Zagreb International Review of Economics and Business
Special Conference Issue
International Conference:
“An Enterprise Odyssey: Building Competetive Advantage' 2004
held at the Graduate School of Economics and Business
Zagreb, Croatia June 17-19, 2004
ABSTRACTS
Constructing an Export Supply Function for Croatia
Natasa Erjavec
Boris Cota
Abstract: The main aim of this paper is investigation of the interplay between Croatian export supply and the real exchange rate, i.e. the relative prices. We analyse here the price elasticity of export supply through modelling both the short- and the long-run structures of the model. Additionally, the relationship between export supply and production capacity is also subjected to an analysis. As a result, this paper provides some insights into the importance played by the real exchange rate and production capacity in explaining Croatian exports.
JEL Classification: F4, F41
Key words: export supply, unit root tests, cointegration, VECM model
Delivering Services via Internet: New Distribution Channel for Traditional Services
Durdana Ozretic Dosen
Vatroslav Skare
Abstract: Traditionally, services have been characterised as low tech and high face-to-face contacts. Today, information technology offers many opportunities for service providers. Thus, Internet presents new way for production, communication and distribution of services. In terms of distribution, for many traditional services (e.g. banking, insurance, travel, retail, etc.) Internet encourages disintermediation to certain extent, since it enables direct, two-way-communication without the need of going to the service outlet. But, this also means that customers must be motivated, willing and capable of using the Internet in their buying decisions and processes. In Croatia, Internet is relatively recent innovation available to consumers for household use.
JEL Classification: M31, O31
Key words: services, Internet, Internet and service delivery
Savings’ Impact on Portfolio Structure of Insurance Companies
Drago Jakovcevic
Ivan Lovrinovic
Abstract: This paper explores the trends in national savings from domestic sources and foreign contributions in Croatia during the last past five years. The aims of the study are on the quantitative and qualitative analysis of the life insurance premiums as a form of long-term savings. It also reflects upon the interdependence of insurance and savings trends in the banking sector characterised by significant growth of the past years, especially foreign currency deposits compared to kuna deposits.
JEL Classification: E21, G22
Key words: savings, life insurance, portfolio
Information-Communication Technologies as Management Tool: Case of Slovenia
Vlado Dimovski
Miha Skerlavaj
Abstract: This paper presents study at national level, which aims to test the influence of information and communication technologies (ICT) on financial (FP) and non-financial performance (NFP) at empirical level. In order to do so, structural equation modeling (SEM) methodology is utilised. Results show statistically significant positive and strong influence of ICT on FP and even stronger statistically significant positive correlation between FP and NFP. ICT did not demonstrate positive impact on NFP. Findings are interpreted from managerial perspective.
JEL Classification: L96
Key words: organisational performance, stakeholders, balanced scorecard, structural equation modeling
Institutional Development and Good Governance Assessments in Croatia: An Extended Focus on Corruption
Zoran Aralica
Jelena Budak
Abstract: This paper examines good governance assessments in Croatia and in selected CEE countries. It aims to confirm that the quality of governance should be evaluated by considering phenomena- or country-specific institutional environment. Based on the analysis of good governance indicators slight improvements in all dimensions of good governance for all of the selected countries were observed in a period from 1996 to 2002. Using constructed aggregate Good Governance Index (GGI) and Human Development Index (HDI) tested the general assumption that good governance is connected to economic and social development. Spearman rank order correlation analysis confirmed that for all selected countries in 2000 there was a high positive correlation between their GGI rank and HDI rank. The correlation matrix for CEE countries in 2000 confirmed our hypothesis that government effectiveness; regulatory quality and rule of law positively correlate with control of corruption. The paper concludes that research on interdependencies among good governance and development indicators as well as on determinants and effects of good governance dimensions remains to be done for Croatia.
JEL Classification: P37, H11
Key words: institutional development, good governance, human development, correlation, corruption
Quality Dimensional Analysis: A Basis for Marketing Strategy of Higher Educational Institutions
Vesna Babic-Hodovic
Eldin Mehic
Abstratct: Higher education institutions currently face an increased number of participants in the market on the supply side, and increased level of requirements at the demand side. Therefore, an appropriate marketing strategy is required to pay attention to this fact. We need to apply conquest marketing to secure a sufficient level of interest and enrollment of students on one hand, and retention marketing in order to create the satisfaction and loyalty of the already enrolled students on the other. The key role in formulating and designing the marketing strategy of an educational institution is assigned to the quality of the educational process, the quality as perceived by the students, and the level of satisfaction derived from the same. Since one specific feature of the service process, including the education services too, is the heterogeneity of the services and difficult standardisation of the service process; the measured quality of services in fact represents the quality as perceived by the clients. From this follows that the precondition of a successfully created marketing strategy is the choice of an adequate quality-measuring model in the education process (service provision process). The paper uses the Kano model of service quality measuring to identify among students the factors that are used by them to measure the quality of the education process and point at them the marketing strategy of institutions.
JEL Classification: I21
Key words: conquest marketing, enrollment service, Kano model
Slovenian SMEs: From the Environmental Responsibility to Corporate Social Responsibility
Jozica Knez-Riedl
Abstract: Environmental and societal issues are emphasising the social role of enterprises, including all size classes, even the smallest ones, so-called micro enterprises. This paper reflects on Slovenian SMEs. These enterprises are confronting ever increasing and changing expectations, demands and claims for accountability not concerning only economic, but also environmental and social performance. Environmental responsibility is one of three dimensions of the concept of Corporate Social Responsibility (CSR) promoted also by the EU. A range of motives and many barriers are decisive for proactive or reactive environmental activities of SMEs. For determining as to how much environmentally responsible Slovenian SMEs are in the period just before joining the EU (May 2004), some aspects in context of environmental management system (including environmental standards and indicators) are investigated here.
JEL Classification: L2, Q5
Key words: accountability, environmental indicators, environmental management system, environmental responsibility, sustainability
Assuring the Competitiveness of European Manufacturer through Changeability in Manufacturing
Thorsten Blecker
Günter Graf
Abstract: Changeability has become a buzzword for operations management, especially in German literature. Therefore, we analyse this concept in comparison with existing concepts for variability, such as flexibility and agility. Agility is an enterprise-wide concept incorporating product design as well as manufacturing systems design and aiming at lean and often dislocated manufacturing processes. Flexibility means that an operation system is variably within a specific combination of in-, out and throughput. Changeability, in contrast, means the ability of an operation system to autonomously alter the configuration to meet new, prior unknown demands e. g. from the market. Changeability is then the ability to realise new states of the in-, out- and throughput. Additionally, the reconfiguration of the system has to be realised as quickly as the environmental changes. Therefore, to be changeable, the speed of adaptation is important.
JEL Classification: M11, L21, L23
Key words: changeability, operations system, competitive advantage, strategic resource
Modified Net Present Value (MNPV): A New Technique for Capital Budgeting
Kenneth G. McClure
Paul Berhanu Girma
Abstract: In this paper we show that, when the firm’s opportunity rate of reinvestment is different from its financing rate, the risk-adjusted discount rate method (RADR) of computing Net Present Value (NPV) leads to the same type of incorrect results that required new methodology for modifying Internal Rate of Return (IRR) calculations (i.e. Modified Internal Rate of Return (MIRR)). Specifically, the current method of calculating NPV is biased in favour of (against) high-risk projects and against (in favour of) low-risk projects when the risk-adjusted discount rate is greater (less) than the firm’s average marginal cost of capital (WACC) for two reasons. First, it incorrectly assumes that the reinvestment rate for project cash inflows is the risk-adjusted discount rate of the project instead of the firm’s opportunity rate of reinvestment. Second, it incorrectly assumes that projected cash outflows, for the time periods after the initial outlay, are also discounted at the risk-adjusted discount rate. We propose a new methodology to establish a Modified NPV (MNPV) to eliminate the RADR methodology bias and derive a generalised rate of return (k*) under all combinations of reinvestment and financing rates for a firm. In addition we derive and demonstrate the linkages and consistency between the new MNPV, k*, Profitability Index (PI) and MIRR methodologies.
JEL Classification: M21, M41
Key words: capital budgeting, cost inflows, reinvestment rate, total initial outlay |
