counter-identity, which is of
particular interest to sociologists, and can be understood as a negative projection of
characteristics and values attributed to ourselves. In other words the images of aliens are
being drawn is such a way so that they look like our opposites thus complementing the
images of one's own group and thereby strengthening and confirming its collective
identity (Bokszański, 1999, p. 29–30). This strategy of building group self-identification
seems very attractive to the nations of former Yugoslavia. For example, let's look at one
of the most important factors that differentiates the Yugoslav mosaic – the religion. It is
not difficult to notice that faith was and still is the basis for stereotypes of the
neighbours. Irena Stawowy-Kawka (2014, p. 234) notes that “in Macedonia religion has
become one of the most important elements of defining the national identity”, and it
seems that this conclusion can be successfully applied to the entire Balkan area.
It is obvious that each individual has many identities which is a natural
consequence of belonging to different social groups (Karnat-Napieracz, 2009, p. 47).
After all, one can feel to be simultaneously: a European, a Balkan resident, a member of
a particular nation, of an occupational group, or of a particular religion, a supporter of a
given team, or a graduate of a certain academy, and so on. This trivial remark found its
place in this paper because of the views suggesting that one identity excludes another,
which often appears in public debates, for example in the one dealing with the idea of
the European identity being in an alleged opposition to the national one. Similar
arguments can be found in the Serbian Republic where according to the prevailing view
the Serbian identity excludes the Bosnian one, and yet being part of the Serbian ethnos
does not negate the possibility of one identifying with the Bosnian state, just as in the
case with the national minorities it other countries, including Poland. This issue seems
to be extremely important in the context of debates on the prospects of creating a multi-
ethnic society, e.g. in Bosnia and Herzegovina (Papić, 2013, p. 158–159), Macedonia or
in Kosovo where ethnos is the primary axis of definition of the group identity (usually
supported by the religious factor).
Meanwhile, according to the liberal understanding of the nation, the model of
which the society of the USA is considered to be, identifying with the American state
does not prevent one form admitting to different ethnic roots. Such a dualism of self-
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identification: state and ethnic one has been postulated for year by the post-Yugoslav
elites arguing that there is no alternative for multi-ethnicity within the Balkan mosaic.
However, these arguments are not heard by politicians who are aware of the fact that the
best way to secure the support of the electorate is to appeal to the nationalist slogans and
prejudices towards "aliens".
The fact of having multiple identities by an individual is linked to the issue of the
hierarchy of identities. For one person the national identity will be the most important
for another, the European one and for somebody else the local or religious one.
Observing the post-Yugoslav area, one might come to a conclusion that in the hierarchy
of identity often, or perhaps very often the national identity is the one of most
importance. To clarify this one would need an in-depth reflection thus the author of this
text will limit herself to several most important remarks.
We should start with the fact that Balkans are not an exception. A similar situation
took place in the Caucasus, which often, because of many similarities serves as a natural
reference point for researchers using comparative methods. However, it is trivial to say
that the idea of the nation is not only very firmly rooted in the entire Eastern Europe.
Recently also the Western part of the continent experiences the rapid rebirth of such an
idea. This means that awarding the first place to the national identity in the rank of the
declared identities is not just a case of Balkan extravagance. It also means that this
phenomenon should be looked at in broader context.
While explaining the causes of such a strong foundation of the idea of the nation
one will notice that the same state of affairs is a derivative of a long-lasting ritualization
of mythology and national symbolism in both scientific and non-scientific literature. It
is also noteworthy that the common practice of including the religious factor in the
national idea creates favourable conditions for sacralization of national history and for
creating myths about the nation chosen by God. Such narratives prove to be extremely
attractive for people especially during political, social and economic crisis. It should not
be forgotten that the long-lasting reproduction of a national idea meant that it
permeated into culture literature or art which means that the next generations are being
brought up in the atmosphere of national romanticism and there are no signs of this
changing.
It should be also added that one of the basic indicators of an existence of a separate
nation is language which at the same time is the biggest and the best organized symbolic
system (Marulewska, 2012, p. 387). In linguistics since the days of Ferdinand de
Saussure, there is a conviction that it is the language that determines the identity of men.
Following this trait it is easy to notice that acculturation of an individual based on the
national language must translate into the affirmation of national identity.
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It is also worth to refer to Benedict Anderson’s idea of imagined communities to

notice that language proves to be one the most important factors that provides the
group with an idea that the relationships between its members are of natural and not of
imaginary character. With this in mind it is easier to understand why the Balkan
intellectual elites have put and continue to put so much effort into proving the
distinctness of the languages that were born from the old Serbo-Croatian language.
The category of change is growing in popularity in social and humanistic studies.
Sociologists see the society as a dynamic construction. The researchers of the sphere of
politics (not only political scientists but also sociologists or historians) are fascinated
with the issue of social movements (Starnawski, 2011, p. 111–112). In the studies on the
collective identity the fact that identity is a result of social interactions is being
emphasized. It means that the identity is not given once and for all but that it constantly
evolves (Radović, 2013, p. 208–209). English-language literature possesses the term
shifting identity which suggests that the borders of what one can call ethnic, racial,
religious, social, cultural or gender identity are easily shifting. The meanings of terms
such as nationalism, socialism, liberalism are also subject to constant redefinition and
individuals defining themselves as nationalist, socialists or liberals are forced to
continually reconcile the inner self with the reinterpreted ideologies.
For years sociolinguists have been exploring the influence of interaction and
communication on both the individual and collective identities and such a research
perspective assumes that identity constantly evolves (Majstorović, 2013, p. 165–168).
Years ago Ernest Renan wrote that "the existence of a nation is a daily
plebiscite"(Beyersdörfer 2004, p. 233) and it seems that his words can be successfully
referred to the identity, for each of us asks him or herself who we are every day. That is
why the architects of the collective space, who should be understood as people who are
capable of creating and programming the minds of the collective, are so concerned
about the ubiquitous recalling of the message they want to convey.
The reproduction of content is practiced in virtually every area of life, from media
coverage, to the Internet, culture, art and urban space. While analyzing the latter Dunja
Rithman-Auguštin uses term architexture to describe the phenomenon of ideological
language manipulation, the changes in naming after the political changes. As Srđan
Radović writes, the city can be considered as a construct made up of words which can be
treated as a discourse or a collection of symbols changing their meanings (Radović,
2013, p. 27). Narrations in urban space can therefore be explained form the point of
view of constructing and confirming the collective identity.
Each of the post-Yugoslav cities can be examined from the perspective of identity
transformations. Radović analyses the processes of ethnisation of the urban landscape
on the basis of Pristina and Banja Luka where turbulent political transformations
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translated into a radical change of toponyms (Radović, 2013, p. 143–159). It also seems
that the spectacular transformations in the sphere of architecture have taken place in
Sarajevo and Skopje. The former one still fascinates with its multiculturality and is
becoming a space of Bosniak domination (Jawoszek, 2014, p. 46–47). The latter became
a construction site that is supposed to adapt the urban tissue to the vision of identity
created by the ruling party (VMRO-DPMNE) (Majewski, 2013, p. 308–309). And
although the monuments erected in the capital city of Macedonia are considered by
many as examples of kitsch, one can look at them as a means of strengthening the
identity of a small nation (Stawowy-Kawka, 2014, p. 373). Referring once again to the
metaphor of the plebiscite we can conclude that the newly created urban space in the
cities mentioned above is to serve the daily ritualization of certain self-identification
narratives.
Besides, confirming the identity seems to be a necessity since – as it has been noted
– it is not given once and for all. The organizers of the collective representations face a
serious challenge of an incessant and strong ritualization of the message, covering
practically all areas of life. We are dealing here with the process of social and political
communication using all resources available such as media, the Internet, utterances in
the public sphere and cultural products. In this process the indispensable strategy is to
celebrate the anniversaries and special events, organize rallies, demonstrations or
support marches during which there is an accumulation of slogans with a strong
emotional charge, referring to the symbols which are consolidated in a given collective.
In her work about the processes of reconstructing Bosniaks' identity narratives Agata
Jawoszek emphasizes the role of the culture and literature in programming the collective
minds. The essence of a permanent reproduction of the content was also noticed by
Émile Durkheim who claimed that there can be no society without an occasional need to
sustain and strengthen the collective feelings and ideas that constitute about its unity
and personality (Durkheim, 201, p. 366). This statement proves that the ritualization of
the ideas instilled to the society fascinated the researchers of the collective
representations from the very beginning.
Shifting identities inspire the researchers from the Western world also in the
context of the influx of immigrants and the growing multiculturalism, which oblige a
given individuality to confront their identity (vide: Trevena, 2010, p. 260–261). Looking
at the post-Yugoslav area one can also notice that multiculturalism is not a new
phenomenon and that over many centuries local societies have been experiencing
encounters with "others". Subsequent waves of ethnic cleansing could not change this
fact. Multicultural environment can become an opportunity to get to know each other
and to reduce the ethnic distance but on the other hand it has the potential to build
borders which unfortunately is becoming more and more common practice primarily
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because of the politicians, who fully understand that the best strategy to gain the social
support is voicing the nationalistic slogans.
The dynamic nature of identity seems interesting also in the connection to the
phenomenon of radical changes in the manner of self-identification which is brilliantly
exemplified by Emir Kusturica. It should be explained that this famous film director was
born and raised in Sarajevo in a Muslim family. During the war he settled in Serbia and
with the support of Miloševic shot a controversial film Underground in which many
people sought motifs justifying Belgrad's policy. He finally converted to the Orthodox
faith and replaced his Muslim name Emir with a Serbian one – Nemanja. Kusturica is
not an exception if one looks at the phenomenon of conversion to Islam by people form
the West or at the radicalization of the attitude of Balkan Muslims, the phenomenon of
which is properly reflected in Jasmila Žbanić's film On the Path.
Among the experts in the subject there is a consensus that individuals have many
identities which seems a natural consequence of belonging to different groups and it is
trivial to notice that one identifies with many groups. The rich spectrum of the possible
identifications consists among others of a national one, a transnational one (eg.
European), a religious one, a local one or a family one and of those connected with
participation in the occupational groups, hobbist groups or school related and religious
groups. Theoretically this rich spectrum of identities should not be mutually exclusive.
However, as experience shows such attempts at ideological juggling with the sense of
belonging were undertaken. Boris Buden gives as example associating affinity with the
Croatian nation with identifying with Catholics. It would seem that these two types of
identities do not have to overlap at all but Buden proves that such a conviction has been
rooted in his native discourse (Buden, 2012, p. 162). A similar phenomenon which was
called a religious nationalism by a Serbian historian, Milorad Ekmečić (Ekmečić, 1989, p.
15), did not bypass other states of the former Yugoslavia. And it seems that supporting
the national identity with the religious one further reinforced the former one also in the
already mentioned context of defining oneself primarily in opposition to the others.
One should not forget that the collective identity is an immanent part of the
collective representations and that just like them it is internally inconsistent and govern
by its own logic. With this in mind it is easier to understand the sometimes astonishing
processes of hybrid connecting of, as it seems, self-excluding attitudes. For example the
experience shows that nationalist sentiments are often complemented with the
declarations of longing for Yugoslavia although is it trivial to say that the idea of
brotherhood and unity was defined in opposition to the national one (Bogusławska,
2015, p. 316). The non-quantifiable nature of the collective identity makes it possible to
study it based on the non-quantifiable factors of change with particular emphasis on the
social and psycho-sphere of human behaviour (Nowicka, 2008, p. 107). The attempts to
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diagnose the collective emotions such as: fear, hope, expectations, disappointment and
humiliation are very helpful since, as it seems, they affect the identity on the basis of
feedback.
The growing attention of the representatives of various social and humane studies
is attracted by the identity of the diaspora – the identity of collectives distant from the
centre – which was originally used in relation to dispersed groups of Jews and
Armenians and which today describes also all collectives living on the territory of
political organisms other than their national state, e.g.. Kosovo Albanians or Serbs and
Croats "scattered" in the countries of the region (Safran, 2004, p. 11). It is easy to notice
that the increased interest in this trend is a natural consequence of the migration
processes and those have been happening for centuries in Balkans, the result of which
was an extremely rich ethnic landscape. There is no doubt that self-identification
narratives for both groups fellow countrymen and aliens are created under different
conditions in Belgrade, Banja Luka and Kosovska Mitrovica. From the political science’s
perspective, it is to notice that the Serb diaspora has the right to vote thus its political
preferences should be taken into account. It is well known that Kosovo Serbs or Croats
are designing their self-identification narratives based on the national mythology in its
extreme romantic version (Dejzings, 2005, p. 71–72). What is more, the unestablished
political and economic situation created favourable conditions for the separatist
tendencies which is eagerly used by politicians – both local ones, creating election
programs and foreign ones who pursue their own political interests as Vladimir Putin
has done in recent times.
However, the sole processes of creating the identity by the dispersed communities
are fascinating as well. In such a context the symbolical identity is used as a term to
describe the forms of self-identification of groups integrated with the community they
live in but also attached to the symbolism of their country of origin, like Polish diaspora
in the USA, South America, Romania or in the region of Transnistria. It seems that such
forms of quite limited national identity which are rather confined to an occasional
demonstration of attachment to the traditions of the ancestors are less relevant in case of
the post-Yugoslav area, but they can be relevant in relation to the small groups such as
Czechs, Vlachs, Poles and Germans. One of the distinguishing features of the Western
Balkans since the mid-nineteenth century is the active ethnic policy of supporting real
and potential compatriots. The consequence of which was accepting the dominating
identities by small communities such as Vlachs and Morlachs.
It must be stressed, however, that each identity is symbolic as it is based on the
interpretation of the common symbolic capital and on symbolic communication (Mach,
1993, p. 28). Symbols should be understood as a kind of ‘basic forms’ having their own
semantic spaces which in turn organize the reality and cognition (Bal-Nowak, 1996, p.
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61–62). It is obvious that the same symbols can be interpreted differently in different
groups but what is more the shapes of semantic fields also change. For example, the
symbol of Turks not only has different meanings in the collective identity of the Balkan
nations but also over time it has gained a different tone in the Serbian, Croatian and
Slovenian discourse.
It is trivial to suggest that in modern times members of a given group dispersed all
around the world find it easy to sustain their identities due to an easy access to the
Internet, the development of the mass media or travel facilitations – like for example the
Polish community in England and Ireland. On the other hand the self-identification of
such individuals seems all the more interesting as they are being injected into a foreign
environment and such situation makes the question about one's identity being asked
more frequently.
Yet, observing the post-Yugoslav area, one must note that one of its special features
is the strongly consolidated identity of place. It is important to remember that
nationalism, although so well received in this area, is a fairly new ideology and that it did
not displace the connection with "little homelands". The question of the place of origin
still remains one of the first ones that is being asked by people during random
conversations. Each region and city has its own legends and some stereotypical features
are ascribed to their inhabitants. To support this, a large number of examples could be
provided, such as the mythologized in many ways Sarajevo or Belgrade aspiring today to
be the main centre of Balkans. Katarina Luketić points to a spectrum of negative features
attributed in the city of Zagreb to the inhabitants of the area of Zagora and Herzegovina
which are considered to be backward regions (Luketić, 2013, p. 240–241).
This divergence between the deterritorialization of identity and the identity of place
is ostensible because one of the features of postmodernity is the overlapping of opposite
tendencies and research orientations. This ostensible contradiction is explained by Ewa
Nowicka on the example of Aromanians. She indicates that the identity of this dispersed
community is based on mythologized cities which historically are seen as political and
cultural centres like Moscopole or Kruševo (Nowicka, 2011, p. 125-134).
Kosovo is another interesting example which for Serbian identity is a founding
myth on the basis of which all other national myths of this nation were built. What is
more, in the literature devoted to the issues of nationalism, Kosovo and more
specifically the Kosovo Polje is seen as a model example of a "sacred place" considered to
be one of indicators of an ethnic nation (Kostovicova, 2005, p. 217). But it is to say that
Kosovo was not within Serbia's borders in the nineteenth century when a romantic
vision of the national vision of history was built. It does not belong to Serbia also today
which does not prevent the nationalist circles from the nationalistic ritualization of the
narration about the ‘heart of Serbia’. In this context the distinguishing to a place in a
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territorial and in an utopian dimension can be helpful. The former one exists physically,
the latter exists primarily metaphorically becoming a code in the intra-group
communication (Rosati, 2015, p. 54–57).
It should also be added that the identity of place is not only the Balkan feature. It is
a part of today’s trend of awakening and revival of local identities. Such processes are
sometimes motivated by the desire to promote and develop tourism and by the
economic factors what was described by Karl-Markus Gauß (2006, p. 176) on the basis
of Lusatian Serbs. One should not forget that one of the effects of globalization is the
interest in ‘little homelands’ which can also be explained as the search for alternative,
unconventional forms of collective identities. As previously noted, man has many forms
of identity, thus the sense of union with one place does not interfere with analogous
relationships with other bigger or smaller "homelands".
The popularity of gathering of people born or connected with a given city is also
worth to note. For example in 2012–2014 there were four meetings of people related to
Gdańsk. Often such identity narratives remain in line with the nation-wide identity
narratives as it was in the case of Sarajevo or Srebrenica in the Bosnian discourse or in
the case of Vukovar in the Croatian discourse (Martinić, 2014, p. 43–44). Sometimes,
however local identities are constructed in opposition to the centre, primarily in
situations of the occurrence of separatist sentiments as in the case of Catalonia. It is
therefore possible to expect that ethnic tensions and centrifugal tendencies will favour
such narratives, which one can observe today in the Serbian Republic or in the
dominated by Albanians Macedonia.
In the identity narratives in the context of the place, a special type of reflection
characteristic for immigrants, both voluntary and forced, has to be mentioned. It is
obvious that the motif behind longing for the home country has been reflected in
literature for a long time, but a sign of our times is the growing scale of this type of
narratives. Such a situation naturally attracts the attention of literary scholars but the
phenomenon of the identity of emigrants – both in the individual and collective aspect
gains recognition among the representatives of other fields.
In conclusion, one should once again underline the special kind of trend of world-
wide fascination of the identity (especially the collective one) which integrates the
representatives of various humane and studies which corresponds to the often-quoted
postulates of interdisciplinary research into complicated phenomena and processes. It
seems that such identity studies should be accompanied by the adoption of
methodology specific to particular sciences, with particular emphasis on the quality
factor. The author of this text tried to list the most important tendencies, assumptions
and research perspectives used in the interdisciplinary studies on collective identity. The
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still politically unstable area of former Yugoslavia proves to be an exceptionally rich field
for investigations in this area.
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przeobrażają świat”, (Warsaw, Poland: Wydawnictwo Naukowe PWN, 2012).
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Znastveni, etički i politički izazov, pp. 143–163, (Zagreb, Croatia-Sarajevo, Bosnia and
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THE CONCEPT OF “TALENT” IN THE LITERATURE - THE

BIBLIOMETRIC ANALYSIS
Yauheniya Barkun 1, Ewa Rollnik-Sadowska2, Ewa Glińska1
Abstract
The article aims to identify areas of the scientific research within which the
subject matter of “talent” in the labour management perspective is
addressed. The research prepositions are based on the bibliometric data
analysis characterizing scientific publications indexed by the Scopus and
Web of Science databases. To achieve the aim, the authors use combined
techniques of the bibliometric analysis facilitated by VOSviewer software.
The research allowed to identify the keywords, visualize correspondence
between them.
Key words: bibliometric analysis; talent management; human resource
management; research methods; labour.
Introduction
The academic literature represents a variety of the articles examining the trends in
human resource management. The global environment shapes the general trends;
however, they differ by countries’ specificity on the macro-level and companies’
distinction on the micro-level (Beechler, Woodward 2009). The researchers point out
that the majority of economies and companies units seek for the employees with high
qualifications. The management of highly qualified employees are described in the
literature with different terms: “war for talents”, “talent management”, “brain drain /
gain”, “brain circulation” and others. All of those terms differentiate in nuances;
however, together they describe the phenomena of talent.
Talent management is both a practical tool and a theoretical concept. Considering
the mutual contribution of theory and practice, it is vital to analyze what the current
trends and directions of research. The main aim of the article is to understand, from a
bibliometric perspective, the current state of research on the subject of talent in the
labour perspective. The article represents how methodological approach with
1
Faculty of Engineering Management, Bialystok University of Technology, Department of Marketing
and Tourism, Bialystok, Poland
2
Faculty of Engineering Management, Bialystok University of Technology, Department of
Management, Economics and Finance, Bialystok, Poland
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involvement of contemporary research tools, such as VOSviewer, can facilitate the

identification of the main trends and, from there, proposal future research initiatives.
The paper is organized as follows. Section one presents literature review on ‘talent’
concept. Section two contains a brief overview of the bibliometric method. Section three
covers the presentation of results of bibliometric analysis. Finally, the last section
includes some final remarks concerning the conducted bibliometric analysis.
The concept of ‘talent’ in the scientific literature
Progress and innovations increase the demands towards employees’ competencies.

In academy and practice talents are recognized as specific group of highly skilled
individuals. Human capital can be divided into general (applicable for various
occupations and industries), and specific (its application is limited) (Estrin et al., 2016).
The human capital value is changeable and depends on the value a person generates for
the firm. “Talents” differs from “highly qualified specialists” by intelligence affecting the
job performance and that is complicated to achieve; the complexity of a “talent’s” tasks
is “objectively” more demanding even for experienced workers (Strenze 2013). Talent
consists of “competence, commitment and contribution” (Beechler, Woodward, 2009).
Talent management originated as a practical instrument for companies and later on
it was developed into a theoretical concept. The term “war for talents” was introduced
by Hudson Institute’s in 1986 in a report predicting major skill shortages in the USA
(Zheng et al, 2007). The concept was developed by S. Hankin in 1997, who was working
for the McKinsey Company (Keller, Meaney 2017). “War for talent” refers to the
“increasingly fierce competition to attract and retain employees at a time when too few
workers are available …” (Michaels, Handfield-Jones and Axelrod, 2001).
The complexity of managing human capital is connected with the intelligence of
human, that means in order to make the human capital work, it is not enough to create
certain external conditions, but also motivation is needed. According to Khilji et al.
(2015), to the global talent management can be referred activities “systematically
developed by governmental and nongovernmental organizations expressly to enhance
the quality and quantity of talent within and across countries and regions to facilitate
innovation and competitiveness …”. Those actions can be divided into two groups:
attracting immigrants, and designing immigration policies identifying the most
desirable immigrants and encouraging them to stay (Papademetriou, Sumption, 2013).
Research methods
To achieve the aim of the paper, a systematic review was conducted based on
articles referred to "talent" and "labour", indexed by the Scopus and Web of Science
(WoS) databases, and published till 2018. Scopus and WoS are the most popular
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bibliographic and abstract databases, which are characterized by high quality of

accumulated resources (Álvarez-Melgarejo, Torres-Barreto 2018).
At the first stage of the research, two lists of articles were generated, containing
references to "talent" and "labour". At the second stage, a bibliometric analysis was made
separately for each of the lists. In the last stage, the results were processed and presented
with the help of VOSviewer software which allowed to prepare a map showing the
existing relationships between keywords indicated by authors of articles chosen for
analysis. Through the use of the VOSviewer software, it was possible to highlight the
frequency with which given elements appeared in the network as well as the frequency
with which they appeared together.
The result of the bibliometric analysis of the topic

“talent” in the labour perspective
Although the “talent” concept became popular with researchers at the beginning of
the 2000s, the first journal that refers to the “talent” in the context of labour topic was
published in 1933 by Oxford University Press, in the Musical Quarterly. The concept of
‘talent’ in the labour perspective is not significantly widespread in the scientific
literature. Without applying any filters, there was identified a total of 727 documents
according to WoS and 922 documents in the Scopus database. Within the last fifteen
years the topic gained its popularity among the researchers, which is reflected in the
gradual growth of the number of publications.
In order to analyze the occurrence of the most frequent terms in their research on
“talent” in the labour perspective, a trend map was created, using a fractional counting
method and based on the co-occurrence of the keywords in the Scopus and WoS
database (figures 1-2). The analysis was made using VOSviewer software.
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Figure 1. Map of research trends (Scopus)

Source: authors own study.
In the Scopus database 50 most frequent keywords were identified and divided into
six clusters. As the figure 3 shows, the first cluster included thirteen keywords: brain
drain, Canada, development, gender, globalization, higher education, highly skilled
migrants, internationalization, labour market, labour mobility, migration, mobility,
students. In the second cluster there are eleven keywords: creative class, diversity,
economic development, education, entrepreneurship, human capital, immigration,
innovation, labor market, management, talent. Cluster number three consisted of ten
keywords: Australia, career development, employment, human resource management,
human resources, India, job satisfaction, knowledge economy, motivation, skilled
migration. In the fourth cluster, six keywords are located: competitiveness, creativity,
inequality, labor markets, occupational choice, productivity. Cluster number five
includes five keywords: China, corporate governance, employer branding, executive
compensation, talent management. In the last cluster there were four keywords:
recruitment, retention, skills, training.
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Figure 2. Map of research trends (WoS)

Source: authors own study.
In the WoS database 38 most frequently keywords were identified and divided into
six clusters. Cluster number one included eight keywords: brain drain, China, creativity,
employer branding, human capital, labor market, productivity, talent management. In
cluster two there are eight keywords: creative class, diversity, economic development,
entrepreneurship, higher education, immigration, integration, job satisfaction. Cluster
number three included eight keywords: employability, globalization, human resource
management, migration, mobility, skills, talent, training. In cluster four there are seven
keywords: culture, employment, gender, labour market, recruitment, retention,
universities. Cluster number five consists of four keywords: human resources,
innovation, knowledge economy, offshoring. There are three keywords in the last
cluster: education, labor, management.
Discussion
The concept of talent is recognized as a part of human capital and a current flow of
human resource management. The researchers conclude that to the category “talent”
belong the individuals with high qualifications or specific skills, that are hard to be
achieved or repeated by others. The researchers agree, that talents are unequally
distributed geographically (Qian 2010). Regardless of the popularity of the talent
management topic, only a few publications are available in the scope of bibliometric
analysis. The most advanced studies were conducted by Gallardo-Gallardo et al. (2018)
and present theoretical frameworks and classify research approaches. While the authors
of current publication identify clusters concerning the main research trends.
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Conclusions
The results of the bibliometric analysis show that talent management is an

emerging topic in the literature, and the number of publications is relatively low in
comparison with other human capital topics; however, the interest of researchers toward
this topic is constantly growing. Bibliometrics analysis with the help of VOSviewer
software facilitated grouping information into clusters according to different research
perspectives. The identified clusters of research trends based on the analysis of the
databases prove that studies are made both on the macro levels, as well as the
organization and employee ones. The main researched areas related to talent in the
labour management perspective consider migration of highly skilled workers, the
importance of education of human capital, job satisfaction and motivation,
determinants of productivity on the labour market, employer branding in the context of
talent management, ways of attracting of talents in organizations, the impact of
globalization and internationalization on human resource management, the influence of
innovation and technology on talent management.
REFERENCES
[1] Álvarez-Melgarejo M., Torres-Barreto M.: “Can resources act as capabilities

foundations? A bibliometric analysis”, Revista UIS Ingenierías, 17/2, 2018, pp. 185-200.
[2] Beechler S., Woodward I.C.: “The global “war for talent”. Journal of
International Management, 15, 2009, pp. 273–285. doi: 10.1016/j.intman.2009.01.002.
[3] Estrin S., Mickiewicz T., Stephan U.: “Human capital in social and commercial
entrepreneurship”. Journal of Business Venturing 31, 2016, pp. 449 – 467. doi:
10.1016/j.jbusvent.2016.05.003.
[4] Gallardo-Gallardo E., Nijs S., Dries N., Gallo P.: “Towards an understanding of
talent management as a phenomenon-driven field using bibliometric and content
analysis”. Human Resource Management Review, 25, 2015, pp. 264-279.
[5] Keller S., Meaney M., “Attracting and retaining the right talent”. 2017, Retrieved
from: https://www.mckinsey.com/business-functions/organization/our-
insights/attracting-and-retaining-the-right-talent (accessed on 15.10.2018).
[6] Khilji S.E., Tarique I., Schuler R.S.: “Incorporating the macro view in global
talent management”. Human Resource Management Review, 25, 2015, 236–248.
[7] Michaels E., Handfield-Jones H., Axelrod B.: “The War for Talent”. Boston,
Mass: Harvard Business Press. 2001.
[8] Papademetriou D.G., Sumption M.: “Attracting and selecting from the global
talent pool – policy challenges”. Migration Policy Institute. 2013. Retrieved from
https://www.migrationpolicy.org/research/attracting-and-selecting-global-talent-pool-
—-policy-challenges (accessed on 20.10.2018).
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[9] Qian H.: “Talent, creativity and regional economic performance: the case of
China”. The Annals of Regional Science, 45/1, 2010, pp. 133–156.
[10] Strenze T.: “Allocation of talent in society and its effect on economic
development”. Intelligence, 41/3, 2013, pp. 193–202. doi: 10.1016/j.intell.2013.03.002.
[11] Zheng C., Soosay C., Hyland P.: “Manufacturing to Asia: who will win the
emerging battle for talent between Dragons and Tigers?”. Journal of Manufacturing
Technology Management, 19/1, 2007, pp. 52-72, doi: 10.1108/17410380810843453.
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IS CORPORATE CAPITALISM BUILT TO LAST? THEORETICAL

REFLECTIONS ON SUSTAINABILITY OF (MODERN)
CORPORATIONS
Mladen Perić1, Alpar Lošonc2, Andrea Ivanišević3, Sonja Bunčić4 , Lázár Imre5, Mladen
Radišić6 , Jana Majerova7
Abstract
Corporations are significant players in the capitalist economy and, at the
same time, they are contesting. On the one hand, certain criteria that show
their high rationality (technology, economy of returns, etc.) are emphasized,
while on the other, their presence on the market that distorts competition is
problematized; moral problems (ecology, etc.) are treated with respect to the
broader environment and non-motivation with respect to the innovation.
The paper focuses on corporate scandals as an expression of certain
structural tendencies in capitalism, and aims at showing that they should
not be understood "anecdotally" but structurally. To achieve this, we will
first show some selected examples. Furthermore, the paper focuses on
various relevant existing economic theories and tests them with respect to
their way of articulating scandals. Finally, the paper criticizes the

This paper resulted from the Project 179052, entitled "The Transformation of Social Identity in Crisis
Conditions and Its Impact on European Integration". The Project was funded by the Ministry of Science
and Technological Development of Serbia.
1
Modern School of Business, Belgrade, mladenr@uns.ac.rs
2
Full Professor, University of Novi Sad, Faculty of Technical Sciences, alpar@uns.ac.rs
3
Associate Professor, University of Novi Sad, Faculty of Technical Sciences, andrei@uns.ac.rs
4
Full Professor, University of Novi Sad, Faculty of Technical Sciences, buncics@uns.ac.rs
5
Károli Gáspár University of the Reformed Church, Institute of Social and Communication Sciences
6
Associate Professor, University of Novi Sad, Faculty of Technical Sciences, mladenr@uns.ac.rs
7
Associate Professor, University of Zilina, Faculty of Operation and Economics of Transport and
Communications, Department of Economics, jana.majerova@fpedas.uniza.sk
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aforementioned theories and aims at outlining the direction of future

analysis by being selective.
Key words: corporation, scandal, corporate capitalism, CEO, management,
economic theories.
Introduction
Corporations are indispensable part of modern economy. They can be said to have
realized the triumphal affirmation of capitalism (Robins, 2012, Dunning, 2008). We
could also take into account the fact that they played an important role in stabilizing the
problem of ‘neoliberalism’ that was discussed many times.
However, the discussions about their characteristics have been led since the very
beginning of their formation and still take place today (let us just show you for example
the following comprehensive discussions that center on political role of corporations,
Ciepley, 2013, Mehrpouya, 2014, Partinson, Kelly, 2000). In addition, the same
discussions have been especially initiated about modern phenomena that dynamize the
existence of corporations. This way, the discussion was led about the range of
corporations with regard to the widespread dissemination of the results of their
performance. It is possible for corporations to yield higher profit (share of corporate
revenue in relation to capital), however, it represents a problem for the economy as a
whole (Summers, 2016). A discussion about the problem of “social responsibility of
corporation” (CSR) has become more intense lately: some have suggested this as
situating the corporations in economic world that has become increasingly interested in
ethical questions and business (“business ethics”); others have characterized this as a
tactic for positioning corporations in market competition that they determine and
dictate themselves (Greenberg, 2014, Hanlon, Fleming, 2009, Garriga, Mele, 2004). A
discussion whether corporations have “conscience” or not has also been initiated and it
would mean that some type of moral subjectivity is assigned to them with certain
consequences (Block, 2007). The corporate anthropomorphism treats corporations as
united entities with corresponding legal and moral consequences.
If we could make the aforementioned discussions simple by separating them in two
lines of discussions, then we could say that they focus on:
a) “wealth creation”, that is, the question of efficiency,
b) moral rationality of corporation in capitalism.
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The question of efficiency has arisen because of the research which have emerged
and have shaken an unwavering faith in technological superiority of corporations. A
certain question that was brought up was the question on how technological efficiency
and innovation were conditioned in broader environment that was determined by
certain financialisations and transformations in corporate governance (Lazonick,
Sullivan, 2000). Here, a particularly interesting phenomenon is the one of
financialisation that has created a deeply transformed environment for corporate
emergence (Lazonick, 2011).
However, this can also be discussed in terms of market power of corporation: not
only does their positioning create standard moral problems, but it also offers the
possibility of destroying the basis of competition in the market, which has always been
celebrated as an engine of dynamics in the capitalist market. Corporations, of course,
could have always been accused of destroying their competition, their market power
that could potentially be a candidate for usurpation of market position. Accordingly,
corporations could be the subject of antitrust policy.
Simultaneously, it can be noticed that influential writers who write about the
influential movement of law and economics provide legitimacy to the corporation even
if they do not change or shift the forms of competitions. Let us take a look at the
following argument: “To the extent that efficiency is the goal of antitrust enforcement,
there is no justification for carrying out enforcement into areas where competition is
less efficient than monopoly because the costs of monopoly pricing are outweighed by
the economies of centralizing production in one or a very few firms” (Posner, 2002,
quoted by Davies, 2010). In fact, this argument is the as-if type of the argument, but it
still emphasizes legitimacy and such positions of corporations that can commonly be
blamed for illegal market position. If efficiency is considered to be the ultimate goal of
anti-trust policies, then they can be legitimized even if the aforementioned change in
competition conditions depends on them. Admittedly, contrary to such considerations,
we could mobilize positions that insist that corporations are not absolute representatives
of technological efficiency, and that there are systematic tendencies when there is a
decline in their innovation (Henock, and White, 2007). We should mention here that
there are (significant) views that offer legitimacy for market power of corporation -
although this may be, in our view, also the source of various manipulations of corporate
power.
Moral questions about a corporation are raised since the influence of corporations
is so powerful that their "social responsibility" must be weighed. This would mean an
intensification of the moral sensitivity of corporations. At the same time, if the above
mentioned is taken into account, then one can discuss the impact of corporations on the
escalation of inequality, or even on deterioration of working conditions in certain areas
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(Brenner, 2015). In this regard, corporations have been criticized, or the manager
motivational determinations and related moral consequences have been discussed about
(Jensen, Murphy, 2004).
Our paper focuses on the various scandals that have shaken the social perception of
corporations, since they can help outline the theoretical direction of analyzing
corporations. Accordingly, numerous questions may be asked. Are corporate scandals
just a casual occurrence, or are they paradigmatically contradicting the existence of
corporations? Is it just a matter of superficial phenomena, or something that shows
structural tendencies of capitalism? Should the same scandals be treated as "moral
deviance" which is not interesting for economic theory, or is it just a phenomenon that
strongly tests economic theories?
Deviation or triumph of corporate rationality?
Ever since the corporate scandals from the beginning of 21st century, we have been
witnessing heightened attention to lavish lifestyles of corporate executives, “insights” in
their love affairs, and how many airplanes, yachts and high-end automobiles they have.
Enron, WorldCom and Parmalat were champions of this era. Furthermore, if we look
closely, although corporate scandals have not been as prominent in the media like in
those years, we know that nothing significantly has changed. We can still witness the
great discrepancies between management and workers’ salaries, their social and
economic status, and privileges that managers enjoy.
Fast forward to the present, and it seems as if scandals can be found everywhere.
From accounting and finance scandals, to breaches in security, money laundering,
illegal and unethical conduct, corporate debacles have brought many problems which
were unevenly distributed in the corporate hierarchy. Of course, managers of large
corporations often end up with golden parachutes, bonuses, and generally have higher
chances of finding a new job than workers. So, they are in a much better position to
rebound and make a fresh new start.
Peter Drucker said: “Most of what we call management consists of making it
difficult for people to get their jobs done” (quoted in: Toor & Ofori, 2008). Although
this statement has a lot of truth in it, especially nowadays, it can lead us to a conclusion
that corporate CEOs are all that is wrong with modern corporations and corporate
capitalism. If we fall prey to this kind of reasoning, then we find ourselves in the field
that is well established by the mainstream media discourse which portrays corporate
scandals anecdotally, as one-time interesting case studies which have nothing in
common. Practically, these are incidents caused by inadequate conduct of certain
employees (mostly in the managerial positions), and the cure is better oversight, control
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and regulatory reforms. This approach, which is backed by the methodological

individualism8, is also shared by the mainstream economic profession and majority of
academics. As a matter of fact, neoclassical economics shares this view and, for example,
proponents of behaviorism9 are criticizing neoclassical blindness and unwillingness to
incorporate insights from this relatively new school of economic thought into corporate
decision-making (Zharikova, 2018). They claim that “...behavioral knowledge is being
employed in marketing and investment” (ibid.), but is missing from everyday corporate
functioning.
It seems that when it comes to corporate affairs – despite theoretical advances from
various schools of economic thought, as well as our intimate intuitions – mainstream
neoclassicism is ruling the domain of corporate affairs. In this paper, we will look why
this is the case. First, let’s consider the wave of recent corporate scandals which can
indirectly lead us to some preliminary conclusions.
Recent Corporate Scandals and their relevance
We would like to show our view based on a few selected, representative examples.
We hope that the selected examples can serve as an orientation.
The first prominent case of corporate scandal with significant media coverage is
Nissan Motor Company. Its former CEO and Chairman, Carlos Ghosn, was forced out
of Nissan in November 2018 after he had been arrested. The charges were centered
around financial misconduct. Ghosn was underreporting his income by approximately
€39.6 million over the five-year period until March 2015, and €34.1 million for three
years until March 2018. Furthermore, he was held responsible for an aggravated breach
of trust in relation to the allegations of shifting €14.7 million in personal investment
losses to Nissan in 2008. Ghosn was held in custody for more than 100 days and was
released on bail in March 2019. He denied any wrongdoing and accused coworkers for
“plot and treason” at Nissan (Goldsmith, 2019).
The second scandal involves Apple, a tech giant whose wrongdoings media labeled
as “batterygate” in December 2017. The scandal appeared when one Reddit user
reported that a software update had reduced the performance of their iPhone. The
“error” corrected itself when he replaced the battery. Essentially, media accused Apple
8
It is the approach which states that subjective individual motivation explains social phenomena. On the
other hand, social, class or group dynamics don’t find its place in this kind of reasoning and cannot truly
explain market and social phenomena.
9
Behaviorism postulates that economic (and especially investing decisions) are subject to influence
from emotions, environment and cognitive biases. This leads to failure of rational thinking and market
inefficiencies. Behaviorism is opposed to the traditional rational choice model and the efficient markets
hypothesis. Perfectly rational economic subject is backbone of these paradigms.
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that it was trying to force users to upgrade to newer models by deliberately slowing
devices as they aged. Apple CEO Tim Cook responded by issuing a statement in which
he acknowledged that the software was designed to throttle performance, but the intent
was only to prevent unexpected shutdowns which could affect devices with older
batteries. In the end, Apple was forced to offer a discount on battery replacements as a
gesture of goodwill for their customers. In the next graph, we can see how Apple share
prices responded to the scandal. They started dropping from 22nd to 29th December
around the scandal, and attained previous value in early January 2018.10
Graph 1. Apple share prices during “batterygate” scandal (daily prices in $US)
Source: Beauchamp, C. (2018), “Top 10 biggest corporate scandals and how they affected share prices”, IG
Markets Limited, November 1st, https://www.ig.com/en/trading-strategies/top-10-biggest-corporate-scandals-
and-how-they-affected-share-pr-181031 (accessed October 28th, 2019)
The third case involves Comscore, a publicly traded data analytics firm, and its ex-
CEO Serge Matta deceiving investors about the company's performance. The SEC
accused company Comscore that it overstated revenue by about $50 million and made
false and misleading statements about key performance metrics from February 2014
through February 2016. This enabled company to artificially exceed its revenue targets
for seven consecutive quarters. Without admitting or denying the SEC's findings and
settling the charges, Comscore agreed to pay a fine of $5 million and Matta received a
10
Apart from share price drops, there are other serious economic and non-economic consequences such
as bankruptcies, layoffs, stress, negative effect on the community, violation of trust, etc.
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penalty of $700,000. Furthermore, he agreed to reimburse Comscore $2.1 million from

the sale of company stock and incentive-based compensation. He was also barred from
serving as an officer or director of a public company for 10 years (Gibson, 2019).
These are only three examples of high-profile companies, but as we mentioned
earlier, corporate scandals are much more pervasive. Corporate scandals are often
settled out at courts and penalties are not adequate to prevent similar behavior of
executives (like in the case of Comscore). Also, there is a massive gap between penalties
imposed “on the books” and penalties collected in reality (Ross & Pritkin, 2010).
There are some differences between European and US scandals. Generally,
dispersed ownership systems of governance like in the US are prone to the earnings
management, and European style concentrated ownership systems are much less
vulnerable to these kinds of machinations, but are susceptible to the appropriation of
private benefits of control (Coffee Jr., 2005).
If we look at the data for bankruptcy filings from the last 10 years in the US (Graph
2), we can see that overall number of filings has dropped significantly from as high as
over 60.000 cases in 2010 to just above 20.000 in 2018 (and the number is falling in
2019).
Graph 2. Number of bankruptcy filings in the US from 2009 to 2019
Source: Trading Economics, https://tradingeconomics.com/united-states/bankruptcies (accessed: October

30th, 2019)
On the other hand, if we analyze the number of scandals, particularly corporate

financial and accounting scandals in the media, they are evidently on the rise (Hail,
Tahoun, & Wang, 2018). Years of expansive monetary policy (and quantitative easing)
following Great Recession have contributed to “staying afloat” for many banks and
other financial institutions. Easy money also saved other non-financial businesses,
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making it easier for them to obtain credit. Although bankruptcy filings dropped, that
does not mean that we no longer have corporate scandals. Recently, these trends have
had high correlation, but now they seem to be decoupling.
Now, let’s look at theoretical underpinnings of prevalent explanations of corporate
relations which mask true structural causes of corporate scandals. Naturally, we should
not get carried away with the fact that we can recapitulate all relevant theories. We
should be more focused on further analysis.
Theoretical frameworks of corporation: deficiencies and possibilities
Could economic theory provide valuable insight into corporate behavior?

Before we delve into mainstream theoretical framework of neoclassical economics,
we have to make one important preliminary note. As we mentioned in the introduction,
neoclassical economics is founded on methodological individualism, and a man is seen
as homo economicus, rational self-interested individual who tries to maximize his utility
given objective limitations.11 If he acts in this way, the society will also benefit because in
the grand scheme of things rational behavior in micro sphere translates directly to
benefits for society at macro level. Therefore, neoclassical economics takes us to old
(and forced) paradoxical dilemma: is greed good? Or, is greed rational in capitalist-
market economy?
Comment: neoclassicism promotes a very limited form of rationality that is
understood from teleological aspect (Wolff, Resnick, Madra, 2010). Criticism of
neoclassicism comes from the economic theory that should not be mentioned again here
(Keen, 2003); we can conclude that general deficit which neoclassical theory is faced
with prevents us from forming adequate perception of the phenomenon of corporations
and corporate scandals.
In dealing with corporations, several theories, hypotheses, paradigms and
approaches must be taken into account.
The first one, of course, is efficient market hypothesis (a theory that could be
interpreted as the derivation of neoclassicism), which states that prices reflect all
available information in the market (see for example: Fama, 1970, but this kind of
11
The origin of the homo economicus can be traced to merging of two philosophical concepts treated
reductively. First is the vulgarized Cartesian view of man characterized by rational decision making man from
René Descartes. Second is maximized self-interest assumption, which states that man is instinctively
programmed to pursue individual interest because he needs to survive in hostile environment. This is derived
from the work of reduced theory of Adam Smith and from one-dimensional account of his thinking.
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reasoning is much older12). This hypothesis is primarily dealing with financial markets
but it seems that the market promoters have forgotten all about that (although this is
also one of the questionable and problematic hypothesis; see: Farmer, Nourry &
Venditti, 2013) and expanded this feature on the market in general (Hayek, 1945,13). The
market efficiency presumption implies that market works to align the interests of
managers and shareholders and, in conjunction with effective regulation, restricts
exploitative practices.
Comment: Bearing in mind the similarities between this theory and neoclassicism,
the criticism mentioned above can also be applied here.
Second is shareholder value paradigm. According to it, the purpose of the
corporation is to maximize the shareholder value. This proposition has a special value in
the processes of financialization. The presumption is that by achieving this goal, society
and investors would be better off as a result. Of course, common interests of society that
may be harmed by the pursuit of the maximization of shareholder value must be
protected by effective legislation (for powerful critique of shareholder value paradigm
see: Stout, 2012).
Comment: “primacy of shareholder” value cannot be criticized only from the
perspective of “commons”, that is “social justice”. However, we have to admit that
various criticisms were directed by adopting the mentioned criteria, which is in fact
completely justified (Aglietta, Rebérioux, 2005, Lele, Siems, 2007, Mills, Weinstein,
2000). In any case, “protection of shareholder” opens up the possibility for corporate
“irresponsibilities” (Ireland, 2010). However, we can notice that the concept of
shareholder value, as an absolute horizon for corporations, is questionable in terms of
both efficiency and innovation (Lazonick, 2017). The criticism directed to the
mentioned concept could confirm the fierce criticisms of economic theory that destroy
the community (Marglins, 2010).
Third part can be identified as the so-called stakeholder theory. It expands the
shareholder value paradigm and postulates that shareholders are merely one of many
stakeholders in a corporation. So, anyone investing in and involved, or affected by the
corporation (suppliers, employees, vendors, governmental agencies, customers, etc.) is
seen as important subject whose interests must be taken into account. The theory
implies that a corporation’s success can be achieved by satisfying all its stakeholders
(Freeman, 2010). A shareholder is just one of the stakeholders.
12
The roots of the idea can be traced to the French mathematician Louis Bachelier (1900) and his PhD
thesis “The Theory of Speculation” from 1900.
13
Yet, Hayek is more complicated writer than this simple classification demonstrates.
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Comment: Stakeholder theory actually seeks to broaden the domain of corporate

responsibility starting from the point that corporate performance affects many social
acters. Therefore, within the stakeholder theory, the consequences of corporate
performance are widely accepted. It is here embedded in socio-economic context and
the theory in question aims at perceiving the ethical consequences arising from
positioning of corporations in the market. It is not a coincidence that stakeholder-
theory occupies high position in business ethics, and that numerous theoreticians tend
to add this argument to the theory cohesion. This leads to different application of the
theory in question, for example in ecology (Gilbert, Rashe, 2008, Weiss. 2009, 99, 472,
473). There is always a question as to whether the stakeholder-theory is normative or
descriptive and whether it enables the harmonization of these points. A criticism may be
expressed regarding the lack of acceptance of the power of corporations as well as
structural tendencies for corporate scandals (Mansell, 2016)
Fourth part of theoretical framework is the so-called agency theory (see: Jensen &
Meckling, 1976; it is to emphasize that this article and given theoretical considerations
are some of the most influential achievements even in social sciences). The main goal of
this theory is to provide basis for designing governance and control in organizations. It
explains how to look at relationships where one party (principal) determines the work
and another party (agent) performs or makes decisions on behalf of the principal. The
conflict of interest and agency cost arises due to the separation of ownership from
control, different risk preferences, information asymmetry and moral hazards (Panda &
Leepsa, 2017). Basically, the agency theory tends to align diverse interests of owners and
managers. It should be remembered that the theory in question has developed in the
meantime by taking into account many additional elements (Jensen, 2004). Starting
from the point that there are different acters in the corporations, their coordination can
be assumed: therefore, corporative governance is analyzed based on the coordination
between managers and shareholders, as well as between owners and managers.
Comment: This is an extremely influential theory that appears in different
applications and it has also determined the way of thinking about corporations; it can be
regarded as relevant in different fields (financial accountability, law related to
corporation, etc. Bednar, 2012). However, we believe that it shows reductive aspects:
corporate governance is observed through the prism of conflicts between a priori
rational acters described based on methodological individualism. Considering the fact
that it insists on reductive form of rationality and that it takes into account the limited
field of conflict of interest, it cannot offer comprehensive theoretical account for the
explanation of corporation scandals.
Fifth and the last part is transaction cost theory. Its main contribution is economic
explanation of the reason why individuals choose to form economic organizations
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(corporations and other business entities) rather than trading directly and bilaterally
through contracts on specified markets (see: Coase, 1937, Williamson, 1991).
This theoretical framework can be attributed to popular imagination of rational
behavior we tend to attribute to CEOs and high-profile corporate decision-makers. So,
no wonder we get surprised when encountering corruption at the top of organizational
hierarchy.
Comment: It is an influential theory that takes into account the way a company is
created, consequently corporation as well, and the collective life within it. As it is already
known, Ronald Coase uses this theory to explain when authoritative governance
emerges with horizontal market relationships. Oliver Williamson, balancing market and
authority as the issue of efficiency, introduces power and authority in the analysis of an
organization. Using the categories of opportunism, bounded rationality and asset
specificity, Williamson offers a map of the current corporate world. However, the
similarity between transaction cost theory and neoclassicism is striking: typically, in this
theory, non-market institutional infrastructure is explained as the resolution of the
standard problem of market failures. Despite the fact that transaction cost theory
provides a certain view of corporate scandals, the uncritical attitude towards the market
(which is assumed to be a priori existing entity) makes it impossible to view corporate
scandals realistically. Only a more realistic analysis of power (Ankarloo, Palermo, 2004,
Palermo, 2000) in corporations allows more complex approach to the mentioned
scandals.
Conclusion
Corporate scandals are not random products of capitalism. Therefore, research is
not done based on moralizing and "anecdotal approach" that personalizes these
phenomena. Corporate criticism that centers on the fact that market verification is
inadequate in relation to a corporation (due to the divergence between their high profits
and performance) should address the structural tendencies of capitalism itself and
consider such psychological phenomena that would certainly contribute to the
understanding of scandal (e.g. imitation processes, which behavioral economics
extensively reports about, the prestige which is supported by the old institutional school
led by Veblen). The economic theories cited here show lack of respect for them which is
also the case with the analysis of power and authority in corporation. Our intention was
to analyze the conduct of corporations by accepting the mentioned claims.
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ORGANIZATIONAL IDENTIFICATION AS A CORPORATE

OBJECTIVE1
Leposava Grubić Nešić2
Biljana Ratković Njegovan3
Abstract
The paper discusses the issue of organizational identity as a cornerstone of
corporate identity. Organizational identity can be said to represent a
normative construct, difficult to define and describe. There are different
points of view on this issue, such as functionalist or social-realist,
interpretative or constructivist, post-modernist or semiotic, post-
structuralist, etc. However, it is generally accepted that organizational
identity, as one of the attributes of an organization, plays an integrative
role. Specifically, organizational identification, as a specific form of social
identification, contributes to commitment and loyalty to the organization,
leading to many positive outcomes. However, organizational identification
is a complex process and may not always be successful, since personal and
organizational interests may be identical or similar, but this does not
necessarily mean that an employee has been identified with the
organization. The topic is discussed through the prism of neo-institutional
theory, according to which the construction of organizational identity is
central. Unlike organizational identity studies, which insist on the
interaction of organizational identity and the organization's reputation, the
focus of neo-institutionalist interest is the employee's mechanisms of
cognitive legitimation of the organizational context.
Key words: identity, organization, organizational identification,
employees, neo-institutionalism
.
1
This paper resulted from the Project 179052, entitled "The Transformation of Social Identity in Crisis
Conditions and Its Impact on European Integration". The Project was funded by the Ministry of Science and
Technological Development of Serbia.
2
Faculty of Technical Sciences, Novi Sad, Serbia, nesle@uns.ac.rs
3
Faculty of Technical Sciences, Novi Sad, Serbia, njegovan@uns.ac.rs.
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1. Introduction
Consideration of an organizational identity issue is of multiple significance, but at
the same time is very complex. It is significant for employees, for the organization itself
as well as for the wider context, that is, the community, in fact, for the society as a
whole. Employees in organizational identity perceive the central, enduring and specific
(characteristic) values of the organization in which they work, and which, with well-
managed processes of organizational socialization, internalize as their values. For the
organization, however, the harmonization of all identity elements, such as
organizational "ideology", purpose, culture, brand, management, etc., is a good basis for
its recognition in a competitive market, diversity in relation to other businesses and
position in a certain branch. When it comes to the context, organizations are expected
to have a high level of social responsibility, which in addition to achieving fiscal (hard)
and short-term (soft) benefits, holds to its reputation as a model citizen (corporate
citizenship). In the manner of neoinstitutionalist theory, this would be considered the
institutional responsibility of the organization in terms of increasing public awareness of
the role of business and other relevant entities in financial, social, economic and
management practice, ie. that corporate profits should be analyzed in conjunction with
social prosperity.
On the other hand, the complexity of organizational identity issues stems not only
from the difficulty of defining this, phenomenologically speaking, normative construct
of one social actor with social and legal status (Whetten, Mackei, 2002; Ashforth,
Rogers, Corlei, 2011), but also because of the possibility of exploring forms of
organizational identity creation, ways of communicating it, as well as employee
reactions to these identities. In addition, the question is whether organizational identity
is just one of the multidimensional attributes of an organization, or is it a category with
ontological assumptions and its general, fundamental and constitutive determinations.
Given these difficulties, most concepts of organizational identity have been more
developed on a theoretical basis; however, a number of empirical studies have been
published on this topic in recent years.
When it comes to the differences between organizational and corporate identity,
Dowling (201: 175) states that organizational identity is an understanding and claims of
employees and outsiders about the character of an organization that distinguishes it
from its peers or rivals, while corporate identity is symbolic and tangible expression of
the desired organizational identity. In that sense, employees wish to, by accepting
organizational identity, receive answers on questions of symbolic, but also tangible
elements of organizational identity in which they recognize themselves as part of that
identity, starting with basic questions such as: who I am in the organization, what I want
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to be and what I am expected to do, and, finally, who I am in the corporate “we” (Pratt,
1998). In this sense, Pratt (1988) describes organizational identification as a
fundamental human process whereby an individual's beliefs about his or her
organization become self-referential or self-defining. In addition, a strong
organizational identity drives the organizational behavior of employees, but can also be
a reason for difficult adaptation to organizational changes.
Overall, organizational identification should be a major corporate goal, as
management seeks to tie employees to the organization and make them loyal to its
values. Therefore, in the continuation of the paper we focus on organizational identity
issues, since organizational identity and identification have a great influence on the
behavior of members of an organization, its functioning, as well as the achievement of
organizational goals, which we consider to be the basis of corporate identity.
2. The integrative function of organizational identity
Organizational identity is based on a complex set of personal traits and

characteristics, that is, on personal identity, then on the organizational roles of a framed
organizational identity, and social identity. Organizational identification, as a dedicated
and loyal attachment to the organization, leads to many positive outcomes, such as
increased productivity and job satisfaction, as well as an overall increase in the
meaningfulness of the work itself. Most research on organizational identity is based on
the basic tenets of social identity theory, where identity is interpreted as a relational
construct, a psychological entity, formed in interaction with others, and based on the
cognitive, evaluative, and emotional components of creating a social-group consensus.
The concept of organizational identity differs significantly from corporate identity
in that it focuses on the importance of internal relationships as primary, employees'
affinity for the organization as well as their identification with the organization. In
contrast, corporate identity is focused on the recognizable attributes of an organization
Organization (Greek οργανώσεις, organon – tool, device) is a special type of
shaping activity in enterprises (Kosiol, 1976), a system of rules that coordinate resources
to achieve a specific result, a structured social unit in which people meet their needs and
achieve collective goals. Organizations are a set of specific roles and a system of division
of labor in which each member performs certain specialized activities that are
coordinated with the activities of other specialists (Mott, 1965), a system in which a
minority of people with complementary skills are committed to a common goal with
individual and mutual responsibility (Katzenbach, Smith, 1993).
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The architecture of a modern organization includes not only the formal

structure (applicable regulations, controls, etc.), but also informal organizational
processes, concerning the content of work and the position of the actors of work in their
organization, in fact human resources, which are the most important factors. As the last
two to three decades have seen significant changes in the organization's position relative
to the environment, expressed as pressures from a range of sources, including
competitors, shareholders, consumers and the general public, employees are
increasingly questioning their commitment, loyalty and sense of belonging, that is, the
projected organizational identity. Because, for an individual, an organization is not only
a means of economically and rationally pursuing goals, but also a social environment in
which, by connecting with other people, it builds a sense of belonging, strengthens
identification with the organization through organizational identities.
According to the prevailing view, organizational identity is made up of the beliefs
of the members of the organization in what is central, recognizable and permanent for
the organization (Albert, Whetten, 1985), that is, the perception of one's affiliation with
a particular organization (Reade, 2001). Organizational identity is one form of an
individual's attachment to an organization (Bamber, Iyer, 2002), where he sees himself
as part of an organization, conceptualizing himself in terms of membership in that
organization. It is the perception of the organization as a whole and the self-perception
of itself as a member of that organization. Organizational identification is a relatively
permanent condition, reflecting an individual's willingness to let another define him,
and to define himself or herself, as a member of a particular organization (Haslam,
2001).
The boundaries of an organization are the boundaries of its identity, as Foreman
and Whetten (2002) state. Identity describes an organization as an entity and in that
sense fulfills an integrative function. Admittedly, organizational identity cannot be
viewed in its entirety only from within the organization, as this would compromise the
objectivity of its study. In addition, research shows that identity is not necessarily related
to the practice of daily work because of a different understanding of organizational
culture by employees, that is, culture is not clearly associated with identity (Jarne,
Maritz, 2014). It is also not enough to look at it externally based on an image or
perception of an empirical environment.
Organizational identity research most often cites the definition of Albert and
Whetten (1985), since this definition captures the key criteria in defining this
phenomenon. Specifically, these authors state that organizational identity is a set of
statements that organization members perceive to be central, distinctive, and enduring
to their organization. Thus, centrality, distinctiveness, and durability form the basis of
organizational identity. Centrality means that the statement should include features that
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are important and essential to the organization. Identity as a statement of central

characters defines what is important and essential to the organization (Albert, Whetten,
1985). The criterion of distinctiveness emphasizes that the identity statement should be
able to distinguish the organization from others. A distinctive identity statement usually
includes organizational ideology, management philosophy, and culture. It helps the
organization locate itself in a specific classification. The character of durability
emphasizes the enduring nature of organizational identity. It implies that organizational
change is difficult to start because the loss of organizational identity will have a strong
impact on the organization (Albert, Whetten, 1985).
In later studies of organizational identity (Gioia, Schultz, Corley, 2000), the
question of its permanence is problematized, with the following argument: first,
identification is not always stable, that is, it varies over time depending on the levels and
context of organizational communication; second, it depends on the organizational life
cycle; third, organizational identity is a subjective and affective category, so that
members have different views on their identity; fourth, organizational context can
influence the creation of a dual, multiple identity, since self-identification results from
membership in a particular social group, whereas membership in different groups leads
to the constitution of different social identities associated with different memberships
(Duton, Duckerich, Harquail, 1994); fifth, organizational identity can be perceived from
a positive identity, when an individual strives to remain a member of the group, to a
negative one, when the individual seeks to leave the group (literally or psychologically)
or, if that is not possible, to reinterpret the negative attributes of the group by applying
individual or group social action strategies (Figure 1).
Figure 1: A Composite Model of Organizational Identification
Source: Foreman, Whetten, (2002: 620).
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Although various interpretations of organizational identity are found in the

literature, most research into this complex phenomenon has been based on the basic
tenets of social identity theory. According to this theory, identity is interpreted as a
relational construct, a psychological entity formed by interacting with others, based on
the cognitive, evaluative and emotional components of creating a social-group
consensus (Ravasi, van Rekom, 2003). This assumes that organizational identity rests on
a combination of cognitive processes, interpretative schemas, knowledge structure,
shared understanding and shared values. Although there are dilemmas as to whether an
organization's identity is contained in behavioral or cognitive, since the construction of
organizational identity is directly related to organizational behavior, behavioral
approaches dominate the study of this phenomenon (Fiol, 2001; Pratt, 2000).
It follows that organizational identity has more of its dimensions, perhaps even
more identities, which raises the question of how members of an organization identify
with more of these identities. In this sense, Gioia (1998: 25) points to three different
philosophical traditions that underlie the examination of the concept of identity. The
first is functionalist or social-realist (Elsbach, Kramer, 1996), based on realistic
ontological assumptions, which argue that identity is a social fact, an essential object or
means. Second, an interpretative or constructivist viewpoint (Pratt, Rafaeli, 1997)
focuses on the question of how employees construct meanings perceived in the
workplace. A third, postmodern or semiotic approach (Sveningsson, Alvesson, 2003),
based on post-structuralist assumptions, where the relationship of power within the
organizational context is critically examined. Fourth, a structuralist approach to
organizational identity suggests a distinction between organizational identity (collective
actor identity) and collective identity (actor set identity). Whether as a
phenomenological or metaphorical term (Corlei et al., 2006), organizational identity is
different from: individual identity (Stets, Burke, 2000), organizational culture (focused
on values; Albert, Whetten, 1985), organizational climate (affective; Albert, Whetten,
1985), organizational reputation (external perception) and corporate identity (external
perception).
Finally, when discussing the prevailing viewpoints on organizational identity, they
are largely based on social constructivist theory, social actor theory, functionalist and
interpretive theory, postmodernist, institutionalist, etc. Due to their actuality and
interest in the issues of the construction of organizational identity, we outline below the
basic characteristics of the neo-institutionalist approach to this phenomenon.
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3. Organizational identity as the central concept of neo-

institutionalism
Neo-institutionalism is a school of thought focused on developing a sociological

view of institutions – how they communicate and how they affect society. In this view,
business organizations also represent institutions of their own.4
From the perspective of neo-institutional theory, organizational identity is of
central importance (Scott 1994: 57), especially the construction of identity, which
connects actors and their fields. While organizational identity studies focus on the
interaction between organizational identity and organization’s reputation, the non-
institutionalist approach emphasizes the importance of cognitive legitimation of the
organizational context by the employee, or what Louis (1980) and Weick (1995) refer to
as seeking meaning in building the organizational members' cognitive schemas, which
streamline organizational requirements and expectations. Normative institutional
mechanisms comprise values, beliefs and assumptions that exist in the institutional
setting, while cognitive mechanisms represent models of individual behavior based on
subjectively created rules and meanings that dictate appropriate thinking, feeling, and
action. Cognitive institutions include symbols, words, signs and gestures, as well as
cultural rules, which guide the understanding of the nature of reality and the
frameworks within which meaning is created.
Neo-institutionalist argumentation, in the observed perspective, respects the
individual – cultural, group, social, professional and collective identity, as work and role
identity. The process of employee transition, their adaptation, assimilation, inclusion,
integration, etc., as organizational (institutional) identification, must be viewed in two
ways. The first way of observation involves incorporating the basic assumptions of
institutional theory into the context of organizational socialization of employees (what
is institutionalized), and the second relates to the study of different domains of
organizational socialization – programs, tactics and control of employee socialization
and re-socialization (what is learned through organizational socialization). Connecting
these conceptions is logical, since organizational socialization, as a set of mechanisms of
cognitive and symbolic adaptation of individuals, helps institutions (organizations) to
function and reproduce. Whether or not management in an organization will opt for
mechanisms of authoritarian institutionalization or progressive individualization
depends on the form of leadership and the overall organizational culture of the
company (Ratković Njegovan, Vukadinović, 2011). In this regard, Aguilera et al. (2006)
4
According to the neoinstitutional matrix in the sense of North’s (1991: 97) defining, institutions as humanly
devised constraints that structure political, economic and social interaction.
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state that organizational socialization is the process of internalization of different types

of institutions – formal and informal, external and internal, which contributes to the
formation of the organizational structure, maintains the continuity of the organization
and its identity.
According to earlier institutionalist understandings (Berger, Luckmann, 1967),
inclusion in a particular structured and formalized social system, ie. organization, takes
place through regulatory, normative, and cognitive mechanisms of socialization (Scott,
2001). Regulatory mechanisms establish "rules" and allow for “monitoring” and
"sanctioning" activities in an organization. Institutionalization of roles, rules, norms and
values plays. A key role in this process, with work identity and role identity being the
most important types of organizational identity. A broader classification of
organizational (collective) identity can be made, such as: cultural identity – in relation to
belonging to a given culture, group identity – indicating belonging to a particular group,
social identity – indicating social status and professional identity – relating to
professional activity.
In order for institutionally (organizationally) desirable behaviour to be accepted by
individuals and groups, and objective reality turned into subjective, the following
processes take place: a) externalization (externalizing customs, knowledge, beliefs
through the construction of symbols and languages, that is, a set of symbols in common
to everybody); b) objectification (the process by which externalized products begin to
function as objective reality; the external action of individuals is shaped into
institutional forms that become permanently transferable); c) internalization (adoption,
acceptance). Once established, the institutional structure of an organization always seeks
to protect its developmental path. Oliver (1991) sees in this position the possibility of
competitive advantage, which is institutionally embedded at the level of cognitive,
normative and regulatory capital.
4. Conclusion
Organizational identity is a phenomenon that emerges from the social and

communicative interactions of organizational members. It is one of the attributes that
an organization possesses and can be managed to enhance organizational performance.
From the perspective of the individual, organizational identity refers to belonging, in a
sense of personal place, to what an individual has in common with other people in the
organization and with the organization itself. Organizational identity has two
dimensions: on the one hand, it implies a state, which indicates the degree of internal
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coherence and purposeful action of people, and on the other, it is a process, that is, a
development that achieves more internal coherence.
The question of constructing and maintaining organizational identity, that is,
creating the concept of organizational identity, was more thoroughly raised during the
1980s. Since then, the concept of organizational identity, as cited in recent work by
Whetten (2006), has been positioned as the central and enduring attribute of an
organization, which sets it apart from other organizations. However, Whetten (2006)
emphasizes that instead of "hard" defining organizational identity and its elements, it
prefers to use the term "organizational identity claims", that is, its references.
Although we can agree with this view, one form of attachment to the organization
is precisely organizational identification. As stated by Mael and Ashforth (1992),
organizational identification is a specific form of social identification in terms of
membership of a particular organization, which presupposes less potential for conflict
between the individual and the organization. In addition, the identity basically provides
a sense of personal place, stability and individuality.
Research on organizational identity and organizational behavior and the
psychological attachment of employees to their work organizations (for example,
O'Reilli, Chatman 1986; Wallace 1995; Wan-Huggins et al., 1998) confirmed these
assumptions. Generally speaking, strong affiliation leads to more favourable
organizational results, increases job satisfaction, commitment, loyalty and reduces
employee turnover.
However, organizational identification is a complex process and may not always be
successful. Clearly, a well-developed organizational identity, whose elements are subtly
mediated to employees, facilitates control patterns in organizations. This gives the
impression that the conceptualization of organizational identity is the process and
product of interaction between the organization and employees. This identity
"harmony" functions most effectively in the decision-making process and persists as
long as individuals in one or more of their organizational roles perceive the values or
interests of those decisions that best promote the interests of the organization (McPhee,
Tompkins, 1985: 193). Personal and organizational interests may be identical or similar,
but this does not necessarily mean that an employee has been identified with the
organization because he or she may not accept all central or permanent (Albert,
Whetten, 1985) elements of organizational identity. This also happens when an
employee finds that organizational identity is merely a tool that management
manipulates to equate its interests with the "interests of the enterprise." In such
situations, organizational identity can be perceived from a positive identity, where an
individual strives to remain a member of the organization, to a negative one. Employees
then question their commitment, loyalty, and sense of belonging, that is, their projected
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organizational identity, and often wonder why some individuals feel good about the
organization and others do not. These doubts can result in leaving the organization or, if
this is not possible, reinterpreting the negative attributes of the organization. This
complex situation makes it difficult to control employees, or to put management into
more subtle forms of organizational identification, to reduce employee resistance, and
more importantly, to confirm the meaningfulness of the work itself.
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NEW CULTURAL MEANINGS EMBEDDED IN THE CITY BY

MEANS OF TRANSNATIONAL CAPITAL
Katarina Stojanović1, Mustafa Cem ALDAĞ2
Abstract
There is a need to understand that financialization goes beyond simple
economic changes registered only by the economists, but also causes deep
transformations that affect the social sphere. In the third world,
globalization is devastating because it allows corporations to squeeze local
businesses and continually start manufacturing processes, leaving behind
economic collapse. There is insufficient research in what way culture, art
and creativity contribute to urban sustainable development. Culture also
refers to quality of life, landscaping, attitude towards non-material and
material heritage, ethics and aesthetics, art, tourism, education. We explore
different models of local sustainability that affiliate culture and
commitment to urbanity and move beyond profit-driven approaches.
Key words: corporations, culture, financialization, transnational, urban.
Introduction
Cities are nowadays faced with the uncertainty of the emergence of economic
crises, environmental problems and growing social inequalities. Deregulation and
financial liberalization caused the global movement and accumulation of enormous
quantity of financial mass (Lošonc, Ivanišević, Mitrović, 2012), profits in the financial
sphere kept increasing, and even the non-financial institutions (for example, retirement
funds) became involved in the dynamics of the financial sphere; so much so that those
same institutions started to practice money lending on the capital market (Stojanović,
Lošonc, 2017).
1
PhD, University of Novi Sad, Faculty of Technical Sciences
2
Bandırma Onyedi Eylül University, Turkey
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The important questions are: in which way do different segments of culture

contribute to sustainability, in order to support and encourage that segment? Culture
takes many forms depending on space and time. This diversity is reflected in the
originality and plurality of identities which are characteristic of groups and societies in
the world. Sources of exchange, innovation and creativity, cultural diversity are as
essential to humanity as biodiversity is to life on Earth. In this sense, it constitutes the
common heritage of humanity and needs to be recognized and affirmed for the benefit
of future generations, as emphasized in the article "Cultural Diversity, the Common
Heritage of Humanity" (Šobe, Marten, 2014).
Under production fetishism, Apaduraj means the illusion created by contemporary
transnational manufacturing which uses local (sometimes even workers') control,
national productivity and territorial integrity to hide translocal capital, transnational
earnings flows, global governance and workers often from afar and engagement in
various types of high-tech industries. This creates a semblance of locality, by means of a
local place of production, but the real control, management and capital are
transnational. This notion—that cultures around the world are becoming more
homogeneous—is a key component of the cultural imperialism thesis, which is perhaps
the longest-standing and best developed approach to explaining cultural globalization
(Mackay, 2000).
We will consider two different examples of the impact of corporations and the
financialization in cities, the absurdities of contemporary architecture and urbanism, the
illusion of imaginary worlds, collections as displays of power- Las Vegas, Duba,
Singapore, Shanghai, striving for the ideal, virtual meetings, and analyze how a
metamorphosis of the city results in a transformed life and a new culture. Corporate
“style” or “culture”, apparently, the well-run corporations of the world have distinctive
cultures that are somehow responsible for their ability to create, implement, and
maintain their world leadership positions. Matching corporate culture and business
strategy (Schwartz, Davis, 1981).
Globalization of culture through transnational corporations
Financialization should be understood as a web of qualitative and quantitative

changes of the status of the financial infrastructure in socio-economic relations,
including the increased role and influence of financial dynamics on the organization of
everyday life (Stojanović, Lošonc, 2017). The modern nation-state emerged as a cohesive
political, economic, and cultural entity designed to consolidate and regulate capital
accumulation within the boundaries of a specific geographic location, contemporary
conditions of advanced globalization have seriously undermined the economic and
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political autonomy that helped constitute the modern nation (Silk, Andrews, Cole,
2005).
Working beyond national boundaries, transnational corporations (such as Toyota,
Philips, Pepsi Co., Sony, and Nike) evidence the degree to which “‘the nation’ today is
visibly in the process of losing an important part of its old functions, namely that of
constituting a territorially bounded ‘national economy’” (Hobsbawm, 1990). These
placeless, decentered, supranational organizations, operating in the interests of a global
market and global circuits of cultural production (Hardt and Negri, 2000), along with
the global flow of peoples, goods, services, capital, images and symbols, has caused
some, within academe and the business communities, to decry the demise of the nation
at the hands of rampant globalization. Given the degree to which the process of
globalization has infiltrated the contemporary imagination (both popular and
intellectual), there has emerged a widespread global panic rooted in the fear that global
corporations have sought to rationalize their products and strategies, as Levitt (1983)
predicted, into single globally focused directives; the corollary being the instantiation of
a globally homogenizing commercial culture (Silk, Andrews, Cole, 2005).
In the modern world where cultural conglomerates can spread their ideas about
what culture should be, the most important questions are: Whose stories are being told?
Who's telling them? How do they arise, how do they spread and how are they received?
Works of art are increasingly becoming the originators of advertising messages and they
are tasked with creating an environment where desire can be created. As Smirs further
states, this context is often full of violence. Every work of art conveys the atmosphere,
content and the reflection of a lifestyle, the idea of pleasure. The question we should not
avoid is: Does this affect me, you, us, them? The greatest influence is probably the
absence of a large number of issues from the dominant discourse and consumer culture.
If we think of values such as respect, equality, sobriety, wisdom, friendship, morality,
human solidarity, togetherness, endurance, or the conviction that pain infliction or
celebration of violence should be avoided, we find that all of these, and more, do not
really pose questions for the world of corporate culture (Smirs, 2004).
Chaubet and Martin wonder if cultural transnationalization testifies to a more
solidary world beyond the borders of the national monster. The Rockefeller
Foundation's medical and sanitary actions in the first half of the twentieth century, as
well as the activities of Amnesty International (1960) and Greenpeace (1970) and the
Hollywood majors, seem to have maintained this direction, as well as the balance of
loyalty to various economic and political structures.
Although the globalization of culture is not the same as its homogenization, it
involves various instruments of homogenization (advertising techniques, armaments,
the dominance of a particular language and clothing styles) that are absorbed by local
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policies and cultural economies to be subsequently repartialized as heterogeneous

dialogues on national sovereignty, free enterprise and fundamentalism, in which the
state plays an increasingly delicate role: over-openness to global affairs - and the nation-
state being threatened by rebellion against China syndrome; insufficient openness - and
the country is coming off the international stage, as has happened in various ways to
Burma, Albania and North Korea, for example (Apaduraj, 2011).
As the creation, processing and transfer of information have become the main
sources of power and productivity in today's information society (Kastels), thanks to the
diverse activities and economic power of private and state cultural actors, this great
American narrative, in which the defense of peace, freedom and market economics are
mixed, has consistently evolved (Šobe, Marten, 2014). Today, countries like India,
Mexico and Singapore are trying to link their transnational actors to a national project,
offering them a preferential status in the form of a fiscal relief or property rights, but
somewhere cultural nationalism is still strong, e.g. Singapore, where foreigners are
prohibited from participating in the capital of national media (Šobe, Marten 2014).
Cultural imperialism and the McDonaldization of society
An important variant is Schiller’s cultural imperialism thesis, which points to

global cultural homogenization and sees this as operating in the interests of the USA
and the West (Tomlinson, 1991). Matelar worked on the theory of cultural imperialism,
among others, while we could say that the notions of this term appeared in Marxism as
early as the 1970s. Later versions emphasize the power of multinational companies,
especially in the media and cultural industries (Šobe, Marten, 2014). The term cultural
imperialism refers most broadly to the exercise of domination in cultural relationships
in which the values, practices, and meanings of a powerful foreign culture are imposed
upon one or more native cultures (Tomlinson, 1991).
At the turn of the new millennium, George Ritzer developed his theory of the
McDonaldization of society based on Max Weber s theoretical assumptions about the
process of rationalization. Weber considered rational mechanisms to be dehumanizing,
fearing of the tendency to rationalize a growing number of segments of society, which
would mean creating an invisible network of rationalized institutions and trapping
people into iron cages without a way out.
Ricera established a new theory by analyzing a series of phenomena that followed
and preceded the spread of fast-food restaurants. It basically explains the growth of
rationalization in terms of the rise of Japanese and the downward trend of American
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industry. He was astonished at the changes that engulfed the Russian society in the
1990s, such as the proliferation of McDonaldization, because the rationality of
McDonald's was diametrically opposed to all the irrationalities of communist remnants.
Just as this theory can be viewed from an optimistic point of view, which is
propagated through powerful links and propaganda mechanisms that are an important
and necessary factor in the phenomenon itself, and which have contributed, among
other things, to its manifestation, it is of utmost importance to point out the dangers it
carries, as Kowinski cites the emergence of a new consumer religion that people profess
in malls as modern consumer cathedrals, or the irrationality of rationality that produces
rational environments that are places where personality is excluded, feelings controlled,
and the spirit suppressed,according to Ronald Takaki (Ritzer, 1999).
Even McDonaldization itself becomes a mechanism and an ancillary system of
financialisation expansion. In other words, the four dimensions of McDonaldization are
efficiency, cost-effectiveness, predictability and control, which are precisely the elements
that accelerate and contribute to the smoother and faster spread of financialisation.
Weber's streamlining process and financialization are compatible.
The natural division of work, in accordance with everyone's possibilities and the
variety of jobs, were at odds with today's McDonaldization, which seems to increasingly
stifle creativity, freedom and inventiveness, thus creating pervasive apathy. It also affects
the development of the individual and society as a whole, spreads pauperism,
debauchery, self-supporting, loneliness and McDonaldisations in general.
New cultural meanings embedded in the city
The content of national identity and collective memory depends largely on the
policies and strategies of the leading social classes and the ideological system that they
represent. Todor Kuljić states that the contemporary memory culture is a
bureaucratically and commercially organized and politically instrumented past, and that
more or less coherent pasts are invented, decreed and used for entertainment. Space is
so often seen as a proving ground for the insription of our ideas of the past and the
public manifestation of different (collective) memories (Radović, 2013).
Today, culture is often the originator of development of new urban regeneration in
the world. Successful examples of this practice indicate a significant role of collective
memory, the means that assist in this process and the formation of a new identity for the
city, enabling identification with history and the intangible, invisible space of the
settlement. The problem of transformation and disappearance of old settlements, in
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addition to the context of contemporary economic change, affects the individual and
their connection with the city in which they live.
Cultural heritage is becoming a commodity, subjected to disneyfication, the
rhetoric about intellectual property rights, genetic material and scientific knowledge
becoming a growing current. (Ostrom, 2000). Disneyfication is a homogeneity that
destroys specificity, originality. Showing everything beautiful, idyllic, striving to make
everyone look happy, filled with life, or representing an ideal world. It's a web that
covers the real world. The term Disney urbanism is associated with idealization and
propaganda, primarily derived from the experience of developing American cities, and
later it emerged as a concept, suggesting a new approach to addressing material
inequalities in the city through the aesthetization of diversity and the control of fear.
Disney realism is a type of utopia in which the deletion of unwanted and negative
elements of urban reality is carefully programmed. The visual and spatial elements of
this model in planning are applied in the design of residential communities, shopping
malls, museums, urban festivals, all projects relevant to shaping the public which gathers
in transit (market) situations, and it is also conceptually related to the notion of place
(Vujović , Petrović, 2005). The city becomes a set of micro-cells, micro-states, in which
rich residents can get all the services provided by private police patrols. This whole, for
example, is intertwined with illegal settlements where urban existence is at the very
bottom (Balbo, 2007). We will analyze some of the examples hereinafter.
Impact of financialisation on Shanghai Pudong

The process of urban restructuring is nowhere so pervasive as in Shanghai, whose
central and inner zones are characterized by poor housing conditions laced with factory
debris. The transformation of Shanghai was a result of decisions made by senior party
and government leaders in Beijing and Shanghai in the late 1980s, when this was
considered important for its survival (Marton, Wu 2006). The restructuring process had
various aspects, the regeneration of the city center, the development of Pudong, which
had been an area of old factories and poor credit houses until then, and the construction
of a commercial and transportation center in Hongkiao, the western outskirts of the
city. The initial impetus for Shanghai's development came as a result of what was seen as
the success of the Special Economic Zones (SEZ) in the south of the country. During
1980, Shanghai continued to rely on manufacturing. Pudong was granted SEZ status in
1990, with the support of the Beijing State Council. An administrative commission was
set up to manage Pudong, with development corporations for each of the four special
zones established.
Two development techniques were used, the first one refers to the construction of
infrastructure and buildings before attracting companies to invest, while the second
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involves gaining interest from investors who then build and profit from the sale of
assets. In Pudong, foreign owned companies are involved and tend to lease land first
(Wu, Barnes, 2008). Much of the construction is related to the plans of the county
government and investment corporations. However, problems have been noted as a
result of over-investment and over-construction, much of which was built off-plan.
There was no way for locals to comment (Waley, 2011). The city is a center for the
development of biotechnology, information technology and microelectronics, with
headquarters of numerous international financial institutions. However, the most
significant problems of urban life of the inhabitants are not resolved by this economic
and construction boom, namely overpopulation, noise, air and river pollution (it was
one of the most environmentally vulnerable cities in the world), as well as social
problems of unemployment and various anomies.
New meanings, collections and imaginary cities

Many phenomena and ideas have long existed both in architecture and in other
arts, only to be embodied through new technologies and technological revolution in
modern times, as a concept and a new way of experiencing of the virtual worlds of
illusion. The concepts and principles of various phenomena existed and were discovered
in the past. Compressions and microcosms have existed throughout the history of
civilization. The collecting of the past, as it was in the beginning of the Renaissance, for
example, was reflected in the collection of classical works. In today's cities, there seems
to be a fear of empty space, just like in such collections. The impression is that as soon as
a blank space is identified, it is immediately filled in, so cities are increasingly starting to
look like Brazilian favelas, only dressed in glitter, height, with a fine, fragrant note of
money.
A Utopian vision, a microcosm, a collection, a set of ancient monuments in an
impossible perspective, in a word - Las Vegas. Intriguing architecture and urbanism, an
inspiration to many analysis theorists, bring together all the significant works of
architecture of all time putting them into one space that seeks to erase the temporal and
spatial boundaries between them. The basic generator of architecture - money, unlike
the first collections that had been created by different design powers.
Stunning, spectacular and in some ways criminally absurd urbanization projects
have sprung up in the Middle East, in places like Dubai and Abu Dhabi, as a means of
channeling surplus capital harvested from oil wealth, using a variety of ways - the most
insolent, socially inequitable and the most devastating to the environment ever applied
(such as the construction of a closed ski jump in the middle of a hot desert
environment). Objects such as the world's only seven-star hotel, the tallest building and
the largest shopping mall in the world, the artificial islands of exclusive housing and
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tourism, Dubailend, the counterpart of Disneyland, are shifting from imagination to

reality (Stupar, 2009).
How does monopoly rent come to existence in some Asian cities? The Hong Kong
government is largely funded by a controlled sale of public land for further high-cost
construction. This creates monopoly rents that are paid on commercial property, giving
attractiveness to a location for international investment, that is, financial capital through
the rental and commercial property market. Favorable topographic trading
characteristics exercise monopoly practices both in this city and in e.g. Singapore.
Monopoly rents are generated through investments and the creation of a co-ordination
of both social and physical environment, promoting the development of culture,
education, communications, in a word, urbanization (Harvi, 2013).
Thematic cities in Shanghai, where Dutch, Spanish, German, Italian, English, etc.
cities are planned in order to bring the whole world of urban culture into one place,
today a financially powerful center. Some call this place a creepy fake, a ghost town
because it has houses, restaurants, shops, whereas people can be found only sporadically.
Suburbia did not work out as planned.
Entire cities have become communities of the rich exclusively, like Manhattan, St.
Louis ... Ocean cities, beyond the reach of law and bureaucracy, in international waters,
are the dream of rich people now, the most viable political model for them might not
be a liberal democracy but an enlightened corporate dictatorship”.
How the imminent influence of corporations can be directed to the

benefit of local communities
Regulation annulment, privatization and investment liberalization are transferring

the economy to multinational corporations (Starr, 2000). These processes are
accompanied by the so-called Structural Adjustment Programs of the International
Monetary Fund and the World Bank, which should discipline lax governments, but
paradoxically they have made developing countries even more open to the influx of
foreign capital from northern financial centers, because while tight fiscal and monetary
policies were being introduced into the country, foreign exchange controls were
abolished and the liberalization of the capital account was promoted with the aim of
freeing the market from restrictions imposed by state regulations (Smirs, 2004).
In addition to a handful of huge transnational cultural conglomerates, in some
major countries, there are cultural industries that dominate the national and sometimes
regional markets that are exporting to a significant number of other countries, usually
the spoken language of their language. Several corporations which are operating on two
levels in the global media market have many connections and joint ventures with the
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largest transnational companies as well as with investment banks in Wall Street (Smirs,
2004).
Culture is not a collection of relics or ornaments, but a practical necessity, and its
decay leads to a disaster (Smirs, 2004). A healthy culture is a common order of memory,
insight, value, work, friendship, respect for aspirations, which reveals human needs and
human limitations, explains our relationships with the earth and with other people from
which we cannot escape, assures us that the necessary constraints are respected, that
work has to be done, and it has to be done well (Berry, 1986).
Cultural conglomerates have too much authority over the production, distribution,
and promotion of substantial portions of our artistic landscapes, they are controlling the
copyright for an increasing number of works of art, while most artists are not
economically viable. Local artistic life is becoming delocalized. Local-level cultural
initiatives are less valuable than moods, influences and specific artistic products created
by a limited number of production centers, which fills the world with corporate culture
where the ultimate goal is increased consumption (Smirs, 2004).
An indicative example would be the corporate patronage of cricket in India, cited
by Apaduraj. Namely, this sport would not have survived or gained popularity and
become a part of the new national identity of the decolonizing country, if it had not
been for entrepreneurship and spectacle, like state sponsorship and huge private profits.
The model is reflected in the fact that powerful companies have recruited the players of
the sport and provided them a secure job even after their sports career is end. They are
supported by the media, of course with the inevitable capitalist method of creating stars
from players, who then become commodities. Transformed into a national passion by
the spectacle process, cricket has become a matter of mass entertainment and, for some,
mobility, which means that victory is increasingly important (Nandy, 1989). The pace
dictated by commodification imposes the need to strive for refinement and quality of
the game itself.
If we go back to art and culture, we might find some methods, in this not-so-
beloved way in which corporate incentives operate, on the part of those who have no
profit or satisfaction there. But the choice of a culture to be corporately supported can
be such that contributes to the overall development of quality content. Smirs concludes
that it is first and foremost necessary to put in the effort for the survival of the arts that
do not immediately make a quick profit, and to insist on the real differences. Of course,
we should not neglect the seductiveness of corporate culture and receptiveness of the
masses. It is necessary to find other models for production, distribution and promotion
of different artists and arts, as well as small and medium-sized cultural enterprises. It is
certain that they would also be able to produce works that would be receptive to a wider
audience, only if they are able to reach, or be offered to a wider audience. Nowhere has it
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been proven that only products of the cultural industries correspond to mass
consumers. The taste of the audience also depends on the context, and the creators of
the context can influence it to be adequate to develop higher quality demand, that is, to
produce an audience that seeks works of art that possess diversity as a virtue.
When we talk about tourism and the question of its purpose today, we can certainly
point out the local cultural heritage as something that is still under-established. One of
the ideas would be that this is a good time to give those artistic values a chance when it
comes to tourist demand. Chaubet and Martin ask several questions regarding the
questionability and purpose of tourism today. Do true exoticism, authentic otherness,
and a genuine departure for unknown lands de facto disappear before the onset of this
curiosity that tends to reproduce everything the same, pretending to be looking for
something that is different? Is it still useful to travel as a tourist? , we might wonder,
having in mind the theme parks that open from California to Dubai, or Japan, which are
truly artificial cities where we can see reproductions of large world monuments in
reduced form. The second question is whether tourism is at the service of globalization
of the world or the constitution of entertainment peripherals for hyper centers?
Las Vegas justifies the reasons for the visit with a spectacle made up of thematic
architecture, show programs, entertainment, pools, weather ... This confirms Gi
Deborah's view of a spectacle as a model of government and control, where capitalist,
consumerist content is pleasantly disguised as entertaining activities and they last
“twenty-four hours a day” (Venturi, 1990). "Las Vegas" and "museum" in the same
sentence were once incompatible, but times are changing. Disney and Las Vegas have
come close to each other as they are both paradigms of the American middle-class
entertainment ideals. New ideas of the museum, such as the EMP (Experience Music
Project), elevate some of Disney's disguised educational attributes to the highest level
and at the same time bring modest fun elements to the museum's hit building, bringing
it all together into one educational and entertaining character. When we learn about
spectacle audiences, the fact is that most people like to get an incentive to successfully
focus their attention on certain forms of content within a multitude of fun elements. In
contrast, the classic ambience of a typical art museum is based on the premise that
people need to get rid of the fun elements in order to focus on a serious aesthetic or
educational experience (Marstin, 2013). In current design, therefore, we have to strike a
balance between museums as synonyms for historical architectural cultural heritage and
new experiences, that is, the presentation and incorporation of museum values into
contemporary trends.
Separating the cosmopolitan stance from those conditioned by other forms of
mobility, such as tourism, exile or immigration, Hanerc believes that true
cosmopolitanism "is first a preference, a desire to deal with others." This also means the
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existence of empathy, which in today's consumerist, increasingly selfish world, could be

said to be an urgent need.
How can under-established potential tourist sites, cultural heritage

sites, find their leading place
In France, Italy, Spain, and the United Kingdom, the income from tourists with the
primary objective of getting acquainted with cultural assets and cultural achievements
exceeds 1/3 of total tourism revenue (Pivac, 2019). It is primarily cultural-historical,
museum, art and event tourism, etc.
Urbanization has often been a development factor in industry, since architecture in
general, the construction process and the various facilities, also require employment of
various branches of industry, so that in addition to the contribution to tourism, there
would be multiple benefits (Stojanović & Lošonc, 2017). Although there are
contradictory opinions about the Bilbao effect (the architectural work that has propelled
the development of the whole area, a museum designed by one of the most famous
current architects Frank Gehry and has become one of the most visited attractions of
Spain), it is a fact that architecture could not be a sole condition for the development of
the area without other circumstances and factors, but it is undisputed that it has been
precisely the driving force and motive (Krivošejev, 2015). Historic hotels have gained
loyalty of passionate guests (Poimiroo, 2015).
The Stamba is a hotel located in a building of Soviet architecture in the city of Tera
in Tbilisi. Tourists can enjoy the artwork of Georgian artists displayed in their rooms as
if they visited a museum or an exhibition. The design allows interaction between the
guests and the local residents. Tourism that offers characteristic relationships,
interaction and direct contact with local cultures and social classes is gaining on
popularity.
In any particular ethnological (village, community, locality), the genealogies of
cosmopolitanism are unlikely to match its history: while genealogies reveal cultural
spaces in which new forms can be adopted (such as tourism currently inhabiting
pilgrimage locations in India), histories of these forms can lead outwards, to
transnational sources and structures (Apaduraj, 2011).
An indicative example is the current selection of the best tourist destinations,
which have been chosen in a modern way and where the voting participants certainly do
use modern technologies. Specifically, site https://travellemming.com/reader-travel-
awards-2019/ presents 44 best travel destinations in the world according to top travel
bloggers and influencers, who are very influential in the virtual world of
communication. A vote was held for the best destination in 2019. It was noted that even
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some politicians and celebrities publicly supported their favored destination. The six
winning tourist destinations were selected: Serbia, Valladolid Mexico, Orange, Australia,
Malawi, Lima Peru and Sri Lanka.
Based on the analysis above, it can be assumed that new and not so attractive
commercial destinations could encourage the affirmation of new local values. The
saturation with branded places and symbols is increasingly pronounced, thus opening
up the chance to highlight and demand for authentic and different places of branded
local character.
Conclusions
Multidisciplinarity is a characteristic of culture and sustainable development.

Financialisation is a global phenomenon and cultural, architectural and historical
differences between countries do not exist when this economic phenomenon is
concerned. There is only a resource, a place on the planet where it will find its way. The
contexts mentioned determine how its influence will manifest, policy and legal
regulations determine where and how it will be able to land and consequences it will
cause for the urban enviroment. If a country seeks to attract finances and investments at
any cost, if they do not pay attention to their regional characteristics or consider the
context of their climate, then the outcome can often be similar to today's cities such as in
Las Vegas, Dubai or many Chinese cities, hypertrophied urbanism is obtained just as it
is derived from hypertrophied finances, bubbles, that is to say financialisation.
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[2] Apaduraj, A.: “Kultura i globalizacija”, Beograd: Biblioteka XX vek, 2011.
[3] Balbo, M.: “International migrations and the “Right to the City””, UNESCO
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[4] Berry, W.: The Unsettling of America: Culture and Agriculture, San Francisco:
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[6] Harvi, D. “Pobunjeni gradovi”, Novi Sad: Mediterran publishing, 2013.
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[8] Krivošejev, V.: “Luvr Lens - nova paradigma muzeja kao generatora razvoja
okruženja”, Kultura, br. 146, 250-263, 2015.
[9] Lošonc, A., Ivanišević, A., Mitrović, S.: Strukturalna kriza: forme i uzroci, Novi
Sad: FTN Izdavaštvo, 2012.
[10] Mackay, H.: “The globalization of culture?” In A globalizing world? Culture,
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[11] Marstin, Dž.: “Nova muzejska teorija i praksa”, Beograd: Clio. 2013.
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dimensions of sporting capital”, In Sport and Corporate Nationalisms. Oxford, New
York: Berg, 2005.
[19] Smirs, J.: “Umetnost pod pritiskom: promocija kulturne raznolikosti u doba
globalizacije”, Novi Sad: Svetovi, 2004.
[20] Šobe, F., Marten L.: “Međunarodni kulturni odnosi”, Beograd: Clio, 2014.
[21] Stojanović, K., Lošonc, A.: “Impact of Financialization in Transformation of
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[22] Stupar, A.: “Grad globalizacije: izazovi, transformacije, simboli”, Beograd:
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[25] Vujović, S., Petrović, M.: “Urbana sociologija”, Beograd: Zavod za udžbenike i
nastavna sredstva, 2005.
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ENGELS’ CONTRIBUTION TO THE METHODOLOGY OF

RESEARCH OF SOCIAL STATUS OF INDUSTRIAL WORKING
CLASS
Gordana Vuksanović1
Abstract
“The Condition of the Working Class in England” is still one of the most
complex studies of the industrial working class. In the mid-nineteenth
century, Engels examined the interdependence of the development of
industry, industrial proletariat and the labor movement using various
sources and methods of data collection. The aim of this paper is to point out
the methodological characteristics of the work that can serve as a model of
study of corporate identity, as well as for writing monographs. The
abundance of sources indicates a developed scientific imagination that can
encourage contemporary researchers to do more thorough studies.
Key words: Engels, England, working class, bourgeois, methodology
Introduction
“The Condition of the Working Class in England” represents the most extensive
work of young Engels. He collected the material between 1843 and 1844 during his time
in England2. Although this period of his life related to London and Manchester, he
mainly focused his research on the most developed industry in England located in
Manchester, which was the center of the textile industry. He spent every day at the
factory, where his father was a shareholder, collecting information. This enabled him to
1
Novi Sad School of Business, gordanavuk@uns.ac.rs
2
The first edition was published in German in Leipzig, in 1845, and the second revised edition was
published in 1892 in Stuttgart. The edition in English language was published in 1887 in New York and 1892
in London (Karl Marx-Friedrich Engels, Works, Volume 4, 1968 : 388).
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understand the relations on the market as well as the living and working conditions of
the workers. Engels developed acquaintances with them, visited their neighborhoods
and went to their homes. He examined his primary experience theoretically by studying
economic and political literature (Adam Smith, David Ricardo, Thomas Robert
Malthus, James Stuart, Jean-Baptiste Say).
Subject and field of study
Guided by a historical-materialist approach and using a variety of sources and

methods of collection and analysis of experiential data, Engels explored the social
position of the working class in England. At that time, it was the starting point of all
social movements and it reflected the extremes of social misery of the day. The aim of
in-depth analysis was to provide a solid empirical basis for socialist theories, to connect
theory and practice, and to overcome the problem theoretizing. There were several
reasons why Engels decided to do a research into the working class position in England.
- The “state of the proletariat” in its most developed form existed only in the British
Empire, more precisely, in England. At that time, the industrial development of this
country was at a much higher level compared to other countries. Therefore, class
differences were more pronounced and more easily explored than in Germany where
Engels was from. Rapid development of industry and commerce strengthened the
industrial and commercial bourgeoisie while petty bourgeoisie and farmers were
disappearing and the number of industrial workers was increasing. According to him,
“Only in England can the proletariat be studied in all its relations and from all aspects
(emphasized by G. V.)” (Engels, 1968: 115). He explained why he had chosen England as
his area of research and the reasons why he had decided to choose London and
Manchester in particular. Industry and trade reached their fullest development in those
cities, which is why the consequences on the proletariat were most obvious there. There
was a clear polarization of rich and poor classes. The emphasized division into the rich
and the poor, in terms of Weber's ideal types, facilitated empirical research and
theoretical generalization. In addition to London and Manchester, Engels also included
in his analysis some major cities of Ireland and Scotland, such as Dublin and Edinburgh.
Other cities such as Liverpool, Nottingham, Birmingham, Glasgow, Bradford, Bristol,
etc. were also covered by the analysis to show that dirt, misery and neglect were
common features of the working-class neighborhoods.
The industrial working class was the focus of his interest because "industrial
workers are most aware of their interests; those in the mining sector are less so, while
the farmers are almost unaware of their interests" (Engels, 1968: 128). At the same time,
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industrial workers, " the oldest children of the Industrial Revolution," form the "core of
the labor movement" (Engels, 1968: 128).
The material necessary for a thorough analysis was collected only in England by
official examination (Engels, 1968: 113). The middle class approved the costs of forming
a series of investigative boards that produced extensive reports on the living and
working conditions of the vast majority of "free British citizens" (Engels, 1968: 112).
Some methodological characteristics of the research
Long before the discussions about multimethods and triangulation began in social
science methodology (Campbell and Fiske, 1959; Webb et al., 1966; Denzim, 1978),
Engels had sought for depth and broadness of his analysis by relating various sources
and combining different methods. In modern research, the application of triangulation
rules characterizes most empirical research. In order to eliminate doubts relating to
information sources, or methods of work of researchers, different sources of
information, methods and researchers are used (Jick, 1979). Triangulation also involves
combining quantitative and qualitative research methods (Lamnek, 1988).
The subtitle of “The Position of the Working Class in England” emphasizes the
variety of sources that Engels used in exploring the position of the working class: "Based
on my own observations and authentic sources" (Engels, 1968: 107; emphasized by
G.V.). When addressing the "Working Class of Great Britain" he explained his approach:
"I have lived among you for a long time so I am quite familiar with your living
conditions; I paid the most serious attention to understanding them better; I studied
various official and unofficial documents that I could obtain - but I was not satisfied
with that, I needed something more than just abstract knowledge of the subject I was
writing about, I wanted to see you in your homes, to observe you in your daily life, to
speak with you about your living conditions and your troubles (emphasized by G.V.),
to witness your struggles against the social and political power of your oppressors
”(Engels, 1968: 111). In addition to pointing out the importance of documented data,
Engels also emphasized the importance of experiential data as opposed to abstract
consideration of the subject. Thus, it can be concluded based on these notes that the
primary sources of data were: data collected through observation, conversation and
written sources, both formal and informal.
In order to describe as accurately as possible the circumstances in which English
workers lived, and, therefore, to explain the term of "social murder" (Engels, 1968: 184),
Engels described their apartments, clothing, diet, origin, physical and moral condition,
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medical care, education, alcoholism, prostitution, etc. He indicated, both directly and
indirectly, to the importance of the observation process in order to gather credible
information about the living conditions of workers: “And so, under the railway bridge,
there is one yard which, with its dirtiness and abomination outstrips all other yards
precisely because it was so far separated and secluded that only after great difficulties
could one get inside; I, myself, would never have found it (emphasized by G. V.) had it
not been for the viaduct, although I thought I knew the whole area well ”(Engels, 1968:
151). Similar remarks pervade the whole work: “Me, too, have been (emphasized by
G.V.) in yards around Millers Street which were at least half a foot lower than the level
of the main street, and which did not have any drainage channel that would drain the
water collected during rain! " or “... I have seen (emphasized by G.V.) some cottages of
the same height - some even under construction - in which the outer walls were only
half a brick thick - the bricks were not laid in width but in length ..." (Engels, 1968: 154).
The observation is characterized by careful spatial and temporal sampling. For
example, examining the quality of workers' nutrition by observing their behavior in the
market, as well as observing the behavior of salespeople at different times of the day,
enabled him to discover how the English worker was misled about the quality and
quantity of goods (Engels, 1968: 163 - 165).
Engels complemented the analysis of the differences in the living and working
conditions of the bourgeoisie and the proletariat with the observation of the middle
class as well, which sought an ally in the workers to fight the bourgeoisie. At their
initiative, committees of inquiry were formed to submit reports on the position of
workers to the Ministry of the Interior, known as "blue books" (Engels, 1968: 112).
Engels pointed out that, from the aspect of science, the "blue books" were significant as a
historical document but not as reports that, at the time of their creation, contributed to
the improvement of workers' positions. With this observation, he points to the
importance of applicability of research findings in practice, to the connection between
theory and practice.
Although he mentioned that he spoke with the workers, Engels shared their
subjective experience through other sources. We can assume that the workers’
statements that he obtained during his own research, though he did not cite them, only
increased his certainty when making conclusions. Qualitative data are data obtained
from the sources that he discovered independently of his research, from various reports,
daily newspapers and periodicals.
A significant part of the collected material comprises various statistics, too. Thus,
for example, he compared the growth of individual branches of industry and the growth
of the population from 1801 to 1831; he monitored changes in the production of flax,
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hemp, silk, and in the number of coal mines in the period from 1753 to 1843 and the
production of coal; dug channels; built railway lines, roads; he monitored mortality
trends; criminal offenses, changes in the structure of literacy and education, etc. The use
of quantitative indicators is distinguished by: the use of absolute values, percentages and
mean values; data analysis at different time intervals; a comparison between the states
and cities of the British Empire. The comparison method, expressed through spatial and
temporal dimensions, increases the precision in concluding. In addition to state
statistics data, Engels also used the statistics found in the reports preachers, police
investigators, the Asylum Administration for the Homeless, aid associations for beggars,
Parliament and Government reports, health commissions, individual doctors,
investigative committees on the employment of children and youth in mines, coal mines
and industry, investigative commissions on the condition of large cities and densely
populated areas, registrars etc.
Comprehensive analyses are supplemented with the maps of old Manchester with
marked working class neighborhoods, as well as the plans of the layout of houses in New
Manchester, which, together with a map from the old part of the city, represent the
three basic types of buildings for the working class (Engels, 1968: 145, 149, 154, 155).
Engels used the plans to describe "the insane construction of the whole area, especially
near Irka" (Engels, 1968: 149). By analyzing the construction plan, he demonstrated how
the building methods make the workers' neighborhoods invisible to the bourgeoisie. He
paid particular attention to the description of the working class neighborhoods of
Manchester where "houses are stacked out of order, as if they are mocking rational
architecture, and are compacted so that they are formally on top of each other" (Engels,
1968: 149). As a result, one can live there for years, "leaving it and coming back every
day without ever entering the workers' neighborhood or getting in touch with the
workers – that is, as long as one goes only for a walk or personal business" (Engels 1968:
147). By observing other cities as well, Engels concluded that Manchester was no
exception in this regard but “only in Manchester, and nowhere else, had he found such
systematic closure of the main streets for the working class, such gentle concealing of
anything that could be good neither for the eye nor nerves of the bourgeoisie.”(Engels,
1968: 148).
Explanation and prediction were the two primary goals of Engels' research. The
aim was to explain the conditions that led to worker dissatisfaction and forecast of the
same events in countries, first in Germany which development was not fundamentally
different from the development of England, but did not happen at the same pace. In this
respect, the depiction of the position of the proletariat in the British Empire was of great
importance for understanding the position of the proletariat in Germany and
anticipation of social change. The disadvantage of German socialism was, according to
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Engels, the fact that German theorists based their demands for the reality reform on
theoretical assumptions rather than on knowledge of the real life conditions of the
proletariat (Engels, 1968: 114). Awareness of the inextricable link between theory and
empirics and about the importance of empirics for the precision and reliability of
theoretical assumptions prompted him to approach the subject of research
comprehensively. In addition to the temporal dimension of the study of subjects in their
most advanced form, Engels also noted the importance of space, the importance of the
influence of socio-cultural differences on the subject of research. The findings cannot be
transmitted as a template, but they can serve as a basis for prediction. Although he did
not mention the word law, it was obvious that Engels observed regularities in social life,
that is, the possibility of predicting: “Although the living conditions of the proletariat in
Germany are not yet as typical as in England, we still have basically the same social
order which, sooner or later, must got to the same extreme that had already happened
across the North Sea - unless the nation is considerate enough to take measures that will
make the new basis for the entire social system. The causes for misery and oppression of
the proletariat in England were the same as those in Germany, and they had to, over
time, produce the same results” (Engels, 1968: 114). The above example can also serve to
examine the ways in which laws were manifested in social life and what made
distinction regarding the stability of social and natural laws. Class relations in Germany
may develop in the same direction as class relations in England, but not necessarily.
Deviation from the observed regularity can be expected only if, as already said, “the
measures are taken in order for the whole social system to acquire the new basis”. The
findings obtained by studying one society cannot be transferred as a template onto other
societies, but they can serve as guidelines for anticipating further changes.
Self-criticism is a significant feature of Engels's approach to the study of working
class position. Reuse of the original material and its application to the context of new
data testifies about his efforts to correct potential omissions and provide solid and
varied arguments regarding the above observations. For example, in the English edition
from 1892, he remarked that the overview of the industrial revolution was inaccurate in
some parts, but that there were no better sources in 1843/1944 (Engels, 1968: 119). In
addition, whenever he could he referred to the works of authors who, regardless of his
work, considered the same problem in the same way as he did and who came to the
same conclusions. For example, when he had already written about the living conditions
of the workers, he came across an article about the parts of London where workers lived,
which on most occasions completely matched the description (Engels, 1968: 134).
The narrative writing style does not diminish the scientific value of this creative
endeavor. It was inevitable in the fusion of the scientific approach, which he was
undoubtedly guided by, and real life. Even if we made any remarks about Engels's
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emotional approach to writing, we would have to admit that it would be difficult to

remain indifferent to the misery he was portraying. Hence, the emotions resulted from
his presentation; he did not tend to impose them. The emotions are integrated in the
content presented to the reader and not in Engels' assessment. He kept his distance from
the studied subject by means of a series of various reports. If what he saw and heard
stirred his emotions, diminished his critical attitude to reality, and left a mark on his
narrative, then what others saw and heard could be regarded as a criterion of his
rational attitude to reality. In most quotations, he cited the party to which the people he
referred to belonged. Since, in contrary to the conservatives, liberals were denouncing
the misery of factory districts, Engels, whenever he lacked official documents to describe
the position of industrial workers, would rather cite liberals' documents in order to "beat
the liberal bourgeoisie in its own words" (Engels, 1968: 115). He supported his own
observations with the words of the opponents of the labor movement.
The control of emotions and critical attitude towards the descriptions that resulted
from the observations of the working class neighborhoods are also evident in the
following “… and when I read my description for the second time, I must admit that it
is neither exaggerated nor descriptive enough to give a clear picture of impurity, neglect
and inappropriateness of living conditions, of the way of construction that simply
mocks all the principles of cleanliness, ventilation and health of this part of the city
where at least 20-30 thousand people live. One can find this area in the center of the
second biggest city of England and the first industrial city of the world! ”(Engels, 1968:
153).
Conclusion
Engels successfully confronted the problem of monographs regarding the

structuring of abundance of research material in writing 3. He joined different sources of
information to provide a strong support for his observations. Connecting different
sources and methods enabled him to shed light on the relationship between bourgeoisie
and workers and, in modern language, on individual and collective corporate identity.
He used various experiential data to show that factory system created modern
slavery. His research confirmed the observation that identities “were studied by
observing individuals and institutional frameworks in which those individuals were
located” (Kuper & Kuper, 2009: 474). We can assume that if identity affects the
3
Strauss Anselm, Corbin Juliet (1998), see chapter: Writing Theses and Monographs and Giving Talks
About research.
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decision-making process, its strength and direction influence the type of decision. If the
interpretation of identity from the perspective of the individual and his or her inner
experiences is viewed in the context of the development of industry and labor
movement, then the increase in the number of supporters of the labor movement
indicates to an increase in the negative attitude of workers towards industrial
enterprises. Being based on the confrontation of data from different sources and on the
application of different methods for data collection and analysis, Engel’s study of the
comparative development of industry and labor movement reveals the circumstances in
which a negative corporate identity emerges and spreads.
REFERENCES
[1] Campbell, D. T., Fiske, D.: “Convergent and discriminant validation by the
multitrait-multimethod matrix”, Psychological Bulletin 56 (2), 81-105, 1959.
[2] Denzin, N. K.: “The research act: A theoretical introduction to sociological
methods (2nd ed.), (New York: McGraw-Hill, 1978), page 370.
[3] Engels, F.: “Položaj radničke klase u Engleskoj” (prevod, nemačko izdanje,
1845.), prema: Karl Marks-Fridrih Engrls, Dela tom 4 (urednik: Gligorije Ernjaković),
(Beograd: Prosveta - Institut za izučavanje radničkog pokreta,1968), str. 107-327.
[4] Jick, T. D.: “Mixing qualitative and quantitative methods: Triangulation in
action”, Administrative Science Quarterly 24, 602-611, 1979.
[5] Kuper, A., Kuper Dž.: “Enciklopedija društvenih nauka” Tom 1, (Beograd:
Službeni glasnik, 2009.), str. 870.
[6] Lamnek, S.: „Qualitative Sozialforschung: Methodologie“ Bd. 1, (München:
Psychologie Verlagsunion, 1988), page 289.
[7] Strauss A., Corbin, J.: “Basics of Qualititive Research” (2nd ed.), (Thousand Oaks
– London – New Delhi: SAGE Publications, 1998), page 312.
[8] Webb, E. J., Campbell, D. T., Schwartz, R. D., Sechrest, L.: „Unobtrusive
Measures: Nonreactive Research in the Social Sciences“, (Chicago: Rand McNally &
Company, 1966), page 217.
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RELATIONSHIP BEETWEEN INTERCULTURAL

MANAGEMENT AND THE FINANCIAL CORPORATION
AS MULTIDIMENSIONAL ACTOR
dr Milica Ničić 1
dr Ljiljana Miletić 2
Abstract
The paper describes the relationship between intercultural management

and the financial corporation, through the presentation of a concrete type of
organizational culture and the perception among employees (leaders and
workers), to the best insight into opportunities and meet the challenges of
modern business . The work is the result of the processing of secondary data
obtained from research GLOBE project and primary data obtained by
questionnaire for the assessment of national culture in the company in the
field of the finance sector, the company Porsche leasing doo Serbia. Studies
have confirmed the thesis that management is under the influence of
national culture, but also that there are differences in perceptions between
employees, which can be treated as the resultant of intercultural
management. The practical applicability and usefulness of the research
work relating to the introduction and appreciation of the dimensions of
different cultures, which is a prerequisite for successful business and
effective adaptation to the constant changes in the global market.
Key words: leadership, organizational culture, intercultural management.
Introduction
Erasing the boundaries between national economies and markets, increasing the
impact of globalization, much faster and more efficient exchange of goods of people,
capital and ideas, with the development of the Internet and technology as a prerequisite
for a much faster flow of information, raising operating companies on a global level, as
1
High School of Professional Studies -Sirmium, Sremska Mitrovica, Serbia, nicicmilica1@gmail.com,
2
Faculty of Project Management, Educons Unversity, Belgrade, Serbia, mileticlj1@gmail.com
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well as creating international work environment, represent the beginning of interest in

the national culture in management and business, and for performance intercultural
management, also.
Economic globalization in recent decades is undoubtedly the theory of
management and organization imposed challenge of studying cultural differences and
their impact on organizational structures, systems and processes. Such investigations are
particularly important for the operation of multinational (MNC) of the companies,
which are, with the right will be declared the global economy hinges (Chokar, et al.,
2007).In today's business world, mergers and acquisitions of companies have become
part of everyday life and also one of the decisive factors of success of such a move.
Managing cultural differences in the clash of cultures in the process of organizational
transformation on the one hand can be a source of creativity and motivation, but on the
other hand can be a source of conflict and failure. Therefore research and examples of
good practice are very useful for complex leadership in contemporary business (Robbins
2005).
In the context of its importance for national identity, the focus of this paper is the
relationship of leadership and organizational culture, as manifestations of the influence
of Serbian culture on the management of the company, through the presentation of a
specific type of organization.The hypothesis proved in this paper reads: the
organization's management is under the influence of national culture and there are
differences in perceptions between employees, which can be treated as a result of
intercultural management.
The first part of this paper explains the methodology, the survey results are given
in the second part of the paper, the third part deals with interpretation of research
results, the final part of the paper concludes.
Intercultural management
researches in the global level
The relationship of leadership and organizational behavior as an essential part of
intercultural management, explicitly expressed as a result of one of the largest and most
influential organization of intercultural programs of research in recent decades, called
the "Global Program effectiveness of leadership and organizational behavior" (Global
Leadership and Organizational Behavior Effectiveness - GLOBE) (Leung 2007). Since its
inception in 1993 until today this program has become, along with the classic study of
Geert Hofstede (1980; 2001), one of the most important research projects of the entire
field of intercultural management and organization. When it comes to the basic
concepts of research, leadership in the research project GLOBE defined as "an
individual's ability to influence others, to motivate them and enable them to contribute
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to the efficiency and success of organizations whose members (Northouse 2008).

Culture, in turn, represent the "common motives, values, beliefs, identities and
interpretations or meanings of important events arising from the common experiences
of members of the collective, which is passed on for generations (House & Javidan 2004,
pp. 15). What is the relative novelty of this type of research is the effort to empirically
detect real (Culture "As Is"), but also "desirable" (Culture "Should Be") characteristics of
social and organizational culture. In other words, there was a commitment to
recognizing cultural practices and values at the level of companies, as well as individual
organizations. At first glance, this approach is very different from Hofsted, who believes
that the basis of national culture values while the essence of the organizational culture
make practices (Hofstede, 2001; 2006).
Authors of the project GLOBE determine the existence of significant differences
between Western (Nordic Europe, Germanic Europe, Latin Europe, Anglo clusters of
Latin America) and eastern cluster (Eastern Europe, Confucian Asia, South Asia, Middle
East and Sub-Saharan Africa). Western clusters are characterized by lower scores on the
dimensions within the group collectivism, human orientation and distance of power,
but more pronounced in avoiding uncertainties of orientation to the future (Gupta &
Hages, 2004).In contrast to the eastern, western cluster members emphasize the value of
gender equality, but have lower scores when it comes to uncertainty avoidance values,
orientation to the future, power distance and aggression. There are, the authors believe,
the characteristics typical of the material (structured and "predictable") society.
The basis of this predictability makes rationality, not authority (as in the East).
Respondents from eastern cluster see their culture as well as human-oriented and in
favor of collectivism within the group while the value of gender equality is considered
less important. In these cultures, values and practices of power distance are more
pronounced. When it comes to uncertainty avoidance dimensions and orientation to
the future, the scores are lower in terms of practice (actual situation), but higher in
terms of value (desirable state) than in the western cluster (Stojanovic et.al., 2010).
The research results are of great importance for the management of inter-
cultural, since the specific value of each culture and practices, and the organizational
contingency (organization environment, size and technology), and the determined
behavior characteristics of the leader which is commonly considered to be acceptable
and possibly successful. Also, certain characteristics of cultural practices predict the
economic competitiveness of nations and the physical and psychological well-being of
their members (House & Javidan 2004, pp. 17-19). Germany is among the highest
ranked countries according to aggressiveness and avoidance of uncertainty. On the
other hand, is one of the lowest rankings on human orientation.
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Leadership and national culture are the main sources of organizational culture,
which in various ways affect the operating results of the organization (Jovanović, 2007,
320). The organizational culture is a significant factor in creating and strategic decision
making in the organization (Miletic et.al., 2015). It is determinant of the ability to adapt
to changes in the environment. Used as the coordination mechanism in an organization
and the mechanism effectively control the behavior of employees. The organizational
culture is a significant factor elimination of the conflict and motivation factor.
Metodology
Methodology includes survey based on characteristic items on the basis of
which the dimension of national culture is determined, shown in Table 1.
Table 1. Determination dimensions of national culture and characteristic items
The definition of the cultural dimension Specific sentence of the

questionnaire
Power distance: The degree to which The slave should obey their leaders
members of the society accept or without question.
organization leaders.
Uncertainty avoidance: The level of effort to Most people should lead their lives
avoid the unpredictability of future events. predictable, with some unexpected events.
Human orientation: The degree to which the People should in principle be very
collective encourages and rewards tolerant of mistakes.
individuals for honesty, altruism, friendship,
generosity, caring and thoughtfulness for
others.
Institutional collectivism: The degree to Leaders should just encourage loyalty to
which organizational and institutional the group, even at the expense of
practices encourage and reward collective individual goals.
distribution of resources and collective action
Intragroup collectivism: The degree to which Employees should feel a strong loyalty to
individuals express pride, loyalty and unity in their organization.
their organizations and families.
Aggression: The degree to which individuals People are usually prone to dominance in
prone to conflict and rivalry. their relationship with others.
Gender equality: The degree to which the Boys more than girls are encouraged to
collective weight of improving the lot of achieve better education (reverse score).
gender inequality.
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Approximate future: The extent to which People longer live for the present than for
individuals choose to conduct focused on the the future (reverse score).
future, planning activity and investment in
the future.
Approximately achievement: The degree to Students are encouraged to strive for
which the collective encourages or rewards continuous improvement success.
group members for the overall success
Source: Javidan, House, Dorfman 2004, p.30.
The main objectives of the project GLOBE contained in an attempt to offer

answers to six basic questions (House 2007, p. 31). Primarily, are there any traits and
behaviors leaders, and organizational practices that are widely accepted and effective in
all cultures? Second, does the characteristics and behaviors of leaders and organizational
practices that are accepted and successful only in some cultures, i.e. culturally specific?
Thirdly, how do the characteristics of societal and organizational culture affect whether
or not the specific behavior of the leader will be accepted and successful? Fourth, what
qualities societal and organizational culture affects certain organizational practices?
Fifth, how do the characteristics of societal culture affect the economic, physical and
psychological well-being of members of these societies? Sixth, what is the relationship
between societal and cultural variables studied international economic competitiveness
of companies?
The practice has shown that it is very difficult to determine the organization of
only one type of culture as dominant, but is more often encountered in the mix of the
various types of culture, both in the context of the whole organization, and within the
parts. Organizational culture affects all segments of the organization in order to achieve
strategic objectives, is a way of communicating to employees, as well as with suppliers
and customers, is a form of behavior (Milinic-Bogicevic, 2005). A healthy
organizational culture can develop many benefits for an organization like the
competitive advantage that comes from innovation and customer service, efficient and
moral employed staff, teamwork, a strong orientation of employees towards achieving
the goals, low staff turnover, etc.(Mojic 2011).
Scientific studies have shown that administration of the national culture has a
strong influence on long-term performance and effectiveness of the organization. In this
regard, it is for the purposes of this study carried out research at the financial
corporation Porsche Leasing doo Serbia, to assist in response to the crucial issue of
contemporary intercultural management. Bearing in mind the GLOBE research,
comparative analysis of the isolated results related to Germany and Serbia, in order to
see relevant global parameters for a specific company.
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The paper will test the following hypotheses:H0 - null hypothesis: There is a
difference in relation to the dimensions of organizational culture among leaders and
employees.H1 - auxiliary hypothesis: For certain dimensions there are no differences
between leaders and employees in the financial corporation Porsche Leasing doo Serbia.
Intercultural management-researches in the financial

corporation
Results and discussion
Financial corporation „Porsche Leasing doo Serbia“ includes 3 companies:

„Porsche Leasing SCG doo“ (specializing in extortion of services of financial leasing
exclusive vehicles from the group Porsche Serbia), „Porsche Mobility doo“.
(specializing in the provision of lease vehicles from the group Porsche Serbia) and
„Porsche Partner“ doo (insurance broker insurance) and is part of „Porsche Holding“,
which through daughter companies, state holding company, operates in 10 countries
around the world.
Table 2. A comparative analysis of national culture Germany and Serbia

Dimension Germany Serbia
1. Power distance 35 86
2. Uncertainty avoidance 67 25
3. Individualism 66 43
4. Gender equality 65 92
5. Long-term navigation 83 52
Source: GLOBE (Hofstede G. 2001).

A comparative analysis of individual dimensions of national culture Germany
and Serbia is presented in Table 2.
Social responsibility and high ethical standards influenced the Porsche Financial
Group in Serbia is one of the best in the field of financial leasing, leasing of vehicles and
representation and insurance brokerage. The introduction of a code of conduct that
applies to all countries of Porsche Holding Group, made another step towards a
consistent perception of international and local responsibility.
In Table 3 is presented mean values of the answers to questions of determining
the dimension of national culture in this research.
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Table 3. Mean values of the answers to questions of determining the dimensions of national culture
Questions Mean The most

value common
value
In our society stand out order and consistency,
even at the expense of experimentation and 4,96 5,00
I
innovation
Uncertainty
In our society, the social requirements and
avoidance
instructions outlined in detail so that citizens 4,28 4,00
know what is expected of them
II In our society of followers are expected to
5,24 6,00
Power accept the decisions of leaders without question
distance In our society, power is concentrated at the top 6,08 6,00
III In our society, leaders encourage group loyalty

4,50 5,00
even to the detriment of individual goals
Institution.
In our society, the economically system is
collectivism 4,24 5,00
designed to maximize collective interests
IV In our society children are proud of their
4,88 5,00
individual achievements parents
Collectives in
In our society, parents take pride in individual
the group 5,60 5,00
accomplishments their children
V In our society, boys are more encouraged to
4,36 6,00
continue their education than girls
Gender
In our society, it is more likely to be in senior
equality 3,44 4,00
positions for wives
VI In general in our society people are revolting 4,60 5,00
Persistence In our society, people are generally rough 4,86 6,00
VII In our society accepted norm is to make plans

4,90 5,00
for future
Turned on
In our society, people pay more attention to
future 4,86 4,00
making plans for the future
VIII Our society supports students / learners to
4,44 5,00
attain outstanding results
Focus on
In our society, people are rewarded for
results 4,18 4,00
outstanding results
IX Humanity In our society people care about others 4,54 5,00
Source: authors.
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The subject of the empirical part of the research conducted in the framework of
case studies of this study was to analyze the dimensions of organizational culture in
terms of our national culture among the leaders and employees of the corporation
"Porsche Leasing" doo. Serbia because it is part of a global company the company with
foreign majority German ownership, and significant in terms of intercultural
management.
This research was intended to determine the dimensions of national culture
among the leaders and employees of companies that operate in Serbia, i.e. to check how
they perceive the different characteristics of our culture. The main goal of this research
is to systematize the latest knowledge in the field of national and corporate culture and
the impact of the organization's leaders on it.
In this paper, the intention was to determine the dimensions of national culture
among the leaders and employees of companies operating in Serbia. In other words, to
check how different features of our people's culture are observed. The main goal of this
research is to systematize the latest knowledge in the field of national and corporate
culture and the influence of the organization's leaders on it. Of the 50 respondents from
the private companies with foreign German-Austrian ownership, the respondents were
representatives of three subsidiaries of Belgrade (60% of respondents), Novi Sad (22% of
the respondents) and Subotica (18% of respondents. After statistical analysis of the
results of research are presented and explained in three parts:
a. Results in the company as a whole,
b. The comparative analysis of results obtained among the leaders and among
employees,
c. Testing hypotheses.
a. Results in the company as a whole
After statistical analysis results are obtained for the enterprise as a whole, which
are given in Table 4. The results suggest that the mean values of the responses received
by the survey are grouped in the interval 3.44 which is the smallest value obtained to the
question of whether it is in the our society is more likely to be in a higher position at
work to find a woman, to 6.08 which is the largest mean value obtained on the question
"in our society, power is concentrated at the top", which indicates that our society is still
polarized on the issue of equality, this is still a rarity to be in higher positions of our
companies, even foreign women often found.
In addition, the result shows that in our society there is a strong centralization,
with the greatest concentration of power at the top, indicating that employees pre
implement the decisions of leaders without question, but it will call into question the
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attitude of, when with him at variance, which the efficiency of business operations is not
good.
Table 4. Indicators of central tendency among the leaders and workers of the national
dimension of culture
Number Size Middle value The most common value

Nationality Leaders Employees Leaders Employees
cultures
Uncertainty
5,37 b 4,71 a 6 5
I avoidance
Power 5,53 a 5,06 a 5 5

II distance 6,11 a
6,06 a
6 7
Institutional 4,95 a 4,23 a 5 5
III collectivism 4,74 a 3,94 a 5 5
Collectivism 5,79 b 4,32 a 6 5
IV in the group 5,79 a
5,48 a
5 5
a a
Gender 4,79 4,10 6 5
V equality 4,16 b
3,00 a
5 4
a a
4,89 4,42 5 5
Persistence
a a
VI 4,89 4,84 5 5
a a
Focusing on 5,26 4,68 5 4
VII the future 5,47 b
4,48 a
6 4
Focus on 5,16 b 4,00 a 5 4
VIII results 4,89 b 3,74 a 5 4
b a
IX Humanity 5,21 4,13 5 4
Source: authors.
b.The comparative analysis of results obtained among the leaders and among
employees
The results of the research indicate that the following differences between
workers and leaders were (presented in histogram 1):
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Histogram 1. Comparative analysis of the results obtained among

the leaders and among employees
6
4
2 Leaders
0 Employees
I II III IV V VI VII VIII IX
Source: authors.
I - the leaders are significantly higher than workers believe that in our society emphasize
order and consistency, even at the expense of experimentation and innovation;
II - the leaders are at a somewhat higher level than when employees believe that in our
society the power concentrated at the top;
IV - the leaders in is significantly higher than workers believe that in our society,
children take pride in individual accomplishments of their parents;
V - The leaders of the is significantly higher than workers believe that in our society is
more likely to be in a higher position at work to find women;
VII - the leaders on is significantly higher than workers believe that in our society,
people pay more attention to making plans for the future;
VIII - the leaders on is significantly higher than workers believe that in our society
people are rewarded for outstanding results;
IX - the leaders on is significantly higher than workers believe that in our society people
care about others;
For III and VI dimension values are equal, or no difference to the category of
institutional collectivism and perseverance.
c.Testing hypotheses
On the basis of testing the significance of differences in mean values and

distributions received answers can be accepted basic hypothesis Ho that the corporation
Porsche Leasing doo Serbia is among the leaders and employees is a difference in
relation to the dimensions of organizational culture in cases of uncertainty avoidance
(5.37 : 4.71); power distance (5.53 : 5.06); collectivisms the group (5,79 : 4,32); equality
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(4.79 : 4.10), orientation towards the future (5,26 : 4,68); orientation to results and
humanity (5.16 : 4.00).
Here is also confirmed and auxiliary hypothesis H1 that there is no difference in
relation to the dimensions of organizational culture among leaders and employees in the
corporation Porsche Leasing doo Serbia in case of resistance (4.89 : 4.84), as a
dimension of culture.
Conclusion
It is generally known that management is a core function of any organization,

which determines long-term stability of the organization of work, as well as business
effectiveness. We are witnesses, that most businesses in Serbia are in a very difficult
position and that the companies, if they want to survive in the market and reduce
market uncertainty, must continually adapt to constant changes in the external
environment. This is possible by the process of organizational transformation, whose
efficient performance is necessary to know how leadership dimensions used in the
enterprise culture of the society in which they operate.
For the purpose of the work was carried out research, whose main goal is
systematizing the latest knowledge in the field of national and corporate culture and the
impact of the organization's leaders on it. In addition to this, the aim of the research was
to by leaders and managers, and employees better understand the dimensions of our
culture, as part of the ownership and management structure brings western culture (the
German-Austrian). The reason for this is to highlight the importance of considering the
dimensions of different cultures, which is a prerequisite not only better communication
between business leaders and employees, but also a successful business and effective
adaptation to the constant changes in the external environment, which are an integral
part of doing business in the global market.
REFERENCES
[1] Chhokar, J. S., Brodbeck, F. C. and House R. J. (Eds.). (2007). Culture and
leadership across the World: the GLOBE book of in-depth studies of 25 societies.
Lawrence
Erlbaum Associates, Mahwah, NJ; London.
[2] House, R. J., Hages P. J., Javidan, M., Dofman, P. W., Gupta, V. (Eds.).
(2004).Culture,Leadership, and Organizations: The GLOBE Study of 62 Societies. SAGE
Publications, Thousand Oaks, CA.
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[3] Hofstede, G. (2001). Culture's Consequences: Comparing Values,

Behaviors,Institutions,and Organizations across Nations. Thousand Oaks, CA: SAGE
Publications.
[4] Hofstede, G. (1980). Culture’s consequences: international differences in
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[5] House R. J. Chhokar, J. S., Brodbeck, F. C. (Eds.). (2007). Culture and
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across the World: the GLOBE book of in-depth studies of 25 societies. Lawrence
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[6] Gupta, V. Hanges, P. J. (2004). Regional and climate clustering of societal
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In: R. J. House et al. (Eds.), Culture, Leadership, and Organizations: The GLOBE Study
of 62 Societies. SAGE Publications, Thousand Oaks, CA.
[7] Javidan, M., House, R. J., Dorfman, P. W. (2004). A nontechnical summary of
GLOBE findings, In: House, R. J. et al. (Eds.), Culture, Leadership, and Organizations:
The GLOBE Study of 62 Societies. SAGE Publications, Thousand Oaks, CA.
[8] Jovanović M., Živković M., Cvetkovski T. (2007). Organizaciono ponašanje.
Megatrend Univerzitet u Beogradu.
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(Eds.). Culture and leadership across the World: the GLOBE book of indepth studies of
25 societies. Lawrence Erlbaum Associates, Mahwah, NJ: London.
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System” in Context of Quality Improvementin Marketing, Надёжность и качество,
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[14] Northouse G.P. (2008). Liderstvo - teorija i praksa. Western Michigan

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DEVELOPMENT POTENTIAL OF CREATIVE CITIES IN THE

TWENTY-FIRST CENTURY1
Sonja Pejić2, Danuta Szpilko3, Joanna Szydło4
Abstract
This paper will analyze the impact that the application of the concept of
creative cities may have on local and regional development in developing
countries. It starts from the assumption that developing countries have large
human capital that, through the development of the creative industries
sector and the application of the concept of creative city, can be maximally
exploited for the purpose of cultural, economic and social development of
the country. The analysis shows that a small number of developing
countries are developing strategies for their cities development that include
creativity, culture and art as strategic fields of action and that have long
term, positive effects on socioeconomic development. In this paper
secondary data sources will be analyzed using descriptive and comparative
methods.
Key words: creative cities, creative class, development, creative industries,
strategic planning, developing countries.
Introduction
"Cities are cauldrons of creativity"
1
This paper is the result of work on the project: ‘Transformation of Social Identity of Serbia in Crisis
and Influences on European integration’ (179052) financed by Ministry of Education, Science and
Technological Development of the Republic of Serbia
2
Faculty of Technical Sciences, University of Novi Sad, anael@uns.ac.rs
3
Bialystok University of Technology, Poland, d.szpilko@pb.edu.pl
4
Bialystok University of Technology, Poland, j.szydlo@pb.edu.pl
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Richard Florida
"Be creative – or die"
Christofer Dreher
Urban environment is a field of interdisciplinary research aimed at understanding

of the city and its lifestyle, supporting its development and contributing to its greater
regional and global importance. New approaches to urban and economic planning that
were developed at the beginning of the 21st century represent the city as a place of
diverse and inclusive art and culture (culture-centric approach) or as a place of
economic innovation, creativity and creative industry (econo-centric approach)
(Chapain and Lee 2009:157). These two approaches are correlated since art and culture
affect the development of creative industry, innovation, knowledge and vice versa. The
cities of the past, generic cities are today represented as boring, the ones that do not
attract tourists, non-inspirational, poor in contents that stimulate creativity, do not
attract cyber workers (digital nomads) and world travellers whose main goal is not only
to earn money but to gain considerable experience by changing the place of work. The
21st century has brought some changes in the perception of the city compared to the
vision of the city given by George Zimel, who claimed that the city, or metropolis,
created specific psychological conditions, led to intensification of nerve stimulation,
hatred for the metropolis and indifferent attitude reflected in insensitivity to differences;
life "became dominated by those impersonal contents and offers that tend to diminish
the authenticity of personal color and incomparability" (Zimel 2008: 289), which all led
to a tendency for seclusion and isolation in order for the personality to be preserved.
Yet, the truth on one side of the Alps is a lie on the other because "[e]ven if the quality of
the city life does not fulfill the expectations of the citizens, their migration to villages
almost never happens"(Pušić 2007: 676). The inhabitants of the city are “foreigners” for
Zimel. A foreigner is a person who has come today and will stay tomorrow. A foreigner
belongs to the group which boundaries are similar to spatial boundaries but his position
in the group is determined by the fact that he has not belonged to that group from the
very beginning. The only thing that matters is that he/she brings some quality in the
environment that he/she belongs to, thus transforming it. The aim of the creative city is
to be inhabited by creative people – "[h]omo creativus is an atomized subject,
apparently, with preference for intense but shallow and noncommittal relationships,
mostly played out in the sphere of consumption and on the street"(Peck 2005: 746).
The city filled with tolerance, openness, cultural diversity, different cultural and art
program and creative people is the city that has a “cool factor” which enables it to have
greater potential for development and become competitive in regional, national and
global market. In addition, "urban area is becoming increasingly differentiated in social
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terms and from functional aspect, it interconnects without physical contact" (Castells
2000: 429). The modern city is seen as a socio-economic system, a hub in the global
network through which the ideas, goods and services are exchanged. It is characterized
by the complexity of various elements and their relationships that integrate city
components in such a way that it can function and develop (Stawasz and Sikora-
Fernandez, cited based on Winkowska, Szpilko and Pejić 2019: 70). The modern city has
become a place where human creative energy is collected and channeled through
technological development, development of creative potential and a new field of activity
- the creative industry. The innovative potential of modern society is concentrated in
cities, which makes the city a center of socio-economic and cultural development, and
the understanding of the city revolves around the term of creative city, creative class5,
creative man, and creative industry. Numerous scientific papers and projects testify to
the transformation of urban environment into creative and smart environment (Florida
2005; Hartli 2007; Krätke 2010, 2011, Musterd 2004; Egedy and Kovács 2010, Chapain
and Lee 2009, Hall 2000, Scott 2006, Pratt 2008a, 2008b, Hospers 2003a, 2003b, Evans
2009, Grodach 2013, Gerhard, Hoelscher and Wilson 2017, Cooke and Schwartz 2007,
5
The concept of creative class was introduced by Richard Florida (Florida .2002, 2005). According to
his work, new class division must be made and there should be difference between 1) working class
comprising people employed in industrial production, transportation, civil engineering, 2) service class
comprising people who provide services for which no special skills are required, like health care, food
industry, cleaning, 3) agricultural class comprising farmers, fishermen, foresters, and 4) creative class which
is crucial for economic development in modern society. The creative class comprises people who are not
motivated by material rewards but by wish to lead an exciting lifestyle in interesting places, to have
challenges and be mentally stimulated 24/7. The quality of place plays an important role in all this, and the
jobs are something that comes and goes. According to Florida, the creative class is divided into 1)
Supercreative core – comprising natural scientists and engineers, information scientists, economists, social
scientists, physicians, architects, academics and related occupational types, 2) Bohemians comprising people
employed in the art field (writers, visual and performing artists, photographers, musicians, designers), 3)
Creative professionals – very heterogeneous group that includes highly skilled employees who apply their
professional knowledge in continuously changing contexts and interactive relations, including technicians,
consultants, organizational experts, mediators and brokers.
The concept of creative class and new "hipster strategy" for urban development (Peck 2005) have been
questioned by numerous authors (Krätke 2010, 2011; Lorenzen and Vaars Andersen 2009; Kagan and Hahn
2011, Peck 2005), primarily due to the facts that it is difficult to define the members of the creative class since
lot of creativity is necessary for today’s job, and there is the problem of overemphasizing the role of creative
people in the process of local and regional development as well as the role of LGBT population as an indicator
of openness and tolerance in urban environment. Many categories are included in the calculation of creativity
index – the number of patents per capita, density of bohemians and homosexuals in urban environment, the
percentage of migrants in the population, number of workers who have knowledge (knowledge workers),
number of fit people compared to overweight people leading to the fact that "[p]ositive urban images are
roughly quantified, transformed as objects that need to be respected – as places that are imitated" (Peck 2005:
747). Glaeser (Edward Glaeser) criticizes Florida’s argument about what attracts creative people to a certain
city – funky, socially free areas and high population density. According to Glaeser, those are large suburban
plots easily accessible by cars, with safe streets, good schools and low taxes (Glaeser 2004), while education
is a key factor in urban development. The creative class has been broadly defined, emphasizing that creative
professionals active in the field of finance, real estate, management and consulting are not relevant drivers of
economic growth in the way that scientific and technically creative work force is (Krätke 2011: 45-46).
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Kagan and Hahn 2011, Winkowska, Szpilko and Pejić 2019) and indicate to the need for
cultural aspects of urban lifestyle to become an important factor in developing urban
policies, businesses and everyday life of citizens. A certain change occurs in the way of
thinking about urban area and drive for growth in the city (Kagan and Hahn 2011).
Urban areas can be revitalized, re-imagined, rejuvenated through the living arts and
cultural sector development, leading to new jobs, connecting regional and old industrial
cities with the new economy, rebuilding industries or creating new ones, opening up
collective co-working spaces, the distribution of knowledge, information and products
at local, regional and global level. The development of creative industry leads to the
expansion of "social basis for entrepreneurial culture thus creating more business
opportunities for the population that was earlier regarded as having poor
entrepreneurial activities and different forms of social dependence" (Hartli 2007: 8).
The new economic class – creative class – is very important in economic and
cultural life of the 21st century, “in the same way as the working class was dominant in
early decades of the 20th century and service class in the second half of the 20th century.
Although the creative class is not as numerous as the service class, it still represents the
drive for development and source of changes in the overall economy and, at the same
time, the general spirit of the times we live in (Hartli 2007: 7). In developing countries
that are rich in human capital but are clearly unable to develop faster due to lack of
economic and natural resources, it is necessary to create an environment that would
contribute to innovation, new discoveries and new knowledge (Tej 2007). The aim of
this paper was to analyze the existing strategies for economic growth and urban
planning in developing countries by stimulating the development of knowledge,
innovation and creative economy. The starting point in this paper was the assumption
that creative people were not sufficiently utilized in developing countries and that the
concept of creative cities should not only be applied to large cities but to small cities as
well which must be ready for development based on creativity in the fields of art,
scientific and technological research.
Creative industries and city
The development of urban creativity cult is directly related to the development of

cultural industry or what is today called creative industry. According to John Hartley,
the "[c]oncept of creative industries aims at describing conceptual and practical merging
of creative arts (individual talent) with cultural industries (mass) in the context of new
media technologies (ICT) within the new economy of knowledge that can be used by
new interactive citizens – consumers"(Hartli 2007: 11). When we discuss about creative
industries in the 21st century, we can notice that they encompass the following sectors:
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advertising, architecture, market of arts and antiques, crafts, design and fashion design,
film, video, photography, computer games, music, performing and visual art,
publishing, television and radio. These sectors form the core of creative industries or
“the core creative industries”, besides which, there are also “the non-core creative
industries”. “The non-core creative industries” encompass interdependent industries
engaged in production, production and sales of equipment which function is to facilitate
the creation, production or consumption of cultural products. These include, for
example, production, wholesale and retail of television sets, radios, CD players, DVD
players, electronic games equipment, computers, musical instruments, recording
materials, paper, photocopiers, devices for photography and cinematography; non-
dedicated support industries which activities are related to broadcasting,
communication, distribution or sales of cultural products. They include the part of
general wholesale and retail trade, general transport, telephony and the Internet (see
The Economic Contribution of the Creative Industries to EU GDP and Jobs, 2014: 14).
Many global funds have recognized the significance of investing in creative industries
due to their range of activities. "Creativity, knowledge and city have become a new hope
for urban planners when they are faced with urban problems that need to be solved"
(Chapain and Lee 2009: 159, text in italics is original).
Until the 1950s of the 20th century, the cities did not have enough creative workers.
According to Florida (Richard Florida), less than 15 % of population in the USA worked
in the field of creative industries which were in that period called cultural industries
(Florida 2005: 3). Nowadays, we are witnessing the creative sector boom which is proven
by the fact that a third of employees in developing countries are employed in the
creative sector. The results of the research in creative industries show that creative
industries today generate more than 7% of the world GDP (Gross Domestic Product) and
have annual growth rate of 5-20%. The creative industries are leading industries in
Europe based on the economic growth with 558 billion dollars value added to GDP
(total of 4.4% of total GDP in EU) and ,on average, 8.3 million of jobs equivalent to full-
time jobs (3.8% of total labor force in EU) (see The Economic Contribution of the
Creative Industries to EU GDP and Employment, 2014 < https://www.forum-
avignon.org/en/study-tera-consultants-forum-davignon-0 >; Bontje 2016). According to
Eurostat data, 80% of people employed in the sector of culture worked in small and
medium size enterprises in 2015. From 2006 until 2010, the ACRE project
(Accommodating Creative Knowledge – Competitiveness of European Metropolitan
Regions within the Enlarged Union) was conducted in the EU with the aim of assessing
soft and hard6 location factors that stimulate the creation of “creative knowledge
6
Soft location factors are the tolerance, diversity and openness of city regions and their population.
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regions”. The research covered thirteen European cities (Budapest, Amsterdam,

Barcelona, Birmingham, Dublin, Helsinki, Leipzig, Milan, Munich, Poznan, Riga, Sofia
and Toulouse) and was conducted in three stages during which the views of the
educated workforce in the creative sector and knowledge-intensive industries were
collected on working and living conditions and the role of hard and soft location factors
in making decisions about living in a particular location or region; detailed
questionnaire was conducted with the owners and managers of companies in the
creative and knowledge-based industries with the aim of gathering data necessary to
decide on the establishment of their businesses at a particular location, as well as on how
important the location factors were in the decision-making process regarding the choice
of company location. The third stage of the research involved conducting interviews
with transnational migrants employed in the creative industries with the aim of
gathering information about their opinion on the impact of location factors on their
decision to stay and find a job at that particular location. The results of the research
show that "[i]n both eastern and western European cities, knowledge intensive branches
represent a higher share of the local labor market compared to the creative ones.
Considerable disparity can be observed, however between the two parts of Europe in
that the labor market share of creative branches is undoubtedly lower in eastern
European cities" (Egedy and Kovács 2010: 130). The main reasons why respondents
decided to come to the cities that were part of the research were primarily favorable
conditions on the labor market, more possibilities for good jobs, larger market
(companies and clients). As for the factors for staying at a certain location, the key ones
are family and personal relationships, housing costs, size of house, and proximity to
public transport, to work place, quality and atmosphere in the neighborhood. In the
long term, the most important factors for staying at a certain location are personal
safety, quality of life, access to significant facilities. We have acquired very interesting
data according to which young people, the employed and managers usually decide to
stay at a certain location based on the availability of hard location factors while the
elderly take into account soft location factors (Egedy and Kovács 2010:133-134). The
research conducted in Slovakia (Baculáková 2018) shows that there is unequal
development of creative industries on the territory of the EU. According to 2014 data,
around 6.2% of companies in Slovakia fell in the category of creative companies, while
4% of the total number of employees were employed in creative industries. The research
on creative clusters in Slovakia, conducted in 2018, indicated that creative industry and
large number of creative class members were concentrated in bigger cities (Bratislava) -
resulting in higher monthly salaries for employees in this sector compared to other
Hard location factors are traffic accessibility, possibility for education, real estate, land availability,
prices, taxes, access to markets and labor (Egedy and Kovács 2010: 129).
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places in Slovakia (Senec, Trnava, Hlohovec, Trenčín, Púhcov, Nitra, Zlaté Moravce,
Žilina, Turčianske Teplice, Banská Bystrica, Žarnovica, Poprad, Košice, Rožňava) that
were part of the research (Baculáková 2018). Mark Lorenzen and Vaarst Andersen
(Kristina Vaarst Andersen) conducted the research from 2003-2007 on the distribution
of general population and creative class in 444 cities from eight European countries
(Denmark, Finland, Germany, Netherlands, Norway, Sweden, Switzerland and the
United Kingdom) and showed that smaller cities were less interesting to the members of
creative class than to the rest of the population. Their research shows positive
correlation between the size of the general population and the size of the creative class in
selected European cities. This would mean that the larger the city, the greater the
concentration of the creative class in it; cities with a large number of creative people
additionally attract more creative people. A greater share of the creative class in the total
population also means its greater impact on professional, daily and political life, as well
as on political decision-making on the use of public spaces, funds and other resources
(Lorenzen and Vaarst Andersen 2009: 381). It seems that the most interesting for the
creative class are medium-sized cities where there is no urban congestion, with reduced
pollution and cheaper accommodation (Musterd 2004), the city with well organized
infrastructure and a developed social network among members of the local creative class
and the visitors. With this in mind, it is clear that “instant” success in the economic
development of a city is impossible. The most successful creative cities are those that
stand out economically and have a long tradition as the centers of culture and
knowledge (Bontje 2016). Marco Bontje analyzes the development possibilities of cities
that were not created on the principles of sustainable urban development, that are not
attractive places or powerful regional centers, and which are positioned in economically
weaker regions – the shrinking cities. Bontje cites the examples of cities such as Leipzig,
Dresden and Manchester which managed to develop owing to the development of
creative and knowledge industries but also to the prevention of suburbanization and the
influx of new population from the region. It should be noted that this way of new urban
development is not applicable to all cities - especially not for the small ones that have
never been cultural centers, or the centers of innovation and knowledge.
Creative cities in the developing countries
Not every city can be a creative city and

not even all city inhabitants profit from such a strategy:
it is often a strategy with relatively few winners and many more losers.
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(Bontje 2016: 154)

In the developing countries, the process of investing in the creative industries and
developing the creative potential of the city is only at its beginning. As many cities in the
developing countries are not economically developed and they do not have the
knowledge and information on development opportunities by fostering activities and
work in the cultural sector, a significant development strategy for future is the formation
of alliances between cities at international level and participation in international
competitions and projects (for example, the European Youth Capital, The European
Capital of Culture, the Intereg IVC project “Urban-Rural Partnership in the
Metropolitan Area”). "Small shrinking cities and towns that lie close to major creative
centers, and which are perhaps shrinking precisely because of this proximity, may be
able to augment the regional creative economy. They might be able to offer what the
large creative cities do not have (or no longer have): a room for affordable working and
living environments and free spaces for creative starters and marginal creativity" (Bontje
2016: 156). Smaller cities that are away from large creative centers need to explore the
potential that their region has to offer and try to profit from them, or to create alliances
with creative industry centers, or organize themselves into creative clusters with
businesses similar to theirs in order to help each other. Cities in developing countries
that have a university, an authentic neighborhood and a certain number of employees in
the ICT sector, as well as a certain potential to attract tourists, have a chance to succeed
in a process of economic development which is based on creativity. "Cities that offer a
lifestyle and creative sector but still have available factory facilities and cheap beer
(Ward 2000) will attract more creative workers and diverse communities" (Ward cited
Tej 2007: 344). Considering that the creative workforce is the one practicing the most
visits to museums, art exhibitions, classical music concerts, music, dance, and acting
performances, visits to libraries, tours the cultural heritage of the place of residence
(Lorenzen and Vaarst Andersen 2009), the cities with rich cultural life will be more
attractive to the creative class than other cities. The development of creative industries
and attraction of creative people to cities, however, should not lead to the gentrification
of urban spaces in favor of the creative elite (the bobos, the bourgeois-bohemians), the
new urban professionals, yuppies and DINK (double income no kids people), because
"[e]ven though a creative city’s template can be copied, its success will depend largely on
how it tackles the issues of long-term development, such as economic and social
sustainability, settlement and local displacement, exclusionary practices and local
identities" (Tej 2007: 340). A city focused on the development of creative and knowledge
industries continues to be a place where members of other professions are equally
important for the city to function as a system, and they should not be neglected in the
urban renewal process. Because, "[i] n particular the notion of the ‘creative class’ as the
most important human resource of successful cities can be understood as a new place-
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marketing slogan that is based on the glorification of specific functional elites in a

neoliberal social order" (Krätke 2011: 194).
If we try to synthesize what are the strategies that must be implemented in the
process of creating creative cities, or the cult of urban creativity in developing countries,
then those would be: 1) Hipsterization of cities or areas through the process of building
quality and creative places for creative people (construction of walking and cycling
paths, opening conceptually designed cafes, restaurants, galleries, arts and crafts shops,
bookstores, recreation areas, concert venues), 2) development of creative economy, that
is, creative industry focusing on design and innovation, 3) encouraging an
entrepreneurial climate among people in the local environment, 4) creating networks
and clusters to connect cities that identified creativity as a strategic factor for sustainable
urban development (e.g. The UNESCO Creative Cities Network, Creative Europe) , 5)
opening coworking and coliving spaces that would provide work space for mobile and
creative work force, meetings, recreation and enjoyment (e.g. Mokrin House in Mokrin,
Serbia), 6) attracting a large number of young people through internship programs, 7)
maintaining the cleanliness of the city, creating green spaces, parks, outdoor exercise
spaces, pavilions, developing physical infrastructure, 8) avoiding spending funds for
ephemeral events such as festivals, cultural events that leave no lasting effects on the
creative city environment, 9) 3S rather than 3T - Skills, Sun and Sprawl - developing
cities are not creative capitals, but rather cities where educated people live, where taxes
are low, and housing and basic necessities are cheap. Such cities are called “creative
losers” (Glaeser 2004, 2011), 10) remember that regional economic development
depends on the performance of everybody, and not just the creative workforce.
Conclusion
However inspiring the story of creative cities is, it should be remembered that
"[c]reativity and innovation are embedded in the basic imperatives of capitalist
economies which subordinate creative work and innovation activity to the continued
race for competitive advantage and the appropriation of surplus profits" (Krätke 2011:
198). For developing countries, the focus on developing creative cities should be only
one of the economic development strategies. Considering that employees in the creative
sector fall into the middle-class working poor category, that there has been deregulation
and flexibility in the employment field, that the cultural sector’s ability to recruit a large
number of people is limited, that not all cities have the ability to attract and keep the
creative class - creative urban development can only be seen as a way to improve the
image of a city and increase its competitiveness with respect to other cities.
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CHALLENGES OF THE DIGITAL TEAMS

Ivana Pezerovic1, Ivana Katic2, Ana Nesic3, Milica Dzida4
Abstract
The paper illustrates the challenges of working in digital teams. New and
powerful digital technologies, digital platforms and digital infrastructure
have transformed the way corporations operate in a significant way.
Globalization and the growth of multinational companies have led to an
increasing number of virtual teams (as members communicate with each
other in a virtual environment, using ICT tools), which are often
multicultural. Both, virtuality and interculturalism bring to the team work
certain peculiarities that must be taken into account when we consider
managing teams. A significant topic is how management chooses to
establish ongoing collaboration with digital workers. What are the value
systems and what are the most important personal competences that
influence the achievement of stable and long-term long-distance
cooperation? The main question is what new skills and knowledge should
digital workers need in order to successfully work in virtual teams.
Key words: digital teams, digital team work, digital worker, competencies
of digital workers.
1. Challenges of the Digital Team Management
New and powerful digital technologies, digital platforms and digital infrastructure
have transformed the way corporations operate in a significant way. In addition to
opening up new opportunities for gaining corporate benefits, digital technologies have
1
Faculty of Technical Sciences, University of Novi Sad
2
3
4
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more opportunities to create new value and to preserve it. Research focused on
understanding digital transformation in economics must include multiple levels of
analysis, capture ideas and concepts from multiple disciplines, and explicitly
acknowledge the role of digital technologies in transforming organizations and social
relationships.
Globalization and the growth of multinational companies have led to an increasing
number of virtual teams (as members communicate with each other in a virtual
environment, using ICT tools), which are often multicultural. Both, virtuality and
interculturalism bring to the team work certain peculiarities that must be taken into
account when we consider managing teams. The most important aspect of digital
transformation is the cultural change that requires organizations to constantly rethink
the status quo, often experiment and get used to failure as an integral part of success.
Leadership challenges, different thinking, fostering innovation and new business
models, all include the use of new technology. This means a change in the mindset of
employees and an orientation towards constant change.
According to the authors of Haas & Mortensen (2018), teamwork has transformed
and now is much more diverse, dispersed, digital and dynamic - and by these
characteristics, new teams have been called 4D. In their research (Haas & Mortensen,
2018), which lasted over the15 years, they have analyzed teams and groups of people in
different working conditions, in global organizations, on large projects. This long-
standing research effort has shown what are the most important features and conditions
that are necessary for a 4D team to work successfully.
Interestingly, similar research was also conducted 40 years earlier by J. Richard
Hackman in 1970 (Hackman, 1970, according to Haas & Mortensen, 2018), which laid
the groundwork for research into teamwork and organizational behaviour. Even then,
Hackman concluded that for successful teamwork, it was necessary to achieve the
following three conditions: clear focus, reliability and support. In their research, Haas &
Mortensen, 2018 comes to the conclusion that these three conditions are still as
significant to the success of teams today as they were 40 years ago. They even expressed
that they need to be given even more attention nowadays. In addition, during the
research, Haas & Mortensen (2018) also brought a fourth condition that they consider
to be equally important, which is a sense of community.
1. Clear focus. The basis of every successful team is to set a clear goal and
direction. A clear goal is a benchmark for team members, but it should also inspire and
connect them. The goals that management sets for teams should be achievable, but still
challenging so that motivation does not fall. In new, 4D teams, it is especially important
to clearly define goals. People from different cultures understand differently, e.g.
customer satisfaction, so they will say that this is the highest quality, and team members
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from another country will think that customer satisfaction is achieved by better
customer service. Because of the different understanding of the same concept, it is
necessary to clarify each term in detail so that all team members understand their tasks
in the same way.
2. Reliability. Forming a team requires a specific combination of the right number
of members who will receive exactly the tasks and procedures they can accomplish while
maintaining a positive dynamic. A good team is made up of individuals with different
qualifications. None of them individually needs to have the ideal knowledge and skills,
but the stimulating team embraces all competencies and thus delivers outstanding
results. If there is diversity in the team in age, gender, race, nationality, it can help with
creativity in thinking and problem solving. The reliability and trust that team member
gain in each other is mostly achieved by arranging video meetings, encouraging
informal communication, and striving to have their tasks connected, but with greater
autonomy and responsibility for team members from different countries.
3. Support. When it comes to support, it is usually considered to be an adequate
payment for the effort and work involved. In addition to making money, it is very
important to have access to all the necessary information needed to perform the tasks, to
provide training and education, as well as equipment that fully meets the requirements
when performing the tasks.
4. A sense of community. Digital collaboration often leads to intolerance between
team members. Usually, members from the same culture, office, city, state, connect
mentally, and view other team members as the opposing side. In this sense, it is
necessary to work to create a sense of community. Successful managers, who have seen
this, use a variety of methods to create a sense of community in such a dispersed team. It
is important for team members to understand their role, as well as the role of other
members in the implementation of joint major projects, and to see that they would not
be able to perform such a complex task on their own.
2. How to Organize a Successful Digital Team?
The standard workday is based on the assumptions of the Industrial Revolution era
that result in a traditional view of employees, with individuals expected to meet
productivity over a period of time for an agreed wage. With the advent of internet
technologies and the rise of knowledge work, organizational leaders should question the
old, hierarchical notion of work. A study on remote control found that remote working
led to increased productivity for both management and team members, who had
increased autonomy over traditional mode (Gajendran & Harrison, 2007). Increased
autonomy, in the case of digital work, is thought to be the result of flexibility in work
schedules and the ability to control the work environment. Such flexibility is contrary to
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the assumptions of traditionally organized work. Consequently, not only a standard

workday is not necessary to optimize work performance, but non-standard
arrangements can produce greater results.
While selecting the right candidates may increase the probability of success,
performance management must be tailored to reflect the unique challenges of digital
work. In addition to managing and evaluating task-oriented digital workers, digital team
managers should focus on maintaining relationships to avoid the potential decline in
relationship quality between team members. Lombardo and Mierzwa (2012) in a paper
submitted to the Second International Conference on Engaged Management
Scholarship point to several best practices for managing digital teams, including:
implementing a communication strategy based on personal meetings; facilitating direct
interaction; reporting on value and highlighting the success of team members physically
separated from the organization. In addition, it is recommended that managers establish
a relationship with digital workers that will allow them to identify issues through
behavioural change, which is a major challenge in digital communication.
These recommendations certainly appear for the management of any teams, but
when it comes to digital teams, this is a more complex mechanism for executing these
recommendations. Accordingly, executives need to be trained in detecting behavioural
changes, identifying opportunities for problems, and resolving identified problems with
limited interaction frequency and forms of communication.
3. How to select a Perfect Candidate for the Digital Team?
As digital business evolves, workforce engagement in the digital world (gig

economy) is emerging to the same extent. In the studies by Atkinson and McKay (2007)
and Lamsfus et al. (2015) digital workers are defined as people who have a range of IT
competencies. Digital work is one of the first and most massive phenomena linking the
fields of digitization and labor and employment. Digital 'mass' work is paid work in
which the employer is not necessarily registered in the same country as the worker.
According to the analysis of the labor market in the online sphere, the supply of digital
workforce is more present in developing countries with the developed IT industry
(OECD, 2018). Digital worker needs to achieve organizational goals in a digital
economy environment. The digital competencies of workers need to be highly adaptable
to the digital age.
A significant topic is how management chooses to establish ongoing collaboration
with digital workers. What are the value systems and what are the most important
personal competences that influence the achievement of stable and long-term long-
distance cooperation. So the main question is what new skills and knowledge should
digital workers need in order to successfully work in virtual teams.
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Sawatzky (2019) published a study that examined the most important

competencies for digital workers and found that the most important were those based
on emotional intelligence. A high emotional coefficient (EQ) is important for
leadership, especially in team environments. Prati et. al. (2003) described EI as the
ability to understand others in a social context, understand emotional response, and use
this knowledge to influence others through emotional control. Team leaders with high
EQ can analyze others' emotions and control their own emotions when interacting with
subordinates (Prati et al., 2003). Understanding their own emotions and being able to
understand the emotions of employees enables leaders to build adequate interpersonal
relationships and effectively manage the team. Leaders who rely on charismatic
leadership have a high EQ and their leadership strength is based on a high appreciation
of the thoughts and feelings of others, as opposed to a narcissistic style that creates a
negative atmosphere in the team and diminishes the importance of teamwork.
Teamwork is very important because every business environment where the team
is working must ensure collaboration between team members in order to complete
coordination and the distribution of the tasks. EI has positive effects on relationship
management, which is important in any environment that involves collaboration (Prati
et al., 2003). A manager who can evaluate and anticipate the emotional reactions of
subordinates will more easily adapt their leadership styles depending on the particular
employee. These capabilities can play a key role in influencing behaviour and
performance among members of digital teams.
3.1 Contribution of Emotional intelligence to digital team members

High EQ has a positive effect on teamwork and can ensure a sustainable digital
team membership. When evaluating potential members of digital teams, research has
shown that EI can be used as a key determinant to describe whether someone will be a
suitable member of the digital team (Frye, Bennett & Caldvell, 2006). Frye et al. (2006)
have defined EI as an emotional and social aspect of intelligence. Empathy is seen as a
key attribute of informal leaders emerging from formal groups and helping to manage
alongside managers (Ferbrache, 2009; Frye et al., 2006). High EQ is of great importance
to leaders, but the importance is also noticeable in other team members. The EI level
can be an instrument for assessing whether an individual will fit into the digital team
well. Despite this knowledge, EI still cannot be identified as a common attribute that
distinguishes members of digital teams, but can be recognized as a characteristic that
can be very useful. It is also important to consider the impact of trust and empathy in
digital teams. Members of digital teams with high EI have a greater ability to understand
the emotions of other team members and can therefore respond and make decisions
about how to proceed (Prati et al., 2006). Empathy contributes to greater team
connectivity, and leaders of such a team are required to manage relationships between
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team members and should always keep other team members in mind. Removing
selfishness adds to the collective spirit and team atmosphere. The challenge is greater in
the case of digital teams where members are dispersed both temporally and locally,
where it is much more difficult to apply such empathetic styles. High EQs make it easy
for leaders and team members to evolve and reach their full potential.
Of the digital workers' competencies, the most prominent in the study (Sawatzky,
2019) are based on emotional intelligence: • communication, • self motivation, •
reliability, • discipline, • initiative / curiosity, • flexibility, and • efficiency.
Clear communication as an exchange of knowledge and information, especially in
writing, is considered to be the most crucial factor for successful cooperation in digital
teams. Communication skills are highly valued because communication is vital and
depends on the successful collaboration of virtual teams. Accuracy and elimination of
ambiguity in messaging can only be achieved if there are excellent communication skills,
especially written. There is a misunderstanding in digital teams because different terms
are used (people are from different countries) and the possibility of non-verbal
communication is limited. Due to different time zones, they cannot always rely on
technology that supports virtual meetings where audio-video transmission exists. It is
believed that excellent communication requires patience, reflection, review and
transformation of messages and information in order to achieve the goal of
communicating clearly.
Self motivation is one of the most important competencies when working in digital
teams. It refers to taking personal responsibility for organizing his/her own work
effectively. This kind of work is based on self motivation without pressure from others.
It is believed that digital workers would not be able to successfully perform assigned
tasks if they were not able to organize themselves without the influence of superiors.
The reliability of the digital team members is essential for successful collaboration.
If a person is not trustworthy, this can be a deciding factor for that person not to engage
in further cooperation. There are many more disruptive factors in digital work than in
the traditional workplace, such as leisure activities due to informal work place and part-
time work. In these working conditions, the worker must set priorities and schedule
daily activities, when he/she has already committed himself/herself to the task. The
worker demonstrates reliability by performing each task as agreed. Management of
digital teams recognizes that it will be difficult to rely on the work of a person who
thinks that commitment is restrictive, and they attach great importance to this trait.
Discipline shows a controlled behavior or behavior pattern. Discipline is a long-
term commitment in the same direction because a person believes that it is the right
path. Discipline also involves great dedication, because it happens that a person does not
want to do a certain thing, but still does it in order to achieve the set goals. Digital
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workers who are disciplined are highly valued in digital teams because of their long-
term commitment.
Initiative and curiosity refer to an activity or strategy that aims to solve a problem
or improve the current situation. Initiative workers are usually eager for new
knowledge. In a digital environment, the individual is responsible for doing his or her
own task and, if he/she encounters a problem, must find a way to solve it by him or
herself. There are no micro-managers in the digital teams that instruct workers in detail
by performing precise step-by-step instructions. Curiosity speaks of a desire for
constant growth. Such individuals are never satisfied with the “status quo”. They seek
new and improved processes, new solutions, learn new things and never indulge in
stagnation. The desire for continuous learning is also very important for the success of
digital workers.
Flexibility is a person's willingness and ability to change and adapt to new working
conditions. Flexibility can be the key to the success of digital workers, despite their
exceptional expertise. In digital work, there are often changes in the course of
collaboration from different sides, client, supervisor, team member, unforeseen
circumstances, or even personal reasons. Regardless of the source, successful digital
workers need to develop the ability to adapt in order to accomplish their task in any
situation without threatening project implementation.
Self-efficacy is the belief in one's own ability to achieve high results. An individual
with high self-efficacy knows his or her capacities well, can provide the highest quality
of work he / she is capable of, but is also willing to seek help when needed without
feeling less valuable about it.
4. Conclusions
The digital age has brought about a lot of changes in professions and employment
(Atkinson & McKay, 2007), especially for IT jobs within the digital economy. The
complexity is now greater as teams become increasingly global, virtual and project-
based, which means that team members change according to project needs. In order to
ensure the success of the collaboration and achieve the expected result of the digital
teams, a systematic approach and analysis of both the individuals and the conditions in
which they collaborate are required, which is greatly influenced by management.
Digital transformation is a step further and has a huge impact on the economy,
government and society of a country. Clearly, artificial intelligence (AI) will become an
important part of how we communicate and collaborate in the foreseeable future.
Integrating artificial intelligence technologies and business communication
applications, such as teamwork and unified communication, can improve worker
productivity, save time and improve the overall flow of business. It represents a kind of
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revolution that will bring about great change and growth in all fields if we keep up with
it and take full advantage of the opportunities it offers, while reducing the effects of all
the challenges it can bring.
When it comes to teamwork, the emotional competencies of people who are leaders
and members of digital teams most influence success regardless of all the technology
that is being implemented. Technology and digitization is ubiquitous and significant,
making it easier to work with and connecting people from distant parts of the world.
This is very significant because of the greater choice in the labour market, which in this
case becomes global and accessible, both to multinational corporations and smaller
players in the market. But it should be borne in mind that digitalization brings a whole
new set of challenges to management who, in human resource management, need to
apply even more emotionally non-IT skills to make digital teams successful.
REFERENCES
[1] Atkinson, R.D., McKay, A.S., 2007. Digital prosperity: Understanding the
Economic Benefits of the Information Technology Revolution. A research report of The
Information Technology & Innovation Foundation, Washington, DC, p. 20005.
[2] Ferbrache, C. P., 2009, Virtual team leader emergence: A model to objectively
measure leader emergence (Master’s thesis). Available from ProQuest Dissertations and
Theses database. (UMI No. 1484525)
[3] Frye, C. M., Bennett, R., & Caldwell, S., 2006, Team emotional intelligence and
team interpersonal process effectiveness, Mid-American Journal of Business, 21, 49-56.
doi:10.1108/19355181200600005.
[4] Gajendran, R. S., & Harrison, D. A. (2007). The good, the bad, and the
unknown about telecommuting: Meta-analysis of psychological mediators and
individual consequences. Journal of Applied Psychology, 92(6), 1524-
1541.http://dx.doi.org/10.1037/0021-9010.92.6.1524
[5] Haas, M.& Mortensen, M., 2018, The Secrets of Great Teamwork, HBR.org
[6] Lamsfus, C., Martín, D., Alzua-Sorzabal, A., Torres-Manzanera, E., 2015. Smart
tourism destinations: an extended conception of smart cities focusing on human
mobility. Information and Communication Technologies in Tourism 2015. Springer
International Publishing, Lugano, Switzerland, pp. 363–375.
[7] Lombardo, Christopher and Mierzwa, Tom, Remote Management Styles: Effects
of Relational Psychological Contracts and Leadership Style on Teleworkers (June 15,
2012). The Second International Conference on Engaged Management Scholarship,
Cranfield, UK, June 21 – 24, 2012. Available at SSRN:
https://ssrn.com/abstract=2084762
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[8] Noe, R., Greenberger, D. and Wang, S. (2002), "Mentoring: What we know and
where we might go", Research in Personnel and Human Resources Management
(Research in Personnel and Human Resources Management, Vol. 21), Emerald Group
Publishing Limited, Bingley, pp. 129-173. https://doi.org/10.1016/S0742-
7301(02)21003-8
[9] OECD. (2018). Online Work in OECD countries. Policy brief on the Future of
Work.
[10] Parker, G., Alstyne, M. and Choudary, S. (2016). Platform Revolution: How
Networked Markets are Transforming the Economy, and How to Make Them Work for
You. W. W. Norton & Company. ISBN-10: 0393249131.
[11] Prati, L. M., Douglas, C., Ferris, G. R., Ammeter, A. P., & Buckley, M. R., 2003,
Emotional intelligence, leadership, effectiveness, and team outcomes. The International
Journal of Organizational Analysis, 11, 21-40. doi:10.1108/eb02896.
[12] Sawatzky R. and Sawatzky N. J., 2019, Remote work: equipping business
students for the working reality, Okanagan College School of Business.
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MARKET POWER OF HIGHER EDUCATION INSTITUTIONS

Anja Jakšić1, Jelena Ćurčić2, Jelena Spajić3, Danijela Gračanin4, Zdravko Tešić5
Abstract
The main goal of this paper is to emphasize the significance and the market
role of higher education institutions (HEIs) for the (global) socio-economic
development. As one of the pillars of social development, these institutions
represent the main drivers of the economy, providing industry professionals
educated in areas that the global market requires. Therefore, the main
research questions of this study are: can world universities really follow the
economic trends and whether they really contribute to the development of
the workforce for the most sought after professions of today? Higher
education market is facing with the challenges of rapid socio-economic and
technological development. In that manner, the objects of our study are
HEIs, both as actors and creators of market trends in the era ofmodern
globalization. This view is supported by the relevant literature review and
well-known Shanghai ranking methodology. The research results supported
by the presented theoretical concepts provide valuable insights about market
power of HEIs, for both academic and professional community, and
contributes to the further discussion of how much HEIs participates in the
creation of new professions and the development of particular industries,
and vice versa.
Key words:higher education institutions, socio-economic development,
professions, market power
Introduction
The environment of higher education institutions becomes extremely competitive
and universities have to strategically devote themselves to monitoring socio-economic
and technological trends.In the contemporary context of education, universities face the
1
University of Novi Sad, Faculty of Technical Sciences, Novi Sad, Serbia
2
3
4
5
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challenge of increasing their cooperation with business entities, because it can also affect
their ranking in the perception of the viewer. Based on how the university applies the
laws of new market trends and whether its curriculum is relevant to current and sought
after professions in the market, formal and informal university rankings are created.
Considering the multidimensional role of the higher education institutions (HEIs)
on educational market, and their (necessary) influence on the development of economy
and society, the aim of this study is to highlight the significance of these market subjects
and their influential power. Therefore, the subjects of this research are the best global
universities and their working approach, in order to gain insight into which industries
and how these HEIs are truly contributing. For the purpose of selecting the best higher
education institution, Shanghai Ranking methodology was used.The research results are
followed by a discussion based on the literature review and conducted market analysis.
Theoretical background
Education has been, and still is largely considered as a public good(Nedbalova,
Greenacre, & Schulz, 2014), the purpose of which is to disseminate knowledge and
contribute to the development of society(Council of the European Union, 2014).
Universities’ contemporary functions can be classified under the four categories
(Gürüz, Şuhubi, Şengör, & Türker, 1994):
1. Education,
2. Basic scientific research,
3. Community service and
4. Training a qualified workforce.
In The Beautiful Risk of Education, Biesta characterizes and argues against “strong”
perceptions and practices of education, and explains and exemplifies a “weak” view
through seven “themes”: creativity,communication, teaching, learning, emancipation,
democracy, and what Biesta labels ”virtuosity”(Yosef-Hassidim, 2016).
Universities are expected to play as conducting scientific research, developing
solutions for national and universal problems, training the labor force the country
needs, spreading the knowledge, skills, and insights it has gained to other people,
publishing, and setting an example in all fields(Sönmez, 2003).
On the other side, some authors claim that universities’ functions include
producing knowledge via research, teaching on the basis of this knowledge, publishing
to spread the knowledge, training a highly qualified workforce for the development of
the society, contributing to the creation of education policies, being a center of criticism,
providing counseling to various institutions, and serving the society(Karakütük, 2006).
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Methods
Shanghai Ranking Consultancy is a fully independent organization dedicating to

research on higher education intelligence and consultation. The Academic Ranking of
World Universities was first published in 2003 by the Center for World-Class
Universities, of Shanghai Jiao Tong University, Republic of China, and updated on an
annual basis. Since 2003, it has been presenting the world Top 500 universities annually
based on transparent methodology and objective third-party data. This year, the best
1000 universities in the world are published. It has been the official publisher of the
Academic Ranking of World Universities since 2009.
There aresix objective indicators to rank world universities, including the number
of alumni and staff winning Nobel Prizes and Fields Medals, number of articles
published in journals and number of articles indexed in Science Citation Index-
Expanded and Social Sciences Citation Index, and per capita performance of a
university(ShanghaiRanking Consultancy, 2019).
Results
The impact in the Academic ranking of world universities by topic area is shown in
the Table 1, which including Mathematics, Physics, Chemistry, Computer Science and
Economics/Business. Table 1 shows the ranking of the world's best universities by
subject in 2019.
Table 1: Academic ranking of world universities by topic area
Computer Economics/
Mathematics Physics Chemistry
Science Business
Harvard
12 8 6 6 2
University
Stanford
4 2 2 2 8
University
Cambridge
8 16 8 27 12
University
MIT 7 1 3 1 5
UC,
11 4 1 3 3
Berkeley
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The results indicate that MIT is at the forefront in physics and computer science.
UC Berkeley occupies the first position in chemistry. Stanford University ranks second
in Physics, Chemistry and Computer Science, and Harvard University in economics.
UC Berkeley is on third position in Computer Science and Economics/Business.
It can be concluded that three of the top five world’s universities are at the forefront
in Computer Science and Chemistry.
Considering the fact that modern society witnesses rapid technological
development, for the purpose of this research it is important to highlight the top ten
universities in the field of Computer Science (Table 2).
The Table 2 shows the data from the Shanghai Ranking of the Global Ranking of
Academic Subjects for 2019, and it is a blend of engineering with a major focus on
computer science, which is the main key to faculty success around the world relating to
information technology.
Table 2: Academic ranking of top ten world universities by Computer Science
World Rank University Country
1 MIT United States

2 Stanford University United States
3 UC, Berkeley United States
4 Carnegie Mellon University United States
Swiss Federal Institute of
5 Switzerland
Technology Zurich
6 Harvard University United States
7 Tsinghua University China
8 UC, Los Angeles United States
9 Princeton University United States
10 University of Oxford England
According to data from the Shanghai Ranking list, we can conclude that the United
States is the most successful country in the field of information and information
technology. In the top 10 next to United States are Switzerland, England and China. By
the all indicators of Shanghai ranking, Massachusetts Institute of Technology is the most
successful university in 2019 in the field of information and information technology.
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In addition to programming, other job seekers are finding their place in the future
business. Many of them are experiencing their current expansion in the business and in
the business world.
The demand for IT professionals is very high and the data from the research
published on site Computerworldhighlights which future IT skills will be the most
sought in the future. According to researchers, the most promising profession of the
future will be(IDG Communications, 2014):
1. Programming - 48% of companies planning to hire workers with these
perspective skills
2. Project management of IT - 35% of companies planning to hire workers with
these skills
3. Technical Support- 30% of companies planning to hire workers with these
skills
4. Network administration - 22% of companies planning to hire workers with
these skills
5. Mobile applications development - 24% of companies planning to hire
workers with these skills
If we are looking at the great success in the business world that has grown in recent
years thanks to information technology and rapid technology development, many
professions have developed rapidly. Researching this area, it was concluded that as many
as 48% of companies have focused their business on programming development. Many
are focused on technical support, network administration, mobile application
development as well as the application of project management in information
technology.
Future professions will require new competencies and skills to fit into an
increasingly digitized and responsible economy, whose rapid pace will require
continuing education and ongoing efforts.
Discussion
A majority of global universities have made considerable efforts to attain the title of
‘‘world-class university’’ through various strategic approaches, such as: recruiting global
talents(Brown, Lauder, & Ashton, 2011), highlighting outcome-based research
performance (e.g., research published in certain academic indices), securing huge
funding, encouraging academic exchanges and collaborations, launching offshore
universities(Marginson, 2007), etc.
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International organizations such as the European Union, United Nations, OECD

and World Bank are constantly conducting studies on change in higher education and
related concepts. As a result of their efforts, “quality assurance principles and standards”
started to be applied in higher education, and each country started to evaluate its own
higher education system(Özdem, 2011).
Amid various efforts made to achieve the status of world-class university (and
thereby improve their university rankings), there has been a growing recognition of the
importance of web visibility (i.e., structure of web links) of universities that may
critically shape people’s perceptions of university reputations and images(Moosung &
Han Woo, 2012).
Clearly the worldwide market for students and the ceaseless search for research
funding and prestige are crucial elements in this fascination with the idea of a world-
class university, as well as the desire of governments for universities to contribute to
their national economies(Rosemary, Mok, & Lucas, 2008).
It is important to emphasize that higher education institutions have a large share of
public research, both basic and applied. A properly organized higher education system
can increase the efficiency of research activities, which in turn increases the stock of
knowledge capital — as distinct from human capital — which is the basis for
technological progress (Cervantes, 2017).
Technology plays a central role within the fundamental changes in
education(Bates, 2009). Increased competition and the massification of education have
encouraged universities to increase their market share by expanding and diversifying
their offerings (in terms of educational levels and curricula) and the scope of their
recruitment to attract and serve new subgroups that have not yet been
tapped(Pucciarelli & Kaplan, 2016).
In the higher education sector, higher education institutions are facing rapid
social,technological and economic changes(Zhu, 2015).HEIs have become main actors
in innovation systems.The national innovation systems theory considers HEIs as the key
actors in the performance of nationalinnovation systems given their important
functions(Cervantes, 2017).
Conclusions
In this study, two important listswere identified. First, there is a ranking of the best
global universities with their market contribution to particular scientific areas and thus
industrial fields, and the second, there is a list of the most promising (i.e. the most
popular) future professions. The research results indicate that educational fields are
evolving towards the desirable professions of the future.
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Higher education has become a crowded global marketplace and as such, is not
immune to changes affecting 21st century society–an increasingly global, digital, and
dynamic environment(Pucciarelli & Kaplan, 2016).Technological and social trends
inevitably influence the operation of HEIs. On the other side, these market entities also
show that they can successfully follow and create new trends in the market by
demonstrating their power of influence.
In this era of rapid technology development and constant change, universities
should compete for the attention of different stakeholders.In addition to their main
market role,HEIs contribute to local economic development through entrepreneurial
and commercial activities, their social and cultural relevance, and knowledge transfer.
From a macroeconomic perspective, HEIs play a mediating role between capital
and labour in economic growth. HEIs train and develop productive human capital
through teaching activities, and human capital accumulation has been an important
driving force behind aggregate economic growth (OECD).
Due to their strong socio-economic impact, higher education institutions can be
considered as multidimensional entities in the higher education market, that together
with business corporations and other stakeholders develop industries and professions of
the future.
Acknowledgments
This paper is supported by the Ministry of Education, Science and Technological

Development of the Republic of Serbia, Grant no. TR35050.
REFERENCES
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[3]Cervantes, M. (2017). Higher Education Institutions in the Knowledge
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education: Managing complexity and uncertainty. Business Horizons.
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Education in Whose Image? Exploring the Concept of the ‘World-Class’ University
in Europe and Asia. Higher Education Policy, 21, 83-97.
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TURNOVER AND ABSENTEEISM: INDICATORS OF

MANAGEMENT DYNAMICS IN MODERN CORPORATION
Bojana Sokolovic1, Ivana Katic2, Anna Frank3
Abstract
The paper examines absenteeism as a part of turnover which has a strong
impact on the business overall performance of contemporary corporations
and corresponding indicators of business success. It includes determinants
of sickness absence behaviour in terms of employee characteristics,
workplace characteristics, working time, economy conditions, full time vs
part time, work related injuries and many others. Occupational turnover
intention is affected by many different factors such as demographic
characteristics, experience in the profession, job demands, work-home
interference, unemployment rate, opportunities for professional
development etc. Volume of turnover and absenteeism has direct effects on
modern business in terms of performance indicators. The paper also studies
researches on the absenteeism and turnover topic in business in the present
days with conclusion how to upgrade business dynamics, managing
successfully key processes such as turnover and absenteeism.
Key words: absenteeism at work, turnover, business, sickness absence,
performance indicators.
Introduction
Measuring organizational performance, and using the information to drive

organizational policy and functioning is at the core of modern management (Neely A.,
Al Najjar M., 2006). Absenteeism and turnover among modern organization’s workers
1
Affiliation, Faculty of Technical Sciences, University of Novi Sad, PhD student
2
Faculty of Technical Sciences, University of Novi Sad, Associate Professor
3
University of Waterloo, SERS – School of Environment, Resources and Sustainability,
anna.frank@uwaterloo.ca
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have a significant impact on overall company business performance. Absenteeism has

been in the focus of multidisciplinary interest. Overall understanding of absenteeism has
profited from the interest of a wide variety of academic disciplines, including
psychology, sociology, management, medicine, rehabilitation, economics, ergonomics,
nursing, law, public health, and industrial relations. Each of these disciplines has its
favored methodologies, data sources, and levels of analysis that operate in
complementary ways to shed light on the nature of absenteeism (Johns G., 2003).
Absenteeism as a part of turnover need to be investigate to prove succesfull dynamic of
modern business.
Turnover as an element of the business processes should be integrated into
business management system. Business process characteristics must be identified.
Modern business process management need to reconcile academic theories with
industrial contexts, and need for upcoming software functionalities that prioritize
removing the barriers frequently. Furthermore, indicators of performance management
of business should be recognized and studied. In order to support organizations in
implementing successful business practice this paper attempts to explain basics of
absenteeism as part of turnover and indicators of performance in the modern business
environment. Business success is closely related to these topics.
Absenteeism Problems
Absenteeism has a significant impact on organization’s productivity and further

more on the overall business costs (Bierla I., Huver B, Richard S., 2013).
Definition of absenteeism: Absenteeism in the literature is defined through
different categories of time loss: holiday and sickness reasons (annual leave, work –
caused accidents, certified sickness, hospital appointment, etc.), education and training,
employee relations social, community, suspension with pay, union duties, civic duties,
jury services, military reserve, preretirement reduced working, marriage leave, unknown
reasons etc. (Tilczak L., 1990).
Absenteeism is generally viewed as the phenomenon of not showing up for
scheduled work (Lohaus D., 2019). One of the established definitions of absenteeism is
lack of physical presence at a behavior setting when and where one is expected to be.
The key social referent at work, the source of expectation for attendance, is likely to be
one’s immediate supervisor, or whomever is party to the psychological contract implicit
in one’s work schedule (Harrison D., Price K., 2003). One’s work schedule codifies and
makes concrete the social expectations for work attendance. There is a mention in the
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literature of a choice-element in absenteeism and potentially decisive role for the utility
of leisure (Markussen S., Roed K, 2015).
The literature studies the worker’s incentives to play ‘hookey’ from work. There is
possibility for this statement due to an outwardly unobservable probability of being sick
and further, being unable to work. While absenteeism caused by job dissatisfaction,
psychological disturbance, coworker collusion, a sick child, or a hangover evinces
surface similarity, different methods may be necessary to explore these different causes.
For instance, people may be more willing to self-report with candor about asick child
than about their drinking habits. To manage absenteeism it is necessary to take into
consideration the following influences: employee specifics gender roles and
responsibilities, age, financial status, family-related activities, personal illness (including
abuse of alcohol or drugs), desire to spend time with friends, family, personal business,
child care, family member illness, education, hobbies, employee’s value system, strength
of the work ethic, self-growth, personal needs, job stress, personal commitment to the
job, job satisfaction, peer pressure, loss of promotional or wage-raise opportunities, loss
of benefits, disciplinary probation, fault or no-fault absentee program, job involvement,
employer commitment, incentive program, workgroup size, job range or scope,
workgroup norms, job variety, job autonomy, task significance, worker participation in
decision making, distributive justice, pay equity, leadership style, supervisor’s attitude
toward absenteeism, job specialization, work communications, paid sick leave, amount
of paid vacation, size of firm, lack of transportation, local and national unemployment
rate, geographic area (Tilczak L., 1990).
The author Goetzel mentioned health conditions as the main reason for absenteeism
(Goetzel, Long, Ozminkowski, Hawkins, Wang, Lynch, 2004).
Author has summarized the relationship between absenteeism and a rather wide
variety of variables, including: work attitudes, such as job satisfaction and organizational
commitment; demographics, including age and tenure and gender; role ambiguity and
conflict; lower back; interventions to reduce absenteeism, including back pain
interventions flextime and the compressed workweek and various other; performance,
integrity, structured selection interview ratings, turnover and lateness, self-reports of
absence; various other correlates (Johns G.,2003).
It is well known fact that the level of sickness absence varies substantially across
time and place (Bonato L, Lusinyan L., 2007). It is important to examine the
determinants of sickness absence behavior such as genuine employee heterogeneity
(Markussen S.,Roed K., 2011), the identity of a person’s panel doctor, sickness absence
insurance and local regulations during the sickness absence. For example, according to
Serbian Labor Law, sickness absence is paid 65% of the salary. In case of minimum
wages (shop-floor workers), absence of few days has minimum effect on the monthly
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employee salary, hence, it can influence a higher rate of absenteeism. The root cause of
these situation is the lack of regulations that could identify veracity of the sickness
diagnosis (Issues like strong headache, stomach-aches, neck-pain, or back pain,
presented to the doctor can hardly be verified without full analyzes, nevertheless, the
doctor has authority to issue a certificate of paid sickness absence without the full
analyzes). All mentioned above implies that an absentee should be recognized as an
organizational problem, needed to be properly managed.
Different perceptions of turnover
According to authors, turnover is an outcome affected by variables listed as follows:

staff development, motivation, job satisfaction, having other job, burnout, technical
ability, commitment, transformational leadership, voluntary overtime, contribution to
decision making, team effort, career development, social skills, risk exposure, salary,
working time, handover of shifts, ongoing education, effective communication, work-
related injuries, negative perceptions of managers/team leaders, unsupportive work
climate (Daouk-O L.,Anouze A-L, Dumit, Osman, 2014).
Scholars make distinction between voluntary and involuntary turnover (Allen D.G.,
Bryant, Vardman, 2010).
Occupational turnover, like organizational turnover, represents a form of voluntary
withdrawal from a specific work situation (Adams G.A., Beehr T.A., 1998).
Occupational turnover is not just a of concern for an individual employee, but
comprises an important organizational and societal issue as well (Dalton D.R., Todor
W.D., 1982). Some of the researchers use the theory of planned behavior and
occupational turnover intention as the most immediate predictor for occupational
turnover (Heijdena, Peeters, Le Blance, Van Breukelenf, 2018). Furthermore, age and
tenure are often considered as demographic variables and are subsequently treated as
controls in studies on turnover. Decision to leave the company can be caused by job
demands and job resources on the market.
Modern companies need to reduce high rate of employee turnover to avoid costs
caused by turnover and improve indicators of successful business. Management
researchers have provided an appreciation of how un organizational unit of analysis can
be used to probe how variations in attendance policy affect absence behavior (Dalton
D.R., Perry J.L., 1981). Every year, companies spend significant amounts of money due
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to lack of successful management of turnover intentions of employees. It is measured

per hourly employee salary, or on annual employee salaries. Organizational leaders can
gain abetter understanding of person-organization fit within a value congruence
framework within their organizations, particularly at the non - managerial levels, and be
better informed in creating internal processes designed to increase job satisfaction and
minimize employee turnover. A supportive management style could lead to positive
engagements (Olubiyi O., Smiley G., Luckel H., Melaragno R., 2019). If people fit well
with an organization, they are likely to exhibit more positive attitudes and behaviors
(Amos, Weathington, 2008).
Evidence from the literature suggests that sickness absences can be linked to
salaries, benefits, as well as, working conditions (Henderson, Tulloch, 2008).Some
researches show the positive link between ‘demographics’ variable (age, gender, having
other job) and higher rates of absenteeism and turnover (Daouk-O L, Anouze A.L.,
Otaki F., Dumit N.Y., Osman, 2014). Furthermore, other demographic variables were
found to lead higher turnover: full time job status, having childcare responsibilities,
living far from the workplace. Personal characteristics of employees also have impact on
the turnover rate. Personal characteristics are: skills, knowledge, traits, abilities,
technical ability, social skills. For example, employees with certain personal
characteristics such as higher problem-solving ability, better stress coping strategies, and
the ability to withdraw from work obligations were found to be less likely to be absent as
compared to others (Screuder, Roelen, Zweeden, Jongsma, DerKlink, Groothoff, 2011).
Some authors state there is positive relationship between burnout and career turnover
intentions (Barthauera L., Kauchera P., Spurk D., Kauffelda S, 2019). They assumed and
proved in the research, that the contextual resource of perceived departmental support
moderates the mediated path, and therefore plays a buffering role within unsustainable
career development. The relationship between burnout and turnover intentions has
been empirically confirmed (Alarcon G.M., 2011).
Research of organizational turnover and absenteeism in

modern business
Modern business definition implies providing a wide range of opportunities for

automating, sharing information and transforming business.
Business process characteristic (Viriyasitavat W., Martin A., 2011) presented as
follows: Transient and persistent – doing the modern business the necessity of operating
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in a short time basis occurs. It means situation where services needed to be acquired in a
short time. Persistency of modern business can be found in modern systems where the
changes of business workflows are not many, but the services executing workflow tasks
may be selected dynamically; dynamic and static; workflow formation and enactment;
centralized and decentralized management.
For the last years, numerous researchers have conducted surveys to identify success
and failure factors for modern business. Measuring organizational performance, and
using the information to drive organizational policy and functioning is at the core of
modern management (Neely A., Al Najjar M, 2006).
The research on the absenteeism and turnover topics are quite available in the
literature and studiously examined. Some research presented below.
The first research on the topic of absenteeism and turnover appeared in the second
half of 20th century. The purpose of paper ’Employee absenteeism: A review of the
literature (Muschinsky P., 1977) is to examine the literature on vocational behavior,
specifically the aspect of withdrawal behavior, referring to employee absenteeism and
turnover by dealing with this phenomenon at a very practical level.
Emphasis is placed on the indices used by investigators to measure absenteeism,
examining the psychometric properties of absence measures, relationship between
absenteeism and personal, attitudinal, and organizational variables, and the problems
associated with use of multiple indicators.
The research has contributed to overall knowledge of vocational behavior,
summarizing and integrating the previous research on employee absenteeism, and by
offering
conclusions that suggest this important topic is of both theoretical and practical
concern.
Studying the topic of absenteeism authors Gaudine and Saks tested the effects of an
absenteeism feedback intervention on employee absenteeism (Gaudine A.P., Alan M.,
2001). Obtained results indicate that the intervention was successful in reduction absent
episodes and total days of absenteeism for employees with above average but not
extreme absenteeism.
Authors examined the relationship between perceptions of unfairness at work and
absenteeism. They predicted premise was unfairness causes absence behavior in a direct
or indirect way. The central aim of these study was to investigate the extent to which
perceptions of unfairness at work contribute to explaining the absence behaviors of
employees over and above effects on the other unfavorable work conditions and
previous absenteeism. That study provided evidence for the contention that different
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components of the fairness concept are important for predicting absence behavior (De
Boer E., Bakker A., Schaufeli, 2002).
According to authors S. Markussen and K.Road impact of hours of daylight on sick
leave absences among workers is proven. In their study it is found sensitivity of
absenteeism to weather conditions (Markussen S., Roed K., 2015).
Researchers presented study to unravel the relationships between job demands and
resources, occupational turnover intention and occupational turnover. They did
examination into nurse working in European health care institutions and results of it
supported the hypothesis that job demands are positively related with occupational
turnover intention while job resources and experience in the nursing profession are
negatively related with occupational turnover intention (Heijden B., Peeter M., Blanc P.,
Van Breukelen W., 2018).
Authors investigated the impact of pay on CEO turnover from two perspectives:
managerial power perspective and tournament theory. they found out that both the level
of CEO pay and its ration over the average pay of the firm’s four other highest paid
executives have a negative impact on CEO turnover (Shen W., Gentry R., Tosi H., 2010.
Conclusion
In this paper it was studied indicators of performance both absenteeism and

turnover as part of modern business dynamic. It is essential that modern companies
define and implement systematic processes for managing success aiming to improve
deliverables performance. Sustainable success of any modern organization is strongly
associated with precisely defined and managed indicator of performance such as
turnover and absenteeism. A well-designed system for measuring performance enables
an organization to translate its strategy to operational goals, and drive the behavior of
employees to achieve the goals. There is no unique standard set of KPI’s. Defining set of
KPI’s modern companies need to be guided by KPI’s used to measure the performance
of the employees in all levels of organization including management positions. For it are
useful performance appraisal records. It is important to cover all aspects of KPI’s:
people, process and technology. Somethimes, managers who are dealing with
absenteeism issue don’t have too much informations and it becomes harder to focus on
what is most important for the solving or decreasing the problem of absent employees.
It is necessary to understand the purpose of the specific KPI, such as absenteeism as
part of turnover, and how it is connected to the strategic objectives and goals of the
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organization. To be competitive every modern company should implement a business

performance measurement system. That creates opportunity of monitoring production
and business performance and corporate strategy at all levels of company. The purpose
of this paper is to present literature review of turnover introducing absenteeism and
suggest further topics to investigate in terms of performance indicators of business, and
eventually to avoid additional costs for company and achieve overall goals.
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similarities and differences, Personnel Psychology, 51(3), 643–665, (1998)
[2] Allen, D.G., Bryant, P.C., Vardaman, J.M., Retaining talent: replacing
misconceptions with evidence-based strategies. Acad. Manag. Perspect. 24 (2),48–64
(2010)
[3] Alarcon G. M., A meta-analysis of burnout with job demands, resources, and
attitudes. Journal of Vocational Behavior, 549–562 (2011)
[4] Amos E.A., Weathington B.L., An analysis of the relation between employee
organization value congruence and employee attitudes. J. Psychol. 142 (6), 615–631
(2008)
[5] Barthauera L, Kauchera P, Spurkb D, Kaufflelda S, Burnout and career
(un)sustainability: Looking into the Blackbox of burnout triggered career turnover
intentions, Journal of Vocational Behavior (2019) article in press
[6] Bierla, I., Huver, B., Richard, S., New evidence on absenteeism and
presenteeism, The International Journal of Human Resource Management, (2013) 24,
1536–1550
[7] Bonato L., Lusinyan, L., Work absence in Europe. IMF Staff Papers 54, 475–538,
(2007)
[8] Dalton D. R., Perry J. L. Absenteeism and the collective bargaining agreement:
an empirical test, Academy of Management Journal, 24, 425–431, (1981)
[9] Dalton D., Todor W.D., Turnover: A lucrative hard dollar phenomenon,
Academy of Management Review, 212–217. (1982)
[10] Daouk-O L., Anouze A., Dumit F., Osman I., The joint model of nurse
absenteeism and turnover: A systematic review, International Journal of Nursing Studies
(2014)
[11] De Boer E., Bakker A., Schauffeli J., Unfairness at work as a predictor of
absenteeism, Journal of Organizational Behavior, Vol. 23, No. 2 (2002), pp. 181-197
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[12] Gaudine A., Alan M., Effects of an absenteeism feedback intervention on

employee absence behavior Journal of Organizational Behavior, Vol. 22, No. 1 (2001),
pp. 15-29
[13] Goetzel, R. Z., Long, S. R., Ozminkowski, R. J., Hawkins, K., Wang, S., Lynch,
W. Health, absence, disability, and presenteeism cost estimates of certain physical and
mental health conditions affecting US employers. Journal of Occupational and
Environmental Medicine, 46, 398–412. (2004)
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and dispositional influences across multiple settings, Human Resource Management
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[15] Heijden B., Peeters M., Le Blance P., Van Breukelenf V., Job characteristics
and experience as predictors of occupational turnover intention and occupational
turnover in the European nursing sector, Journal of Vocational Behavior 108 (2018)
108-120
[16] Henderson L.N., Tulloch J., Incentives for retaining and motivating health
workers in Pacific and Asian countries. Human Resources for Health 6 (18) (2008)
[17] Johns G., How methodological diversity has improved our understanding of
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[18] Lohaus D., Habermann W., Presentism: Review and research direction, 2019
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[19] Markussen S., Roed K., Rogeberg O., Gaure S., The anatomy of absenteeism,
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[25] Shen W., Gentry R., Tosi H., The impact of pay on CEO turnover: A test of
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CLIMATE CHANGE IMPACT ON BUSINESS WITH A SPECIAL

VIEW OF INSURANCE AND REINSURANCE COMPANIES
Vladimir Njegomir 1
Jelena Demko Rihter 2
Abstract
The twentieth century is marked by global warming that has not been
recorded, of such dramatic intensity, in all previous human history. Studies
by the Intergovernmental Panel on Climate Change have showed that
climate change is evident and measurable and that humans predominantly
caused climate changes. Climate change causes large-scale catastrophic
events such as floods, fires, tsunamis, hurricanes, which threaten
individuals, the economy and society. Particularly, the impact of the
negative effects of climate change is on insurance and reinsurance, since
insurance and reinsurance companies bear the greatest consequences, in
view of the increased need to pay for damages that accompany the
occurrence of catastrophic events that cause climate change. The aim of the
paper is to determine the impact of climate change on the economy,
business entities and insurance and reinsurance. In the paper, we first
analyse impact of climate change on the companies, especially insurance
companies and consider the role of reinsurance and alternative mechanisms
in managing the risks that climate change causes.
Key words: climate changes, business, insurance companies, reinsurance
companies.
Introduction
The climate always has a strong influence on humans and society in general. The
impact of climate on humans can clearly be seen from the fact that the highest
population density is in areas of continental and temperate continental climates.
1
Faculty of Legal and Business Studies dr Lazar Vrkatić Novi Sad, vnjegomir@flv.edu.rs
2
Faculty of Technical Sciences, University of Novi Sad, jciric@uns.ac.rs
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The climate affects all aspects of human life and determines the diversity of
agricultural production, influences the development of tourism, plant and animal
species, and through the influencing supply and demand for certain products, the
climate indirectly affects the financial system. Climate information is of enormous
economic importance for various industries such as agriculture, construction, energy
supply, transportation, but also insurance and reinsurance companies so that they can
anticipate the potential impacts of climate change on adverse events, especially
catastrophic ones. Given the strong impact of climate on human society, it is clear that
climate change in the form of global warming will inevitably affect man and his
activities.
Climate change in the form of global warming is visible, tangible and measurable
and represents one of the most significant risks facing the world. The focus of this paper
is exploring the impact of climate change on the business with a special view of
insurance companies. The aim of the paper is to determine the impact of climate change
on the economy, above all companies and securability. In the paper we analyze impact
of climate change on the business of companies and especially insurance companies as
well as securability and finally consider the role of reinsurance and alternative
mechanisms in managing the risks caused by climate changes.
Business in the climate change conditions
In terms of the impact of climate change on the economy, in addition to the direct
impacts caused by catastrophic events, it is also necessary to mention the costs required
for preventative measures. For example, given that there are approximately 20,000
kilometres of coastline in the U.S. and more than 32,000 kilometres of coastal areas
exposed to frequent flooding, it is estimated that adjusting to a 1-meter rise in sea level
would require investment to adapt to new conditions of about $ 156 billion, or 3% of US
gross domestic product. Also, according to World Bank experts, catastrophic weather
events in the US generate about $ 23 billion in expenditures annually. Bearing in mind
that the costs of adapting to climate change are putting enormous pressure on the
economies of even developed countries, it is quite clear that the poor countries will be
particularly vulnerable to climate change, especially concentrated in high-risk areas.
Climate change is a reality in which businesses today operate and adapting to it is a
conditio sine qua non of their survival and future development. To avoid the worst
consequences of climate change, companies and society in general need to reach “net
zero” carbon emissions by 2050 or sooner. It requires comprehensive changes in a way
of producing, transporting and consuming electricity. Significant results in reaching
„net zero carbon emission“ will be achieved by state policy of applying price on carbon.
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Although Paris Agreement signed in 2016 reflects the world’s best effort to solve climate
change so far, it doesn’t include needed emissions reductions [9]. Climate change and
accompanying policies aimed at reducing global warming emissions create systemic
risks for the economy and regulatory, physical and reputational risks at the industry and
company level. Although the impact of global warming varies by industry, all companies
are to some extent exposed to the effects of climate change and ought to assess their
business exposure to new risks and opportunities and to make appropriate decisions
about future activities in the context of climate change adaptation and reducing negative
effects on global warming that mostly occurs due to the intensification of the
greenhouse effect.
Figure 1: CO2 emission and increasing of GDP in period 1990-2019

Source: [8]
The opinion of the Federation of European Risk Management Associations is that

the issue of climate change for risk managers in Europe will become increasingly
important. Corporate management is facing increasing requests of key stakeholders,
especially after the implementation of the Kyoto Protocol, to disclose information on
applied strategies related to global warming, especially with respect to greenhouse gas
emissions. Having in mind the increasing interest of shareholders, potential investors
and the general public, disclosure of information regarding emissions and the actions
taken by companies to reduce them is becoming increasingly important. Since climate
change can have an important effect on business performances, investors are reasonably
interested in getting information on how companies are coping with the reality of
climate change, their threats and opportunities. After the implementation of Kyoto
Protocol companies in Europe have begun to disclose information about their emissions
and the activities they are taking to reduce them in order to improve public relations
and to react proactively to reduce the greenhouse gas emissions. Given the fact that
disclosure of this type of information is not yet standardized, as is the case with financial
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reporting, the Climate Disclosure Standards Board was established at the 2007 World
Economic Forum in Davos.
Climate change is affecting the availability of material and human resources,
regulatory pressures, and growing activism of shareholder and the public. Also, the
importance of risk management stems from the fact that companies are also faced with
and responsible for potential environmental damage caused by the emission of gases.
However, climate change also creates new opportunities for businesses by creating
markets for the development of new products and processes that improve energy
efficiency and reduce greenhouse gas emissions. Therefore, companies are affected by a
numerous risks caused by climate change, such as the risk of non-compliance with
regulatory requirements, the risk of non-compliance with the requirements of
shareholders and the public and thus the risk of losing market position. However, if
companies take a proactive approach to climate change risk management, they can
leverage climate change to improve their business in terms of better comply with the
requirements of shareholders, regulators and the public, which facilitates access to
additional capital, enhances reputation and competitive advantage.
Solutions regarding mitigation of effects of global warming require balancing the
economic costs of reducing greenhouse gas emissions more rapidly with the
corresponding medium- and long-term risks of delaying corrective action. Thus, from
the perspective of companies regarding climate change, risk managers have two key
roles: 1) reviewing long-term exposure to problems and finding a long-term sustainable
solution, and 2) obtaining insurance coverage.
Securability in terms of climate change
According to the Insurance Information Institute, catastrophic events are events

caused by a natural or human factor that are unusually strong and affect a large number
of insurers and insureds. The Insurance Services Office gives a similar but more accurate
definition of a catastrophic event by determining the dollar amount at which an event
can be considered catastrophic. According to ISO, an adverse event can be considered
catastrophic when it causes damage that reaches or exceeds $ 25 million.
Catastrophic damage has been intensified in the last two decades, especially
disasters caused by natural factors and climate change. Historically and especially in
recent times natural disasters caused by changing weather conditions such as
hurricanes, tsunamis, droughts and floods have threaten the most business of insurance
and reinsurance companies (see Fig. 2).
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Figure 2: Damage caused by catastrophic events covered by insurance in the period 1970 –
2019 (in US$ bn)
Source: [1]
In addition to the increasing number of catastrophic events and the growing

impact of catastrophic damage on insurance, there is a dominant influence of damage
caused by natural factors, i.e. weather conditions, due to the manifestation of climate
change. These tendencies are shown at Fig. 2
Zemljotr Urag
200 esi u ani
Uragani Japanu i Harv
Katrina, Rita, Wilma
Novom
150 Zel.,
Uragani Ivan, poplave
100 Charley, Frances na
Zimska oluja Lothar Tajlandu
Uragani Uragan
Svetski Ike, GustavSandy
Uragan Andrewtrgovinski
50
centar
0
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Ljudskim faktorom izazvane katastrofe
Figure 3: Types of catastrophic events covered by insurance in the period 1970– 2018 (in US$
bn)
Source: [1]
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The data in the Figure 3 testify to a continuous increase in the adverse effects of
catastrophic events. Insurance operates on the basis of reciprocity and solidarity in risk
sharing and payments of premium. However, catastrophic damages threaten the main
principles of insurance, as well as the basic conditions that risks accepted in insurance
coverage must meet (numerous risks with average damage rather than few risks with
great damage; risks should be mutually independent which is not in the case of
catastrophic damage; the economic consequences of the damage must be determinable
and in the case of catastrophic events the damage is usually difficult to determine).
Increasing the number and intensity of damage caused by catastrophic events, which are
mostly caused by climate change, has the effect of limiting security. Limited security is a
restriction on the ability to take risks into insurance coverage, given that the capital of
insurance companies is limited.
A typical example of the limited insurability of risks that cause catastrophic damage
and the limitations of insurance coverage for these risks is an example of insurance
coverage for these risks in Florida after the 2005 U.S. hurricane season. After this
hurricane season, which represents the year with the most catastrophic damage to the
insurance and reinsurance market since these activities were operated in an organized
way, it has led to an increased need for capital in insurance companies. A higher amount
of capital causes higher capital costs, due to the limitation of alternative use of capital,
which ultimately leads to a significant increase in insurance premiums. This jeopardizes
the basis of insurance. However, after the 2005 hurricane season in Florida, the
availability of insurance coverage was almost completely limited, which required state
intervention and establishment of the Florida Hurricane Catastrophe Fund. Insurance
premium were increase, supply of insurers were limited, prices of reinsurance coverage
was increased and the retrocession market almost ceased to exist.
Also rating agencies increasingly require from insurers to increase the amount of
capital needed to provide insurance services in the areas which are exposed to the
frequent impact of catastrophic events. Combining the above factors has led to the
complete disappearance of insurance coverage for catastrophic risks in Florida. Such
response of insurance companies is fully justified because they operate on market
principles, but from the point of view of the insured and the wider society, it is not
justified given that the interest of individuals and society is to make insurance available.
The role of reinsurance and alternative mechanisms of

transferring insurance risk to the capital market
In the light of evident climate change, reinsurance companies, particularly large

ones such as Swiss Re and Munich Re, are exposed to strong concentrations of risks of
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natural disasters because of limited risk diversification opportunities. Climate change is

affecting the increasing incidence of natural disasters with increasingly devastating
consequences in expanding geographical areas.
Based on empirical data, it is evident that climate change affects the business of
reinsurance companies similarly to insurance companies. Having in mind that the role
of reinsurance is mainly to take responsibility for covering rare but extreme events, it is
clear that climate change has an even greater impact on reinsurance companies. Under
current conditions, there are two alternatives for reinsurers: eliminating certain risks
from reinsurance coverage, which is unacceptable given that under such conditions
insurance coverage for such risks would not exist, or an increase in reinsurance
premiums that would make it impractical to carry out insurance.
Reinsurers tend to apply sophisticated risk modelling and more disciplined risk-
taking based on support to climate change research and by using adaptive measures
such as seasonal hurricane forecasting, understanding the sensitivity of emerging
industries in order to use new market opportunities. The solution was found in the
transfer of insurance risk to the capital market. Development of alternative forms of
insurance risk management imply management of risks through their transfer to the
capital market [4]. Some of instruments that enable transfer of insurance risk to capital
markets include catastrophe bonds, conditional equity instruments, financial
derivatives, etc. [6]
Catastrophe bonds play the most significant role. Catastrophe bonds allow the
sponsor not to fulfil its obligation in the case of predicted catastrophic event. At the
same time investors in these bonds may lose the associated interest or principal if the
anticipated insured event occurs. By issuing catastrophe bonds, insurers and reinsurers
have instant access to increased capacity thanks to investments of institutional investors
in these bonds [3]. These bonds are securities adjusted to reinsurance in order to
transfer risk of catastrophic damage. [2] It is final product of the securitization process
by which the insurance risk is transferred to a liquid financial instrument on the capital
market.
A special type of alternative risk transfer mechanisms is the Reinsurance sidecars as
the newest alternative forms of transfer of insurance risks. Reinsurance sidecars are
"attached" to existing reinsurance companies and they do not require separate
administration or offices and their operation is based on the expertise of employees in
reinsurance company that they are attached to and totally dependent on although they
provide them collateralised coverage, usually through a quota reinsurance contract [5].
Weather derivatives represent a financial innovation based on weather data such as:
precipitation (rain and snow), number of rainy days, number of sunny hours, air
temperature or wind speed. Trade of weather derivatives was initiated by energy
companies in North America, Japan and Europe. Essentially, weather derivatives are not
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a form of risk dispersion of insurance companies, but they also provide hedging against
insurable risks through the instruments similar to financial derivatives. These
instruments, on the one hand, provide protection for companies whose revenues are
directly threatened by adverse weather. On the other hand institutional investors,
especially insurance and reinsurance companies need to manage insurable risks that
they can indirectly achieve through the use of weather derivatives, by investing their
funds in risk acceptance, i.e. they appear as a kind of risk buyers [7].
Conclusions
Climate change is evident and indisputable and most research indicates that
humans are the key culprit for climate change. In the world today, the question is how
evident climate change is affecting life on Earth, the economy and especially insurance
and reinsurance companies. Predicting the likelihood of occurrence and intensity of
adverse consequences is critical for insurance and reinsurance companies. Assessing the
likelihood of the occurrence and intensity of adverse effects of extreme natural
catastrophic events is a significant challenge.
In the context of global climate change, the responsibility of insurance and
reinsurance companies is twofold because on the one hand, they need to be prepared for
the negative effects that climate change can have on their businesses and their clients,
and on the other hand, they can greatly contribute to minimizing the risks to which
individuals and businesses are exposed, providing adequate solutions to cover the risk.
The issue of global warming can also be viewed in two ways from the aspect of the
insurance and reinsurance market, as a source of new risks that threaten business
continuity, both from the aspect of insurance and investment, but also as a source of
new opportunities that can result significant economic benefits if adequate measures are
taken.
There are various solutions such as pooling insurance and reinsurance companies,
regarding the issue of limited capacity to cover the risk of increased likelihood and
intensity of adverse effects of catastrophic events caused by climate change, which is a
key challenge for insurance and reinsurance companies. Certain options also exist in the
area of alternative transfer of insurance risk to the capital market, through the
securitization, conditional equity instruments and marketable securities that are derived
based on insurance risk. Finally, we would like to point out that the constant
improvement of catastrophic risk modeling techniques with improved risk management
skills, including public and private sector collaboration, will enable insurance and
reinsurance companies to offer coverage for risks at a price and conditions that will best
meet the taken risks. This is the basis for the long-term sustainability of successful
business in the insurance and reinsurance sector.
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REFERENCES
[1] Bevere, L., Schwartz, M., Raajev, S., Zimmerli, P.: “Natural catastrophes
and man-made disasters in 2017: a year of record-breaking losses”, (Sigma No. 1,
Swiss Re, Zurich, 2018)
[2] Marović, B., Žarković, N.: “Leksikon osiguranja”, (Budućnost, Novi Sad,
2007), page 182.
[3] Njegomir, V.: „Upravljanje rizikom u osiguranju emisijom obveznica za
katastrofalne štete“, Ekonomska misao, 39 (3-4) 183-202, 2006.
[4] Njegomir, V., Maksimović, R.: “Risk transfer solutions for the insurance
industry“, Economic annals, 54 (180) 57-90, 2009.
[5] Njegomir, V.: „Reosiguravajuće prikolice kao inovativni oblik upravljanja
rizikom osiguranja“, Računovodstvo, 54 (1-2) 72-83, 2010.
[6] Njegomir, V.: “Osiguranje i reosiguranje: tradicionalni i alternativni
pristupi” (Tectus, Zagreb, 2011.)
[7] Njegomir, V.: „Uloga finansijskih derivata u upravljanju rizikom
osiguranja“, Računovodstvo 55 (3-4) 73-85, 2011.
[8] The Economist https://www.economist.com/printedition/2019-09-21
[9] https://www.ucsusa.org/climate/solutions
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HERDING BEHAVIOR ON SERBIAN CAPITAL MARKET

Aleksandra Pavlović1, Dušan Dobromirov2
Abstract
The aim of this paper is to investigate the financial behavior of Serbian
listed companies on the Belgrade Stock Exchange, with particular emphasis
on the herding effect. Previous studies of this problem, in financial decision
making, in other countries such as China, Taiwan, Romania, etc., have
shown a persistent herding effect, which is generally assessed as negative for
a company’s profit maximization. However, there is a scarce number of
studies addressing this effect in non-financial sector. Also, the effect is poorly
researched in Serbia. Taking this into consideration, this paper seeks to
provide an overview of recent research on this issue and investigate if
companies are showing the herding behavior, following the mean capital
structure in the non-financial sector.
Key words: herding behavior, Serbian listed companies, debt ratio,
financial market, panel analysis.
Introduction
A financial market as an organized place where financial claims and obligations are
issued and transferred and where supply and demand for financial instruments meet or
more specifically, all three of its components: money market, capital market and
derivatives market, aren’t perfect.
The new approach of corporate finance (i.e. behavioral finance) as an opposite of
traditional approach (Shefrin, 2001) argues that there are speculative actions in every
financial market and seeks the causes of market imperfections in human psychology
1
Faculty of Technical Sciences, University of Novi Sad (e-mail: sanjaphd@gmail.com)
2
Faculty of Technical Sciences, University of Novi Sad (e-mail: ddobromirov@uns.ac.rs)
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claiming that feelings, perceptions and passions of a an individual have an aggregate

influence on economic events and are more important than governmental policies and
economic and technical indicators.
After the pioneering work of Tversky and Kahneman, a large number of papers
about investors’ irrationality in financial behavior have appeared. Rationality is always
imperfect, if it exists at all (Tversky & Kahneman, 1973; Tversky & Kahneman, 1974).
The rational expectations theory and efficient market hypothesis state that financial
market participants always act rationally (Shiller, 1999), independently evaluate future
economic trends and adapt to them, have perfect information, markets are perfect and
tend to equilibrium and prices reflect all available information. Nowadays, this
hypothesis needs to be substituted by a new hypothesis named deficient market
hypothesis (Hirshleifer, 2001) according to which prices do not reflect all available
information and that financial market participants don’t always act rationally since, in
real world, they don’t have perfect information and markets are imperfect, thus,
deficient market hypothesis is a confirmed theory.
The nowadays studies in behavioural finance overemphasise the cognitive
processes and give less importance other related psychological processes (Mathews,
2013). Cognitive biases are defined as irrational judgments that occur in everyday
situations and are always present in mental operations (Mathews, 2013), and the most
common cognitive biases are: overconfidence, excessive optimism, confirmation bais,
illusion of control. Some other common behavioral biases are herding and risk
aversion. Usually, the final result of all behavioral biases (Backer at all., 2004; Hackbarth,
2008) is negative influence on the company’s market value and disruption of the
maximization of this value.
Herding behavior is manifested when a large number of market participants take
the same action, especially when individuals imitate the actions of other individuals. In
behavioral finance, it’s the investor’s tendency to follow the crowd (Graham, 1999).
Market participants suppress their beliefs and available information to base their
financial decisions on collective action in the market (Seetharam & Britten, 2013), and
the expected return on shares will be lower though the high demand for stocks was
generated by public memory of high returns from the past. Irrational herding
(Andersson at all., 2014) occurs when investors’ predictions of stock prices are
influenced by inaccurate predictions made by other investors. Herding can lead to the
profitable trading opportunities by driving stock prices away from their fundamental
values, but in the case when the others who make inaccurate predictions constitute a
majority herd, they would have an influence as irrational herding, and whether their
predictions are accurate or not is never assessed (Andersson at all., 2014; Zhou &
Anderson, 2013).
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Capital structure represents the combination of debt and equity in finance (Kanwal
at all., 2017) and an optimal capital structure, as the best mixture of debt and preferred
and common stock, can maximize the company’s value.
First, we set out the review of literature dealing with behavioral finance issues and
financial behavior of market participants. Then, we describe the data and methodology
used and set out the hypothesis. In the next section, we report the empirical results.
After that, there is the discussion of the main findings and suggestions for future lines of
research. Finally, we summarize the main conclusions of this study.
Data, methodology and hypothesis
To study the herding behavior on Serbian capital market, we collected data from 10
most liquid companies whose shares are listed on the Belgrade Stock Exchange (BELEX)
according to the trading volume criterion. We collected necessary data from secondary
data sources – business books (i.e. balance sheet and income statement) available on the
official website of the BELEX and the websites of the companies themselves. The period
2007. – 2011. was taken as the analyzed period considering the Global financial crisis of
2007. – 2008. which has also affected Serbia and the possible consequences it has left on
the behavior of investors in the capital market in Serbia. The financial companies (banks
and insurance companies) were excluded from this research because their business
books are different from those of the non-financial companies, and the companies with
missing data were also excluded. More specifically, the aim of this study was to
investigate 10 Serbian companies listed on the BELEX with the highest trading volume
from economic domain (different non-financial sectors) and not from the finance
domain, which would imply a totally different analysis. We observed the non-financial
sector as a whole and the type of non-financial sector was irrelevant.
To examine the herding behavior of Serbian listed companies during the period
2007. – 2011., we employed a panel data model. The dependent variable is debt ratio
(DR) of Serbian listed companies in non-financial sector, defined as the ratio of the
borrowed financial sources and the total assets of the company, and its mean value is
defined as the ratio of the sum of all DRs and total number of analyzed companies. As
independent variable we used the first lag of the mean DR of Serbian listed companies in
non-financial sector. As control variables we used profitability, asset tangibility and
company size. To calculate company’s profitability, we used return on assets (ROA) as
the ratio of net income and total assets. To calculate asset tangibility, we used tangibility
assets ratio as the ratio of tangible fixed assets and total assets. The company size is
calculated as natural logarithm of net sales.
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Company characteristics (e.g. profitability, asset tangibility, company size) change

over time (Huang & Ritter, 2009), so the characteristics of the companies from the past
will still have an influence on the present DR. This lead us to propose:
H1. If Serbian companies listed on the BELEX have a herding behavior, a positive
relationship between DR and the first lag of the mean DR in non-financial sector is
expected.
If there is the herding behaviour on capital market, companies tend to reach a
capital structure different from the optimal one that maximizes profits (De Haas &
Peeters, 2006; Nivorozhkin, 2005). Thus, we propose:
H2. If Serbian companies listed on the BELEX have a herding behavior, a negative
relationship between DR and profitability is expected.
In developing countries, including Serbia, the importance of tangible assets is
limited (Nivorozhkin, 2005) by some factors such as: ineffective legal system, grey
economy, underdeveloped market, etc. Thus, we propose:
H3. If Serbian companies listed on the BELEX have a herding behaviour, a negative
relationship between DR and asset tangibility is expected.
A large number of studies have argued that the debt policy of companies may be
affected by size (Moh’d at all., 1998). The greater the future growth opportunities of a
company, the less it borrows today (Myers, 2003), taking into consideration that the
company’s growth opportunities are intangible assets (e.g. advertising costs, research
and development costs) that are vulnerable in times of financial distress and bankruptcy.
Exposure to risky debt today reduces the company's ability to invest in the future. Large
and safe companies with mostly tangible assets and high profitability and growth
opportunities have easier access to debt (Myers, 2003) because of their better financial
reputation than small and risky companies with mostly intangible assets. This lead us to
propose:
H4. If Serbian companies listed on the BELEX have a herding behaviour, a positive
relationship between DR and company size is expected.
Empirical results
To examine the herding behaviour of Serbian listed companies during the period
2007. – 2011., we used a panel data model. The descriptive statistics of the variables
included in the model are presented below, in Table 1.
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Table 1: Descriptive statistics of the variables
DR Profitability Asset tangibility

Company
Mean ± SD Mean ± SD Mean ± SD
Company 1 54,64 ± 9,95 6,18 ± 7,39 57,26 ± 2,27
Company 2 11,63 ± 4,66 7,22 ± 3,08 75,99 ± 15,20
Company 3 24,76 ± 16,33 4,88 ± 1,79 6,91 ± 3,71
Company 4 53,61 ± 7,62 3,57 ± 2,79 32,22 ± 6,21
Company 5 14,62 ± 9,08 6,74 ± 4,43 33,31 ± 16,15
Company 6 42,90 ± 12,43 4,01 ± 3,79 26,18 ± 9,37
Company 7 36,34 ± 14,14 2,25 ± 1,22 15,10 ± 0,98
Company 8 48,67 ± 12,82 5,41 ± 3,95 55,16 ± 5,49
Company 9 44,97 ± 12,24 17,93 ± 4,45 25,18 ± 2,80
Company 10 13,30 ± 1,21 9,92 ± 0,58 32,03 ± 3,27
SUM 34,54 ± 19,10 6,81 ± 5,49 35,93 ± 21,43
The mean DR of the Serbian listed companies, according to Table 1, was 35 % for
the period 2007. – 2011., which is below the value reported in some neighbour or more
developed countries. For example, the reported value in the neighbour Romania, for the
period 2009. – 2011., was 36 – 41 % (see Serghiescu & Văidean, 2014), which means that
the Global financial crisis of 2007. 2011. affected Serbian economy and disabled Serbian
companies to achieve higher DRs.
Table 2 shows the relationship between observed variables included in the model.
Table 2: Relationship between observed variables
Variables r p
First lag 0,348 0,028
Profitability -0,050 0,728
DR
Asset tangibility -0,042 0,770
Company size 0,375 0,007
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As it’s shown in Table 2, there are two positive, medium strenght and statistically
significant correlations, and two negative, insignificant strenght and statistically
insignificant correlations.
Correlation between DR and the first lag of the mean DR is positive because the
value of correlation coefficient (r = 0,348) has a positive sign. Since 0,3 < r < 0,5, this
correlation is of medium strength. Probability value is p = 0,028 < 0,05, which means
that this correlation is statistically significant.
H1 is fully supported, since our results show that there is the positive correlation
between DR of Serbian listed companies and the first lag of the mean DR in non-
financial sector. This is confimed by the scatter diagram below (Figure 1).
Conclusion: Serbian listed companies have a herding behaviour, they follow the
“herd” trying to reach the mean DR of the non-financial sector.
Figure 1: Debt ratio to the first lag of the mean debt ratio relation
Correlation between DR and profitability is negative because the value of
correlation coefficient (r = -0,050) has a negative sign. Since r < 0,1, this correlation is of
insignificant strength. Probability value is p = 0,728 < 0,05, which means that this
correlation is statistically insignificant.
H2 is partially supported, since our results show that there is the negative
correlation between DR of Serbian listed companies and profitability in non-financial
sector, but statistically insignificant. This is confimed by the scatter diagram below
(Figure 2).
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Conclusion: We cannot say with certainty if there is a herding behaviour of Serbian

listed companies, in non-financial sector, but we can assume that they use equity rather
than debt as a financing source.
Figure 2: Profitability to debt ratio relation
Correlation between DR and asset tangibility is negative because the value of

correlation coefficient (r = -0,042) has a negative sign. Since r < 0,1, this correlation is of
insignificant strength. Probability value is p = 0,770 < 0,05, which means that this
correlation is statistically insignificant.
H3 is also partially supported, since our results show that there is the negative
correlation between DR of Serbian listed companies and asset tangibility in non-
financial sector, but statistically insignificant. This is confimed by the scatter diagram
below (Figure 3).
Conclusion: We cannot say with certainty if there is a herding behaviour of Serbian
listed companies, in non-financial sector, but we can assume that they don’ use tangible
assets to a large extent as collateral to debt.
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Figure 3: Asset tangibility to debt ratio relation
Correlation between DR and company size is positive because the value of

correlation coefficient (r = 0,375) has a positive sign. Since 0,3 < r < 0,5, this correlation
is of significant strength. Probability value is p = 0,007 < 0,05, which means that this
correlation is statistically significant.
H4 is fully supported, since our results show that there is the positive correlation
between DR of Serbian listed companies and company size in non-financial sector. This
is confimed by the scatter diagram below (Figure 4). Conclusion: Serbian listed
companies have a herding behaviour. In Serbia, the company size in the terms of larger
and safe company with growth opportunities, is a guarantee of solvency of debtors to
creditors.
Figure 4: Company size to debt ratio relation
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Discussion
Our study addresses the role of specific behavioral biase i.e. herding behavior on
the Serbian capital market example. In order to conduct this research, we collected the
data from 10 most liquid companies whose shares are listed on the BELEX, according to
the trading volume criterion. The data were collected from secondary data sources i.e.
business books available on the official website of the BELEX and the websites of the
companies themselves. According to Global financial crisis of 2007. – 2008. which has
also affected Serbia and the possible consequences it has left on the Serbian financial
market, we took the period of 2007. – 2011. for our analysis. Since the business books of
the companies from financial sector are different from those from non-financial sector,
we excluded banking and insurance companies from the study. To examine the herding
behavior of Serbian listed companies during the period 2007. – 2011., we used a panel
data model. As dependent variable we used DR of Serbian listed companies in non-
financial sector, as independent variable we used the first lag of the mean DR of Serbian
listed companies in non-financial sector, and finally as control variables we used
company characteristics i.e. profitability, asset tangibility and company size. We set out
four hypothesis. Two hypothesis were fully supported and the other two partially
supported. Our results showed that there is the positive correlation between DR of
Serbian listed companies and the first lag of the mean DR and company size in non-
financial sector, thus the existence of chording behaviour of Serbian listed firms, which
fully supported H1 and H4. Hypothesis H2 and H3 were only partially supported since
the results showed that there is the statistically insignificant negative correlation
between DR of Serbian listed companies and profitability and asset tangibility in non-
financial sector. According to the first lag of the mean DR and the size of Serbian listed
companies, we can say for sure that here is the herding behavior on Serbian capital
market. Serbian companies tend to reach a capital structure different from the optimal
one that maximizes profits, leading other companies with usually irrational judgements
i.e. the “herd”. Our paper has several contributions. First, it necessary to do more studies
analyzing the specific behavioural biases (e.g. herding) not only for developed
economies but especially for emerging ones, including Serbia. Second, we examined the
herding behaviour of listed companies on emerging market (i.e. Serbian capital market)
and concluded that there are similar psychological judgements in the heads of market
participants on Serbian and neighbouring countries markets. Despite these
contributions, this study has several limitations that suggest potential future researches.
First, empirical results in our study are based on secondary data sources. Second, we
focused on only 10 Serbian listed companies, so furure researches could overcome this
limitation by considering the larger number of companies. Third, we focused on period
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2007. – 2011. (i.e. after-crisis period), and it might be interesting to see what happened
after 2011.
Conclusions
Whereas there is a large body of literature on herding behavior and other types of
behavioral biases on financial markets of emerging economies as well as on developed
ones, the issue of herding effect is relatively unstudied in the case of non-financial
sector, especially of emerging economies. Previous studies of this problem in
neighbouring countries, such as Romania or Bulgaria, have shown a persistent herding
effect, which is generally assessed as negative for a company’s profit maximization. In
conclusion, the effect is poorly researched in Serbia and there are almost no the studies
on this topic. Our suggestion to future researchers of this issue is to pay more attention
on behavioral biases of the Balkan countries.
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and Probability”, Cognitive Psychology, 4, pp. 207–232, 1973.
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Biases”, Science, 185, pp. 1124–1131, 1974.
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IMPACT OF FOREIGN DIRECT INVESTMENTS ON EMPLOYMENT:

EXPERIENCE OF SERBIA
Mladen Radišić1, Andrea Ivanišević2, Alpar Lošonc3, Dušan Dobromirov4, Ivan Štefanić5,
Aleksandra Pavlović6, Milica Njegovan7
Abstract
This paper problematizes the role of foreign direct investment in the employment trends.
There is no consensus among theorists as to whether there is a direct positive correlation
between FDI and employment increase. Some studies confirm a positive correlation but
there are also those that yield opposite results. Serbia is a country that has created a
favorable investment climate in recent years, which has encouraged many investors to
invest their capital in key economic sectors. According to the available data, this resulted
in a decrease in the unemployment rate, that is, an increase in employment. Following the
example of AP Vojvodina, which is one of the top European regions in terms of foreign
investment efficiency, the volume of FDI in recent years can be monitored, as well as the
number of newly employed workers.
Key words: FDI, employment, Serbia, Vojvodina, economic development
Introduction
Foreign direct investments (FDI) play an important role in a host country’s

economic development. FDI are very important especially for developing countries,
because they contribute to economic growth and the growth of investment activities in
the host country. As defined by the Organization for Economic Co-operation and
Development (OECD), "Foreign Direct Investment is a key driver of international
1
University of Novi Sad, Faculty of Technical Sciences, mladenr@uns.ac.rs
2
University of Novi Sad, Faculty of Technical Sciences, andreai@uns.ac.rs
3
University of Novi Sad, Faculty of Technical Sciences, alpar@uns.ac.rs
4
University of Novi Sad, Faculty of Technical Sciences, ddobromirov@uns.ac.rs
5
Full Professor at Faculty of Agrobiotechnical Sciences, Josip Juraj Strossmayer University of Osijek,
Croatia, istefanic@fazos.hr
6
University of Novi Sad, Faculty of Technical Sciences, sanjaphd@gmail.com
7
University of Novi Sad, Faculty of Technical Sciences, njegovanmilica@yahoo.com
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economic integration which, with the right legal framework, should ensure financial
stability, promote economic development and improve the well-being of society".
Foreign direct investment (FDI) is defined as an investment involving a long-term
relationship and reflecting a lasting interest and control by a resident entity in one
economy (foreign direct investor or parent enterprise) in an enterprise resident in an
economy other than that of the foreign direct investor (FDI enterprise or affiliate
enterprise or foreign affiliate) (UNCTAD, 2007: 245).
In recent years, the volume of FDI in Serbia has increased significantly, so in 2018,
Serbia attracted a large number of FDI projects and emerged as the first country in the
world in the number of FDIs. Most data show that FDI's effects on economic
development, technology transfer, and development of local government are positive.
However, there is no official analysis which has accurately confirmed that the increase of
employment is a direct effect of FDI. Although the unemployment rate has seen a slight
declining trend in previous years, econometric analyses have not clearly shown whether,
and to what extent, FDIs affect employment increase in Serbia.
It is generally agreed upon that FDI have the potential to generate employment,
increase productivity, transfer knowledge and new technologies, and enable the
integration of the country into international flows. Moreover, FDIs influence the
sustainable development of the host country and even change its economic
environment. According to Lehnert et al. (2013), FDIs offer developmental potential
and contributions to the social welfare of the host country, growth in education, life
expectancy, and technological effects. This is especially true of Greenfield investments.
Fortanier (2007) analyzed the effect of FDI on the host country’s economic
development using a specific entry mode. The results showed that the impact of FDI on
the host country’s economic growth differs depending on the country of origin of FDI,
the host country characteristics related to the “absorptive capacity” (the ability to reap
the potential benefits of FDI), and finally, on the host country’s characteristics that
include the quality of institutions, the extent of trade openness and the stock of human
capital.
FDI can increase employment by directly creating new jobs in foreign affiliates
(Greenfield investment). According to Meyer at al. (2014), Greenfield investors usually
bring more important benefits into the host country’s economy such as new
technologies, production capacities and job creation comparing to acquisitions, which
tend to have high profile in local media and political discourses, but they also involve
short-term job losses. Dunning et al. (2008) think that Greenfields have the highest
potential for employment creation since they generate completely new jobs that did not
exist before, opposite to mergers and acquisitions. Mencinger (2003) states that FDI can
also influence the labor demand of domestic firms through competition effects and
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productivity spillovers. If FDI entry creates a competition pressure that crowds-out

domestic firms, the labor intensity of the receiving industries might be negatively
affected.
In that sense, we will give an overview of FDI in Serbia and the employment
situation for the last few years, but also the prevailing, often contrary views about the
effects of FDI on the employment in the Republic of Serbia.
Different views on the correlation between FDI and employment
According to the general conclusions of UNCTAD (2006), FDIs produce

several effects related to the employment, such as job creation through the opening of
new production facilities, job cuts in competing firms, higher wages offered by FDI-
based firms, which lead to the taking over of top-quality employees from other firms,
and even job losses due to increased workflow efficiency.
There is no consensus among theorists about the correlation between FDI and
employment increase in a host country. A more recent research problematizes this issue
in several aspects. In 2006, Craigwell conducted an empirical study which showed that
increasing FDIs in the Caribbean countries led to higher employment. He concluded
that the impact of FDI was greatest in the first year of the investment, and that
investment success was greater in a stable macroeconomic environment (Craigwell,
2006). Similarly, Abor and Harvey (2008) state that FDIs have a statistically significant
and positive impact on employment in Ghana, but that the impact on earnings is minor.
According to Točkov, there is a strong connection between the level of FDI and
employment in Serbia (Točkov, 2017). Kovačević (2016) points to the positive effect of
FDIs in Serbia in reducing unemployment indirectly through increasing export
activities and engaging domestic cooperative enterprises, especially in the
manufacturing industry. The very structure of investments in the past period indicates
the connection of these processes in Serbia. The same author also concludes that the
contribution of FDI is particularly reflected in those investments aimed at building
production facilities that produce exchangeable products (Kovačević, 2016: 65), which
also presupposes job creation. Madzar (2016: 16) cites potential, but valuable, effects of
FDI: they may be complementary and possibly stimulating effects on entrepreneurship
development as a form of addressing unemployment. Kastratović (2016) confirms that
foreign direct investment has an impact on accelerating economic growth, reducing
unemployment, inequality, poverty, as well as increasing exports.
Other authors (Gligorić, 2016; Gnjatovic, 2016; Đorđević, 2016), who found a
positive correlation between export growth and FDI levels are also optimistic, but they
also pointed to negative correlations primarily due to the unadjusted structure of
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foreign investment, which in the previous period was more oriented on service than the
industrial sector. However, in the last two to three years, the country's economic policy
in attracting foreign investment has stimulated foreign investment in the manufacturing
sector, so it is to be expected that these processes will also affect job creation.
According to the stated argumentation, it would be logical to expect that there is a
direct and positive correlation between FDI and employment levels (this is, after all, a
general place in the Keynesian theory related to this issue). However, the results of this
relationship depend on a number of factors that can lead to increased employment,
maintenance of existing and new employment, and even reduction of employment.
According to Baldwin (1995), there are three factors: the extent of replacement of
domestic investments by FDI, the growth of exports of intermediary and capital goods
due to FDI, and whether FDI is geared towards purchasing existing capacities or
opening new production capacities. Furthermore, some studies (Feldstein, 1994;
Graham and Krugman, 1991; Vaistos, 1976; Tambunlertchai, 1975) have shown that the
effects of FDI on host country employment are relatively small, that there is no link
between FDI and technology transfers and know-how to the host country, and there is
no direct link between FDI and employment growth, even in the developed countries.
As for the Serbian authors, there are also some opposing views. Thus, for example,
Stojadinović and Todorović (2014) affirm that the positive effects of FDI inflow on
employment in Serbia are not significant. Similar claims are found by other authors
(Zdravkovic, Duric, & Bradic, 2017; Rakita and Markovic, 2013) who state that there is
no positive and high correlation between FDI and employment increase. Perić (2019)
used multiple linear regression models and discovered that the FDI inflow gave a
minimum contribution in increasing average wage and employment, while the time
effect played the main role in showing positive impact of FDI inflow on host country’s
employment rate, as the biggest positive impact of FDI was in its second year of
operation.
Foreign direct investments in Serbia
The main legal source of foreign investment in Serbia is Law on Investments (2018)
which, in addition to the basics related to this field, ensures the equalization of domestic
and foreign investors and improves the investment environment. The law generally does
not distinguish between a foreign investor and a domestic investor: investors who are
foreign legal or natural persons, in all their investment, enjoy the same status and have
the same rights and obligations as domestic investors.
According to the amounts invested in Serbian economy, it can be assumed that FDI
had positive impact on economic development, development of local governments,
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employment of the population and technology transfer. The unemployment rate has
had a slight declining trend in previous years, and average earnings have shown a slight
upward trend. However, it is difficult to find a clear correlation between the amount of
FDI and the increase in the occupancy rate.
The investment climate in Serbia has improved significantly in recent years
owing to a more favorable political, legal and economic environment, that is,
macroeconomic reforms, greater financial stability, and improved fiscal discipline.
These were the main factors for Serbia to take the first place in the world in the number
of foreign direct investments in 2019 (Financial times, 12 August, 2019). The Financial
Times Specialized Service (FT) reported that Serbia is at the top of the list with an index
of 11.92 points, which is 1.33 index points higher than the previous year, 2018.
According to the same source, in 2018, Serbia attracted 107 foreign direct investment
projects, or 26 more than in 2017, which is almost one-third growth. Data show that
Greenfield FDI is 12 times larger than one might expect for an economy of this size. The
text further specified that leading foreign direct investment sectors in Serbia are the
automotive components, food and tobacco, textile and real estate sectors, which
together accounted for more than a half (54%) of total FDI inbound projects in 2018.
With a score of 11.92 points, Serbia also outperformed countries in the region of
emerging European economies, including Lithuania and Bosnia and Herzegovina,
which also have high index scores.
Table 1: Total foreign direct investment in the period 2014-2018 (in thousands of EUR)
TOTAL
2014 2015 2016 2017 2018
2014-2018
1.500.450 2.114.242 2.126.928 2.548.141 3.495.829 11.785.591
Source: Center for Investment Support and Public Private Partnership of the Serbian Chamber of
Commerce, August 2019.
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Table 2. Foreign direct investment by industry (in thousands of EUR)
Source: Center for Investment Support and Public Private Partnership of the Serbian Chamber of
Commerce, August 2019.
According to the data above, total FDIs from 2014 to 2018 amounted to EUR
11.7 billion (Table 1). The largest amount of foreign direct investment relates to the
manufacturing sector, with the investment of 5.7 billion euros (49%) in the last five
years, and the financial and insurance sector, with the investment of 3.5 billion euros
(Table 2). However, data on FDI in money that The National Bank of Serbia receives
comes from commercial banks, which means that these data are obtained by payment
country and not by investment country, and are largely dependent on the country in
which a particular company has a bank account through which it makes a payment. The
largest inflow of investments comes from the EU countries, the Russian Federation and
the Republic of China (Center for Investment Support and Public Private Partnership of
the Serbian Chamber of Commerce, August 2019).
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Foreign direct investments in the Autonomous Province of Vojvodina
Increased volume of foreign investments was also recorded in AP Vojvodina.

Vojvodina is one of the top European regions in terms of foreign investment
effectiveness (in competition with Italian, Spanish and Slovenian regions) as well as in
attracting foreign investments. Table 3 shows the volume of FDI in AP Vojvodina for
the period from 2014 to the first quarter of 2019. Data show that FDIs were the highest
in 2014 and 2018, and that the number of new employees and employees of foreign
companies increased.
Table 3. Foreign direct investment for 2014–2019

Average number of Reduced Investment
employees in Number of new number of amount per
foreign companies employees per year employees per year (EUR
per year year million)
2014 3424 6001 2577 547.5
2015 2958 6547 3589 267.95
2016 6906 8613 1707 281.5
2017 9423 11454 2032 170.4
2018 9100 10693 1593 527.7
2019 535 737 202 161.8
TOTAL 322
32346 44045 11700 1956.85
companies
Source: Vojvodina Development Agency, 2019.8
Generally speaking, FDIs in Vojvodina have contributed to job creation.

Table 4. Total amount of FDI and number of employees 2014–2019
TOTAL AMOUNT OF Total number of Total number of Total number of
FDI IN APV (EUR employees foreign companies foreign active
million) investing in APV companies in APV
9402.7 90748 472 368
Source: Vojvodina Development Agency, 2019.
8
Note: Due to the unavailability of official statistics, all information provided in this report was collected
through detailed research and cooperation between the Vojvodina Development Agency and companies
operating in the territory of AP Vojvodina. Although the Vojvodina Development Agency has taken great care
to ensure the accuracy of the information contained therein, the Vojvodina Development Agency assumes no
legal responsibility of any kind whatsoever arising from, or related to, the use of the information provided.
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Foreign investment has had various forms, but the most present ones were
reinvestments, Greenfield and Brownfield investments (Table 5).
Table 5.Types of Investments

Types of Investment Number
Acquisition 17
Greenfield 55
Brownfield 41
Joint venture 11
Re-investments 122
Liquidation 8
Bankruptcy 7
Deleted from the registry 8
Gone 6
Acquisition by domestic companies 8
Table 6. FDI by Countries of Origin
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As regards the country of origin, most investments came from Germany, and Italy
was the country responsible for opening the biggest number of companies (Table 6).
The economic sector in Vojvodina is currently showing an upward trend. Foreign
investors in Vojvodina have secure opportunities to invest their capital in various
activities and sectors, the most important of which are agriculture, the electrical
industry, the automotive industry, information technology, real estate, tourism and free
zones to support exports (Marjanovic, Radojevic, 2011: 138). The data presented shows
that foreign FDI encourage job creation.
Employment in Serbia
Table 7. Employment and earnings in Serbia

EMPLOYMENT AND
2014 2015 2016 2017 2018
EARNINGS
Registered average
1845 1896 1921 1977 2053
employment, in 000
Registered individual
- 93 89 85 79
agriculturists, in 000
Employment, by labor force
42.0 42.5 45.2 46.7 47.6
survey, in %
Unemployment, by labor
19.2 17.7 15.3 13.5 12.7
force survey, in %
Average net earnings, in RSD 44530 44432 46097 47893 49650
Average net earnings, in
380 368 374 395 420
EUR
Net real growth rate -1.5 -2.1 2.5 0.9 4.4
Average gross earnings, in
61426 61145 63474 65976 68629
RSD
Average gross earnings, in
524 506 516 544 580
EUR
Gross real growth rate -1.7 -2.4 2.6 0.9 3.9
Source: Chamber of Commerce and Industry of Serbia, 2019.
In the period 2014 – 2018, average employment rate has been constantly growing
and reached the highest in 2018 (47.6%). This resulted in an increase in average net
earnings of € 40 (€ 56 in average gross earnings), and increase in net real growth rate
(positive value 4.4) and gross real growth rate (positive value 3.9) (Table 7).
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According to the Statistical Office of the Republic of Serbia, in the second quarter
of 2019, a total of 2,161,533 employees were registered. Out of the total number,
1,715,436 are employed by legal entities, 373,444 are entrepreneurs, their employees,
and self-employed persons, and 72,653 persons are registered individual farmers.
Compared to the second quarter of 2018, the total number of employees increased by
1.6%, with the number of employees in legal entities having increased by 1.9%, the
number of entrepreneurs, employees and self-employed persons increased by 2.8%,
while the number of registered individual farmers decreased by 8.7%.
The unemployment rate in Serbia decreased to 9.5% in the third quarter of 2019
from 12.9% in the corresponding period of the previous year. It was the lowest
unemployment rate since comparable data became available in 2008. The number of
unemployed persons fell by 17.1%, to 308.4 thousand, and the number of employed
ones rose by 0.3%, to 2,938.7 thousand. In the second quarter, the unemployment rate
was higher by 10.3%. Unemployment rate in Serbia reached a record low of 9.50 percent
in the third quarter of 2019 (Statistical Office of the Republic of Serbia).
Conclusion
Foreign direct investments consist of concrete assets from members of the

global economy. FDIs have proved to contribute to the growth and development of the
host country, complementing domestic investment, facilitating trade and technology
transfer. FDIs can effect positively the economic growth, and economic growth has a
positive effect on employment, which is a two-way causality. However, both foreign and
Serbian scientific discourse face conflicting views on the impact of foreign direct
investment on employment and earnings, since FDIs may also have unintended negative
consequences on the host country. Bearing in mind the optimistic views and keeping the
critical distance (Točkov, 2017, for example), the authors of this paper have concluded
that the increase in the number of employees is a result of the increase in FDI, i.e. "an
inflow of every euro of FDI in Serbia results in an increase in the number of employees"
(Točkov, 2016: 83).
The data presented in this paper show a significant increase in FDIs in Serbian
economy, as well as the increase in employment. Global Location Trends 2018, Annual
Report: Getting Ready for Globalization 4.0 (p. 5) pointed out that measured by
population, Serbia is leading the FDI influx, and this trend continues. Investments are
the largest in key sectors such as textiles, transportation equipment, chemicals and
electronics. The big advantage is that the investments are mainly directed to production
activities, which accounts for almost 80 percent of all FDI jobs. Furthermore, according
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to the IBM Global Location Trends 2019 report, Serbia also ranks first in the world as
the country with the highest percentage of export-oriented investment projects (91.2%),
along with the number one position for the number of newly created jobs through FDI
projects initiated in 2018 in the electrical equipment sector, which is a good indicator.
Unemployment in Serbia was 9.5% in the third quarter of 2019, which is significantly
lower compared to the previous years.
However, concrete evidence of a possible link between FDI and employment
requires further research, different correlation analyses, accurate data on permanent or
temporary outflow of labor to other countries, foreign investment structure (for
example, infrastructure investment does not employ a lot of people, but it requires large
investments), and whether FDIs are mainly oriented on technology and export or on
other economic areas. In this context, additional studies are needed in order to
understand better the impact of foreign investments on employment and earnings in
Serbia.
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[24] Zdravković, A., Đukić, M., & Bradić-Martinović, A.: „Uticaj stranih direktnih
investicija na nezaposlenost u tranzicionim zemljama – kointegraciona analiza panela“,
Industrija, 45(1), pp. 161–174, 2013.
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[9] UNCTAD: “World Investment Report 2006: FDI from Developing and
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BUSINESS PERFORMANCE EFFECTS ON THE NON-

PERFORMING LOANS (NPLs) LEVEL IN THE CEE BANKING
SECTOR
Milos M. Dragosavac1
Abstract
This paper offers an analysis of the regulatory and economic variables in
the banking sector which may impact, to a greater or lesser extent, the level
of non-performing loans in CEE. Currently there is a growing trend of
NPLs, which could disrupt the overall stability of the CEE financial system.
The aim of this paper is to determine the overall condition and the
importance of business performance, in order to observe mutual
relationship and the degree of development of banking sectors among the
surveyed countries.The statistical analysis was based on the influence of the
most significant indicators, such as: the level of capital adequacy ratio
(CAR), GDP per capita and the level of profitability, measured by return on
assets (ROA) and return on equity (ROE). The data will be processed using
the linear panel model. Using defined variables, examined the dependence
of observed data series using the Hausman test and Breusch - Pagan test, for
the period from 2008 to the 2017. Annual data were used with the total of
91 observations. The research was conducted in 13 countries of the observed
region. Considering the number of the analysed countries, time period, the
way of observation and methods that we used, it was found that business
performance have an impact on the level of NPLs. The research should
contribute to helping the management of the banking sector in the process
of finding adequate solutions for non-performing loans, which have arisen
as a result of inadequate management of banking risks.
Key words: business performance, credit risk, non-performing loans,
Breusch – Pagan test, Hausman test.
1
Modern Business School, Terazije 27, Belgrade, Serbia
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Introduction
The banking system of Central and Eastern European (CEE) countries is very
specific. The problem with the analysis of the banking market is a big gap between the
analysed countries. A special attention will be paid to the level of non-performing loans
(NPL), which represents one of the main problems in the banking industry
(Barjaktarović et al., 2013).
Barth analyses the impact of regulatory factors on the banking business. Breuer
investigates the impact of political, economic and banking institutions on the level of
NPLs. Furthermore, Babihuga analyses the connection between macroeconomic
variables and the profitability, capital adequacy. Stakic investigates determinants of the
NPLs level movement in the banking sector. In many research works NPLs are treated
as an independent variable which serves to explain banking performances.
This research is different than others because it is based on internal characteristics
of banks, i.e. business performance and methodology that was used to establish
connections with NPLs. In this research NPLs are treated as a dependent variable. The
hypothesis to be proved is as follows:
H1: The level of NPLs of the CEE banking sector depends on the level of CAR,
ROA and GDP per capita.
Also, this paper differs from previous research in terms of a unified methodology of
grouping the countries of Central and Eastern Europe into three groups according to
the time of accession to the European Union (EU). This represents a unique type of
analysis, because the parameters of completely different banking systems are compared.
The data will be processed by econometric panel data models by which the uniformity
in the study of banking indicators is achieved (Dragutinović Mitrović, 2002).
In the first group, there are countries which are members of the European Union
from the very beginning. These are the countries such as Slovenia, Poland, The Czech
Republic, Slovakia and Hungary (Košak et al., 2009). The second group consists of the
countries that have subsequently joined the EU. It includes Bulgaria, Romania and
Croatia (Cocris & Nucu, 2013). The third group consists of the countries that are in the
process of transition. These are the countries that have a much lower level of economic
development and which are leading accession negotiations with the EU. Serbia, Bosnia
and Herzegovina, Montenegro, FYR Macedonia and Albania stand out among them
(countries of the Western Balkans).
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Methodology and Data

The data used in the study were taken from the central and commercial banks in
the CEE region. Also, the analyses of the European Central Bank and audit firms were
used in this study. The subject of the analysis was a large number of indicators of the
CEE banking sector. In addition to the level of total loans, deposits, the level of total
assets, the most important business performance was analysed, including: the level of
NPLs, corporate NPLs, NPLs of the non-financial sector, household NPLs, CAR, ROA,
ROE and GDP per capita. Countries and the time period that was analyzed are indicated
in the introduction and abstract.
The above-mentioned indicators will be subject to the statistics of linear panel
models. The data will be processed by statistical software package STATA. In this
research we used: Pooled (Constant Effects) Model, the model with individual effects,
the model with individual and temporal effects, the fixed-effects model, random-effect
model, the Breusch-Pagan test and the Hausman test.
By applying this methodology, there may appear certain restrictions, which
nevertheless can be relevant for a final conclusion. First of all, with regard to the level of
development of the banking sector and regulations that are applied, there will be some
differences between the observed countries. Secondly, we should take into account that
the calculation of individual indicators differs among countries, especially NPLs and
CAR. Also, the data series were analysed, for which it is assumed that can have a smaller
or greater impact on the level of NPLs.
Description of variables
The banking sector is the most important segment of the financial system of the
CEE countries, and as such it represents the bearer of the financial structure (Andries et
al.2012).
The CEE banking market in comparison with the EU banking market is relatively
poor and underdeveloped (in terms of instruments, market volume and institutions),
except for Slovenia, which records the best results in this field. The CEE banking market
becomes interesting for foreign banks – regionally active from the EU at the end of the
20th century. A minimum of 70% of the banking market (in terms of the amount of
assets, realized financial result) of South Eastern Europe is currently under the
supervision of foreign banking groups (T. Poghosyan, A. Poghosyan, 2010).
Certain rules of NPLs growth are common in the CEE countries regardless of the
fact that the very level differs significantly. Primarily, microeconomic and
macroeconomic factors should be analysed there such as "overheated" credit activity,
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loans predominantly placed in foreign currency, inadequate structure of approved loans,

illiquidity of economy and large number of banks (overbanking), the reduction in real
estate prices, rising unemployment, a decline in GDP (gross domestic product), etc.
The stabilization in share of NPLs in CEE was noticeable in 2013. The total share of
NPLs did not change significantly in 2013 and it remained stable, at 9%. The average
share of NPLs in Central Europe increased by 0.2% and reached the level of 9.1%.
Russia, Poland and the Czech Republic are the most significant drivers of these positive
developments. The sales of NPLs by the government started in these markets with the
aim of increasing the quality of assets. However, in the region of South East Europe,
regional share of NPLs increased by 2.5% (Delova Jolevska & Andovski, 2015). Joint
efforts directed towards resolving the NPLs are needed in order to allow faster and more
efficient recovery of the banking sector in the region.
The research of NPLs is performed according to certain segments. In the analysis of
the level of NPLs by segments, certain problems can be noticed. First of all, the countries
that are members of the EU have identical methodology for the classification of NPLs, as
opposed to the countries that are not members of the Eurozone. An analysis of the NPLs
for the first two groups of countries will be performed, including Slovenia, Slovakia, the
Czech Republic, Poland, Hungary, Croatia, Bulgaria and Romania. First, non-
performing loans ratio of non-financial sector for selected countries in the period from
2010 to 2016. Also, the classification of NPLs according to the corporations is made.
Corporate lending improves due to more pronounced demand, and credit activity in
relation to economic growth is expected to accelerate. Two years ago, the lending
standards improved in almost all segments. It is expected that corporate lending will
surpass consumer lending (Beck et al., 2013). In the period from 2013-2015, the average
growth rate in this area in the region of Eastern Europe stood at 7.1%. The forecasts for
the period 2016 - 2020 predict a level of 9.6%. Also, it is anticipated that the growth rate
of housing loans and consumption loans will have a long-term increase in Central and
Southeast Europe. In the area of EU loans for enterprises occupied 48% of GDP in 2012,
while in Poland that level was 16% and in the Czech Republic stood at 22%. When it
comes to housing loans granted to individuals, their share was 40% of GDP in the EU
(European Banking Coordination, 2012). The last category of NPL ratio is the part that
refers to the household. Household lending and the need to keep lending flowing to the
economy is the primary activity of each bank. It is an important function of a bank since
in this way banks are increasing their total assets, and the competition between banks is
most pronounced with the household lending. For most banks, loans make up half or
more of total assets, about 1/2 to 2/3 of their income (Laidroo & Männasoo, 2014).
The CAR of the banks in the observed region is at a higher level compared to the
level which is found in the EU. Increased supervision in the period before the global
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economic crisis has defined high loan classification and capital adequacy
standards(Basel Committee on Banking Supervision, 2006). At the very beginning of the
crisis in 2008, the level of capital adequacy of banks in the analysed countries varied in
the range of 17% in Croatia up to 28% in Serbia. The increase in credit risk in these
countries in recent years has led to a drastic reduction in the level of banks' CAR. The
CAR level is still above the EU's new regulatory requirements of 9% at the first capital
level (Andries, 2011). The greater problem is a sharp decline in profitability of the
banking systems in these countries. The decrease in profitability occurred as a
consequence of decreased net interest margin and increased allowance for impairment
and provisions for credit losses (Dmitrovic et al.,2016). The reduction of the interest
margin is a result of increased competition and lower demand for loans due to the
pronounced recession trends.
Next, it will be important to determine the effect of credit risk management on
banking sector profitability. In this case, the profitability will be analysed, namely the
two most important indicators, such as ROE and ROA (Mishkin, S. F. ,2006).
The rate of return on equity (ROE) is analysed because it represents the most
important measure that concerns the company shareholders. The value of this indicator
gives us information on how the company used the equity capital, more precisely, how
much profit it managed to achieve with the use of that capital (Đukić et al., 2006). In this
regard, the ROE represents the ratio of net income and total equity. The ROE recorded
the best results in the first group of countries. The Czech Republic had the highest value
of this indicator, which went up to 25.8; Slovenia and Hungary had the least favourable
results, ranging from -13.2 to -31.6. Poland had a maximum of 23.6 in 2008; Slovakia
had a value of 14.2 in 2011. The second group of countries has recorded a declining
trend after the global crisis. Romania had the negative value of -12.5 at the end of 2014,
while Bulgaria and Croatia had the positive values ranging from 3.3 to 6.87 in the same
year (Pervan et al., 2015). The third group of countries had positive ROE values, except
for Montenegro whose value ranged from -25.6 to -7.54 in the period 2010-2012 (Achim
et al. 2015).
The return on assets (ROA) is, along with the prior indicator, one of the most
important measures of profitability (Garciya-Marco et al., 2007). The return on assets is
mathematically calculated by ratio of the total profit and the average level of asset. This
indicator depends on a number of factors, the most prominent being: operational
efficiency, total turnover of assets, interest rates, and tax factors. Some countries such as
Slovenia, Hungary and Romania recorded a negative value of this parameter. In the first
group of countries this indicator had the value 1, while in transition countries this
indicator had the value below 1. This value is certainly an indicator of the lower levels of
yield in less developed countries.
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Results and discussion

All indicators in the analysis are for the CEE countries (Slovenia, Slovakia, the
Czech Republic, Poland, Hungary, Bulgaria, Romania, Croatia, Serbia, Bosnia and
Herzegovina, the Former Yugoslav Republic of Macedonia, Montenegro and Albania);
the research results are valid, regardless of the fact that the division of countries by
groups is not executed. The analysis period is in the interval from 2008 to 2017. During
the research the dependence between the observed indicators will be determined. The
NPL will be considered as a dependent variable while the level of CAR, ROA, and GDP
per capita will be observed as independent variables.
First, we will begin with the model with constant parameters (Pooled model)
Table 1: Pooled OLS regression model
Source SS df MS Adj R- Number of obs = 91

Model 1294.65246 3 431.55082 squared F (3,87) = 23.93
=0.4332
Residual 1568.79741 87 18.0321542 Prob˃F = 0.0000
Root
Total 2863.44987 90 31.8161097 R-squared = 0.4521
MSE =
4.2464
NPLs Coef. Std.Err. t P>‫׀‬t‫׀‬ (95% Conf. Interval)
CAR .813223 .1822284 4.46 0.000 .4510245 1.175422
ROA -3.166852 .4988111 -6.35 0.000 -4.158293 -2.175411
BDPpc -.0002422 .0001116 -2.17 0.033 -.000464 -.0000204
_cons 2.075474 3.41271 0.61 0.545 -4.707657 8.858604
(Source: Authors' calculation using STATA 13 software)
A mutual dependence of the observed variables can be assessed using this
model whereby Prob ˃ F = 0. Also, R-squared amounts to 0.4521. Due to the obtained
values it can be concluded that statistically significant variables are CAR, ROA and GDP
per capita, because the P-value ˃t is less than 5%. At present, this model cannot be
accepted because according to the results it seems as if all 13 countries are the same.
Fixed-effects model and random-effect model are specially analysed for models
with individual effects.
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Table 2. Fixed – effects regression model

R-sq within = 0.3539 Obs per group: max = 7 Number of obs = 91
R-sq between = 0.2298 F(3.75) = 13.69 Number of groups = 13
R-sq overall = 0.0483 Prob˃F = 0.000 Obs per group: min = 7
Corr (u_i, Xb) = -0.9406 Obs per group: avg = 7
NPLs Coef. Std.Err. t P>‫׀‬t‫׀‬ (95% Conf. Interval)
CAR .308089 .2443003 1.26 0.211 -.1785821 .7947602
ROA -3.084914 .5674826 -5.44 0.000 -4.215397 -1.95443
BDPpc .0024199 .0008946 2.70 0.008 .0006376 .0042021
_cons -11.47622 7.38709 -1.55 0.125 -26.19206 3.239617
It can be concluded that the number of observations is 91, while the number of
groups (countries) is 13. Wherein F- statistic amounts F (3.75) = 13.69 and the value of
probability is very small, less than 5% (Prob ˃ F = 0), which means that there is a
statistical significance. When there is the significance it is very important that the
coefficients are not equal to nought, which means that the model is appropriate. In this
case, the CAR has the significance level of 21.1%; the ROA has the significance level
of 0%, while GDP per capita has the significance level of 0.8%. Thus, variables ROA and
GDP per capita can explain the NPL variable.
Table 3.Random – effects regression model
R-sq within = 0.2760 Obs per group: max = 7 Number of obs = 91

R-sq between = 0.6895 Wald chi2 (3) = 47.51 Number of groups = 13
R-sq overall = 0.4506 Prob˃chi2 = 0.000 Obs per group: min = 7
corr (u_i, X) = 0 (assumed) Obs per group: avg = 7
NPLs Coef. Std.Err. Z P>‫׀‬t‫׀‬ (95% Conf. Interval)
CAR .6680308 .2041631 3.27 0.001 .2678784 1.068183
ROA -2.944547 .5245197 -5.61 0.000 -3.972587 -1.916507
BDPpc -.0002333 .0001655 -1.41 0.159 -.0005575 .000091
_cons 4.205468 3.975948 1.06 0.290 -3.587247 11.99818
In this model, the number of observations and groups remained unchanged. The
Wald statistics is 47.51, while the value of probability is Prob ˃chi2=0, which means that
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this model is significant because the significance level is less than 5%. In this case the
CAR and the ROA are important in explaining NPLs, because the significance level is
less than 5%, while the level of per-capita GDP is 15.9%.
The Hausman test is applied in the selection of the fixed effects model or Model with
stochastic effects. As a starting point, two hypotheses can be set up:
The null hypothesis: Random effects model is appropriate;
Alternative hypothesis: Fixed effect model is appropriate.
In order to determine which hypothesis can be applied, the results of the Hausman
test will be displayed in the table given below.
Table 4. Hausman test
(b) (B) (b-B) Sqrt (diag (V_b-V_B))

Fixed Random Difference S.E.
CAR .308089 .6680308 -.3599417 .1341643
ROA -3.084914 -2.944547 -.1403665 .2166
BDPpc .0024199 -.0002333 .0026531 .0008792
Test: H0: difference in coefficients not systematic
chi2 (3) = (b-B) ‘ [(V_b-V_B)^(-1)] (b-B)
= 19.72
Prob ˃ chi2 = 0.0002
Since the value of Prob ˃chi2 is very small and amounts to only 0.02%, it means
that the signification level is less than 5%, so that the random effects model is not
appropriate. The alternative hypothesis is accepted where the fixed effect model is
appropriate. If we return to the fixed effects model once again, we can notice that the
value of the coefficient of the return on assets (ROA) is negative and amounts -3.0849
while the value of GDP per capita is positive with a value of 0.00241. Therefore, if the
level of ROA rises, the level of NPLs decreases, and vice versa. This statement can be
accepted from an economic point of view because when the level of NPLs decreases, the
level of bank profitability increases. On the other hand, when the level of GDP per
capita increases, the level of NPLs also increases, this is completely contrary to the
economic theory. Namely, it is considered that with the growth of the level of GDP per
capita, citizens and the economy in general will be better able to make payments on
their loans.
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In the models with stochastic effects Lagrange multipliers tests (LM tests) are
applied, such as Breusch-Pagan test. The research can begin with two hypotheses:
The null hypothesis (H0): Pooled effect model is appropriate;
An alternative hypothesis: Random effects model is appropriate.
Table 5. Breusch-Pagan test
Var sd = sqrt (Var)

NPLs 31.81611 5.640577
e 13.23727 3.638306
u 4.054186 2.013501
Test: Var (u) = 0
chibar2 (01) = 6.20
Prob ˃ chibar2 = 0.0064
The probability value is 0.64%, which means that the signification level is less than
5%. Thus, the alternative hypothesis is accepted which states that the random effects
model is appropriate. In this model the probability level for the CAR is 0.1%, for the
ROA 0% and for the GDP per capita it amounts to 15.9%. The level of CAR and ROA
may explain the NPL variable, given that the significance level is less than 5%.
Conclusion
Overall, the CEE region is characterized by diversity in all spheres of development.
For all the observed indicators, there are noticeable differences between all three groups
of countries. The banking sector affects the development of an economic system of a
country. Based on the performed analysis, the hypothesis H1 was confirmed. A fixed
model is acceptable by applying the Hausman test, while the model with stochastic effect
is acceptable by applying Breusch-Pagan test. Both models can be used, however both
models have certain advantages and disadvantages. The obtained data are important,
but the problem occurs in comparison with the economic theory. In this case, the results
provided by Breusch-Pagan test are acceptable, because they favour Random effects
model. This means that if the level of capital adequacy increases, the level of NPLs also
increases, and vice versa. On the other hand, when the level of NPLs decreases, the level
of bank profitability increases, and vice versa. The data indicate that the level of GDP
per capita does not describe the level of NPLs, which in turn may be contrary to the
economic theory. The fact is that the level of NPLs should be reduced to a minimum
with a stable economic and political level of development. In the end, it may be noted
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that the data can be viewed and analysed by using econometric models for panel data.
These results can be justified by comparing the banking system of very different
countries. Despite the fact that the countries belong to the same region, the differences
between them are more than obvious.
During the research, we came across a large number of restrictions related to the
countries of the region observed. First of all, the countries differ according to the time of
accession into the EU, as well as the method of calculation of certain indicators. The
method of calculating the capital adequacy ratio and NPL differs from country to
country. Despite the fact they all have a problem with high levels of NPLs, banks are
profitable, with a good credit risk management, and are not ready to give up their
profits. It is important to emphasize that in spite of the high degree of the model
reliability, the issue of NPLs cannot be resolved without an increase in economic activity
and more favourable credit conditions. Also, an analysis of the average for the banking
sector is a necessity, but the results differ from bank to bank. Our future research will be
dedicated to the relationship between the NPLs and banks and banking groups which
operate in the CEE region.
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THE IMPACT OF GLOBALIZATION ON HUMAN RESOURCE

MANAGEMENT
Ljubica Duđak1, Mitar Jocanović1, Zorana Tanasić2
Abstract
The process of globalization enables the development of processes of
interdependence and integration, which not so long ago seemed abstract
and impossible, both in the field of technology and economy, as well as in
the political arena. Thus, at the company, region or state level, coalition
partnerships and strategic alliances are being formed between yesterday's
competitors or political enemies.
Human resource management, as an integral part of global management,
has a significant role and great responsibility, both within the company and
in the wider community. It is more than clear that successful organizations
need to change their attitude towards employees, as the only source of
diversity that will provide, with their own knowledge, the required
competitiveness and sustainability.
The aim of this paper is to theoretically bring closer and define the notion of
globalization and human resource management as one of the most
important functions in modern organizations. Through the theoretical
research, we will try to bring closer and point to all the changes that
globalization brings, as far as possible, and to show how the effects of these
changes affect organizations and their relation towards employees.
Key words: globalization processes, human resources, management
1
University of Novi Sad, Serbia, Faculty of Technical Sciences, Trg D.Obradovića 6, ljuba@uns.ac.rs
1
University of Novi Sad, Serbia, Faculty of Technical Sciences, Trg D.Obradovića 6, mitarj@uns.ac.rs
2
University of Banja Luka, BiH, , Faculty of Tmechanical Engineering, Voj. S.Stepanovića 71,
zorana.tanasic@mf.unibl.org
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Introduction
If we turn back and take a closer look at the appearance of modern society today,
we come to an obvious conclusion that the society has made great progress in
comparison to previous decade or two. This progress is the result of constant changes,
the source of which is globalization process. Globalization is a trend that has spread over
the entire world. The trend that affects all segments of human life and dictates all the
happenings in the world. It is the current world order and what our planet and modern
society look like, which represents the result of globalization process.
Society has always been changing, and throughout the history of mankind it has
been exposed to various pressures, challenges and changes. However, there is an
impression that the changes that have defined the appearance of our society today are of
much greater intensity and that the effects of the changes are far more powerful. The
progress goes on and it cannot be predicted what results of the changes the future will
bring.
What we mean when talking about globalization is first of all, a comprehensive
process that initiates changes and influences the appearance of the society, as well as the
political and economic order on the planet. Globalization has influenced technical and
technological development, development of information technologies and
telecommunications. It has also influenced the opening of borders and markets. As a
result of this process, the market has experienced greater competitiveness, the
emergence of new products and services. The product life cycle has shortened and the
range of products expanded dramatically thanks to people who have become more
creative and innovative. Thus, globalization affects all segments of life, brings about
dramatic changes and encourages the development of the individual, organization and
society as a whole.
The impact of the globalization process is expanding both horizontally and
vertically. It means, in all directions and at all levels. If we have a look at the local,
national, regional and international levels, we can say with certainty that all of them are
affected by the process of change.
With the development of communications and the Internet, today we are able to
get in touch with someone who is at the other end of the planet with just one click.
Moreover, the exchange and flow of information, goods and services is also achieved
with incredible speed and accessible to everybody. It appears that today, people are
connected more than ever. And yet, sometimes it seems that the fast pace of life and new
forms of communication have alienated people more than ever.
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2. The Concept and Dimensions of Globalization
2.1 The Concept of Globalization

Globalization has brought with it a number of changes that have decisively affected
the phenomena, processes and relationships within societies and countries across the
globe. It affects all aspects of life, politics, economy, science, technology, and culture. So,
it is a comprehensive process.
We can say that the capitalist mode of production and the industrial revolution are
the turning points in the emergence of this modern process, whose primary aim is to
gain and increase profits 6. In a broad sense, we can define globalization as a process
whose ideology is the abolition, or the erasure of borders, which enables the free flow of
goods, services, people and ideas among countries around the world. Some of the
distinguishing features of globalization are the increase in the flow of international
capital, the increase in the number of international treaties, the development of global
financial systems, international organizations and multinational corporations, the
development of telecommunications, information technology, the Internet and
infrastructure, migration, multiculturalism, the development of international laws,
courts, and institutions, development of ideological movements and terrorist groups,
etc.
So, we can say that globalization has as many definitions and approaches as there
are scientists and theorists who are dealing with it. A general definition of the term
globalization could read as follows:
Globalization refers to the increased degree of integration of national economies,
economies around the world, especially through trade and financial flows, and it also
refers to the movement of people and ideas, facilitated by the telecommunications
revolution and the transportation revolution 7.
So, there is a number of different views and definitions of globalization. We can say
that the process of globalization is an interplay of all the relations between different
entities at the level of a country, region and even the world and civilization, in different
fields and at different times, at different speeds of development, with a tendency of
expanding, shaping and directing from the local towards the global, from the individual
towards the universal 6.
The well-known theorist Stiglitz points out that it is just because globalism has been
accepted as an ideological concept, it should not be equated with a comprehensive
process such as globalization 1.
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Stiglitz further considers that the process of globalization cannot be said to be

either good or bad, because the process itself is value neutral, but that the way in which
globalization is managed can be evaluated 9.
2.2. Dimensions of Globalization
As it is difficult to define the concept of globalization by one general definition, it is

also difficult to define different aspects, i.e. dimensions of globalization. Globalization
must be observed in partial dimensions. There are two valid reasons for this approach.
One of them is that globalization is a comprehensive process, which requires
observation from several different aspects, i.e. dimensions. And another reason for this
approach is the time factor. It refers to the time when certain aspects were created,
considering the fact that not all aspects were created simultaneously. Some of them have
been created for years, decades and even centuries through the history of society 1.
There are four dimensions of globalization - environmental, military, socio-
political and economic 1. Today, the economic dimension is attracting the most
attention. The importance of this dimension is reflected in the emergence of the world’s
economic and financial institutions, which govern the economic order. First of all, the
International Monetary Fund (IMF) and the World Bank, which dictate all
developments in the financial and economic sectors. The pressure and influence they
exert upon individual countries are progressively increasing with the decline of the
economic power of these countries. Another reason for such a great attention is the
growing number of multinational companies. These companies are the inevitable
political actors in shaping the global world order. The budgets of individual
multinational companies are estimated to exceed the budget of the countries in which
they operate.
This is not the only interpretation of the global aspects encountered in
contemporary literature. According to Anthony Giddens, globalization has four basic
dimensions - the world capitalist economy, the nation-state system, the world military
order, and the international division of labour 2. Other authors consider that there are
more dimensions, classifying them into: economic, political, infrastructural, ideological-
cultural, military and geostrategic, and environmental 6.
Although different classifications of the dimensions of globalization can be found
in the literature, the conclusion is that their essence is the same and that it has great
influence on the functioning of the society, the individual and the operation of
contemporary organizations.
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3. Contradictions of Globalization
This brief but still detailed analysis of globalization, raises the question whether it is
a positive or a negative process. This is, however, not the only question that creates a
dilemma. Is the development path the same for all countries? Has economic equality
been established between countries? Are the rights and obligations equal for all citizens
around the world? Did it really bring the prosperity and advancement to modern man's
life? These are all issues modern society is dealing with 1. Optimists consider
globalization to be the process that has positively influenced the development,
advancement and prosperity of modern society as a whole. They point out progressive
advancement in the sphere of economy, culture, technology and politics as positive sides
of globalization. In their view, one of the positive effects of globalization is the opening
of the borders of countries and the establishment of the international market, which has
increased economic growth and improvement of the economic standards, especially in
the third-world countries. Today, it is possible to exchange goods and services from one
end of the world to the other, thanks to infrastructure and telecommunications
development. Not only is there greater connectivity among countries, markets and
processes, but also among cultures and societies around the world. Thus, sense of
togetherness within the world society has been created. Numerous charities and similar
organizations have emerged, followed by multinational companies and modern business
organizations, thanks to intensive technical, technological and information
development, as well as infrastructure and telecommunication development. New,
modern business processes are being introduced such as, first of all, the decision
making, executing and control processes. The processes of mass movement, migration
and travel are also the result of globalization. Today, it is possible to travel the whole
world in just one day. Thanks to the networking, people are changing their attitudes,
understanding, beliefs as well as lifestyle. New trends are spreading at tremendous
speed, reaching all corners of the globe. Optimists believe the quality of life to have been
improved and the life expectancy extended. Among the positive effects of globalization
there is also spreading of values on which the modern political order rests - democracy,
human and civil rights and freedoms, rule of law, legal state, etc. 1.
On the other side, there are all those who consider the process of globalization as
negative and who see in it only the downfall of mankind. They believe that the
development, that everyone is talking about, does not represent a bright future for our
society.
Everyone talks about the positive effects of globalization on economic growth and
development, and no one mentions the gap between developed and underdeveloped
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countries. The fact is that countries that are considered to be developed are becoming
increasingly richer and more powerful. And they are the ones that dictate all the rules in
the market and decide all the important political issues. On the other hand, there are
countries in transition and underdeveloped countries that are becoming increasingly
poorer. It is said that there are as many as 2 billion hungry people in the world 7. This
inequality is confirmed by the fact that the G8 countries make up only 15% of the
world's population, and own more than 50% of the world production and 85% of the
world's wealth 6.
Anti-globalists believe that mankind is at risk of destruction and that the society
does not take this problem seriously. The planet is becoming increasingly polluted and
endangered and there are fewer and fewer natural resources. Frequent social and
demographic changes are causing a lot of issues. National, religious, cultural and
political riots are the result of imbalance in the world. They argue that by opening
borders and markets, countries have lost their identity and sovereignty. Furthermore,
they believe that man, as the key resource in modern society, has the right to decent
work and a better position in society. They claim that the biggest problem about
globalization is the people who are managing it.
It can be concluded that globalization cannot be characterized either as an
absolutely negative or absolutely positive process. It is a positive global process of
integration and internationalization in all areas of human activity. However,
globalization, as well as other major global changes, can have negative effects if
companies and countries enter into global processes haphazardly, without proper
understanding of the theory and practice of management 3. The controversy of
globalization process was also commented on by Joseph Stiglitz, a well-known analyst,
who asks “Why has globalization, a force that has brought so much good, become so
controversial” 10.
4. The Impact of Globalization on Modern Business Environment
It is obvious that globalization has an extremely large impact on human life, being
the source of all changes and events in the world. Consequently, business environment
has undergone transformation as well.
When we talk about the impact of globalization on the business environment, we
mean the turbulent market, strong competition and very dynamic business conditions.
We also mean technological, informational, demographic, cultural and other changes
that have been taking place. New technologies require new knowledge. A lot of
knowledge becomes obsolete even before it has been used. That is why today man is the
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most important resource, and knowledge and information are the key to success in
modern business conditions. To survive in competitive conditions, the organization has
created new knowledge, new forms of business and redesigned its form.
New forms of organizations are national and multinational companies. It means
that the corporations are based in their home countries, while their business facilities
and branches are placed worldwide. The financial power of the corporations is
extremely large and they have a strong impact on international relations, as well as the
local and world economy. Their budgets are often larger than the GDPs of the countries
in which they operate.
In order to survive in a turbulent business environment, the organization has
developed a flexible form. Compared to traditional organizations and the basic
principles of their business operation, today’s organizations look completely different.
Based on all the aforementioned, we come to the obvious conclusion that the
process of globalization is responsible for the present form of the organization. Every
change that has happened creates conditions and needs for new changes. Globalization
can be said to be a chain of changes with no end in sight.
The modern organization must have a flexible structure, such that it can respond to
market demands, consumer demands and other changes in the environment at any
moment. Such flexibility implies complexity and a number of challenges. The modern
organization management is facing very serious tasks. The management must look at
the bigger picture, must constantly monitor the events in the external environment,
remove all threats, take every opportunity, while at the same time responding to all
market demands and consumer needs. In addition to all the aforementioned, the
management has to implement the system, which includes normal and safe working
conditions, a favourable organizational climate, a healthy working atmosphere and
organized employees. The organization must have the right people in place at any
moment. This is why man, with all his knowledge and skills, represents the most
important resource of an organization today. The human resources manager is
responsible for leading, monitoring, directing and encouraging development of the
employees.
Traditional organizations have not been considered here, because they are
practically a relic of the past. So, when modern organizations are mentioned here, it is
meant organizations that operate in the conditions of globalization as a natural business
environment. Modern organizations operate in an extremely volatile and dynamic
environment with a high degree of competitiveness. Modern organizations have
developed such a form that allows them to respond quickly to the threats from the
environment, and have good information flow and good communication in all
directions. By providing a fast and efficient response to all threats from the environment
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and recognizing and timely taking all opportunities, modern organizations gain a
competitive advantage in the market. Modern organizations are forced to plan for the
short term and adapt their business to the given conditions.
The form of the modern organization is extremely flexible. It has no firm structure
and clear boundaries between business activities. Low specialization, low formalization
and high decentralization are the main characteristics of the form of modern
organizations. They have a horizontal coordination of operations and control. Modern
organizations are opening their boundaries. Both internal and external boundaries.
They are open to cooperation with the business environment and external partners, all
with the aim of achieving positive business results. These relationships are often short-
term, with partners changing as needed and depending on the requirements of a specific
business transaction. Also, cooperation between parts of the organization is much more
intensive and better.
In the modern organization, communication is direct and two-way, both
horizontally and vertically. The boundaries between the top and operational
management are erased. Good communication, above all open and honest
communication, leads to the exchange of opinions, knowledge and experience and
consequently to the creation of new ideas and knowledge. In this way the creativity and
innovation of the employees is supported, which results in their better work
performance, and therefore better performance of the whole organization. Employees
become more motivated and their job satisfaction is greater.
5. The Impact of Globalization on Human Resources Management
The impact of globalization on human resource management is best seen through

the changed role that employees as well as managers have in modern organizations.
Managers at these organizations are aware that the human factor is the most important
resource of any organization. The manager of a modern organization should be a leader,
a coach and a designer at the same time. The manager’s job is not just to monitor work
activities and evaluate the achieved results. The manager’s job is also to integrate the
organization with the environment as well as the employees with the organization. It is
his responsibility to create the mission, vision and strategy of the organization, while
ensuring that they are presented and clearly explained to all employees. Additionally, he
must connect all parts of the organization into one compact entity, establish
organizational culture, encourage others and look after the employees. The management
of the modern organization allows employees to deviate from the established methods of
work, allows them to experiment, while tolerating possible mistakes.
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Now, employees have a completely different approach to work and a new way of
thinking. They think a bigger picture and are aware of their role and importance. In
modern organization, employees perform various tasks, having at the same time the
opportunity to decide independently on the methods and techniques needed to
successfully complete their tasks. Employees are given freedom, which means placing
trust in them. They are allowed to experiment and deviate from the established methods
of work. They also participate in decision making procedures and in defining the goals
of the organization. Consequently, all this results in synergy among employees, the
sense of togetherness and commitment to a common goal. It means that in the modern
organization there is no dividing, but creating of functional teams. Such a creative
environment enables the exchange of knowledge, abilities and skills among the
employees, which results in new ideas and knowledge.
As every advanced economy becomes global, a nation’s most important
competitive asset becomes the skills and cumulative learning of its workforce.
Globalization, almost by definition, makes it true. Virtually, all developed countries can
design, produce and distribute goods and services equally well and equally fast. Capital
moves freely across international borders seeking the lowest costs. Factories can be built
all over the world. The latest technologies move from computers in one nation, up to
satellites deployed in space and back down to computers of other nations - all at the
speed of an electronic impulse. It is all exchangeable - capital, technology, raw materials,
information - all except for one thing, the most important part, the one element that is
unique about a nation or a company - its workforce. A workforce that is knowledgeable
and skilled at doing complex things keeps a company competitive and attractive for
foreign investors.
This connection is, in fact, a virtual circle: well-trained workers attract
multinational companies, which invest and give the workers good jobs; good jobs in
return, generate additional education and training. Productivity growth coupled with
world education systems, portable pensions and health insurance, tax credits or
education and training loans are the most important things for improving the standard
of living for all people. In the future, the network of our suppliers, manufacturers,
distributors, service providers and customers will be so tightly connected that we will
not be able to identify where each of them comes from. No political force can stop or
even slow down for a long time the borderless economy. The message to managers is
clear: be prepared or die.
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6. Conclusion
Globalization as a term has been in existence since the beginning of the human
society. Human society has been changing through its history to the present day and will
continue to change. At the ancient time, however, the changes that society went through
were less intense and the effects of those changes were much weaker. Today,
globalization is experiencing its full momentum and expansion. Changes are happening
more and more frequently, and their effects are much stronger.
Changes have become an integral part of daily life of each of us. Globalization
affects all processes and relationships and acts on all horizons and in all directions. It
affects all spheres of human life. It affects individuals, social groups, organizations and
the state. It acts locally, nationally, regionally and internationally. Among other things,
globalization also determines social, economic, political, legal and socio-demographic
changes. Globalization is the synonym for all the changes.
The sense of connection among people is more pronounced today than ever. New
knowledge, new information and new products are available to everyone at any
moment. It has been achieved by opening the borders of countries and markets. Of
course, the advancement and expansion of new technologies, telecommunications and
information technology, have contributed to the process of networking people.
Globalization is a phenomenon that has occupied the entire world. The question
arises to what extent people are aware of the intensity of the changes it brings with it and
what effects those changes have. It appears that generally, society is not aware of the
extensiveness of this process.
References
[1] Džamić V.: “Uticaj globalizacije na kvalitativne i kvantativne promene

savremenih organizacija”, Doktorska disertacija, Univerzitet Singidunum. Beograd,
2003.
[2] Gidens E.: “Posledice modernosti”, Filip Višnjić, Beograd, 1998.
[3] Ikač N.: „Menadžment ljudskih resursa“, FTN, Novi Sad, 2006.
[4] Maljković M.: “Globalizacija u istoriji”, Ekonomski pogledi, 2011., 1/2011,
str. 1-11.
[5] Milanović B.: “Dva lica globalizacije”, Arhipelag, Beograd, 2007., str. 13- 16.
[6] Nestorović M.: “Različite dimenzije procesa globalizacije”, International
scientific conference – ERAZ, 2016; str. 289-295.
[7] Salvatore D.: “Međunarodna ekonomija”, Ekonomski fakultet, Univerzitet u
Beogradu, 2014., deveto izdanje, str. 14.
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[8] Stiglitz J.: “Protivrečnosti globalizacije”, SBM - x, Beograd, 2002., str. 18.
[9] Stiglitz J.: “Globalizacija i dvojbe koje izaziva”, Algoritam, Zagreb, 2004., str.
40- 41.
[10] Trajković S, Nikolić M, Stošić-Mihajlović Lj.: Upravljanje ljudskim resursima
u menadžmentu. International journal, scientific and applicative papers, Skoplje, 2014.,
Vol. 4.
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MOST IMPORTANT FACTORS FOR PENSION REFORM

CONSIDERATION IN SERBIA
Ana Anufrijev1
Goran Dašić2
Anđelka Aničić3

Abstract
The pension reform process in Serbia has always been highly politicized, leading
to inconsistent policies and poor long-term results. The goal of providing a decent
standard of living for the elderly at an affordable cost has eluded successive
Serbian governments. The soaring Pension Fund deficit – the gap between
pension obligations to pensioners and revenues - continues to threaten economic
stability and to crowd out necessary investments in health, education,
infrastructure, and defense. Unfortunately, Serbia still has not managed to
introduce a second pillar pension scheme, although the modern reforms began in
2005. Due to poor demographic situation, the deficit in the public pension
system, and the already high contribution rates for pension insurance, the second
pillar is still questionable.
Key words: pension system, reform, factors, principles
INTRODUCTION
The cornerstone of pension systems was laid between the end of the 19th
century and the beginning of World War II. The first pension system was created in
1889 when German Chancellor Bismarck formed a pension system for industrial
workers over 70 years of age. In 1891 Denmark and then New Zealand introduced the

1
PhD, School of Business “Čačak” Belgrade, Modern Business school Belgrade email:
anufrijevana@hotmail.com;
2
PhD, Modern business School, Belgrade
3
PhD, School of Business “Čačak” Belgrade
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so-called Beveridge's pension system, which was based on an absolute standard of living.
Although most countries have established their own pension systems, which are
basically the Bismarck or Beveridge model, over the last thirty years there has been a
tendency for the two models to converge. Meanwhile, the pension systems originally set
up in the Beveridge model introduced mandatory pension insurance, while on the other
hand, some forms of minimum income were introduced within Bismarck's models in
order to reduce poverty.
The basic division of pension systems that we most commonly find today is
into public and private pension systems. Public systems that are mandatory pension
protection, that is, derived from compulsory retirement insurance, are usually based on
the pay-as-you-go principle of operation. The PAYG public pension system is based on
intergenerational solidarity and has proven to be very successful in the demographic
conditions of the young population at high employment rates. In addition to the PAYG
system, there is also a functioning capitalized pension system. However, for decades,
countries with PAYG-dominated financing systems have been experiencing constant
difficulties, given the growing number of elderly people in the overall population and
the decreasing number of the working population, which has proven that this system is
unsustainable in the long term. The situation is the same in Serbia, where several factors
make the public pension system increasingly expensive and economically unsustainable.
The first in a series of "culprits" are unfavorable demographic trends in the form of low
birth rates and rising population aging. Another important factor of the economic
unsustainability of the pension financing system is the decades-long reduction in the
number of employees and the increase in the number of pension beneficiaries.
At the end of this paper, the authors will provide recommendations on the
necessity of pension reform in Serbia, because only with the expedient reform it is
possible to establish the long-term sustainability and functionality of the pension system
for future generations.
1. Size and growth of population structure
Since life expectancy is prolonged and fertility rates in developed countries

have decreased in recent decades, the demographic structure has significantly changed
and the participation of the elderly (aged 65 and over) in the total population has
increased. In its most recent Population Report, the European Commission[4], based on
the projections of demographic change in the period 2010-2060, outlined an expected
significant decrease in the EU population aged 15-64, followed by an almost doubling of
the older population, from 87 million (2010) to 150 million (2050) and 152.7 million
(2060). As a result of these anticipated demographic trends, the demographic
dependency ratio of the older population (the number of people aged 65 and more for
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every 100 persons aged 15-64) is likely to double in half a century, from 26 (2010) to
52.5 (2060). Similar characteristics of expected demographic trends can be observed in
Serbia, as well as in surrounding countries.
Demographic processes represent the most significant problem of the modern
world. The Department of Economic and Social Affairs aims to provide objective data
on the socio-economic profiles of all countries in the world, their relationships and
population policies. General Assembly of the United Nations Economic and Social
Council provides guidelines and technical instructions to rectify the negative tendencies
of demographic changes. Based on expert studies, the projections of fertility, mortality,
migration, reproductive health are given. It is expected that the number of the
population over 60 years of age will increase by 1.4 billion in 2030. Of the total
population, 67% of the elderly live in developed countries. It is also expected that 6% out
of the 10% of women and 5.2% out of the 10% of male persons will live 80 years [11].
The existing median age will increase from 29.6 years to 36.1 by 2050, 48% of
the retired population does not receive a pension, and 7 workers per retiree globally will
fall to 4.9 in 2030. The share of young and old population in Serbia in 2017 is shown in
Chart 1.
Chart 1 – The share of young and old population in Serbia by areas of estimates 2017
%
3
20
15
10
0
Raška
Podunavsk
Kolubarsk
ЈJablaničk
Toplička
Srednjebanats
Rasinsk
Zlatiborsk
Pirotsk
Južnobanats
Zapadnobač
Borsk
Šumadijsk
Sremska
Braničev
Pomoravs
Pčinjska
Severnobanat
Mačvansk
Moravič
Severnobač
Zaječarsk
ЈJužnobačk
Nišavs
Beograds
k
Proportion of population under 15 Proportion of population aged 65 and over

r
Source: Statistical Office of the Republic of Serbia - population estimates of the Republic of Serbia
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2. Impact of demographic change on pensions
The expected demographic trends, combined with the budget deficit and the
rise in public debt over the past few years in most European countries, including Serbia,
have raised the question of the sustainability of existing pension financing systems, as
well as the general long-term sustainability of public finances. Most pension systems in
the EU-27 group of countries are public, based on the so-called old-age pension schemes
and funded under a pay-as-you-go (PAYG) funded system where earnings
contributions are used to pay current pensions. Public pension systems are therefore
often subsidized by state budget funds, in a percentage that varies between countries.
However, when it comes to investments, the growth of plans with increasing
numbers of workers has less sensitivity to investment risk than planned prototype
retirement plans with average characteristics, which means that 75% of plans are funded
with the help of the workforce that annually increases by 2%. The odds would increase
to 13% if the funding ratio were 40% (instead of 75%). As labor growth slows or falls, so
does the risk.
Public pension funds have been funded from staff budgets and contributions
for years, even in developed countries. Since they cannot predict requirements with
certainty, they reflect experience by increasing contributions, because forecasts are not
optimistic. The uncertainty surrounding good pension fund investments is increasing.
Formerly the yield margin was 7-8% per year. Today, the yield margin is lowered to 1-
3% without high-risk rates. However, as pension funds continue to project their
investment expectations at 7.5% return rates, they are forced to invest in riskier assets.
When it comes to Serbia, according to the expectations of the European
Statistical Agency Eurostat [5], Serbia will have 21% fewer inhabitants than in 2015 by
2060, which ranks it among the European countries with the highest expected
population decline. The latest available data from 2017 show that the trend of a strong
and continuous process of demographic aging in Serbia continues. The average age in
Serbia in 2017 was 43 years old. and the share of the population over 65 reached 19.6%.
Due to the average population age of 43, Serbia is in the group of Europe's oldest states,
whose age is over 43 years, including Slovenia (43.5 and Croatia (43.4). According to
data for 2017, the countries with the oldest population are Germany, Italy, Portugal, and
Greece, while Turkey (31.4), Albania (35.6) have the lowest average age, followed by
Moldova, Iceland, and Ireland.
When it comes to fertility rates, it was 1,44 [3] in 2015 in Serbia, the same as in
2017[2], and in 2018 it was 1.48% [8]. The assumptions about future fertility made by
the Open Society Foundation relate to the target rate of total fertility for the projected
period up to 2060 and to the changes in specific fertility rates by age. For the last two
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decades, a significant increase in fertility movements was assumed, so that in 2060 it

would result in a value of 1.85 [5]. However, to keep the population at the same level,
the average fertility rate must not fall below 2.1. Otherwise, the population will start to
decline over time. It should be noted that the higher the mortality rate in children, the
higher the fertility rate should be in order to maintain the population.
Economic dependency ratios are used to represent the demographic impact on
the public pension system. When analyzing the economic dependency ratio, i.e.
demographic aging ratios - an aspect of unemployment (or employment), two
population groups are identified: active and inactive. Active, working, independent
population are individuals who have the status of employed, self-employed, or full-time
or part-time workers, including military conscripts and civilian military personnel. The
inactive, financially dependent group consists of the elderly - 65 years and over and all
pensioners, then children and other unemployed [6]. The dependency ratio is very
complex and based on the following: a) employment - called the economic dependency
ratio with the clause: that not everyone who works is an employed person and that not
every dependent person is inactive, b) in the national current account the economic
dependency ratio (NTA - national transfer account) includes parameters: the degree of
dependency of a certain age group (unemployed) and the degree of financial support of
a certain age group (by employees) [4]. Table 2 shows alternatives to demographic aging
ratios
Table 2 - Alternatives to demographic aging ratios

Alternatives to Demographic Alternative Definitions of Demographic Aging
Aging Ratios
Ratio of the total elderly population to the total number of
Standard
employees
Ratio of the total number of the elderly population to the
Type 1
economically active older population
Ratio of the non-economically active elderly population to
Type 2
economically active employed population
Non-economically active elderly population to the
Type 3
economically active population 15 and over
Type 4 Non-economically active elderly population to the total
number of employees
Without considering other fiscal causes that threaten the financial stability of
the European Union, demographic trends in themselves pose a major challenge to the
long-term sustainability of public finances, given the sensitivity of the sustainability of
the PAYG funding mechanism of public pension systems to the tendency to reduce the
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working population and increase the old population contingent in the context of
generally negative demographic tendencies. Despite its weaknesses, PAYG systems are
likely to continue to dominate the financing of public pension systems with some
modifications; in some EU countries, it has already been reformed and upgraded, while
others are still facing the challenges of pension reform.
3. The unfavorable ratio of employees and pensioners
The ratio of the number of pensioners to the number of employees in Serbia

is unfavorable. The number of formally employed in 2018 was close to 2.3 million. On
the other hand, according to the official data of the Pension and Disability Insurance
Fund, the number of pensioners is more than 1.7 million. The deficit in the PDI Funds
depends on the contribution rate, and the question is what is financed from these
contributions in addition to pensions. For example - retiree health care, care and
assistance benefits of another person, personal injury compensation, etc. Should the
contribution rate increase, a deficit reduction could be ensured. Also, if health care
financing from the budget were to be introduced for all citizens, the expenditures of the
pension fund would be reduced, and thus the deficit.
SORS data from the second quarter of 2019 show that the number of
employees was 2,161,533, and in June 2019 1,707,592 pensions were paid. From the
previous data, it is impossible to conclude whether the situation would be better in the
coming years. A reform that implies social pensions could be on the way. The authors
did not deal with migration, but they will also have a negative effect on the sustainability
of the public pension system.
The essence of further reforms of the pension system must be based on the
portion of capitalized pensions. Also, we are awaiting further extension of the
retirement age beyond 65, as people live longer and receive pensions for a longer period
of time. If the entire system is calibrated in such a way that contributions are paid on
average 40 years, and pensions are received on average 15 years, this balance is disturbed
by the extension of life expectancy. Of course, it may also be possible to increase
contribution rates, but this is not applicable, due to both competitiveness and labor
costs. And, the second option is the extension of the age limit and working age. The fact
is that today young people are hired later in life because they study longer, and career
breaks are more frequent, and therefore the duration of working lives is reduced. In
Serbia, life expectancy is shorter than in most developed countries, so we should not
copy them completely, but in the long run with further life extension, we will have to
move the age limit as well.
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Chart 2 – The number of pensioners in Serbia
Source: Makroekonomija
According to the current 2019 regulation, men aged 65 who have been
insured for at least 15 years or men who have been insured for 40 years aged 57 and
more, are eligible for an old-age pension. The female population is entitled to an old-age
pension at the age of 62 years and 6 months and at least 15 years of insurance, that is,
with 38 years and 6 months of insurance and at least 57 years of age. Members of both
sexes qualify for an old-age pension with 45 years of insurance coverage, regardless of
age.
Conclusion
Public pension systems face several problems. The situation in Serbia is very
dramatic and there is not much room for optimism. First, unfavorable demographic
factors cause the number of retirees to increase every year. Also, low birth rates and
fertility rates indicate that Serbia will be an old country in a few decades. For a pension
system to be sustainable, it is necessary for the country to have 3.5 pensioners per
employee. In Serbia, this ratio was last achieved in 1981, and currently in our country
1.2 employees finance 1 pensioner. Unless the system is reformed, it is inevitable that
the public pension system will soon include a social pension, possibly divided into 3-4
categories.
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This was also caused by demographic changes, which are reflected in the
prolongation of life expectancy, birth rate dropping, but also changes in the structure of
the labor market. Although the contributions are high, the savings collected are not
enough, so they are supplemented by state funds, budgets, or increased taxes, which has
contributed to the avoidance of contributions, problems of registration, i.e. non-
registration of employees or registration of workers with minimum wages for lower
contributions. The PAYG system works well under conditions that involve significantly
more employees than retirees. Over time, this relationship has deteriorated dramatically
in Serbia. These factors, along with the low birth rate, an increase in the percentage of
the elderly in the total population, etc. will soon make the public pension system in
Serbia financially unsustainable.
References
[1] Country comparison: Total fertility rate, URL:

http://www.makroekonomija.org/wp-content/uploads/fertility-2017.png, (last request
2019-10-12).
[2] Demografske promene u EU i Srbiji: Očekivani trendovi i njihove posledice,

URL: https://mons.rs/demografske-promene-u-eu-i-srbiji-ocekivani-trendovi-i-
njihove-posledice, (last request 2019-10-12).
[3] Đukić, G.: “Ekonomske i demografske pretpostavke funkcionisanja sistema

javnog penzionog osiguranja”, Megatrend Revija 13 (3), 107-130, 2016.
[4] European Commission: The 2012 Ageing Report: Underlying Assumptions and
Projection Methodologies, URL:
https://ec.europa.eu/economy_finance/publications/european_economy/2011/pdf/ee-
2011-4_en.pdf
[5] Kovačević, M., Gavrilović, D., Popović, D., Stevović, M.B., Sekulić, Lj., Stančić,
K.: Economic, demografic and social effects of potential scenarios of normalization of
relationsbetween Belgrade and Priština, Fondacija za otvoreno društvo, 2018.
[6] Kovačević, M., Gavrilović, D., Popović, D., Stevović, M.B., Sekulić, Lj., Stančić,
K.: “Ekonomski, demografski i socijalni efekti različitih scenarija normalizacije odnosa
između Beograda i Prištine”, Fondacija za otvoreno društvo, 2018.
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[7] Loichinger, L., Hammer, B., Prskawetz, A., Freiberger, M. and Sambt, J.:
“Economic Dependency Ratios: Present Situation and Future Scenarios”, (Working
Paper), No 74, 2014.
[8] Makroekonomija, Ekonomske analize, Srbija, okruženje, i međunarodna

ekonomija: “Broj penzionera u Srbiji i dalje u lakom padu”, URL:
https://www.makroekonomija.org/demografija/broj-penzionera-u-srbiji-i-dalje-u-
lakom-padu/
[9] Republika Srbija, Republički zavod za statistiku: “Stopa ukupnog fertiliteta”,

URL: http://data.stat.gov.rs/Home/Result/180706?languageCode=sr-Cyrl
[10] Republika Srbija, Republički zavod za statistiku: “Procene stanovništva

Republike Srbije 2017.” 2018.
[11] World population ageing 2015, United Nations, Department of Economc and
Social Affairs. (2015); URL:
http://www.un.org/en/development/desa/population/publications/pdf/ageing/WorldPo
pulationAgeing2015_InfoChart.pdf.
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INFLUENCE OF BENEFIT CORPORATIONS ON SOCIAL FLOWS

Jelena Raut1, Slavica Mitrović Veljković2, Đorđe Ćelić3, Boban Melović4
Abstract
The reality of large multinationals companies, which is usually based in
developed countries, is likely to be different from the problems faces by
companies of other scale in emerging or emerging markets. Nevertheless,
corporate responsibility management becomes a challenge for everyone.
Expansion trends, formalization, standardization of organization around
the world, where organizational legacies such as accounting, business
management, corporate social responsibility and benchmarks cao be
attributed to globalization and its specific tendencies of universalism,
rationalization and the rise of modern concept. Integrating corporate
responsibility has become a must for companies to stay competitive in the
market in which they operate, which is increasingly globalized and very
aggressive – become leaders, differentiating yourself by adding value to
business. The paper considers BC (Benefit Corporation), as a non-profit
organization, which the corporation voluntarily chose to adopt in its
founding list. Benefit Corporation has social responsibilities, which make it
a corporate social responsibility.
Key words: corporations, globalization, social responsibility, corporate
social responsibility
1. Introduction
„In the last 5 to 10 years“ (Perera, 2009), which means that the beginning of 21st
century is being considered, the importance of corporate social responsibility as a
1
Scholarship holder of doctoral academic studies, Ministry of Education, Science and Tchnological
Development, jelena.raut@yahoo.com; University of Novi Sad, Faculty of Technical Sciences
2
University of Novi Sad, Faculty of Technical Sciences, mslavica@uns.ac.rs
3
University of Novi Sad, Faculty of Technical Sciences, celic@uns.ac.rs
4
University of Montenegro, Faculty of Economics, bobanm@ac.me
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function is raised to a higher level in different regions of the world. In his research on
„Embedding corporate responsibility through effective organizational structures“,
Perera already notes the changes and challenges that his clients have faces as they
develop, grow and compete in increasingly demanding markets, both locally and
internationally. He points out that the most frequently asked questions were:
 Should we move forwars with a dedicated CSR (Corporate Social
Responsibility) department or is if sufficient to set responsibility and goals
in the existing organization structures?
 Is it right for CSR function to „rest“ in the PR department?
 What is the CSR budget in my company relative to the industry standard?
 Is it necessary to establish a CSR committee at the boartd level?
 Should we hire a CSR manager from within at the board level?
In order to be given responsibilities and to do everything in order to carry out the
tasks, when it comes to corporate social responsibility, that is corporations, it is best to
decide on a set of correct incentives. Culturally, this implies a major shift from short-
term views to cost reductions, to long-term sustainable performanse (Kelly and White,
2007). An organization needs to decide on a set of incentives that work best to complete
profit maximization, which is very important for corporations with social
responsibilities, thas is, their performance. Just like when it comes to any other strategic
component of a business, performance should be tailor-made and evaluated in
accordance with the established formal strategy.
In the midst of the latest financial crisis, corporations have been criticized as being
self-initiated and reckless when it comes to their relationship to society. The corporate
pattern has been dubbed „sick“ and „broken“ (Metcalf and Been, 2012). Altrough
corporate law is only one element in the complex relationship between business and
society, it is often misunderstood. Because of a business entity called a corporation, it
may be considered to be there to fulfill the needs of the company, which is relevant to
discussiong how it relates to corporate social responsibility and corporate
responsibilities.
2. Benefit Corporation, as a corporate form with the

necessary social responsibilities
BC in a new legal entity created by legislation in ten countries.

The primary difference that distinguishes BC from a corporation is that it is legally
required to use, in addition to its own benefit, public liability to returs profits to
employees.
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It is a legally profitable, socially obligared, corporate form, with all traditional

corporate charachteristics, but with the necessary social responsibilities (Hiller, 2012).
This new business structure is an ethical step towards empowering socially engaged
business entities.
2.1. History and evolution: Corporate form and its relation to social purpose
BC evolution and design are inextricably linked to the existing paradigm and
respond to profit as the true purpose of the corporation, whether or not that legal
boundary is real or perceived. The early links between corporate purpose and society are
based on the fact that the corporation was created under state law (as opposed to
federal). Altrough certain elements of a corporation might be created privately without
status, the contract between the owner and the manager has the sine qua non of
corporate existence, limited liability and separate existence (Deskins, 2011; McBride,
2011).
Today, every state has its own founding status. If a company follows standardized
reyuirements and submits proper paper work, it is automatically granted corporate
status. It was now always that way (Resor, 2012).
2.2. Benefits of the corporation

As this point, nine states have adopted BC statutes: California, Hawaii (Hawaii’s
statute is called the Sustainable Corporation Law), Lousiana, New Jersey, New York,
South Carolina, Vermont and Virginia (Hiller, 2012).
By adopting the status, BC wishes to address a shareholder led by standards for
maximizing primacy and profit and changing these CEO and follower responsibilities to
include social and environmental considerations. In other words, building consideration
of social and environmental considerations in „corporate DNA“ (Clark and Babson,
2012). BC must be incorporated as a corporation, with state law in place. The entity
must follow all the steps of incorporation and the entity is subject to all other relevant
statutes relating to the formation and management of the corporation for profit.
Therefore, BC is a non-profit organization, which the corporation voluntarily chose to
adopt in its founding list and is then subject to the additional special duties and purpose
established by the statute of givind.
What is of great importance for CSR are the primary aspects of status that can be
divided into five areas:
1. The purpose of a corporation is to provide a public benefit.
BC must provide general public benefit. General public well-being is
defined as „Material that has a positive impact on society and the
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environment, taken as a whole, evaluated against a third party standard“

(Model Law, §102).
Corporations have been accused of „laundering green spaces“ by
emphasizing a public relations action or product or advertising rather
than revealing the overall effect of a business or product on the
environment (Cotton and Lasprogata, 2012).
The subversion of corporate responsibility, more broadly and for
environmental social issues, is addressed in part by the requirement that
BC report on the totality of its operations. In addition to the general
public benefit, a corporation may also adopt a certain public benefit
(§201b). The core of the list of preferential benefits in a model statute
includes the promotion or preservation of the environment, health, the
arts, science and knowledge, as well as providing jobs or products to low-
income or underserved communities (Model Law, §102a).
2. Independent third party standard to review corporate public benefit
annually.
When it comes to a third-party standard, BC must select a recognized,
independent, comprehensive, credible and transparent third-party
standard to produce an annual report to „define, report and evaluate the
social and environmental performance of corporations in the business of
creating a general and, where appropriate, special public compensation
(Model Law, §102 (a)). The standard must include a comprehensive
assessment of the factors that are the subject of the third party's annual fee
report, which must be independent and must not have any „material ties"
with BC or its
affiliates or interrelations with the industry group standard. The standard

must be credible because it is designed by experts and uses a „balanced
multiple owner access" (Model Law, §102 (a)) with a public comment
period of at least 30 days. The standard setting must be transparent, so
information on the criteria used, the relative weights given to those
criteria and any development and revision must be made publicly
available. The third-party standard used by BC is the first step towards an
objective review of performance and variation across countries that may
affect the effectiveness of this review. This could also lead to problems for
investors and shareholders, who will need to look more closely at BC's
balance sheet to determine the reliability of the report.
3. Duties of directors to consider a wider range of interests beyond
shareholder profits.
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4. Transparency.
5. BEP (Benefit Enforcement Proceeding).
Directors and officers are required to consider both shareholders and owners,
employees, the local and global environment. Thereafter, they are obliged to consider
the short and long term interests and the realization of general and specific public
benefits in the operation of the company.
Directors have the power to take into account any factors and interests that they
deem relevant. In the choice of interests, without interest (including shareholder profit),
first the person or group takes precedence. Unless the founding act gives priority to an
element that will help the public gain, none of the mandatory considerations takes
precedence over any other.
3. Environmental and Social performance of the

corporation as a socially responsible organization
In making investment decisions, shareholders are today asked to evaluate and easily
monitor company financial performance measures and metrics covering E&S
(Environmental and Social performance), which are two components of CSR.
Tests ecploring the financial costs and benefits of increasing E&S performance have
mixes results. If firm managers worry about pressures or receive other private benefits
from investing in E&S, the will invest overtime (Masulus and Reza, 2015; Cheng, Hong
and Shue, 2016; Cronqvist and Yu, 2017).
It is very important to find out if shareholders are managing the work of E&S for
companies around the world because the pressure to improve the health system is
indeed a global phenomenon. Institutional investors are especially important because
these shareholders own and vote for most of the world's capital. Company-level
environmental and social performance measures need to be built, using items covering
areas such as CO2 emissions, renewable energy use, renewable energy violations, human
rights violations, and quality of employment from several E&S providers (Amel and
Sefafeim, 2017).
Below, some of the ways to combine these E&S firms' performance, with
institutional ownership and financial data, will be presented to create a sample of 3,277
non-US firms from 41 countries over the period 2004-2013 (Dyck, Lins, Roth and
Wagner, 2019).
Investors who are signatories to the UN PRI (United Nations Principle for
Responsible Investing) which commit them to E&S activism, have more than double the
average investor impact on the E&S business of the company. Investors also have a
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stronger effect in firms with below-average initial E&S results and thus a larger scope for
improving E&S.
If an investment manager lives in a community that strongly believes that
companies should have a high level of environment and social performance, increasing
E&S performance in firms brings social rewards to the investment manager and avoids
social sanctions. In this environment, the Investment Manager can lead companies to
excessively increase E&S performance in the sense that the level they choose can exceed
the level that maximizes financial income, which becomes acceptable as it moves the
E&S business closer to community and science ideals in the field of community.
3.1. Managing investors with the environmental and social performance of

the firm
It is very important to assess whether the global evidence shows whether
institutional investors are the driving force against the performance of firms and
research.
Figure 1: Summary data on environmental and social outcomes as well as institutional
ownership (Dyck, Lins, Roth i Wagner, 2019)
This table summarizes environmental and social performance data as well as

institutional ownership.
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Figure 2: Panel A - Environmental and life results for the entire sample
Panel B - Environmental and Social Assets as well as Institutional Ownership (Dyck, Lins, Roth i
Wagner, 2019)
Category results are calculated as the sum of all indicator variables in each category,
divided by the number of times the cases are reported. The total score is the average
score for the category. Data are from ACCET4 ESG database and Factset and are
obtained for 2004-2013. Businesses enjoy lower capital costs if they can make themselves
attractive to a larger shareholder group. Therefore, investors can take advantage of the
exit threat or the threat of selecting only firms with certain E&S policies to indirectly
influence firm choices (Hirschman, 1970; Gillan and Starks, 2003; Edmans and Manso,
2011; Edmans and Holderness, 2017). There is evidence to suggest that investors use exit
and choice to influence the performance of businesses and management systems. Some
investors use negative screening to exclude poor E&S professionals or positive screening
to buy only firms above certain E&S thresholds (for example, socially responsible funds
or direct funds) (Barber, Morse, & Yasuda, 2017). Negative screening is used by a few
institutional investors and excludes only a few companies. For example, the Norwegian
Global Pension Fund has had investments in more than 9050 firms worldwide since
December 2015, but only 66 firms have been blacklisted. Positive screening used by
CSRs represents only a small part of institutional ownership.
Public involvement through shareholder proposals, given their lack, is unlikely to
be the dominant mechanism used by investors to drive the performance of E&S firms.
Private engagement is the most likely channel through which investors encourage
companies to strengthen E&S performance. Although private engagements may in some
cases imply shareholder suggestions, they do not require them to be effective for the
goals of shareholder activism.
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3.2. Financial and social motivation to improve E&S

Investing in E&S could be an increase in value by providing a form of risk
insurance or a difference in the product market, or both. Many investors use such
motivations to explain their E&S activism, and these investors often find that spending
on E&S is for long-term rather than short-term repayment. Institutional investors
should also encourage improvements in the performance level of E&S firms due to the
social pressures they face. Guiso et al. (2006) show the widespread effects of culture, a
broad term that encompasses the beliefs, values and norms of a group or society on a
range of economic outcomes. Akerlog and Cranton (2005) provide a definition of
norms - "people's attitudes about how they and others should or should not behave" and
show that social norms can significantly influence agents' behavior. The necessary
ingredients for the norms that are important for investment managers are for managers
to identify with a particular community, the community has attitudes about appropriate
science and education performance (ideals), and the investment manager receives social
rewards for aligning his portfolio. Social norms are important if institutional investors
are trying to reflect their users' preferences. To the extent that the community has
consistent attitudes toward E&S, rather than differing, the investment manager reflects
those preferences in their dealings with firms (Akerlof, 2005). When it comes to foreign
investors, they also transplant their social norms when investing in the US, and should
such institutional ownership increase, it is projected to have a significant impact on US
firms' research and science practices.
To the extent that the community has consistent attitudes toward E&S, rather than
differing, the investment manager is more likely to reflect those preferences in their
dealings with firms. In the context of E&S, environmental and social norms were simply
recorded and tested to see if they affect the impact of investors on businesses and E&S
businesses.
4. Conclusion
There is an awareness that corporations, as large global entities, greatly influence

the formation of both economic and cultural, or social, flows. The primary goal of
corporations is certainly to maximize profits, but if not in the Balkans, when we analyze
the world, we can see that there are regulations, which at the moment, corporations
voluntarily opt to be socially responsible due to the fact that social responsibility is one
of very important business parameters and the fact is that this parameter will be adopted
more globally, currently, because of the culture that exists. Following the latest financial
crisis, corporations have been heavily criticized for their interests and their relationship
to society. BC has emerged as a new legal entity, with all the traditional corporate
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characteristics, but also new social responsibilities. Research suggests that this new
business structure is one of the first steps toward empowering socially engaged
businesses. Whether the BC model will be widely adopted and whether it will effectively
promote corporate responsibility is something that needs to be demonstrated in the
future.
The BC model absolves directors from the limiting responsibilities of the social law
paradigm effect and obliges them to consider the interests of stakeholders. The legal
integration of profit and responsibility within BC connects corporations to CSR theory,
which is its primary purpose. BC statutes provide an opportunity for a unique type of
socially responsible business that has great potential for sustainable practices. While
state laws have significant similarities, legal differences will provide space for studying
the interrelatedness of assessment, transparency, and process with the social standing of
responsible corporate purpose.
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[9] Dyck, A., Lins, V.K., Roth, L., Wagner, F.H.: “Do institutional investors drive
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GLOBALIZATION, CAREER AND ADAPTATION TO CHANGE
Ivana Katić1, Ana Nešić2
Abstract
Studies of the globalization process reveal that we are confronted with a
phenomenon that has multiple dimensions - economic, social, political,
cultural, religious and legal - and that they are all interconnected in a
complex way. The changes brought in by globalization are much faster and
more radical than ever before in our history. The pronounced market
dynamics, pressure from growing competition and fast responses to changes
in business, challenge organizations in terms of caring for educated, creative,
progressive employees in order to position themselves in the market and
succeed in the future. One of the key features of modern business is that
without competent people there are no healthy society or a healthy
organization, therefore, career decision-making as well as employee
development is an ongoing process and investment for the future of many
organizations. In order to successfully achieve its goals and development, an
organization must turn more to the individual goals and interests of its
employees, and design, plan and pursue its development through the
development of its employees.
Keywords: career, globalization, change, employees
Introduction
We are witnessing the growing interdependence between countries around the world
and the unfolding of a series of independent processes that occur and span countries,
regions, in fact the whole world. We call this combination of all the relationships that
connect many participants at the national and regional levels, including civilization - in
different fields, times, at different speeds, with a tendency to be comprehensive, but also
in those processes that have already become global - the globalization. The concept of
globalization can be understood and defined in different and numerous ways. One

1
Faculty of Technical Sciences, University of Novi Sad, mail: ivana.katic@uns.ac.rs
2
Faculty of Technical Sciences, University of Novi Sad, mail: ana.nesic@uns.ac.rs
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theoretic view defines globalization as a positive and optimistic process that brings
development of technology, market expansion, higher profits, a more leisurely life,
scientific advancement, the collapse of dictatorial regimes, and the development of a
hedonistic, consumer society and value. Thus, it emphasizes the need to connect the
world without national borders. The second theoretic view defines globalization as a
necessary evil, the dominance of the US and the EU in all aspects of life: economy,
politics, science and culture (thus as a form of colonialism and imperialism over small
nations). The third option, somewhere between the first hyper globalist these and the
other one, marked as skeptics, theorist David Held speaks of transformationalism, as a
kind of third path, uniting the previous two (Popić, 2018).
The source of globalization fits into a new philosophy known as the New World Order,
conceived in the United States after the collapse of communist orders and the Soviet
bloc, whose most important determinant is the creation of a global market. Also, in the
unification of Europe, many see the first step of creating a world state, and this idea of
one world is as old as the illusion of eternal peace that the world should guarantee
(Giddens, 2003). Globalization is an impossible process to avoid, given the evolvement
of highly sophisticated technology, especially IT which turns the world into a global
village. Such a global open market imposes high criteria for quality, efficiency,
development and affinity of companies, as well as managers' competences. Openness to
the world market, deep international integration and revolution in the knowledge based
economy shape globalization as a process with ever diminishing ability of nation states
to influence economic processes. Many governments of individual states have less and
less power that now transfers to the managers of multinational interests, to whom most
nations of the world are subjugated, causing the disappearance of state capitalism and
the nation-state. On the international agenda, governments are increasingly working
together with international organizations, all the way from United Nations to the
General Motors.
Early process of globalization begins with the industrial revolution and the capitalist
mode of production, which aims to gain and increase profits. Profit can increase with
rapid production growth from costs for the same level of production. The industrial
revolution and technological advances reduced production costs and made it possible to
create new products, previously completely unknown. As mentioned, the process of
globalization was driven especially by technological advances in telecommunications
and transport, and the end of the 20th century brought information technology (Ritzer,
2007).
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The economic dimension of globalization as a basis for changes in

work and career
Economically speaking, it can be said that the causes and incentives of globalization are
the capitalist mode of production, technological progress and international regulation.
In the global economy, factors of production, natural resources, capital, technology,
labor, information as well as goods and services are moving freely around the world.
Globalization involves complete economic liberalization, that is opening the door to big
business. Multinational companies are at the forefront. Governments create the most
favorable conditions for the growth of their businesses. Regional groups such as Asia-
Pacific Economic Cooperation or World Trade Organization are fully committed to the
same objective (Stiglitz, 2002). If we are to understand economic globalization in the
narrowest sense, as a growing economic interdependence of countries around the world,
then we must be aware that it is not enough for economic ties to cross the borders of
countries or regions, but rather to establish themselves with a large number of countries
and tend to span the whole world - to become global and only then to be an integral part
of the process of economic globalization.
Economic globalization is a necessary process and product of the operation of market

laws, international economic policies, states and international economic institutions and
organizations, as well as transnational and multinational companies. In this process, a
particularly stimulating role is played by the development of technology in the fields of
information and communication. Both major flows of global economic integration
international capital flows and international commodity flows move cyclically, but have
a clear tendency for rapid growth, much faster than overall product growth (Nee and
Swedberg, 2005).
Multinational companies, as major players in both economic globalization and

globalization in general, can take advantage of business opportunities in many different
countries. They can raise money for their operations around the world. It benefits them
from being able to establish production facilities in the countries where their products
can be produced most efficiently and effectively. Companies with operations spread
across the globe sometimes have access to natural resources and materials that may not
always be available to domestic companies. Multinational companies can hire managers
and other staff from around the world.
Accordingly, there were tectonic changes in the working processes too. Flexible working
hours, the end of a lifetime's jobs, more and more professions are service-oriented, the
knowledge based economy covering over 50% of occupations in developed countries etc.
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has inevitably led to changes in career definition and perception. In this regard, a very
important question arises about career decision-making and career alternatives, which is
not only enabled, but also encouraged by modern society.
Career decision making
Career choices are one of the most important choices that people make over the course
of life. These choices have a long-term impact on an individual's lifestyle, emotional
well-being, economic and social status, as well as sense of personal productivity and
contribution to the community (Urbanaviciute, 2018). It is therefore natural that
individuals at different stages of life are occupied with the choice and development of
the profession and career (Saka, 2008). Even though most people make career decisions,
many face the difficulties that globalization and new trends bring (Gati et al., 2001).
Theoretical approaches that prevail as a career guidance framework are:
a) Career development theories (Savickas, 2002), which focus on the developmental
circumstances in which decisions are made, including changes that occur in individual
preferences, career maturity, adaptability, and the effects that these changes have on
career decision-making;
b) An approach to individual fit in the environment (which mainly focuses on the
matching of the individual and his or her environment, resulting from the decision-
making process).
The complexity of the working world of the twenty-first century and the constant
changes that characterize it, turn careers into multi-choice, unpredictable and unstable
paths (Blustein, 2006). Therefore, empowering the individual as an autonomous
decision maker is essential for the ones career development and requires career
consultants to help them acquire skills that will help with making the decisions.
Decision-making theories are applicable in situations that indicate the following (Katic,
2017):
1. It is up to the individual to make the decision;
2. A set of goals that an individual strives to achieve;
3. A set of alternatives from which the individual chooses the right one;
4. Key factors that an individual considers when comparing alternatives;
5. The need to collect and process information (usually under uncertain circumstances).
Harren (1979) defined the decision-making model as a description of the psychological
process in which one organizes information, considers alternatives, and decides on the
course of action. This definition illustrates the cognitive, analytical nature of decision-
making models. However, the importance of intuition, as well as the emotional -
personal aspect of making career decisions in order to make a satisfactory and secure
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choice, has been accepted and much research is now devoted to understanding the
importance of these factors in the decision making process.
From a cognitive perspective, decision-making situations differ in many ways,
including: a) importance of decision b) information necessary for decision c) required
type of information prosecution.
The consequences of making inappropriate career decisions can have a significant
impact in financial segment (e.g. training investment) and psychological segment (e.g.
difficulty making changes in a particular aspect of one's life as well as the frustration one
is going through dissatisfaction at work). With all that in mind, it is not surprising that
career decision-making can become a stressful process for many people that can often
be associated with an increased anxiety degree (Grubic-Nesic, 2005).
Career alternatives
The most prominent feature of career decision making in today's business world is
variability in career alternatives, one of which should be chosen. At twenty first century,
choosing a career is a life process with many steps and many changes, which are not
necessarily focused on a specific goal, but already include contingency management and
opportunities. The modern career world involves knowing the dynamic nature of the
career path decision making. Therefore, instead of the traditional linear, progressive
picture of a career path, the postmodern career path can be described as a path with
many changes where each one offers lots of different directions to look at. On the one
hand, variations in occupations and jobs give individuals the freedom to seek
alternatives that most closely matches their preferences, interests and abilities, but on
the other hand, a large number of alternatives and a lack of predictability of changes in
the business environment increase the complexity of decision making (Di Fabio, 2017).
A lot of potential career alternatives, nuances that differentiate them, and the frequent
changes they suffer, require the thinking of the individual to gather what more
information for as many alternatives as possible. The challenge in dealing with this
many information is merged through business variations - first and foremost, significant
variations in specific job attributes of the same occupation. Organizational
characteristics (such as organizational culture) can also significantly affect the
characteristics of a specific job (Cambel et al., 2001).
Continuous changes in the business world, as well as changes in individual preferences,
increase the uncertainty involved in the subjective importance attributed to the
information by individuals. Lastly, different sources of information (television, internet,
social networks) differ significantly in credibility and quality, which further increases
the complexity when using information.
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Individual preferences
The purpose of career decisions is to locate the alternatives that best match individual
goals and abilities. Defining one's preferences is a challenging task, which brings many
difficulties to the thinking of individuals. Lack of self-information or difficulty in
defining one's preferences is not only a theoretical problem but a major cause of career
indecision (Katic et al., 2018).
Unlike occupational information, which can be used in environmental research,
affirming individual career preferences, decision making requires intense self-
examination and it is rare for individuals to begin the career decision-making process
with the set well-defined and clear career preferences. Self-exploration is a life activity
that requires the individual to relate to the active experience through which they
develop professional and personal schemes and therefore people become better decision
makers (Udayar et al., 2018).
Relying on individual preferences, the decision-making process is based on assuming
that these preferences are stable. However, people generally do not have stable personal
styles, but a dynamic variable system of preferences, interests, values and beliefs that
lead to changes in one's aspirations for a particular occupation in different ones stages of
life. Also, human preferences are somewhat built up and heavily influenced by
situational components, including changes in the market.
When organizations understand the importance of career development for employees,
they can offer numerous opportunities for those employees. These opportunities include
training programs or career consultants that develop individual career plans. These
programs are available when the offer is open to all employees and regular. The goal is
to connect organizational and individual goals with current or future changes and
opportunities in the organization. Well-designed development programs help
employees to identify their needs for career development, build up and enhance
opportunities in the organization and connect the needs and goals of employees with
organizational goals. Career development programs include career counseling, human
resources, career information systems, management and supervision development,
training programs and special groups (Pakholok, 2013).
One of the tasks of management is to increase the success of the employee-employer
relationship.
Knowing about employees' competencies, understanding of their personal preferences,
supporting career development and well-designed motivation program ensures working
with the best employees, which is what management really wants.
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Conclusion
The process of globalization is not only about economic globalization, it is changing our
life circumstances. This is how we live today. To resist economic globalization would be
an equally missed tactic for rich and poor nations alike. Accordingly in the 21st century,
the picture of work is very different. With the rapid development of technology, the
global economy is focused on information and service delivery. Trends impose
restructuring of organizations, labor mobility and job adaptation to new organization
design. The specificity of business in our conditions, expressed through the integration
of changing economic, political, technological, social and internal factors of the
organization, indicate the importance of career development of employees. In addition
to a positive attitude towards changes in the business operations of the organization, an
adequate commitment to the employees in the form of their development and
advancement, and therefore the development of the organization, is required. The
experiences of successful organizations from developed countries cannot be copied, but
they can serve as inspiration for finding own models, but also at the same time, as a
basis for the rapid and efficient design and implementation of concrete solutions. In
order to increase strategic adaptability in times of change, it is necessary to enable such a
development of organizational climate, in which employees will take responsibility for
professional development and actively participate, and therefore be important catalysts
for change.
REFERENCES

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depth exploration, and choice”, Contemporary models in vocational psychology: A
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[5] Grubić-Nešić, L.: “Razvoj ljudskih resursa” (Novi Sad: AB Print, 2005).
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tehničkih nauka, 2017).
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career-decision-making difficulties”, Journal of Career Assessment 16(4), 403-424, 2008.
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TRANSNATIONAL CORPORATIONS AND INTERNATIONAL

HUMAN RIGHTS LAW – HOW FAR HAS REGULATION COME?
Milica Njegovan1
Abstract
The paper deals with the problem of human rights violations by
transnational corporation. International law is trying to find solutions for
the problem of transnational corporation’s liability concerning this
question. Even though states are seen as only subject of international law
and only actors responsible for upholding citizen’s rights, for some time now
there have been suggestions, and even demands for an international legal
binding treaty which would establish direct legal liability of transnational
corporations. However, due to doctrinal disagreements, but also due to the
conflict between the need for profit and the need for protecting individual
human rights, many hurdles stand on the way to achieving this goal. The
legal instrument that is currently being negotiated in the UN is a great
opportunity to strengthen human rights protection system on an
international level.
Key words: transnational corporations, international human rights law,
human rights violation, Revised Draft, legally binding treaty
1. Introduction
In the modern, globalized world, transnational corporations (TNCs) represent a

powerful economic, political and legal factor. The economic power of these
corporations, in many cases, reaches the economic power of some developed countries.
1
Faculty of Technical Sciences, University of Novi Sad, njegovanmilica@yahoo.com
*This paper resulted from the Project 179052, entitled "The Transformation of Social Identity in Crisis
Conditions and Its Impact on European Integration". The Project was funded by the Ministry of
Education, Science and Technological Development of Serbia.
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For example, Walmart exceeds Spain and Australia, and Apple has greater revenues
than Belgium, Mexico and Switzerland (Babic et al, 2017). Of the top 100 largest
economies in the world, ranking shows 71 of them are corporations. Even though host
countries can receive many benefits from transnational corporations, the data shows
(Grabosch, Scheper, 2015) that many transnational companies violate human rights. In
this sense, we can speak of a certain aporia in the operation of TNCs when it comes to
human rights: on the one hand, they help create opportunities for the advancement of
human rights, and on the other, they are “pressed” by increasingly common concept of
corporate social responsibility for violation of good business practice in social and
economic sense, and particularly in view of human rights violation.
In practice, it has been shown that there are different types of illegal activities
commited by transnational corporations. Well known are numerous scandals related to
tax evasion, corruption, pollution of the environment and human rights violations2.
Given that respecting human rights is of enormous importance for all human beings,
their protection call for strong and coordinated measures. Although, according to
classical legal doctrine, states have primary responsibility to respect, protect and fulfill
its citizen’s rights, international community is increasingly insisting on establishing
direct international obligations for transnational companies, as a necessary means to
strengthen their accountability and to allow victims of corporate-related abuses access to
justice and to the legal remedy. Emposing international duties on TNCs would mean
that there is no need for states to impose them, as TNCs would be obliged under
international law directly (Bilchitz, 2019).
In many countries’ domestic law, companies, as legal persons, have legal
obligations and they may be held liable for breaches of these obligations. Even though
companies cannot be imprisoned as natural persons, in many states they can be
sentenced to other criminal sanctions such as fines (Kamminga, 2004)3. Given that
TNCs have enormous economic, and even political power in the globalized world,
domestic law is proving to be an insufficient mechanism for imposing human rights
related obligations on TNCs. States hosting powerful TNCs often lack the capacity or
are reluctant to act against them in order to keep foreign investments on their soil.
Other than that, given the fact that TNCs operate globally, it is difficult to determine the
responsibility of key decision-makers at the highest command position in the
diversified business chain (Zamfir, 2018). TNCs can use their corporative structure and
2
Some examples are: use of forced and child labour, lack of respect for labour rights, including the right
to associate and form unions, poor safety and health conditions at work, unlawful violence perpetrated by
private security etc. (Zamfir, 2018)
3
In Serbia, for example, the Law on Liability of Legal Entities for Criminal Offenses is in force (2008).
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the gaps in international law to escape liability, which could lead to the „corporate
impunity”.
Because of these reasons, there has been a growing demand to adopt a legally
binding treaty that would regulate the behavior of transnational corporations and even
establish their direct international legal liability for human rights violations. However,
there are many obstacles to this goal along the way. In this paper we will discuss the
doctrinal problem of establishing direct international legal liability of transnational
corporations for human rights violations, currently existing international legal
instruments which regulate this area, as well the instrument, Revised Draft, which is
momentarily being negotiated in the UN. In that respect, we will specifically comment
on the provisions of the Revised Draft and what its possible adoption could mean for the
future development of this field.
2. The concept and legal identity of transnational corporations under

international law
According to United Nations Conference on Trade and Development (UNCTAD,

2012), transnational corporations are incorporated or unincorporated enterprises
comprising parent enterprises and their foreign affiliates. A parent enterprise is defined
as an enterprise that controls assets of other entities in countries other than its home
country, usually by owning a certain equity capital stake. In addition to the term
transnational corporation, other terms are used as well: multinational corporations,
multinational enterprise, etc. Although there are some differences between these terms,
they are often used synonymously. In this paper, the term “transnational corporations”
is used to define any cross-border business associations in a broad sense.
TNCs can be traced back to the sixteenth century4 in the form of major colonizing
and imperialist ventures from Western Europe, especially England and the Netherlands
(Greer, Singh, 2000). Such companies (for example: British East India Trading
Company, England and Dutch East India Companies, Muscovy Company, Hudson's
Bay Company, and Royal African Company) traded goods and services across national
boundaries and had a geographical reach similar to today's largest TNCs. (Kulubekova,
2015). As the power and influence of transnational corporations strengthened, the need
to regulate their behavior and to establish the responsibilities of these companies
became increasingly necessary on an international business and legal scene. However,
there have been major obstacles to this, primarily in the nature of international law
itself, which provides obligations, in principle, only for States. In this respect, arises the
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question of legal subjectivity (or personality) in international law: can transnational

corporations be subjects of international public law and bearers of international rights
and duties?
According to the traditional legal doctrine, only states are true subjects of
international public law. In that sense, they have primary responsibility for human
rights violations, provided that an international norm has been violated, and that these
actions can be attributed to the state (Beširović, 2018). However, there are points of view
that other entities, such as corporations, may also be subjects of international law.
Therefore, on TNCs legal identity opinions differ. Some scholars think that TNCs may
have direct obligations based on international law. Slawotsky (2013:1) believes that large
global corporations should have “similar duties and responsibilities towards the public
as a state government”. He cites the following reasons for this view. First and foremost,
large corporations share similar characteristics with states on the global scene: some of
them have more capital than many state actors, they operate on many continents and
often perform traditional governmental functions. In addition, state actors are
increasingly appearing on the market as private corporate entites, operating state-owned
companies and large sovereign investment funds5. These trends indicate that
transnational corporations should also assume the obligations of international law.
Other authors had a similar view. For example, Muhvic (2017) states that mere
possession of international legal rights and obligations by an entity (which TNCs do
have, at least to some extent) are sufficient to consider it a subject of international law.
Bilchitz (2009) argues that corporations are ‘directly’ obliged to participate in the
observance of fundamental human rights. These obligations stem from international
agreements signed by the states in which corporations are based.
Let us also point to the opposing views, in which we find reasons against the
recognition of TNC as a subject of international law. Francois Rigaux (1991:121) states
that “transnational corporations are neither subjects nor quasi-subjects of international
law”.Kulubekova (2015), considers that from a legal standpoint, TNC is not a unit. The
TNC is usually a system of several legal entities, which separately are subjects of national
law of various states. Thus, it does not meet the criteria to have an international legal
personality.
Nevertheless, it can be said that at least some TNCs have internationally recognized
rights, such as the right to the peaceful enjoyment of possessions under the European
Convention on Human Rights (1953), which explicitly grants this right not only to
natural persons but also to legal persons. Bilateral investment treaties and free trade
5
It is worth noting that states have grown as global corporate owners in recent years. They invest in
state-owned enterprises beyond their borders, „thus gaining strategic leverage vis-à-vis other states or actors“.
(Babic et al, 2017).
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agreements also provide TNCs with strong protection. In addition to rights, some
examples of TNCs’ international obligations can be found. For example, the 1969
Convention on Civil Liability for Oil Pollution Damage provides that the owner of a
ship (which may be a company) shall be liable for any pollution damage caused by it.
Similarly, UN Convention on the Law of the Sea (1982) prohibits not only states but also
natural and juridical persons from appropriating parts of the seabed or its minerals.
А certain evolution can also be seen in the decisions of international control
mechanisms. In the case of Urbaser v. Argentina (2018), the ICSID6 arbitral tribunal
dealt with the issue of Spain–Argentina Bilateral Investment Treaty’s (BIT) relation to
international human rights law. This tribunal rejected the investors' argument that
corporations could not, by nature, be subjects of international law and stated that,
“while such principle had its importance in the past, it has lost its impact and relevance
in similar terms and conditions as this applies to individuals” (para. 1195). The tribunal
also held that, in light of recent developments in international law, it could no longer be
alleged that companies operating internationally would be immune from becoming
subjects of international law. However, the tribunal only found that companies have
negative international law obligation (the duty to abstain from human rights violations).
In any case, the need for regulation at the international level, regardless of the
conceptual challenges, is clear. Often the duties imposed by the domestic law of the
country where the transnational company is domiciled are not sufficient, for several
reasons. Firstly, the company in question operates outside the home country, in a
number of countries, so they have complex corporate structure. Secondly, the host
country is often too weak and dependent on foreign investment or unwilling to
effectively control the operations of transnational organizations, especially with respect
to human rights (Krivokapic, 2017). In this sense, Duruigbo (2008) states that since
TNCs have an “amorphous nature”, they are difficult to control by any particular state.
That is why international control is needed.
It is worth noting that one of the hurdles victims face is the doctrine of “separate
legal personality” (the 'corporate veil'): “each separately incorporated member of a
corporate group is considered to be a distinct legal entity that holds and manages its
own separate liabilities”. (Amnesty International, 2014:8). This doctrine implies that a
parent company virtually cannot be sued for actions of its subsidiaries. Moreover, a
major obstacle is the problem of jurisdiction. If victims wish, in the absence of host State
action, to sue parent company in its home country, they are often rejected because of a
6
The International Centre for Settlement of Investment Disputes is an international arbitration
institution established in 1966.
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forum non conveniens7 doctrine, which exists in common law systems. Besides, victims
usually do not have sufficient financial means to sue wealthy and powerful TNC.
Because of all this, many scholars (such as Beširević, 2018) and civil society groups
have suggested not only implementing an international binding treaty on human rights
and business, but also establishing direct international legal liability for TNCs. However,
others think that would be problematic. For example, Vasquez (2005:927) states that if
international legal norms apply directly to corporations, and if an effective international
court for TNCs is established, states “would lose control over compliance with the
norms”. He also stated that if these norms were not accompanied by an effective
enforcement mechanism, they “would probably be widely disregarded”.
3. International instruments regulating TNC’s behavior in relation to

human rights
The first attempts at codification aimed at regulating the behavior of transnational

corporations came to light in the 1970s (Mišović, 2016). However, the absence of a
single type of regulation, which might effectively coordinate TNCs' activities, resulted in
the system of regulation at different levels: self-regulation, national, regional and
international regulation.
The principle of self-regulation (corporate social responsibility) contained in codes
of conduct, rules, declarations, standards and statements dealing with human rights
protection, encounters various criticism. Even though self-regulation can have a positive
impact on the behavior of TNCs, the major disadvantage of corporate social
responsibility in which self-regulation is contained is that it may be used by TNCs as
merely a tool to protect reputation and preserve the image of TNC without tackling and
solving any real problems. The disadvantages of self-regulation in relation to human
rights are visible in practice, especially in the aspect of the role of the state, which in this
case gradually diminishes as the role of the regulator and controller (Beširević, 2018).
This shows that neither corporate social responsibility principles nor company codes of
ethics are sufficient to protect human rights.
Regarding national regulation, given that the legal systems of states differ, and that
some countries provide for criminal and civil liability of legal entities, including
corporations, while in other states this is not the case, in this paper we will pay more
attention to the international regulation.
7
It is a doctrine applied mostly in common law judicial systems, which allows courts that have
jurisdiction over a case to stay or dismiss the case upon a determination that the case may be heard more
appropriately in another court (Brand, A. R., 2019).
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On an international level, UN Commission on Human Rights initiated creation of

a certain legal instrument, which would deal with obligations of TNCs. In 2003, the UN
Sub-Commission for the Promotion and Protection of Human Rights approved in
Resolution 2003/16 a set of 'Norms on Human Rights Responsibilities of Transnational
Corporations and Other Business Enterprises'. The 'Norms' proposed by the Sub-
Commission on Human Rights represented a “restatement of the human rights
obligations imposed on companies under international law” (Shutter, de, 2008:7). In the
Norms was stated that even though States have the primary responsibility to promote,
secure, respect and protect human rights, organs of society, such as transnational
corporations and other business enterprises, are also responsible for promoting and
securing the human rights set forth in the Universal Declaration of Human Rights”.
According to this statement, transnational corporations and other business enterprises
must also respect generally recognized responsibilities and norms contained in United
Nations treaties and other international instruments (UN Resolution, 2003). This
regulatory approach (meaning it aims to impose a wide range of international legal
obligations on transnational corporations) to corporate responsibility for human rights
violations, as opposed to voluntary approach, did not come to fruition (Mišović, 2016;
according to Wouters, Chanet, 2008). Specifically, the Human Rights Commission did
not adopt the draft Norms due to opposition from a number of organizations, such as
the International Chamber of Commerce and the International Organization of
Employers.
After several years of unsuccessful attempts to reconcile the views of the business
community and human rights groups, the next step was taken in 2005, when the United
Nations established the mandate of the Secretary-General's Special Representative “for
Human Rights and Transnational Corporations and Other Enterprises.” Special
Representative Professor John Ruggie created the “Protect, Respect and Remedy
Framework” in 2008, upon which “The UN Guiding Principles on Business and Human
Rights” (UNGP) were adopted in 2011. This document is a soft law instruments, so it
has a limited impact. UNGP and other soft law instruments were even considered a
complete failure by some experts. There are several reasons for this: their legally non-
binding nature, the absence of control and implementation mechanisms, lack of
sanctions and victim’s inability to address human rights abuses in a legal forum.
However, there are some positive sides to the soft law approach: in addition to raising
awareness that businesses need to respect human rights, TNCs are, in that way, forced to
acknowledge their participation in human rights violations (Beširević, 2018).
In line with the growing comprehension of the need for a legally binding
international treaty, the UN Human Rights Council adopted a resolution in 2014, which
called for the establishment of an open-ended intergovernmental working group to
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discuss the impact of transnational corporations and other forms of business enterprise
on human rights. The Working Group is mandated “to elaborate an international legally
binding instrument to regulate, in international human rights law, the activities of
transnational corporations and other business enterprises” (UNHRC, 2014). Four years
later, in 2018, the same working group published the so-called the “Zero draft”. The text
of this document encountered differing opinions among international organizations,
civil society, academic public and business organizations, because many of the
provisions proposed in this version were confusing, imprecise and not coherent with
other provisions of the same document, with unnecessary repetitions of general
principles (Pigrau Solé, A., Iglesias Márquez, D, 2019:2).
4. Comments on the Revised Draft: what we know so far
One year later, in 2019, the Permanent Mission of Ecuador, on behalf of the
Working Group, released a new revised version of the draft treaty on business and
human rights, created on the basis of comments and recommendations, which were
presented by participatory states and other relevant stakeholders. The revised draft
introduced several changes. First of all, the scope of the contract has been extended so it
applies to “all business activities, including but not limited to transnational ones”,
(UNHRC: Revised Draft, 2019), in contrast to the Zero Draft, which referred only to
transnational activities. This change was met with general approval with some civil
society groups stating that it deflects the focus from TNCs.
The primary obligation of states is to regulate business enterprises within their
territory or jurisdiction so that they are required to respect human rights and prevent
human rights violations. The states ought to do this by introducing legislation to make
human rights due diligence mandatory (Article 5). Article 6 requires states to establish
liability for “failure to prevent another natural or legal person with whom it has a
contractual relationship, from causing harm to third parties”. This provision relates to
the corporate veil doctrine, but dilutes it by using the wording “contractual
relationship”, instead of any kind of business relationship. Such liability would thus exist
only when there is either control over the contracting party or where human rights
violations or abuses could have been foreseen. The Revised Draft also requires that
states establish criminal liability for involvement in human rights abuses that amount to
crimes. Notably, the preamble of the treaty states that all businesses shall respect human
rights, regardless of their size, sector, operational context, ownership and structure.
Furthermore, the Draft states that countries need to guarantee effective legal remedies
for victims of human rights violations.
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The criticisms of the Revised Draft refer to many confusing and imprecise
provisions, and especially to the fact that despite the obvious novelties it introduces, it
does not include substantive provisions that impose direct obligations on companies to
respect human rights, thus maintaining the status quo of international law. From the
Revised Draft’s provisions follow that states have primary responsibility to respect and
protect human rights from illegal business practices. However, some authors think that
the wording of the Preamble could be interpretated that corporations may have
even direct human rights obligations and responsibility recognized outside of it
(Carrillo-Santarelli, 2019). It is difficult to draw such conclusions, given that the direct
liability of the companies is not explicitly stated. The Draft does not not provide for an
international tribunal or some other body to which corporations would be held liable
for human rights violations. In addition, it does not include the express assertion of
human rights primacy with respect to trade and investment agreements, as proposed by
several delegations and civil society organizations during the Working Group's sessions
(Pigrau Solé, A., Iglesias Márquez, D, 2019).
While the text of the agreement is likely to change in the coming sessions, some
progress has been made: the expanded scope of the Revised Draft applies to all
businesses, transnational and local, and the preamble explicitly refers to the UN Guiding
Principles on Business and Human Rights (UNGPs). This is very important because by
doing that, Revised Draft confirms that it is complimentary with UNGPs, further
developing and strengthening a system of human rights protection (Zorob, 2019). In its
current form, the treaty would be a supplement to the domestic law with the aim of
achieving an effective remedy for victims of human rights violations perpetrated by
corporations. It gives the states obligations to make important changes in its legislation,
but allows them a certain level of freedom in order to attract as many states as possible
to sign it.
Conclusion
Transnational corporations, as a powerful global factor, have the resources to

contribute to the development and growth of the countries in which they operate.
However, their relentless pursuit of profit can harm those countries on various grounds,
often in respect to human rights. The issue of liability of TNCs for human rights
violations has been put on the agenda of international law, but it is still open, without a
clear consensus on how to regulate it. Even though states still bear the main
responsibility for protecting, respecting and fulfilling human rights, gradual
transformation of international law is evident. It is starting to take into account
corporations. The Revised draft, as a proposed legal document which would regulate
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this area, is a great opportunity to adopt a legally binding treaty. In its current form, it
represents a success on one hand, but a disappointment on the other. Namely, it does
not explicitly introduce the direct obligations on the TNCs, advocated by many experts,
but obliges states to harmonize their legislation and to provide for criminal and civil
liability of the corporations. Obviously, states should, through their legislation, provide
for different forms of liability of corporations that violate human rights. However, with
some optimism, it can be said that this is a significant shift, since the expected adoption
of a binding legal instrument will, in the future, force signatory states, with lower
standards, to harmonize their legislation with the demands of the treaty.
For now, it is necessary to monitor developments at the international level, and
recognize that the inherent tensions between the search for profit and respect for human
rights call for a coordinated action by many actors: states, businesses, civil society
gropus and international organizations.
Despite significant shifts in attempts to regulate the obligations of transnational
companies with regard to the protection of human rights, their major impact, both
domestically and globally, remains. These corporations' own, private interests are often
represented as general, i.e. public interests, so states, by identifying these interests as
their own, support corporate goals, putting aside its role of guarantor of human rights.
Therefore, it is not only important to exert pressure on the state to protect human rights
from the influence of corporations, but it is also necessary to strenghten liability of
corporate actors on both national and international level and to develop mechanisms
and bodies that would have effective control over TNCs.
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THE CHALLENGES OF MULTINATIONAL CORPORATION’S

BRANCH MANAGEMENT IN THE GLOBALIZATION PROCESS
Ivana Jolović1
Abstract
The process of globalization already lasts for decades. Its basic characteristic
is the overcoming of national borders in all spheres of human activity.
Therefore, it's obvious that comes to the formation of companies which,
from the economic point of view, are no longer oriented only towards the
market of one state, but in the same time with the same or similar
strategies, appear on several markets. These companies are called
multinational corporations. Their operations in many countries are
characterized by the existence of a wide number of branches (subsidiaries).
Branches belong to an organized corporation group and receive business
orders from a single top. However, each of these subsidiaries is given a
special figure who will take care of her goals, staff and overall business - the
branch manager. In globalization, this managerial role is very challenging,
involves numerous and almost everyday decisions that can affect not only
the future of the subsidiaries they govern but also the corporation as a
whole. Accordingly, in this paper will be presented some of the challenges
with which these executives face.
Key words: globalization, multinational corporations, branch
management.
Introduction
Formation of the global market, exploitation of cheap resources, development of

global telecommunications, free movement of capital, knowledge, and goods are just
some of the features of globalization. In that modern world, in the face of fierce
competition, limited, inaccessible and expensive resources, to secure its survival,
companies had to internationalize, ie. extend their business beyond the borders of one
1
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country to new, unknown and unpredictable markets for them. In this way, the
organizational parts of the company were created, ie. branches that “settled” and partly
became independent in foreign countries but still retained under the patronage of one
main company (headquarter) from their country of origin. The connected network of
these organizational parts made the multinational corporations, which as such are one
of the main drivers and carriers of the mentioned globalization process.
The strategies and policies that multinational corporations cherish are universal to
all their branches, and knowledge, resources, and technology are factors that determine
the success rate of each branch. The results achieved by the branch are an important
factor in evaluating the activities and rewarding the management that heads it. Branch
management has a simple task ahead of itself, which is to respond to all challenges posed
by its business entity and to solve problems that come from the internal and/or external
environment as successfully and efficiently as possible.
The aim of this paper is to analyze, from the perspective of contemporary
theoretical understanding, some of the challenges that branch managers of
multinational corporations face in the ever-present process of globalization. The paper
consists of three logically structured and conceptually interdependent parts. The first
and the second part of the paper contain a theoretical interpretation of the concepts of
globalization and multinational corporations. The third area is devoted to the concept of
branch managers, as well as to the elements, goals, and challenges of their branch in the
contemporary market.
Globalization Process
The contemporary economic literature is replete with many different definitions of

the concept of globalization, as many authors who have dealt with this issue have tried
to define it. Among the most cited are the following:
• Gelfand and co-workers (mentioned in Janssens et al., 2019) define the concept
of globalization as the rapid diffusion of economic, political, and cultural practices
across national borders;
• Globalization is an unstoppable integration of markets, nation-states, and
technologies to an unprecedented degree, which has enabled individuals, companies and
nation-states to extend their activities through the world deeper and cheaper than ever
before (Friedman, 1999);
• In its 1996 Report, the OECD defines globalization as the cross-border
activities of corporations related to investment, production, trade, and development,
precisely, the opening of new markets, the expansion of technological and
organizational advantages and the reduction of costs and risks. Globalization has
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interrupted the process of finalizing products in one country. Products are being
completed in parts of the corporation located in more than one country in the world,
which means that there is no longer a clear national recognition for the product.
Globalization is a powerful and unstoppable process initiated by the most powerful
countries in the world, with the primary goal of preserving and improving their
previously acquired positions. The process of globalization implies an intensification of
relations between individuals, organizations, institutions, and countries at the global
level (Maljković, 2011).
Globalization has allowed the free movement of capital, goods, information, and
people through the expansion and abolition of borders, and as such it is, in fact, a
“borderless state” (Macanović, 2014). Globalization is, therefore, a process of economic,
cultural and technological integration and rapprochement of companies, countries, and
continents in order to profit, establish cooperation and other similar effects. Connection
result can be a coalescence into a single whole or rapprochement while retaining all the
diversity (Tomka, 2010). The fact is that globalization is in itself contradictory and,
above all, a current topic present in a wide range of political, economic, philosophical,
ecological, sociological and cultural debates on a daily basis. It is a polarized theme that
brings together many ardent supporters of globalism on the one hand and its fierce
opponents on the other. What characterizes both is the absence of a clear vision of what
globalization will bring to the world and its people in the future (Beker, 2005). The
process of globalization, in the light of all facts presented above, was needed to be
explained in more detail in order of creating a picture of the conditions in which
multinational corporations operate, whose branch managers and specific activities are
the subject of analysis of this paper.
Multinational Corporations
As well as the process of globalization, and multinational companies are highly

researched and interesting scientific topics. Some of the definitions which describe their
existence and operations are:
• Spanning the globe, its branches, and strategic partnerships linking countries in
complex webs of alliances, the multinational corporation is the embodiment of
globalization and its principal agent. Nation-states have contributed towards making
these corporations the key agent of globalization through promoting technological
innovation, reducing tariff and non-tariff barriers, and liberalizing their domestic
financial systems. Multinationals have been the prime movers behind globalization,
taking advantage of the increased openness of domestic economies to integrate their
activities across national markets and societies (Eden & Lenway, 2001);
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• A multinational corporation is a set of geographically widespread organizations

(including headquarters, domestic and overseas branches) with different goals,
belonging to an external network made up of consumers, suppliers, legislators and other
diverse stakeholders with whom they collaborate (Hannon et al., 1995);
• Buckley and Casson state that (mentioned in Yeganeh, 2019) multinational
corporations are profit-seeking entities whose units (branches) are located into the
foreign countries, which have international power, capital, labor and enormous
resources across the globe;
What is common to all of the above-mentioned definitions is that multinationals
operate in a wide number of countries across the globe through their business units -
branches and that that group of subsidiaries together represent one corporation
(company). The operations of subsidiaries within a multinational corporation have been
the subject of many studies, first of all, because of their conflicting and unenviable
position. Subsidiaries are torn between the desire to achieve positive results at the local
level in which they operate and the obligation to take action to meet the corporation's
overarching goals. Also, this related entities were originally characterized by a
confrontation between formal independence, as branches formally function as
independent economic entities in destination countries, and factual dependencies, due
to the factual convergence of economic goals and decision-making power, projected by
the central management of the parent corporation in the country of residence (Đinđić,
2014). Today, multinational corporations are enterprises that have branches in several
countries which are still under patronage of one headquarter.
In 2005, there were 77,175 multinational corporations with 773,000 branches in the
world, and a few years later this number increased to 82,000 multinationals with about
810,000 branches. The largest 500 multinational corporations control 51% of the world's
wealth with a tendency to grow, while national-states own 49% of the same. These
corporations generate 30% of the world's gross domestic product. Multinationals own
90% of modern technology and patents, they are involved in 70% of world trade, and
control investments significantly (UNCTAD, 2006). Some multinational corporations
are larger and more powerful than individual countries. For example, in 2004, the
revenues of the American automobile company General Motors amounted to $191.4
billion, which is more than the gross domestic product of 148 countries in the world
(Stiglitz, 2009).
Based on the presented information, it is not hard to conclude that multinational
corporate action is very powerful. For this reason, certain abuses also occur. In
economic terms, it is inevitable that these corporations play a huge role in the world
economy. Politically speaking, their elites are part of the “power elite”. In the cultural-
ideological sense, they strongly propagate and spread the culture and ideology of
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consumerism. As powerful players, multinationals are highly privileged, and they often
make great harm to national economies by eroding state sovereignty. Their products are
often provided with tax breaks, as investment conditions force domestic producers and
governments to make decisions under their dictates. These corporations reduce the
power of employees, their union protection and increase their exploitation, abuse or
avoid compliance with legal regulations, etc. (Kovačević & Kovačević, 2014). Due to the
significant, complex and, above all, the controversial structure of multinational
corporations, it was important to briefly explain the operation of its factors, ie.
subsidiaries and all this for the sake of better insight into the function and challenges of
its top executives - branch managers.
Branch Managers
Standard management roles such as managing, organizing, recruiting, planning,

controlling and coordinating have been somewhat overcome. More specifically, they
begin to be viewed as something that implies, and managers are assigned new, more
significant and challenging roles on an almost daily basis. The modern manager of one
of the branches of a multinational corporation, the so-called branch manager is a
personality who has to take it upon itself all the aforementioned challenging roles. It is a
fact that the branch manager largely determines the success of the subsidiary which he
directs. The range of his responsibilities is extremely wide, and the time he has to devote
to them is very limited. Accordingly, he must be a good strategist, leader, and planner.
He has to adapt and quickly deal with problems that arise, whether they are: imposition
and selection of team members by senior management levels, lack of finances, problems
in communication and cooperation within the corporation, lack of documented
authority, etc. Only by the quality performance of these roles, the branch manager can
provide the basis for successful strategy implementation, as well as meeting the
expectations of the corporation headquarter and all stakeholders.
The branch manager is fully responsible and authorized for the activities of his part
of the multinational corporation. Although he must regularly report on the progress,
activities, and results of the branch to the multinational corporation headquarters, the
entire workforce and mentioned small “part” of the corporation are actually assigned to
him, ie. directed to work under his direct control (Bobera, 2008). In their papers
Keeling; Newton; Meredith & Mantel (mentioned in Malgorzata, 2018) more precisely
define the characteristics and skills that the average branch manager should have:
authority among team members, technical (specialist) and administrative credibility,
ability to apply a management style focused on both tasks and people, independent
thinking and the ability to defend one's own views, respect for the different views of
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team members, ability to defend the interests of the branch and corporation and cope
with various pressures, etc.
Consequently, additional important skills to beautify a good branch manager are
leadership (directing the efforts of a group of people toward a common goal and
allowing them to work as a team); team building (helping a group of individuals in a
particular subsidiary, bound by a common purpose, to work with one another, with a
branch manager, external stakeholders and a multinational corporation as a whole);
motivation (creating an environment to meet the goals of the branch while providing
maximum satisfaction with the values that employees value most); communication
(effective communication within the team itself and between the branch management,
team members and all external stakeholders); political and cultural awareness
(implementation of adequate policies, the appropriate use of power in managing this
organizational unit and an effective way of managing inevitable cultural diversity of the
branch employees); negotiation (a good branch manager must know to analyze the
situation, focus on interests and issues rather than positions, to seek a lot and to offer a
little with a dose of reality); eployee coaching (helping branch employees to recognize
their potential through selfdevelopment, improving their skills, or in building new skills
needed to make the branch successful) (Project Management Institute, 2013).
It is worth pointing out that the ability of the branch manager to work with the
team and achieve the goals is critical to the success of the multinational corporation as a
whole. Successful branch management is more than just working within predefined
structures and techniques for managing employees (Schmid & Adams, 2008). Based on
all of the above, it is not wrong to conclude that the branch manager is the central figure
of a specific organizational unit of this type, the person responsible for achieving the
planned goals of the branch, which through efficient management influences that all
activities are completed within the stipulated time period, with the planned resources
and costs. It is a complex managerial position that involves a wide number of important
roles and necessary tasks to be performed (Jovanović & Jovanović, 2018).
The Challenges of Branch Management in the Globalization Process
Taking into account all previous conceptual characteristics of globalization,

multinational corporations, their branches and managerial roles within them, it can be
concluded that the main challenges of multinational corporation's branch management
in the process of globalization to a greater or lesser extent relate to (Bezak & Nahod,
2011):
• Management - this role implies the ability to influence the performance of team
members in order to make a positive contribution to a multinational corporation and
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achieve common goals. As it is already pointed out, the branch manager is most devoted
to the interpersonal aspects of management;
• Organizing - represents the part of management that defines and establishes
the structure of tasks for team members in the branch. In other words, all the tasks
necessary to accomplish the goals are assigned to the people who are the most
competent to fulfill them. The role of the branch manager lies in the evaluation of the
work collective he manages, the assessment of their competences and knowledge, and
the division of work responsibilities;
• Recruitment - in order for the branch manager to determine the need for staff
in the selected organizational structure of this type, it is necessary to first systematically
approach the creation of a detailed description of each job that will be undertaken
within a certain period of time within the business. Selection can be made within an
existing organization if there are qualified personnel or through external recruitment
which implies more time and brings a greater risk;
• Planning - by definition, this role of the branch manager relates to the choice of
tasks and goals, as well as how they could be accomplished, through the decision making
and the choice between possible alternatives. There are different types of planning,
ranging from those that relate to the overall purpose of the business, to those that relate
to smaller goals and actions that need to be taken;
• Controlling - is a process in which a branch manager needs to evaluate the
effectiveness of its branch and the degree of fulfillment of goals according to the
previously established plans. Control activities focus on monitoring and measuring the
achievements of both team members and the branch as a whole, and include a wide
number of indicators, such as timelines, resources, budgets, reports of inappropriately
spent working time, etc.
All the above-mentioned elements of the challenges that branch managers face
influence the creation of multiple branch manager activities. The main challenges with
whom these managers face in an uncertain environment and at the global level are
presented below:
• Understanding motive diversity - branch managers are mandated to mediate
between subjects with different attitudes and cultures, and representatives who are often
driven by opposing motives (a multinational corporation, for example, is driven by pure
financial gain, and on the other side, branch employees could be primarily driven by
personal curiosity) (Mikulskiene, 2014). The role of the branch manager is to
understand all of these subjects, respond to their needs, desires, and requirements, all
for the sake of fulfilling the business goals of the branch and the final satisfactory results
of the whole multinational corporation. This manager must constantly balance and
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reconsider own decisions, taking into account that his obeying to the requirements of
one stakeholder group does not hurt other stakeholders;
• Orientation towards innovation versus efficiency orientation - it is quite
commonplace and acceptable that branch managers of multinational corporations who
are operating, for example, in high-tech industries make mistakes in managing them on
an almost daily basis. One of the most common mistakes these managers make is when
it comes to prioritizing organizational innovation or effectiveness. Rae (mentioned in
Chandrasekaran et al., 2014) through the following statement, exemplifies the tensions
that arise at an subsidiary level, according to an inadequate definition of basic
principles: “At one point, the manager tells us, the team members, that we need to
innovate, and the next moment he gives us sharp orders in terms of the tasks we need to
complete as soon as possible. It is foolish to tell people that they need to focus on
becoming more efficient while asking them to explore untapped growth potential”. Such
demands of branch managers arise from the globalization environment, which brings
with it daily innovations and imposes constant engagement and involvement of the
members of the mentioned teams in changes and improvement of business in order to
preserve/improve the current market position. Accordingly, it is obvious that this role of
the branch manager must be carefully implemented. If possible, he should strike a
balance between the requirements set out and, if not, his employees should be directed
towards completing only one (at that point, assessed as more important) task;
• Communication skills - the importance of a managerial role in a subsidiary of a
multinational corporation is reflected in finding a language that is equally
understandable to employees and other actors in the “external world”. According to the
process of globalization, expansion, and internationalization of the world market,
stakeholders come from different parts of society/world and bring with them equally
different priorities, modes of action, business culture, etc. (Mikulskiene, 2014). The
ability of the branch manager relates to establishing good communication with most
stakeholders, communicating the expectations he has towards them, and pointing out
the desired results, which greatly affects the success of the set goals. Modern forms of
social cohesion (for example, the existence of the Internet) have somewhat simplified
this process, but at the same time created an “overload” of information and requests
directed at branch managers who fail to among them find the most important and
relevant ones for their subsidiaries;
• The usage of transfer pricing - transfer prices are the prices used in commercial
and financial relations between related parties, most commonly related to multinational
corporations with business units (branches) in several countries and in different tax
jurisdictions, which can contract prices in inter-group business relationships. These
prices usually deviate from prices that would be established at the market level with
third parties, ie. independent economic operators (Negovanović, 2015). As transfer
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transactions between branches are carried out at transfer prices, their definition
establishes economic relations between these subsidiaries of a multinational corporation
and at the same time directs the allocation of resources. Several factors have been judged
by management to be crucial for the selection of transfer pricing in multinational
corporations operating in the modern global society. These are differences in corporate
tax rates, minimizing customs duties, interests of local partners, exchange rate control
and risks associated with it, restrictions on profit repatriation, risks of expropriation and
nationalization, and good relations with local government (Denčić-Mihajlov &
Trajčevski, 2011). The problem associated with the existence of transfer prices is
precisely the impact of their application on the work of branch managers of
multinational corporations (Petrović & Denčić-Mihajlov, 2010). Transfer prices that do
not realistically reflect the costs of transactions between branches, as profit centers of a
multinational corporation, do not provide an adequate picture of the profitability of the
subsidiaries, so consequently affect the motivation and commitment of their branch
managers. If transfer pricing, at the level of a multinational corporation, is used to
manage working capital or for tax reasons, the performance appraisal system of
individual branches needs to be modified to reflect their real profitability.
Shifting profits between branches determines their internal performance and
therefore the amount of bonuses for their managers. A potential problem is that a wide
range of users of branch financial statements cannot differentiate between planned
profit shifting to minimize taxes and a real decline in profitability (Denčić-Mihajlov &
Trajčevski, 2011). Branch managers, according to the facts presented, face the challenge
of preserving the value of their own subsidiary, their own reputation, and managerial
capabilities in order to allow the multinational corporation as a whole to progress more
easily. Therefore, the top management of the mentioned corporation must establish a
zealous system for recording the results achieved, the rewards and the overall validation
of the order and contribution of the subsidiaries to a multinational entity.
Conclusion
Multinational corporations are entities that dominate the global market in global
conditions. Their branches are spread all over the world, and their working results are
often characterized by variability. Although they belong to the same corporation, these
branches often compete with each other whether it is about gaining corporate capital,
top management confidence or a specific part of the market. The person who in this
“fight” for one branch can bring an advantage over all others it is its manager. Of his
qualities, personality, and knowledge; more specifically, the ability to adequately carry
out processes within a branch: managing, organizing, recruiting, planning, controlling,
and the ability to ensure overall coordination largely depends on the success of the
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branch. The paper presents each of these elements of the managerial job in more detail
and presents the major challenges with which this type of managers face in the
globalization process. Four such challenges are analyzed, which relate to understanding
and aligning with the diversity of the motives of all stakeholders, orientation towards
innovation versus orientation towards efficiency, communication skills, and the usage of
transfer pricing.
A branch manager of a multinational corporation may find himself in this position
as a “domestic” participant, more specifically a manager hired not only because of his
qualifications, but also the fact that he is a resident of the country in which the branch
operates. This type of managers have certain knowledge and know well enough how
“breathes” the market in which significant decisions need to be made. The basis for their
effectiveness lies, among other things, in understanding and aligning with the diversity
of the motives of all the branch stakeholders. Branch managers are given a mandate
during which they are obliged to mediate between stakeholders with different attitudes
and cultures who are often driven by opposite motives. These managers are faced with
the dilemma of whose demands to first meet, what market influences to obey and which
globalization trends to accept/reject, etc.
The other branch management challenge may be related to the decision regarding
the innovation-oriented versus the efficiency orientation of the employees within the
subsidiary. Employee innovation is a necessity for a modern way of doing business, and
efficiency and results, on the other hand, depend heavily on day-to-day activities that
leave little space for the development of innovative solutions. The art of communication
as a third management challenge is inevitable, and sometimes the biggest challenge that
branch managers face. Establishing quality communication with a large number of
subjects that come from different cultures and bring with them the same systems of
business, is a great challenge and a stumbling block for many branch managers.
The last, and perhaps most important, the challenge for the branch managers is the
transfer pricing business. These prices often lead to a situation where the positive
activities of one subsidiary are attributed to another within the same multinational
corporation. This is extremely useful for the corporation as a whole, and quite often
disadvantageous for the branch representatives (managers). For example, branch
managers located in countries with the high income tax rates often lose their results, in
terms of attributing the same to branch managers operating in the countries with low
tax rates, in order of paying lower tax rates at the corporation level. This is done by
lowering the real price of exported semi-finished products exported from a country with
high taxes and increasing the price after finishing in a country with a lower tax burden.
Thus, branch managers in countries with high tax rates are often not adequately
rewarded for their results, as their performance is unrealistically viewed due to product
shifts ie. shown as much smaller. Such processes undoubtedly reduce the financial
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burden of the multinational corporation, but on the other hand cause dissatisfaction
and demotivation of branch managers in high-tax countries. This is also the reason why
many branch managers in these countries require to get a job into the branches of the
same multinational corporation in another country and leave the workplace they had
before. At the very end, it can be concluded that all the branch management challenges
presented in this paper have not yet been resolved and that these managers face them
almost on a daily basis.
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Univerzitet u Novom Sadu

Fakultet tehničkih nauka

University of Novi Sad

5th INTERNATIONAL SCIENTIFIC CONFERENCE

Novi Sad, 2019.

GRAPHIC DESIGN AND PREPRESS

CIP - Каталогизација у публикацији

INTERNATIONAL Scientific Conference (4 ; 2018 ; Novi Sad)

Tiraž 50. - Bibliografija uz svaki rad

a) Заштита природне средине - Зборници

FROM CROWDSOURCING TO CROWDINVESTING – LESS RISK IN

FROM CROWDSOURCING TO CROWDINVESTING – LESS RISK

How Does a 1000x1000 Crowdinvesting Initiative Work?

Figure 1: Focus of 1000x1000 Network

So what is Crowdinvesting? Crowdinvesting is a special type of investment and

The Crowdbusiness framework provides a digital marketplace combined with

Figure 2: The ISN Crowdbusiness Framework

3.1 Crowdbusiness in Practice

Figure 3: The Crowdsourcing process

Figure 4: Project presentation of "Schneeerlebniswelt Wien" on the 1000x1000 platform

Crowdinvesting, i.e. crowdsourcing and crowdfunding can provide much added

THE MARKET AS GOD AND ITS TRANSHUMAN CREATURES

Figure 1. The three cultural layers

The transnational web of negentropic power created a blasphemous irony of the

However, atheism or agnosticism, nihilism or existentialism all share the features of

The Market as God and its worshippers: Credo and Commandments

The Ten commands might be paraphrased similarly:

Command 1. Man is selfish. Man is a profit-maximizing, self-interested creature, so

The ARES-ian God of Market and its transhumanist Creature

The exclusive accumulation of financial resources is the main source of extreme

-diminishing biodiversity- extinction of a species every hour

-diminishing cultural diversity– extinction of 2 cultures every week

restructuring of industrial economies to accommodate an open market approach, the

ARES economy has a counterpart: EROS economy, where EROS is an acronym of

COLLECTIVE IDENTITIES IN THE POST-YUGOSLAV AREA:

It is also worth to refer to Benedict Anderson’s idea of imagined communities to

[1] Avineri, S.: „Mare Nonstrum – metafora i rzeczywistość”, Herito. Dziedzictwo,

[17] Jaskułowski, K.: “Wspólnota symboliczna. W stronę antropologii

mniejszości w metropoliach, pp. 111–137, (Warsaw, Poland: Wydawnictwo Naukowe

THE CONCEPT OF “TALENT” IN THE LITERATURE - THE

involvement of contemporary research tools, such as VOSviewer, can facilitate the

The concept of ‘talent’ in the scientific literature

Progress and innovations increase the demands towards employees’ competencies.

bibliographic and abstract databases, which are characterized by high quality of

The result of the bibliometric analysis of the topic

Figure 1. Map of research trends (Scopus)

Figure 2. Map of research trends (WoS)

The results of the bibliometric analysis show that talent management is an

[1] Álvarez-Melgarejo M., Torres-Barreto M.: “Can resources act as capabilities

IS CORPORATE CAPITALISM BUILT TO LAST? THEORETICAL

aforementioned theories and aims at outlining the direction of future

Deviation or triumph of corporate rationality?

and regulatory reforms. This approach, which is backed by the methodological

Recent Corporate Scandals and their relevance

penalty of $700,000. Furthermore, he agreed to reimburse Comscore $2.1 million from

Graph 2. Number of bankruptcy filings in the US from 2009 to 2019

Source: Trading Economics, https://tradingeconomics.com/united-states/bankruptcies (accessed: October

On the other hand, if we analyze the number of scandals, particularly corporate

Theoretical frameworks of corporation: deficiencies and possibilities

Could economic theory provide valuable insight into corporate behavior?

Comment: Stakeholder theory actually seeks to broaden the domain of corporate

[16] Freeman, R. E.: “Strategic Management: A Stakeholder Approach”,

ORGANIZATIONAL IDENTIFICATION AS A CORPORATE