ISSN 2490-2616 ICEL Internacional Scientific Conference "Economy of Integration" CONFERENCE PROCEEDINGS Tuzla, December 7"-9", 2017 fi efos © Famine ey Univerzay Maribor5" International Scientific Conference “Economy of Integration” ICEI 2017 “The Role of Economic Thought in Modern Environment” CONFERENCE PROCEEDINGS Editors: Emira Kozarevié Jasmina Okicié University of Tuzla Faculty of Economics 74.9% December, 2017 Tuzla, Bosnia and HerzegovinaPeta intemnacionalna nauéna konferencija “Ekonomija integracija” — ICEI 2017, Zbornik radova, Copyright 2017. Sva prava zadrZana. Autor je odgovoran za publikovani sadréaj. Stampano u Bosni i Hercegovini. Nijedan dio ove knjige ne moze biti reprodukovan na bilo koji natin bez pismene dozvole, izuzev ako je ispravno citiran. 5° International Scientific Conference “Economy of Integration” — ICE] 2017, Conference Proceedings, Copyright 2017. All right reserved. The author is responsible of all the content that has been published. Printed in Bosnia and Herzegovina. No part of this book may be used or reproduced in any manner whatsoever without written permission except in case of brief quotations embodied in critical articles or reviews. Organizator/Organized by: Ekonomski fakultet, Univerzitet u Tuzli, BiH / Faculty of Economics, University of Tuzla, BiH Koorganizatori/Coorganizers: Ekonomski fakultet iz. Osijeka, Sveusiliste J. J. Strossmayer, Hrvatska / Faculty of Economics in Osijek, J. J. Strossmayer University of Osijek, Croatia Ekonomsko-poslovna fakulteta v Maribor, Slovenija / Faculty of Economics and Business, Maribor, Slovenia Beogradska Bankarska Akademija, Fakultet za bankarstvo, finansije i osiguranje, Beograd, Srbija / Belgrade Banking Academy, Faculty for Banking, Finance and Insurance, Belgrade, Serbia Ekonomski fakultet u Podgorici, Podgorica, Cma Gora / Faculty of Economics in Podgorica, Podgorica, Montenegro Ekonomski fakultet Prilep, Univerzitet “Sv. Kliment Ohridski”, Makedonija / Faculty of Economics Prilep, University “St Kliment Ohridski”, Macedonia Izdavaé/Publisher: Ekonomski fakultet, Univerzitet u Tuzli, BiH / Faculty of Economics, University of Tuzla, BiH Za izdavata/For publisher: Ermina Smajlovié, PhD, Dean Urednici/Editors: Emira Kozarevié, PhD Jasmina Okidié, PhD Stamparija/Printed by: Harfo-graf, Tuzla, BiH Book of Abstracts is published with ISSN 2233-0445. ISSN 2490-2616PROGRAMSKI ODBOR / PROGRAM COMMITTEE: Predsjednik / President - Bahrija Umihanié, PhD, Full professor, Faculty of Economics, University of Tuzla, BiH Clanovi programskog odbora / Members of the Program Committee - Adil Kurtié, PhD, Faculty of Economics, University of Tuzla, BiH - Adil Trgo, PhD, Faculty of Economics, University “Dzemal Bij - Adisa Delié, PhD, Faculty of Economics, University of Tuzla, BiH - Adnan Rovéanin, PhD, School of Economics and Business, University of Sarajevo, BiH - Alaudin Brkié, PhD, Faculty of Economics, University of Zenica, BiH - Ali Goksu, PhD, Faculty of Economics, International Burch University, Turkey - Alma Muratovié, PhD, Faculty of Economics, University of Tuzla, BiH - Almir Pestek, PhD, Faculty of Economics, University of Sarajevo, BiH - Amela Perié, PhD, UTS/University of Sydney, Australia - Amra Babajié, PhD, Faculty of Economics, University of Tuzla, BiH - Amra Nuhanovié, PhD, Faculty of Economics, University of Tuzla, BiH - Ana Levié Filipovié, PhD, Faculty of Economics, University of Montenegro, Montenegro - Anamarija Delié, PhD, Faculty of Economics Osijek, University of J.J. Strossmayer, Croatia - Andrijana Ostojié Mihié, PhD, Faculty of Science and Education, University of Mostar, BiH = Aziz Sunje, PhD, School of Economics and Business, University of Sarajevo, BiH - Beriz Civié, PhD, Faculty of Economics, University of Tuzla, BiH - Bruno Zavrinik, PRD, Faculty of Economics and Business, University of Maribor, Slovenia - Chivonne Algeo, PhD, Caulfield Sch of Info Technology, Monash University, Australia - Damijan Mumel, PhD, Faculty of Economics and Business, University of Maribor, Slovenia = Damir Sehovié, MSc, Faculty of Economics, University of Montenegro, Montenegro - Darja Borsié, PhD, Faculty of Economics and Business, University of Maribor, Slovenia = Darko Tipurié, PhD, Faculty of Economics, University of Zagreb, Croatia - Dejan Zdraveski, PhD, Faculty of Economics Prilep, University of “Sv. Kliment Ohridski*, Macedonia - Dijana Husakovié, PhD, Faculty of Economics, University of Zenica, BiH - Dimitar Nikoloski, PhD, Faculty of Economics Prilep, University of “Sv. Kliment Ohridski*, Macedonia ~ Dimko Kokaroski, PhD, Faculty of Economics Prilep, University of “Sv. Kliment Ohridski*, Macedonia ~ Drago Cvijanovié, Faculty for Tourism and Hospitality, University of Kragujevac, Vinjatka Banja, Serbia ~ Dragoljub Stojanov, PhD, Faculty of Economics, University of Rijeka, Croatia- Dievad Zetié, PhD, Faculty of Economics, University of Zenica, BiH - Dievad Sehié, PhD, School of Economics and Business, University of Sarajevo, BiH - Edin Osmanbegovié, PhD, Faculty of Economics, University of Tuzla, BiH - Elvir Cizmié, PhD, Faculty of Economics, University of Sarajevo, BiH - Emira Kozarevié, PhD, Faculty of Economics, University of Tuzla, BiH - Ermina Smajlovié, PhD, Faculty of Economics, University of Tuzla, BiH - Fabrizio Santoboni, PhD, Faculty of Economics, University “La Sapienza“, Rome, Italy - Giuseppe Curcio, PhD, Department of Life, Health and Environmental Sciences, University of “L’ Aquila”, L'Aquila, Italy ~ Gjorgji Mancheski, PhD, Faculty of Economics Prilep, University of “Sv. Kliment Ohridski“, Macedonia ~ Hajro Kofre, PhD, Faculty of Law, University of Tuzla, BiH ~ Hamid Aliba8ié, PhD, Faculty of Economics, University of East Sarajevo, BiH - Hasan Hanié, PhD, Belgrade Banking Academy - Faculty for Banking, Insurance and Finance, Serbia - Ilija Hristoski, PhD, Faculty of Economics Prilep, University of “Sv. Kliment Ohridski” Macedonia - Ismail Musabegovié, PhD, Belgrade Banking Academy - Faculty for Banking, Insurance and Finance, Serbia - Ivan Georgiev, PhD, Trakia University, Faculty of Economics, Stara Zagora, Bulgaria - Izet Ibreljié, PhD, Faculty of Economics, University of Tuzla, BiH - Ivona Vrdoljak Ragu, PhD, University of Dubrovnik, Croatia - Iaudin Keketovié, PhD, Faculty of Economics, University of Tuzla, BiH - Jasmina Okigié, PhD, Faculty of Economics, University of Tuzla, BiH - Jasmin Helebié, PhD, Faculty of Economics, University of Zenica, BiH - Joseph W. H. Lough, PhD, University of California, Berkeley, USA - Julia Perié, PhD, Faculty of Economics Osijek, University of J. J. Strossmayer, Croatia - Kadrija Hodzié, PhD, Faculty of Economics, University of Tuzla, BiH - Kasim Tatié, PhD, Faculty of Economies, University of Sarajevo, BiH - Kemal Kozarié, PhD, School of Economics and Business, University of Sarajevo, BiH - Klavdij Logozar, PhD, Faculty of Economies and Business, University of Maribor, Slovenia ~ Ljubi’a Vladusié, PhD, Faculty of Economics, University of East Sarajevo, BiH - Ljubomir Trifunovié, PhD, Faculty of Economics Brcko, University of East Sarajevo, BiH - Maja Bacovié, PhD, Faculty of Economics, University of Montenegro, Montenegro - Maja Lamza-Maronié, PhD, Faculty of Economics Osijek, University of J. J. Strossmayer, Croatia - Mehmed Nurkanovié, PhD, Faculty of Science and Mathematics, University of Tuzla, BiH - Meldina Kokorovié Jukan, PhD, Faculty of Economics, University of Tuzla, BiH.- Merim Kasumovié, PhD, Faculty of Economics, University of Tuzla, BiH - Mersiha Alié, MSc, School for Professional Studies/Fort Wayne Education Center, Trine University, USA - Mila Gadzié, PhD, Faculty of Economics, University of Mostar, BiH ~ Milijana Novovié Burié, PhD, Faculty of Economics, University of Montenegro, Montenegro - Mike Herrington, PhD, Faculty of Commerce, University of Cape Town, South Africa ~ Mirela Alpeza, PhD, Faculty of Economics Osijek, University of J. J. Strossmayer, Croatia - Mirela Kljajié-Dervié, PhD, Faculty of Economics, University of Bihaé, BiH - Mima Leko Simié, PhD, Faculty of Economics Osijek, University of J. J. Strossmayer, Croatia - Miroslav Rebernik, PhD, Faculty of Economics and Business, University of Maribor, Slovenia - Muharem Klapié, PhD, Faculty of Economics, University of Tuzla, BiH - Mustafa Sinanagié, PhD, Faculty of Economics, University of Tuzla, BiH - Najil Kurtié, PhD, Faculty of Philosophy, University of Tuzla, BiH - Nediad Polié, PhD, Faculty of Economics, University of Zenica, BiH - Nenad Brkié, PhD, Faculty of Economics, University of Sarajevo, BiH - Nikos Zaharis, MSc, Director of the South East European Research Centre (SEERC), Thessaloniki, Greece ~ Nik8a Alfirevié, PhD, Faculty of Economics, University of Split, Croatia - Novak Kondié, PhD, Faculty of Economics, University of Banja Luka, BiH - Olivera Kostoska, PhD, Faculty of Economics Prilep, University of “Sv. Kliment Ohridski”, Macedonia - Panos H. Ketikidis, PhD, CITY College, International Faculty of the University of Sheffield, Greece - Polona Tomine, PhD, Faculty of Economics and Business, University of Maribor, Slovenia - Radmil Polenakovik, PhD, Faculty of Mechanical Engineering, University of “Sv. Kiril i Metodij” Skopje, Macedonia - Re¥ad Begtié, PhD, Faculty of Economics, University of Tuzla, BiH - Reuf Kapié, PhD, Faculty of Economics, University of Tuzla, BiH - Rifat Klopié, PhD, Faculty of Economics, University of Tuzla, BiH ~ Roberto Biloslavo, PhD, Fakulteta za management, Univerza na Primorskem, Slovenia ~ Sabina Donlagié Alibegovié, PhD, Faculty of Economics, University of Tuzla, BiH ~ Sado Puskarevié, PhD, Faculty of Economics, University of Tuzla, BiH ~ Safet Kozarevié, PhD, Faculty of Economics, University of Tuzla, BiH - Samira Fazlié, PhD, Faculty of Economics, University of Tuzla, BiH - Samo Bobek, PhD, Faculty of Economics and Business, University of Maribor, Slovenia - Sanja Pfeifer, PhD, Faculty of Economics Osijek, University of J. J. Strossmayer, Croatia~ SaSa Petkovié, PhD, Faculty of Economics, University of Banja Luka, BiH ~ Sa8a Vujosevié, PhD, Faculty of Economics in Podgorica, Montenegro - Sead Kreso, PhD, School of Economics and Business, University of Sarajevo, BiH - Sead Omerhodzié, PhD, Faculty of Economics, University of Tuzla, BiH ~ Sejfudin Zahirovié, PhD, Faculty of Economics, University of Tuzla, BiH - Selma Demirovié, MSc, Faculty of Economics, University of Montenegro, Montenegro - Selma Novalija Islambegovié, PhD, Faculty of Economics, University of Tuzla, BiH - Senad Fazlovié, PhD, Faculty of Economics, University of Tuzla, BiH - Senad Softié, PAD, School of Economics and Business, University of Sarajevo, BiH, - Sunéica Oberman Peterka, PhD, Faculty of Economics Osijek, University of J. J. Strossmayer, Croatia - Senija Nuhanovié, PhD, Faculty of Economics, University of Tuzla, BiH ~ Slavica Roceska, PhD, Faculty of Economics Prilep, University of “Sv. Kliment Ohridski”, Macedonia ~ Slavica Singer, PhD, Faculty of Economics Osijek, University of J. J. Strossmayer, Croatia - Slobodan Vidakovié, PhD, Faculty of Business Economy, Educons University, Novi Sad, Serbia - Srdan Damjanovié, PhD, Faculty of Business Economy, Bijeljina, University of East Sarajevo, BiH - Suvad Isakovié, PhD, Faculty of Economics, University of Zenica, BiH - Svetislay Paunovié, PhD, Belgrade Banking Academy - Faculty for Banking, Insurance and Finance, Serbia ~ Sefik Mulabegovié, PhD, Faculty of Economics, University of Tuzla, BiH + Teoman Duman, PhD, International Burch University, Sarajevo, BiH - Ugur Ergun, PhD, Faculty of Economics, International Burch University, Turkey ~ Velimir Sriéa, PhD, Faculty of Economics, University of Zagreb, Croatia - Vesna Babié Hodovié, PhD, School of Economics and Business, University of Sarajevo, BiH, - Vesna Karadzié, PhD, Faculty of Economics, University of Montenegro, Montenegro - Vladimir Cini, PhD, Faculty of Economics Osijek, University of J. J. Strossmayer, Croatia - Vladimir Ka8éelan, PhD, Faculty of Economics, University of Montenegro, Montenegro - Vojin Senk, PhD, Faculty of Technical Sciences, University of Novi Sad, Srbija ~ Vojko Pototan, PhD, Faculty of Economics and Business, University of Maribor, Slovenia ~ Zdenko Klepi¢, PhD, Faculty of Economics, University of Mostar, Bi - Zijad Dzafié, PhD, Faculty of Economics, University of Tuzla, BiH ~ Zijada Rahimié, PhD, Faculty of Economics, University of Sarajevo, BilLjerka Tomljenovié, PhD Polytechnic of Rijeka, Croatia E-mail: Ijerka.tomljenovic@veleri.hr EXPLORING CHANGE MANAGEMENT IN CROATIAN SMEs ISTRAZIVANJE UPRAVLJANJA PROMJENAMA U MALIM I SREDNJIM PODUZECIMA U REPUBLICI HRVATSKOJ Abstract ‘Small and medium-sized enterprises (SMEs) are considered great contributor of economic growth. Their importance in national economies is not reflected only in their share in the total number of enterprises but also in their share of the realized value of GDP and exports and their great contribution to employment. However, it is not enough to start small businesses and ensure their survival, but a critical ‘factor of SMEs’ influence on economic growth is the propulsion of their growth and development. This research assumes that the way SMEs manage the changes determines their development potential and consequently their success and its associated longevity. The purpose of this paper is to examine whether the studied enterprises could be categorized with recognizable features concerning the mode these SMEs manage organizational and strategic changes. Therefore, a cluster analysis is used on the sample of 190 established SMEs in the Republic of Croatia. The results indicate the distribution of analyzed SMEs in four clusters that show significant differences between selected classification variables of organizational and strategic dynamics and their related performance. In cluster of SMEs with the strongest organizational and strategic dynamics are the enterprises that show the highest level of performance. More than 60% of the enterprises with the potential (fast-growing, high-tech and innovative SMEs) are in this cluster. Based on the conducted research, practical recommendations may be provided for resource allocation on certain aspects of organizational and strategic dynamics with the aim of increasing SME's development potential and their long-term performance. From the theoretical viewpoint, this research gives a new insight into the specificities of change management in SMEs in relation to large enterprises. It also unfolds arrays of new research to include new samples and longitudinal approach. This 522would allow a comparison of results and further expansion of knowledge in this specific area. Key words: small and medium-sized enterprises (SMEs), change management, cluster analysis JEL: D22 Sazetak Mala i srednja poduzeéa (MSP) opéenito se smatraju glavnim poticateljima ekonomskoga rasta. Njihova se vaznost ne ogleda samo u njihovom udjelu u ukupnom broju poduzeéa, vee u njihovom udjelu ostvarene vrijednosti BDP-a i izvoza, te velikom doprinosu zaposlenosti. Medutim, nije dovoljno osnivanje malih poduzeca i njihovo prezivijavanje, nego je kritiéni Cinitelj utjecaja MSP-ova na ekonomski rast propulzivnost njihova rasta i razvoja. U ovom se istrazivanju pretpostavlja da dinamicki kapacitet MSP-ova utjece na razinu njihove adaptabilnosti i fleksibilnosti te posljediéno i na njihovu uspjesnost i s njom povezanu dugovjecnost. Odnosno, pretpostavija se da nacin na koji MSP-ovi upravljaju promjenama odreduje njihov razvojni potencijal. Svrha ovoga rada je istraziti mogu li se, s obzirom na naéin na koji MSP-ovi upravijanju organizacijskim i strategijskim promjenama, istrazivana poduzeéa kategorizirati s prepoznatijivim obiljezjima. U tu svrhu koristi se klaster analiza na uzorku od 190 etabliranih MSP- ova u Republici Hrvatskoj. Rezultati provedene Klaster analize ukazuju na distribuciju istrazivanih MSP-ova u éetiri klastera koja pokazuju znaéajne razlike odabranih klasifikacijskih varijabli organizacijske i strategijske dinamike te s njima povezane uspjesnosti. U Kasteru poduzeca s najjace izrazenom organizacijskom i strategijskom dinamikom su poduzeca koja pokazuju inajvisu razinu operativne i strategijske uspjeSnosti te jemedu njima viseod 60% poduzeca iz skupine brzorastucih, visokotehnoloskih i visokoinovativnih MSP-ova. Na osnovu provedenog istrazivanja mogu se dati praktiéne preporuke za usmjeravanje resursa na odredene aspekte upravijanja organizacijskim i strategijskim promjenama, a s ciljem povecavanja razvojnog potencijala MSP-ova i njihove dugorocne uspjesnosti. U teorijskom smislu, ovo istragivanje daje novi pogled na specifiénosti upravijanja promjenama u MSP-ovima u odnosu na velika poduzeca te otvara prostora za nova istrazivanja koja bi obuhvacala nove uzorke i longitudinalni pristup. To bi omogucilo usporedbu rezultata i daljnje prosirivanje saznanja iz ovoga specificnog podruéja. Kijuéne rijeti: mala i srednja poduzeéa (MSP), upravljanje promjenama, klaster analiza JEL: D22 5231. Introduction Small and medium-sized enterprises (SMEs) are generally considered main contributors of economic growth. In majority of national economies they represent more than 99% of the total number of enterprises. In 2015 SMEs represented 99.7 % of the total number of registered enterprises in the Republic of Croatia, with a share of 54% in total revenues, 69.2% in employment and 50.3% in Croatian exports (CEPOR, 2017, p. 7). Therefore, a vast number of institutional support measures is directed towards different categories of small enterprises in order to strengthen their development potential. On the other hand, those measures often don’t give the expected results. When it comes to scientific context, the number of research papers trying to explain the factors of business success of SMEs in different ways has been growing for the past 25 years. The focus of such research have been different combinations of variables from internal and external surrounding which are crucial for the success of entrepreneurial undertaking. However, none of those research projects, ie. theories, hasn’t been able to fully explain the principles of business success of small enterprises. Beside that, most of research was directed to special categories of SMEs, such as the startups, fast growing and high-tech enterprises. A gap remained in research of already established SMEs, which achieved a long-term success measured by the growth in the number of employees, revenue and years of functioning. This research starts with the hypothesis that the way SMEs manage the changes determines their development potential and consequently their business success and longevity. The empirical part of the research has been conducted on the sample of 190 already established SMEs in the Republic of Croatia. The purpose of this research is to examine whether the researched enterprises could be categorized with recognizable features regarding the specificities of organizational and strategic dynamics and certain criteria of business success. Using the cluster analysis, this research divides the analysed SMEs in several clusters whose characteristics give insight into factors which determine their operative and strategic success. The final goal is to use the findings from this research to create specific models of change management in SMEs with some recommendations for 524key decision maker. Before presenting the results of the conducted empirical research, theoretical framework of this research will be described briefly. 2. Theoretical framework of the research SMEs stand out due to their ability for adaptability and flexibility which enables them to develop their position proactively in current dynamic economic circumstances. Therefore, they have been very inviting field of research for the past 25 years. Although the economic benefits of micro, macro and medium- sized enterprises are well-known, only small number of enterprises grow, while the majority remain small or “die” young (Doern, 2009, p. 276; Amm, 2011, p. 4, quoted in Simié, 2014, p. 20). At that point, general research question about the features of SMEs with long-term development perspective comes into focus. According to Torres and Lyon (2003), research of growth and business success of SMEs can be divided into those trying to establish universal principles (theory of life cycle) and those being directed to research factors of growth in the context of contingency variables. Different theories tried to give insight into growth of enterprises but the generally accepted theory still hasn’t been provided (Federico, Kantis & Rabetino, 2012, p. 575). ‘The area of change management in the enterprises has been researched to a great extent in bigger systems. What can be applied to bigger enterprises can hardly be applied to smaller ones due to their unique features: limitations of different types of resources, short-term goals, smaller market influence, bigger susceptibility to market change, bigger influence of personality of key people/entrepreneurs, changeable and varius strategies, etc. (Poole, 2009, p. 15) Beside their unique features, the question about the typical content of changes being conducted in SMEs pops out. Although according to Nicholson, Shepherd and Woods (2009) the elements of business model which can be subject to change (e.g. offer, market, intemal competences, competitive strategy, financing, personal business ambitions of an entrepreneur, etc.) can be taken as the guidelines, each entrepreneurial undertaking can contain some of the unmeasurable variables which significantly affect the processes as well as the results of the changes. Those are, for example, entrepreneur’s energy, intuition and his personal goals, the employees’ willingness to identify themselves with the company’s aims in all segments of the job, the level of ambidextrous orientation on individual and organizational level, etc. One of the most often mentioned features of SMEs is their resource limitation. In the framework of research of change management in SMEs the question of 525organizational resources and capacities imposes itself. In order to conduct the planned changes successfully, enterprises require resources which overpass the minimum of resources necessary for the production of current output and enable focus on long-term results (Srinivasan, Rangaswamy & Lilien, 2005, p. 114). Small enterprises often lack resources, but they try to compensate through flexibility. Flexibility, in this case, means organizational capability which hastens the organizational adjustment to changes (Bahrami, 1992, quoted in Martin, 2006, p. 17). Connected to the resource flexibility is the area of strategic flexibility as the capability of dynamic re-defining of business model and strategy as the consequences of changes (Hamel & Valikangas, 2003). It is also reflected in fast implementation of changes with strategic impact (Hitt etal., 1998, p. 26-27). All of the above mentioned indicates a large number of specific variables which influence change management in SMEs. Bearing in mind the generally accepted assumption about the internal potential being crucial for business success of SMEs, it is assumed that their internal organizational dynamics can be described by the way they manage organizational changes, resources and capabilities. Since there is also an assumption that the organizational efficiency must be in function of organizational effectiveness, this research includes the research of specificities of strategic dynamics in SMEs. Compatibility between the organizational and strategic processes should crucially affect the business success of an enterprise, appreciating the external influences, Next chapter will describe methodology and results of the empirical research conducted in this research paper. 3. Methodology and results of the empirical research The first phase of empirical research that this research paper proceeds with referred to confirmation of connection between the change management, strategic development and the business success of SMEs'. For that purpose a questionnaire was made and its validity and reliability were confirmed by the analysis of the research results (Tomljenovié, 2016). This research paper is looking for the answer to question whether the researched SMEs can be categorized with recognizable features, duc to the specific variables of organizational and strategic dynamics and certain 526success criteria. Therefore, the cluster analysis is used on the data gathered by empirical research. The basic working hypothesis of this research paper is: based on the variables of organizational and strategic dynamics it is possible to group the established SMEs with regard to their development potential. This research was focused on SMEs with 10 and more employees, which have been operating for over 7 years. Based on FINA’s data base the research population was identified and made out of 7903 SMEs in the Republic of Croatia. The research population represents 8.1 % of total number of. entrepreneurs in the Republic of Croatia, 38.3 % of employees and 28.8 % of revenue from entrepreneurial activity (Tomljenovié, 2016, p. 128). The research was conducted from May to September, 2014 and it included 190 SMEs, which makes 2.4 % of research population. It was made by an on-line questionnaire sent to the owners/managers of researched enterprises. Calculation of chi-square test and its insignificance showed that the research sample reflects the research population due to territorial presence of the sample enterprise, core business and the size of the enterprise (Tomljenovié, 2016, pp. 133-134). During the research, the category of enterprises with specially emphasised growth potential popped out, namely fast-growing, high-tech and highly innovative enterprises. In total sample there were 46 or 24 %. Cluster analysis was used as the basic method in this research. Cluster analysis is a multivariate data mining technique whose goal is to group objects based on features they possess (Hair et al., 2010). Multivariety is a feature of cluster analysis enabling it to analyse several variables at the same time and as a part of a whole. K-means clustering method has been used in order to get detailed characteristics of each cluster. It is suitable for grouping units (SMEs in this case) on which certain features were measured (research variables). In addition to that, this research paper will show the results of discriminant analysis which was also used in order to determine the capacity of variables to predict classification of enterprises within a cluster. To make sure that the result was appropriate, it used canonical discriminant analysis for the verification of the data. 527Here are the variables that have been used for analysis: Table 1. Variables in the questionnaire Organizational Strategic | Performancesand | Context dynamics dynamics business success Managing organizational changes | + Strategic Perceived ‘Entrepreneurial ‘Intensity of changes in operating | Flexibility and | performances orientation processes Diversity Business Environmental ‘sIntensity of changes in market | Strategic performances uncertainty processes orientation _| « Level of achievement ‘*Planned approach to change —_| Strategic of strategic goals '* Specific context of change ambidexterity ‘Individual orientation of entrepreneurs with changes Resource management and capabilities + Availability and flexibility of financial resources * Flexibility of Human Resources '* Contextual ambidexterity Source: Author’s research 3.1. Results of cluster analysis Based on the results of k-means cluster analysis this chapter will explain the characteristics of four clusters of SMEs regarding the chosen classification variables, Table 2. Characteristics of cluster based on mean and standard deviation Cluster! Cluster2 _Cluster3__—_ Cluster 4 Variables N75 N43 St. St. St. St. Mean gy Mean gv Mean qo Mean gi, Intensity of changes in remain process 338 112 202 119 200 0.80 285 1.00 Intensity of changes in .g9 9.72 2.12 1.12 2.10 0.76 2.74 0.74 market processes Planned approach to 3.59 0.80 158 0.77 229 0.77 262 0.83 change Specific context of 3.37 096 3.22 131 353 0.76 229 0.77 change 528Individual orientation of entrepreneurs with 434 0.52 2.72 088 3.83 059 389 0.67 changes Managing sense Bonal changes 352 082 2.33 105 2.75 0.74 2.88 0.80 Availability and flexibility of financial 3.50 0.98 1.75 0.63 3.67 0.87 2.08 0.78 resources Flexibilityof human resources 3.96 0.78 242 1.10 3.23 0.77 3.38 0.94 Contextual ambidexterity 3.89 0.61 2.38 0.81 338 0.53 3.42 0.69 Resource management and capabilities 3.78 0.79 218 0.85 343 0.72 2.96 0.80 Strategic ambidexterity 4.27 0.44 284 1.16 3.51 0.67 3.76 0.64 Strategic flexibility and Siverty 414 0.57 233 0.63 3.22 071 361 0.72 Strategic orientation 4.27 0.59 2.67 0.74 3.44 057 3.97 0.63 Strategic dynamics 4.22 0.53 2.61 0.84 3.39 0.65 3.78 0.67 Level of achievement of strategic goals 3.85 0.75 1.92 1.08 328 0.79 258 0.76 Perceived performances 4.07 0.50 2.08 0.87 3.64 0.49 3.14 0.55 Business performances 3.72 0.65 «-2.11 0.86 3.26 0.76 247 0.76 Entrepreneurial orientation 417 0.56 2.67 0.90 3.54 0.62 3.97 0.65 Environmental uncertainty 330 0.79 279 1.01 261 0.70 335 0.80 Source: Author’s research Distribution of the researched SMEs into 4 clusters shows significant differences among classification variables: organizational dynamics, strategic dynamics, performance and the context of researched enterprises. The key characteristics of SMEs in each cluster will be given below. 529Cluster 1 75 (41 %) out of total 190 SMEs belong to this cluster, making it the cluster with most members. Here is the highest evaluation of most of research variables and more than 60 % of enterprises with growth potential belong to this cluster. When it comes to demographic characteristics, what can be noticed is the difference in revenue which is on average higher in this cluster in comparison to the others. In the area of organizational dynamics there is a significant positive deviation in evaluation of the intensity of changes in the operative processes, planned approach to changes, individual orientation of entrepreneurs to changes and the flexibility of human resources. Ambidexterity is highlighted contextually and strategically which means that the current enterprise potential is successfully used, while they are simultaneously devising and working on the future business success. In the area of strategic dynamics strategic flexibility and diversity are significantly better evaluated than in other clusters. Business success of SMEs in this cluster is higher regarding the level of reached strategic goals as well as reached performances. Beside that, entreprencurial orientation is significantly better evaluated, but the environmental uncertainty is also higher than the average. It can be concluded that SMEs in this cluster are characterized by high level of organizational and strategic dynamics and business success connected to that. The higher level of the environmental uncertainty is connected to the need for dynamics of business system, which is being confirmed by characteristics of SMEs in this cluster. Cluster 2 This cluster has the smallest number of members (12:6%). It has the smallest percentage of family enterprises and no SMEs with growth potential, Average evaluation of research variables in the area of organizational dynamics, strategic dynamics and performances is below average and significantly lower in comparison to the other clusters, What can be noticed is very low business success of enterprises in this cluster expressed through the evaluation of subjective and objective performances and the level of achieving strategic goals. It can be stated that, without a certain level of organizational and strategic dynamics, it is hard to ensure business success and development potential of an enterprise. Enterprises belonging to cluster 2 are those whose future is uncertain and which should recognise possibilities for changes which would affect all the aspects of their business success. Low level of 530strategic and entrepreneurial orientation of entrepreneurs suggests the need to re-define the mission of the enterprise itself and the motifs that guide key people who manage the enterprise. Cluster 3 This cluster has 58 members (30% of total researched enterprises). When taking demographic characteristics into account, the prevailing part of enterprises are family enterprises and service sector enterprises. The particularity of this cluster is relatively small current dynamics of different types of organizational changes. However, they have relatively high availability and flexibility of human and financial resources and the individual orientation of entrepreneurs towards changes. This result can be attributed to high level of family enterprises whose primary goals are connected to longevity and financial stability, as well as willingness to adjustments in order to reach that. Strategic dynamics has average evaluation which means that the need for flexibility and the adjustment of strategic approach is recognized, but it’s not specially highlighted. The environmental uncertainty got low evaluation which can be explained with smaller need for organizational changes and the average evaluation of strategic dynamics. Business success measured by objective performances, subjective perception of satisfaction and the level of achieved strategic goals is satisfactory. It can be concluded that this cluster includes enterprises in relatively stable environment. Therefore, no intensive changes in organizational processes are needed but the entrepreneurs show the willingness to changes if necessary. In the area of strategic behaviour the highest evaluation belongs to strategic ambidexterity which means that, together with the current utilization of the market opportunities, the future strategic moves are being planned. Cluster 4 This cluster includes 45 enterprises (24%). The prevailing enterprises are the ones with revenues up to 15 mil kn (more than 80%), mostly individual or family ownership. Also, in comparison to other clusters, it has the most manufacturing enterprises (33%). The organizational dynamics is relatively low, when taking into consideration types and intensity of organizational changes as well as the availability and flexibility of human resources. Entrepreneur’s individual orientation to changes and the flexibility of human resources are highlighted. Strategic dynamics was evaluated above average, 531which can be caused by higher evaluation of environmental uncertainty. The evaluation of objective performances and the level of accomplished strategic goals is above average, while the subjective evaluation of business success is just a bit higher than the average. In this cluster only strategic dynamics is highlighted, not the organizational. Since they show the environmental uncertainty above average and realatively low evaluation of business success it is obvious that they should put more effort into adjusting the internal organizational factors. Relatively high share of manufacturing enterprises can explain the lower level of organizational dynamics because the changes in this sector are the hardest and the most expensive ones. 3.2. Verification analysis In order to assess the results of the conducted cluster analysis the results of its verification wil be shown below, by using canonical discriminant analysis on 4 clusters and 16 variables. A discriminant analysis checks the goodness of fit of the model that the cluster analysis found and profiles the clusters. In almost all analyses a discriminant analysis follows a cluster analysis because the cluster analysis does not have any goodness of fit measures or tests of significance. The cluster analysis relies on the discriminant analysis to check if the groups are statistically significant and if the variables significantly discriminate between the groups. (Setyaningsih, 2012, pp. 291-292). Box’M test is testing the assumption of covariance matrix equalitiy. In this case, Box’M statistic had value of 747.371 with probability of 0.00. Since the result is significant (p < 0.05) there is sufficient evidence that can reject the hypothesis that the groups covariance matrices are equal. To test the significance of the model it is necessary to analyse eigenvalues and Wilk’s Lambda coefficients presented in Table 3. The larger the eigenvalue, the more of the variance is explained by that function. Nearly all of the variance explained by the model is due to the first two discriminant functions. The canonical correlation is the measure of association between the discriminant function and the dependent variable and the results of the first and second function show high canonical correlation. Wilks’ Lambda is a measure of how well each function separates cases into groups. Smaller values indicate greater discriminatory ability of the function. Results presented in Table 3 indicate highly significant functions (p < 0.05). 532Table 3. Figenvalues and Wilk’'s Lambda result for discriminant analysis, gs] 2/.e|€ |228las) 3 a a > 3 6 a 6 1 3.580" 67.5 67.5 884 074 461,846 48 000 2 1.572 29.6 97.1 782 337 192,522 30 000 | 3 154* 29 100.0 365 867 25,309 14 032 a. First 3 canonical discriminant functions were used in the analysis. Source: Author's research Clasification statistics is used to assess how well the discriminant function works, and if it works equally well for each group of the dependent variable. In this case 96.3% of original grouped cases correctly classified. It can be concluded that the results of the conducted cluster analysis can be regarded as relevant. 3.3. Models of change management in SMEs The presented results of cluster analysis show that the way SMEs manage organizational and strategic changes is of high importance for their business success. Based on the already presented characteristics of each cluster, there has been made an attempt to abstract specific models of change management which could indicate development potential of enterprises that apply them. Presented model of change management in SMEs (Table 4) suggest some general recommendations for key decision makers. 533SomUeUAp JouoEZIUEaIC) “spo08 day aaaiyon 01 soaunosad ajqnpiman 7a Buyoaup ‘sypo8 s,mnauaadasqua Sursapisuorae :uouppuauiuooay 25 sasuudaqua aoas fo anys air] a sosuadioqua dqpun— =H (pasisoydua 8u1aq uoyonfeyvs aayjoa{qns) sooupuuofiad phil a8piaan pup sppo3 218210448 fo uauiaaatyov adv.0ay— Japou ssaujsng SusaSunsaved uy ‘uonpayou s,snauasdasiua Suusapisuosas :uonopuauuory are cc eto ssa ssauisng fo suuawSas jt pea price sted epost ea a 534In model 1 it is suggested reconsidering of organizational dynamics and establishing internal potential which can improve operative success and contribute to better achieving of strategic goals. It seems that the willingness of people to implement changes is not questionable, but the ability to notice the type of necessary changes and the way to implement them. According to model 2 highlighted organizational and strategic dynamics is connected to the high level of operative and strategic success. In order to retain the level of business success and improve development potential they should strive to find ways of using creative and innovative potential in different segments of business. In model 3 dynamics is low and the organizational performances indicate lack of sucess potential. Due to that, it is necessary to reconsider entrepreneur's motivation. If there is motivation to continue doing business further on, the existing business model should be rearranged and significant changes should be made. Model 4 has more highlighted organizational than strategic dynamics and average performances. Since this model has a large share of family enterprises, it is suggested to reconsider entrepreneur’s (family’s) goals. If there is motivation for strengthening competition position and business expansion, decisions on directing available resources to new goals should be made. The results of this research show that business success of the established SMEs is connected to the way they manage organizational and strategic changes. However, key limitations of this research are relatively small number of research variables, the size and heterogeneity of the sample, sample being limited to the Republic of Croatia and the cross-sectional approach. Beside that, taking into consideration all the recognized models of change management, including longitudinal approach and qualitative analyses of the chosen enterprises would enable further understanding of organizational and strategic processes that determine long-term success of SMEs. This way concrete recommendations could be given to key decision makers in SMEs, but also to the creators of institutional support measures for the sector of small and medium sized enterprises. 5354, Conclusion This research was conducted on the sample of established SMEs, questioning the entrepreneurs’ attitudes to key variables of the research: organizational dynamics, strategic dynamics, business success and the context. The results of cluster analysis grouped the researched SMEs into four clusters with different characteristics. Based on the characteristics of enterprises from each cluster four specific models of change management in SMEs have been recognised. In model 1 strategic dynamics is highlighted, in model 2 strategic and organizational dynamics, in model 3 all aspects of dynamics got low evaluation as well as business success of enterprise while in model 4 the greatest attention is directed to availability and flexibility of resources and the entrepreneur’s orientation towards changes is high. Each model, due to its key features, shows different level of performance. All the listed characterictics indicate the possibility to create general recommendations for key decision makers with respect to the key characteristics of each model. The scientific hypothesis of this research paper has been supported by the presented results, but further research requires new samples, longitudinal approach and the inclusion of qualitative research methods. It would enable deeper understanding of the relations between change management and business success of SMEs. 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This paper includes new analyses and presents unpublished results 537