Femeia Intreprinzator PG 68 Engleza2010 - 1

JOURNAL OF
ECONOMICS AND
BUSINESS
RESEARCH
Year XVI, No. 1/ 2010
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JOURNAL OF
ECONOMICS AND
BUSINESS
RESEARCH
Year XVI, No. 1/ 2010
ISSN 2068 - 3537
Edited by “AUREL VLAICU” University

Arad, 2010
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Editorial Board
Editor in chief: Ph.D Associate Professor Luiela Magdalena Csorba, "Aurel

Vlaicu" University of Arad, Romania
Associate Editor in chief: Ph.D Associate Professor Cristina Nicolaescu, "Aurel
Vlaicu" University of Arad, Romania
Associate executive editors
1. Ph.D Professor Tania Matos Gomes Marques, Instituto Politecnico de Leiria,

School of Technology and Management, Portugal
2. Ph.D Professor Elek Sandor, Corvinus University, Budapest, Hungary
3. Ph.D Professor Fabian Attila, University of Sopron, Hungary
4. Ph.D Professor Rodica Hîncu, Economic Studies Academy, Chişinău, Moldova
Republic
5. Ph.D Associate Professor Ana Suhovici, Economic Studies Academy, Chişinău,
Moldova Republic
6. Ph.D Professor Mirjana Radovic-Markovic, Institute of Economic Sciences,
Belgrad, Serbia
7. Ph.D Professor Ricardo Bruno Ferreira, Instituto Politecnico de Portalegre,
Portugal
8. Ph.D Associate Professor Dragoş Şimandan, Brock University, Canada
9. Ph.D Professor Beata Farkas, University of Szeged, Hungary
Associate editors
1. Ph.D Professor Victor Manole, Economic Studies Academy, Bucharest, Romania

2. Ph.D Professor Ilie Rotariu, University „Lucian Blaga”, Sibiu, Romania
3. Ph.D Professor Gheorghe Ciobanu, University „Babes Bolyai”, Cluj-Napoca,
Romania
4. Ph.D Professor Emilia Ungureanu, Faculty of Economis, University of Piteşti,
Romania
Editorial Secretariate
1. Ph.D Associate Professor Mihaela Iacob, "Aurel Vlaicu" University of Arad,

Romania
2. Ph.D Lecturer Radu Cureteanu, "Aurel Vlaicu" University of Arad, Romania
3. Ph.D Candidate Assistant Bogdan Gomoi, "Aurel Vlaicu" University of Arad,
Romania
Address
University “Aurel Vlaicu” of Arad
Romania, 77 RevoluŃiei Avenue, Arad
Tel/fax: 0040-257-280679
E-mail: luielacs@yahoo.com
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CONTENTS
The Iceland cloud of volcanic ash - an environmental

issue affecting the global economy……………………………………7
By Luiela Magdalena Csorba, Bogdan Cosmin Gomoi
Energy, space and society: a reassessment of the changing

landscape of energy production, distribution and use……….…….13
By Kirby Calvert, Dragoş Şimandan
Delimitations and considerations regarding the accounting

information system of the commodity exchanges…………………….38
By Alexandru Vlasiu
Microeconometric models in market research

price optimization........................................................................................47
By Ede Lázár
General management systems and methods

in higher education……………………………………………………60
By Silvia Hanganu
Entrepreneurship, woman and self employed………………………..68

By Mihaela Ioana Iacob
The influence of socio-economic environment and diversity of the offer

coming from the Slovenian schools of business and economics
programmes, on the motivation for education of the employees from
independent business and economics schools in Slovenia………….....73
By Jasmina Starc
The importance of ethical norms in the accounting profession….…84

By Matei Şimandan
Organizational configurations, communication networks and

entrepreneurship in the period of changes……….…………………..96
By Marian-Nicu Spînu
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6
Interference between electoral cycle and economic cycle…………...101

By Emilia Ungureanu, Felix-Constantin Burcea
Understanding labor conflict and industrial relations

in Nigerian academic environment…………………………………...111
By Nkasiobi Silas Oguzor, Austin N. Nosike
The role of domotics in daily life……………………………………..124

By Olga Irina Maxim, Radu Silviu Cureteanu
Instructional technologies and life-long literacy centers in Nigeria...130

By Nkasiobi Silas Oguzor, Helen E. Adebola
The crisis is affecting women entrepreneurship……………………..139

By Ramona Lile, Florentina Barbu, Mioara Florina Pantea, Grigorie Sanda
Companies in specific areas…………………………………………..146

By Petru Tărchilă
Competitiveness of enterprises in the globalized world

and the impact of localization………………………………………...152
By János Varga
Women entrepreneurship and ethics ………………………………..169

By Ramona Lile, Mihaela Iacob
Agricultural produce processing and marketing: a strategy for

poverty alleviation in the new millennium…………………………...173
By Anthony Nweke Eze, Peace O. Eze
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Journal of Economics and Business Research, ISSN: 2068 - 3537,
Year XVI, No. 1, 2010, pp. 7-12
The Iceland cloud of volcanic ash - an environmental

issue affecting the global economy
L. M. Csorba, B. C. Gomoi
Luiela Magdalena Csorba

Bogdan Cosmin Gomoi
Faculty of Economics
”Aurel Vlaicu” University of Arad, Romania
Abstract
After the attacks of September 11, 2001, after a continuing
terrorist threat airports reported, after the aircraft collapse of
some planes - like Tupolev 154 on board which was Polish
President Lech Kaczynski with another 95 people including
87 members of the delegation of Poland - a new airline
crisis is announced: Eyjafjallajokull. A volcanic eruption
has become a phenomenon of an unimaginable scale,
managing to reach the forefront of the world, the headlines
and opening all the newsreels. Volcanic ash cloud was seen
as a threat to mankind. The main news channels have taken
advantage of volcanic eruption in Iceland in order to make
audience and terrify viewers with alarmist statements and
assumptions. Even the funeral of President Kaczynski was
overshadowed by a cloud of ash. And tens of thousands of
flights were canceled in Europe, America and Canada.
These are some of the effects of volcano Eyjafjallajokull, a
hard name to pronounce. Furthermore, Icelanders had fun in
those days on the British account, because they couldn’t
pronounce the volcano’s name under Eyjafjallajokull
Glacier.
Keywords: volcanic cloud, ash, flights, transport, global
economy.
Managing businesses so as to minimize the adverse impact on

environment now attracts an enormous amount of media and public
attention. The media attention given to the environment has been
8 L. M. Csorba, B. C. Gomoi
stimulated by the response of the firms to the public interest. As a result,

firms have become aware of the importance of being seen as
environmentally responsible and reacting to the growth of "green
consumerism". But, how could react the firms if a violence volcanic
eruption happens? The whole world climate will be changed, and also the
economical one.
Readers of British newspapers have been trying days in a row to
say its name, but each time they failed, and BBC even provided
instructions on how to spell: "ay-uh-luh-fyat-YOE-kuutl-uh". In fact,
Eyjafjallajokull is the name of the enormous crater and of the mountain
where it is the volcano, Eyjafyoll (Ay-uh-fyotl).
The worst effect of volcanic eruptions in Iceland was the airline
blocking traffic in most countries of Europe. The decision of
discontinuing flights was much discussed, and some said the events were
just a circus. It seems that the cancellation of flights due to volcanic ash
cloud was based on information provided by computers which were not
able to make this sort of analysis. Computers, that have decided to cancel
the flights, have limited and incomplete data scientifically, said many
European officials, including Willie Walsh, chief executive of British
Airways.
European statements officials agreed with the airline companies
charges which have shown that the authorities have exaggerated with the
closure of the airspace. "It is a black box in some areas," said Matthias
Ruete, Director of EU mobility and transport, indicating that many
computer models generated hypotheses that were not supported by
scientific evidence. European authorities are not even sure at what
concentration of ash are dangers for the aircraft engines. "It is one of the
factors on which, as far as I know, we didn’t make the agreement", Ruete
said. He added that the flight test aircraft made in the weekend of some
airlines such as KLM and Air France have shown that the risks were
lower than the computer showed. So, the sky was safe? Wasn’t the
danger so large for thousands of flights to be canceled?
Under EU regulations, member states may decide on closing their
airspace. However, decisions were guided by computer models of
volcanic ash Centre in London and EUROCONTROL, an organization
which coordinates air traffic.
Costs for companies and passengers generated a large
controversy. Tens of thousands of passengers were left stranded away
from their destinations, because there weren’t sufficient flights even after
the opening of air space. In this context, the controversy concerning
The Iceland cloud of volcanic ash - an environmental issue … 9
compensation or their absence and the possible responsibility of the

authorities, grew. Of course they were "beneficiaries" of the eruption, and
here we speak of the railway companies in Europe, where the number of
passengers has increased considerably. What is for sure is that when the
crisis was worst, European governments have invoked the precautionary
principle, volcanic ash could solidify the airplane reactors in some cases,
resulting blocking.
There are a lot of data about how EUROCONTROL responded.
Thus, on April 14th 2010, EUROCONTROL United Flight Management
Center (known as UFMC) received the first message on the volcanic
eruption in Iceland, indicating possible effects on European air traffic. On
April 18th 2010, we witnessed the lowest air traffic in Europe during the
crisis, with less than 20% of usual traffic.
On April 14th 2010, there were 28,087 actual flights, compared
with 27,912 the same day one week before. At 14:30 and 18:30 CET,
two teleconferences are held, chaired by London. United Kingdom stated
that they were preparing for the worst, planning to restrict airspace.
Limitations were imposed on the first night of Norway and the United
Kingdom (Scotland), being the first countries in order to take action. By
midnight, Sweden and Finland have also started to cover parts of their
airspace.
with 28,578 the same day one week before. On the night of April 14th to
15th, closing airspace spread across the UK, except the south of
Birmingham area. At 12:00 CET, the Netherlands, Belgium and southern
Sweden have begun to close airspace. At 12:30 CET EUROCONTROL
issues a press release informing the media about the situation.
EUROCONTROL Twitter account begins answering questions from
passengers, journalists and professionals of aviation. At 14:00 CET,
Maastricht airspace began to close. French airspace remained widely
open up the next day, Lille and Reims, closed around 15.00 CET.
with 28,597 the same day one week before. Airspace of Germany and the
countries of eastern and southern Europe remained open until April 16th.
On April 16th 2010, there were 5,335 actual flights, compared with
22,653 the same day one week before.
Air traffic regulations have been applied or extended during the
night of April 16th to 17th. From midnight of April 16th France closed
Reims, Paris and Brest regions. Langen (Duesseldorf and Frankfurt),
Karlsruhe and Bremen areas were closed during the night until 12:00
CET the next day. Milano and Padova sectors were closed at 04:00 CET.
Zurich, Geneva and other sectors in Germany were closed during the
night of April 17th. Maastricht and the Rhine area requested to allow
flights, but only exceptionally. Some airports were planning to open in
Britain (Liverpool, Newcastle, Leeds and Bradford) and there was thus a
progressive decrease in airspace restrictions. Estonia and Poland were
closed. Munich sector started to close at 05:30 CET. Prague airspace
closed at 11:00 CET, Slovakia at 13:10 CET and Hungary and Vienna, at
17:00 CET (the latter was finally replaced with a danger area). At 21:00
CET, Romania and Ukraine started closing their sectors.
On April 18th 2010, there were 5204 actual flights, compared with
24,965 the same day one week before. The night of April 17th to 18th was
more stable. Most control centers were forecast to 12:00 CET. At 12:00
CET, Volcanic Ash Advisory Centre (VAAC) showed improvements. At
16:00 CET the airlines were beginning to open in the following areas:
Maastricht, Rhein, Bremen region, all Spain, France, Austria, Poland,
Italy and Switzerland. At 17:20 CET, Milano and Padova regions
opened.
with 28,126 the same day one week before. European Commission and
EUROCONTROL held a morning meeting to prepare for EU transport
ministers meeting at 15:00 CET. A press release presented revised
approach to air traffic affected by the cloud of volcanic ash.
with 27,508 the same day one week before. During the day, most of the
airspace reopened, except the United Kingdom which was not available
until 20:00 CET.
On April 21st 2010, there were 21,916 actual flights, compared
with 28,087 the same day one week before. From 09:30 CET, most
European airspace opened, except for areas in Northern Scotland,
Sweden, Helsinki, Finland and the northwestern area of airspace Brest. At
14:30 CET teleconference aircraft operators to CFMU was suspended.
On April 22nd2010, flights were almost back to normal, with
27,284 flights, up from 28,578 the same day two weeks ago.
This small calendar meant a "black week" for airline companies,
making an impressive bill: 1.5 billion euros. Cumulative losses in
Romania reached 11 million euro and were affected over 1.2 million
passengers, of who 80,000 travel tickets with flights to and from
Romania.
The Iceland cloud of volcanic ash - an environmental issue … 11
The fuel economy achieved by the stationing of aircraft

amounting to almost one hundred million per day but the largest share of
the amount saved in a totally unexpected way was spent to reassure
customers dissatisfied.
In Europe, Air France and KLM have quantified the biggest
losses, amounting to 35 million euro per day. According to officials, 350
- 400 passengers of Air France and KLM in Romania were affected. The
companies’ titles deteriorate by almost 2%. Also, SAS registered a loss of
29 million euro. British Airways announced losses of 17 to 23 million
euro per day and a 1% depreciation of securities. Wizz Air registered a
loss of 2 million euro per day. Germanwings announced a net loss of 4
million euro. Easz jet reported total losses of 45, 5 million euro. Rynair
having a loss of 42 million euro
In Romania, Tarom lost 4,5 million euro during that week. Blue
Air low-cost operator faces a paradox: more money given than they have
received on tickets. It lost about 2,5 million euro following cancellation
of 164 flights which affected about 20,100 passengers. The company
asked for help to the European Commission and Romanian Government.
Carpatair reported losses of 1,5 million euro having 115 canceled flights.
Wizz Air, a low cost airline, has recorded losses of 1,3 million euro, with
124 flights canceled.
After the model bank rescue plan, European airlines companies
were beginning to seek financial help from the European Union, informs
Bloomberg economic news portal. The European Union had already
taken in the past measures to support the air transport sector in an
exceptional situation, after the terrorist attacks of September 11, 2001 in
the United States. At that time, EU members have adopted an aid for
aviation, which was approved by the European Commission.
Volcanic ash cloud effects on the global economy not only
consisted of damage to airlines companies, but also many other
companies have suffered from the situation. Meetings were canceled, and
many employees were left stranded in foreign countries. In addition,
courier companies were unable to meet commitments. Although,
international trade is based mainly on road transport, rail and water,
perishable goods such as food and flowers, which can not be carried only
by air. Food exports from Africa and the Caribbean were among those
affected. It appears that Kenyan farmers have been forced to dump their
stocks of food and flowers for European consumers. Kenyan economy
has lost every day about 4 million dollars following the closure of the
European space. Also, South American countries, based on agriculture,
had also suffered. The impact of these events on tourism was small. The
money which the tourism industry has lost as a result of tourists who
were unable to reach their destinations, have been recovered mostly from
tourists stranded in various locations, having to spend more than they had
planned.
But some companies have benefited from cancellation of flights.
Railway company Eurostar, linking London, Paris and Brussels served
more customers than normal, all trains have reached full. Ferry operators
have reported a growing number of passengers. Great winners of the
week were rail carriers, the naval and road ones.
In Romania, according to CFR, traffic has averaged more than
1,800 passengers per day extra. The international trains were also
supplemented, the number of their carriage being double than in the
normal period.
The same growing demand has been registered on bus transport.
For example, Eurolines supplemented the number of flights to Europe
with 25.
The International Air Transport Association (IATA) accused
European states that they panicked unnecessarily. Many airlines demands
compensation, although the National Authority for Consumer Protection
sustains that major force does not affect the rights of passengers.
Bibliography
L. Csorba - Macroeconomie, Editura Gutenberg Univers, Arad, 2009

L. Csorba - ProtecŃia consumatorilor în economia de piaŃă, Editura
UniversităŃii "Aurel Vlaicu" Arad, 2010
M. Surridge, T. Bushell, Ph. Gunn - The business environment - Collins
Educational 1993, London
www.eurocontrol.int, the site of The European Organization for the
Safety of Air Navigation.
www.realitatea.net
www.ziare.com
www.guardian.co.uk
www.bbc.co.uk
Year XVI, No. 1, 2010, pp. 13-37
Energy, space and society: a reassessment of the changing

landscape of energy production, distribution and use
K. Calvert, D. Şimandan
Kirby Calvert
Dragoş Şimandan
Queens University, Kingston, Ontario, Canada; Brock University, St.
Catharines, Ontario, Canada
Abstract
While geography has always mattered for the energy sector,
the relative effects of location and distance on the
economics of energy regimes are increasing as we begin to
deploy more renewable energy technologies. This re-
introduction of the friction of distance is leading to an
energy landscape that is far different from fossil-based
regimes. The new energy paradigm, based as it is upon the
physics and the economics of renewable energy, is being
reflected in the landscape as distributed, decentralized, and
diversified patterns of energy generation. Because the
increased use of renewable energy technologies is beginning
to change the spatial patterns of political and socio-
economic activities, a thorough understanding of these
patterns is crucial to increasing the socio-political
acceptability of new technologies and to avoiding the
socially costly unintended consequences of policy and
investment decisions. This paper proposes a theoretical
foundation upon which economists and economic
geographers could scaffold their analyses of the spatial
characteristics of the economics of energy use. To this end,
we bring together two complementary conceptualizations of
economic geography: firstly, as the study of the effects of
location and distance on energy economics, and secondly, as
the study of the ways in which political, economic, and
technological energy-related practices give rise to particular
14 K. Calvert, D. Şimandan
spatial patterns of socio-economic welfare. We end the

paper by developing the concept of energy rationality and
showing how it relates to discussions of metarationality,
common sense, and wisdom.
Keywords: renewable energy technologies; energy
rationality; location; social change; economic geography;
resource economics
“As change accelerates, so does the speed at which still more

[obsolete knowledge] accumulates. All of us carry with us a far bigger
burden of obsolete knowledge than our ancestors did in the slower-
moving societies of yesterday.” (Toffler & Toffler, 2006: 114)
Introduction
There are (albeit few) global truths about the economics of
energy, and our discussion must begin by elucidating some of them.
Most important is the economic manifestation of the laws of
thermodynamics, particularly as they apply to exhaustible energy
reserves: as we exploit the highest grade and most accessible reserves
we proceed to a state of higher entropy – i.e., marginal energy gradients
and thus less ‘useful’ energy – in which capital and energy expenditures
increase and future returns on investments decrease. It is thus inevitable
that we will eventually become ‘priced out’ of fossil energy (Banks,
2000). As a consequence fuel mixes invariably become more
heterogeneous with time as alternative sources of energy become
competitive. Such transitions are slow and arduous, however, as a
function of the ‘lock-in’ effect whereby significant investment and thus
sunken costs in energy infrastructure encourage preferential political-
economic treatment for incumbent energy sources. This is currently the
case with respect to fossil energy sources – a situation that observers
have called ‘carbon lock-in’ (Unruh, 2000). Such ‘lock-in’ effects [1]
cannot be overcome by market forces alone but require deliberate and
delicate public management schemes (Unruh, 2002; Weiss and
Bonvillian, 2009); and indeed all major historical energy shifts were
driven by some form of public investment (Podobnik, 2006). Public
investment is justified not only by the fact that access to reliable energy
is a prerequisite to socio-economic development, but also by the fact
that immature energy technologies become more efficient and cheaper
when privy to collective investment and to guaranteed market
opportunities (Söderholm and Sundqvist, 2007). The final truth worth
Energy, space, and society: a reassessment of the changing landscape … 15
mentioning is that the distribution of energy is uneven over the surface

of the Earth, and its existence does not presuppose exploitation
(Manners, 1971; Chapman, 1989). It is in this latter point that questions
of the economic geographies of energy find relevance. We use the term
‘geographies’ deliberately to embrace the variegated nature of economic
geographical practices (see Barnes & Sheppard, 2010; cf. Simandan,
2011a).
In what follows we shed light on some energy and energy-related
issues surrounding renewable energy – taken here to mean hydro,
biomass, solar, wind, and some geothermal and hydrogen applications
(see Cassedy, 2000) – that would benefit from the sustained application
of geographical thought and analysis. We engage this topic through
two lenses of economic geography. The first lens rests on a
conceptualization of economic geography as the study of the effects of
location and distance on energy economics. The second lens rests on a
conceptualization of economic geography as the study of spatial
patterns of socio-economic welfare as a function of energy exploitation.
This discussion aims to provide a broad initial foundation upon which
economic geographers could build on to analyze energy and energy-
related futures.
“When the environment is rapidly changing, so too are the
problems”. (Watts, 2004: 273)
Economic geography as spatial and regional analysis
In this section, we conceptualize economic geography as the
study of location and (geo)metric relationships in economic processes,
and apply this framework to the (changing) geography of energy
production. Three topics are addressed in the respective sub-sections
that follow: the changing energy landscape as a function of greater
reliance on renewable energy sources, the geography of renewable
energy market opportunities, and the use of the spatial domain to answer
important technical questions surrounding renewable energy utilization.
Renewable energy sources and technologies: physics, economics,
and geography
The physical nature of the energy source upon which a given
conversion technology or an entire energy regime relies shapes the
spatial pattern of its techno-economic viability. In other words, the
extent to which location and distance matter in the economics of energy
systems – which includes resource extraction and transport, and energy
conversion and transmission – is intimately tied to the physical nature of
the energy source. This is not only a matter of pecuniary economics
expressed as, for example, monetary returns on investments, but also of

physical economics expressed as net energy balances or energy
valuations. In this sub-section we explore this relationship as it applies
to the various energy sources that have been made available for societal
consumption through time, and highlight some of the crucial variables
that help explain existing and emerging energy landscapes.
While it is true that biomass, wind, and solar energy were being
used in various ways by early civilizations, humanity’s ability to
harness the power of falling water arguably had the most profound
impact on the course of economic and social transformation.
Hydropower drove early mechanical developments, laid the foundations
for the Industrial Revolution (Cook, 1976; Simandan, 2009), and was
the first supplier of electricity. Prior to the development of high voltage
electrical transmission, national balances of hydropower production and
consumption were very near to equal (Guyol, 1971) because radial
supply areas were limited. As a consequence, industrial developments
radiated from these energy sources. Enhanced conductive qualities of
transport mediums and knowledge of electro-physics have extended the
distance at which hydropower can be used, but the fact remains that the
capture and conversion of the energy source occurs on-site, and thus the
techno-economic viability of energy generation is site-specific.
Fossil energy sources including uranium, coal, oil, and natural gas
exhibit characteristics that are much different from hydropower. While
they are also spatially fixed sources of energy, they are chemical energy
carriers with power densities that are unmatched by any other Earthly
resource. This high energetic and thus economic value has reduced the
friction of distance that characterized early energy regimes. Of course,
transportation networks need to be constructed and some are more
confined than others (e.g., pipelines vs. oil tankers), but the fundamental
point is that in a fossil-based energy regime there is little correlation
between the location of energy supplies and the location of energy
conversion and consumption since locating near natural energy sources
(e.g., falling water) is no longer necessary to procure electricity and
heat. [2] Energy conversion facilities are able to locate based on patterns
of demand rather than on supply, while at the same time operating in
relatively remote sites at a ‘safe’ distance from urban areas. Fossil-
based energy generation can also be mobile, as with steam and internal
combustion engines. These favourable characteristics led to a steady
decrease of the proportion of hydropower in the fuel mixes of high
energy societies (Luten, 1971) that continues to this day, and have
constructed an energy regime which can, unlike hydropower,

‘transcend’ geography.
As spatially-fixed stocks of potential energy that can be used on
demand, hydro-dams, oil pools, coal seams, gas fields, and uranium ores
are utilized and exhausted at a relatively predictable rate. Under these
conditions, the efficiency and the installed capacity of an energy facility
– e.g., a refinery or an electrical plant – become strong predictors of the
energy and the revenue delivered from said facility, since loading
conditions are for the most part optimized by a spatio-temporally stable
and reliable energy source. In other words, a coal electrical plant with
an installed capacity of 3000 MW will deliver approximately 95 per
cent of that power at any given time (a 100 per cent loading factor
would strain the plant), with the exception of annual downtime which
usually approximates 10 per cent.
In contrast to fossil and large-scale hydro energy sources, the
relatively low energy density of renewable energy, including micro-
hydro applications, re-introduces the friction of distance in an energy
regime (Elliot, 2000). For immobile renewable energy technologies
(RETs) that passively convert energy flows – e.g., wind, solar, hydro,
and some geothermal applications – energy must be captured on-site
similar to pre-fossil fuel-based energy regimes (Cassedy, 2000). There
is thus considerable spatial correlation between energy production and
energy consumption. For mobile RETs which actively capture energy
sources such as bio-energy applications, the relatively low density of the
stored energy – which is a consequence of its partial oxidation as a
carbohydrate versus oxygen-poor and carbon-rich hydrocarbons –
prohibits long distance travel, and thus fuel supply-sheds are localized
(Vasco and Costa, 2009). Furthermore, the viability of a bio-energy
operation is easily compromised by transportation congestion (Bai et al,
in press) and variations to biomass supply within a span of only a few
hundred meters (Panichelli and Gnansounou, 2008).
Existing and emerging energy densification technologies can
extend renewable energy fuel- and supply-sheds. This is presently the
case for the bio-energy sector, which employs technologies that increase
energy density per unit volume such as pelletization, gasification or
pyrolysis. The addition of this pre-processing step to the energy system
has enabled biomass to enter the global energy market. Other
renewable energy sources as yet have no viable densification and
transportation options, although wind-hydrogen or solar-hydrogen
regimes, where the electricity generated by wind or solar technologies is

deployed in the electrolysis process by which hydrogen is isolated and
used as an energy carrier, may alter this state of affairs. In addition to
this, solar refining systems used in conjunction with fibre optic cables
are touted as a potential way to transmit solar radiation internationally –
e.g., from Arabian deserts to European markets (Şen, 2004). It is
important to note, however, that many of these systems are in the
experimental stage, and in all cases their production chain begins with
spatio-temporally variable and low-density energy fluxes.
The seasonal and diurnal fluctuation of renewable energy sources
at any given site means that the rated capacity of a renewable energy
system is a poor predictor of delivered energy, as it is rarely satisfied
(Leijon et al, 2010). There are three explanations for this fact. First,
technological configurations are standardized to make the
manufacturing process of RETs economical while the physics of natural
energy fluxes are spatio-temporally variable (ibid). Second, project
designers lack the data necessary to make optimal site-selection choices
or to match the physics of the design with the physics of the local
energy source (Carriona et al, 2008). Third, the naive belief that we can
optimize project designs assumes that we can fully predict natural
energy fluxes, and this simply is not the case. As a consequence of
these factors, many RET installations have been prone to unnecessarily
high capital costs and poor overall process economics ensuing from sub-
optimal loading (Leijon et al, 2010; Skoglund et al, 2010).
In describing the relationship between the physics, the economics,
and the geography of renewable energy, a number of themes emerge.
Three are most important: 1) the physics of renewable energy sources
are more spatio-temporally variable and less energy dense than fossil
energy sources, 2) the fitness of a given RET is site specific, and 3) a
number of different renewable energy sources exist at any given
location and thus decision-makers are burdened by having to choose
among a wide variety of source and conversion options. In the
subsections that follow we wish to extend the logic suggested by these
physical principles of renewable energy and identify how geographical
thought and analysis lends itself well to the organization, management,
and analysis of future energy regimes.
The geography of RET market opportunities

Given the site-specific fitness of renewable energy options and
the scope of technologies that might be employed at any one location,
having an understanding of spatial patterns of demand is crucial.
Identifying market opportunities from a spatial perspective will help to
rationalize an energy regime. As an example, the identification of urban
heat and electricity ratios are crucial in determining the feasibility and the
configuration of municipal combined heat and power (CHP) applications,
as explored by Beaumont and Keys (1982). This section elaborates on
some other key relationships between location and market opportunities,
thus identifying some immediate research opportunities for economic
geographers.
Isolated communities relying on low grades of energy are favourable
market opportunities for RET investors and developers (Thompson and
Durrigala, 2009). This is not a matter of absolute location, but rather of the
relative lack of a) market clout by which to achieve scale economies and
thereby reduce the price per unit of fossil fuel delivered and b) existing
infrastructure with which to deliver said energy. In addition to this,
isolated communities are most likely to rely on inefficient diesel generators
or on heavy oil for home heating. As climate change policy begins to
impact energy policy such that incentive structures encourage the
consumption of cleaner energy, these consumers will be low-hanging fruit
for RET investors.
That being said, supply-side renewable energy policies including
quota systems, certificate trading, and feed-in-tariff programs are beginning
to expand and modify the geography of market opportunities (for a more
detailed discussion of these mechanisms see Palmer and Burtraw, 2005).
Through obligatory mandates or by paying a premium for renewable
energy delivered, such policies level the economic playing field and thus
enable RETs to compete in otherwise inaccessible markets. In fact, such
policies have a tendency to swing the pendulum too far. Ontario, Canada
boasts North America’s first feed-in-tariff program, and a generous subsidy
for solar photovoltaic farms has encouraged sub-optimal location decisions
(Nguyen and Pearce, 2010). This suggests that renewable energy policies
need to consider geography more seriously to reduce the short-run
marginal costs of carbon mitigation and fossil fuel avoidance.
Another potential mechanism by which to expand the market
opportunities of RETs is to base electricity pricing systems on locational
marginal prices (LMPs), or at least to consider these prices before making a
determination about the location of resource investments. Brown and

Richards (2009) demonstrate that solar photovoltaic technologies become
economically competitive at locations where heavy burdens or bottlenecks
in the system are present and thus localized electricity rates are high. This
is especially the case when long distance transmission and thus sunk capital
can be avoided by distributed technologies. The same effect has been
demonstrated by Lewis (2008) in relation to wind energy utilization.
Economic geographers should work to uncover the spatial patterns of these
high value investments, especially since aggregate pricing systems obscure
these market opportunities by subduing these price signals.
Taking geography seriously in renewable energy analysis

The fitness of RETs is localized and in many cases site-specific.
Indeed, small scale geographical nuances are consequential to RET techno-
economic viability. Spatio-analytical technologies, generally referred to as
geomatics, are adept at synthesizing the data necessary to flesh out these
nuances, and indeed attempts are being made to link spatially explicit
resource inventories with systems analyses tools by which to capture the
effects of geography on renewable energy process economics (Dominguez
and Amador, 2007). One publicly available tool in this regard is
RETScreen 4.0, a software package designed by a consortium of agencies
including NASA and Natural Resources Canada. This software has been
downloaded more than 265 000 times, and has been used to derive results
that are published in peer-reviewed literature (e.g.,Thompson and
Duggirala, 2009; see also Connolly et al, in press).
It is important to note that RETScreen 4.0 is a pre-feasibility
modeling tool, and thus its intent is not to be entirely accurate but to
provide quick and easy ‘go’ or ‘no-go’ decisions that dictate if, when, and
where further research is warranted. RETScreen communicates results as
net present values, returns on investment, and internal rates of return. It is
thus sensitive to the scope of different investment criteria. Perhaps most
importantly, it provides these indicators for both a proposed and a ‘base
case’ scenario. Figure 1 displays the user-interface of the geo-referenced
resource data from which these criteria are derived, and includes variables
related to renewable energy stocks and flows at a given location. These
data represent the physical basis of RETScreen: the model requires inputs
in terms of capital costs, operation and maintenance costs, debt / equity
ratios, and other key financial variables. It also has a bank of existing
technology performance data from which efficiency and net energy
delivery are estimated depending on the chosen technology. Given the

emergence of this software program and others of the sort it is important to
critically analyze underlying assumptions and data structures and discuss
ways in which it might be improved.
The premise of RETScreen is promising: it recognizes that the first
vital step in feasibility analyses is the geographical potential of energy
availability. There are, however, three key shortcomings with this software
package. First, it does not model a ‘degradation factor’ – i.e., the rate at
which the performance of a technology in terms of energy efficiency
begins to deteriorate. Second, it lacks a comprehensive bio-energy module.
Comparative analysis of all possible options is crucial in energy planning,
especially at the pre-feasibility stage. Without a resource or a technology
database to draw on for bio-energy, public and private investment decisions
can be biased by a limited solution space. Finally, in cases where the data
source is ‘NASA’, the value represents aggregation over a 1 degree x 1
degree area of Earth which approximates an area of 110 km2. From a
geographical perspective, this is perhaps the most important limitation.
Figure 1: A screenshot of RETScreen 4.0 resource data
Given the localized nature of RET viability a key consideration to

RET techno-economic analyses is the spatio-temporal resolution at
which resource information has been assessed (Van Hoesen and
Letendre, 2010). Indeed, scale-aware logic must be embedded in

renewable energy analyses. This will privilege distributions instead of
averages [3] while at the same time reflecting the scale at which
renewable energy systems operate. Solar energy systems simply do not
operate at a scale of 110km2, and in fact spatial units of 1km2 are
suggested as optimal for solar photovoltaic farms (Nguyen and Pearce,
2010). Rooftop-mounted solar energy systems and combined heat and
power systems both require resource analyses at the community level
(see Wikington et al, 2010 and Beaumont and Keys, 1982, respectively).
The scale at which RETs are best assessed requires further attention,
and in this context multi-level analyses are welcomed (see Ayoub et al,
2007). The subject of scale will be re-visited in section 3.1.
The spatial domain offers a useful framework within which to
synthesize data necessary to distinguish actual from potential energy
sources prior to deriving any financial information. RETScreen
assumes that a site has been chosen, and that this site is economical in
terms of transmission hook-up, transportation infrastructure, land-use
and land-values, and other key spatial variables. Using overlay analysis
in a GIS, datasets associated with these variables can help to distinguish
actual from theoretical energy availability. This will help to reduce the
assumptions of RETScreen, and models of the sort, and thereby
communicate more meaningful results. These spatially-explicit results
are crucial because obtaining the finances necessary to move forward
with a RET project is dependent on available information, the paucity of
which hinders RET investments.
Securing finances, however, is not only a matter of reducing
uncertainty through robust baseline geographical information.
Preliminary discussions with a select group of energy consultants by
one of the authors suggests that trust is more important than the way in
which information is derived when soliciting finances for project
development. As such, and although the objective of RETScreen is to
develop a cheap way to provide the information by which finances can
be secured and projects mobilized, it is necessary but not by itself
sufficient. More important is social capital and risk management, and in
this regard having municipalities involved in renewable energy
procurement may help considerably. The capacity of municipalities to
provide such leverage should be explored (see as a starting point
Woodward et al, 1994), and as suggested above, spatially explicit
analyses should be conducted with these audiences in mind. This latter

point is explored further in the following section.
“The starting point…is to determine what changes slowly or not
at all…once we construct this framework, we want to incorporate the
elements that seem easier to control or predict. It is usually easier to
predict technological change than social change”. (Holland, 2002: 172-
173)
Economic geography as the study of the nature-society
relationship
Forms of socio-spatial organization are at least in part a
consequence of the manner in which a society exploits available natural
energy. Indeed, the use of different forms of energy changes physical
and socio-economic landscapes in profound ways (Foley, 1976;
Solomon and Pasqualette, 2004), in part because different forms of
energy require specific forms of socio-physical organization for
optimum performance (Chapman, 1961; Beaumont and Keys, 1982;
Zvoleff et al, 2009). It stands to reason, then, that as we begin to deploy
RETs we will witness, with some delays, changes in how our society is
organized and managed. This section speculates on the shape that
society will (should?) take as we begin to rely more heavily on the
rhythms of renewable energy.
In order to avoid grossly inaccurate predictions of technological
and regulatory changes in energy systems, we emphasize from the very
beginning that it is important to pay close attention to delays. The
energy infrastructure is best conceived of as a collection of material
stocks and flows with a degree of inertia that is higher than that of most
other economic sectors. The stocks of the energy sector – ranging from
the stocks of fossil fuels to the stocks of built plant capacity and the
stocks of electricity grids – are particularly worthy of note for our
purposes because all delays presuppose stocks. If we define delays as
processes whose output lags behind their input (Sterman, 2000), it
becomes apparent that the only way in which they could happen is by
having a stock in-between the input and the output of the system. This
intercalated stock effectively decouples its output from its input and
thus generates disequilibrium dynamics with massive economic and
geographical implications (as the slow reactions of the energy sector to
energy crises have shown). Stocks are a concept from system dynamics
that is equivalent to what Simandan (2001, 2006) calls ‘legacies’ (which
are one of the three ontological categories in his logic of recursive
cartographies, the other two being rhythms and events). Stocks are the
explanation for the inertia of the energy systems because the weight of
the past is embodied in stocks. The current stocks of the energy sector
constitute the memory of past deeds (inflows, outflows) in that sector.
The energy sector we have today is the accumulation of decades of past
practices and beliefs, fact which begins to explain why change will not
happen overnight and why the enthusiastic predictions of the 1970s
about the dominance of renewables by the year 2000 turned out so
wrong.
Renewable energy and socio-spatial change

Recent paradigm shifts in energy planning from large-scale,
centralized and relatively homogenous to a decentralized and diversified
energy regime (see Helm, 2005; Sebitosi and Okuo, 2010) are
underpinned by the physical characteristics of renewable energy and by
technological achievements. Advancements in technologies related to
harnessing two thermodynamic cycles (e.g., combined cycle turbines) or
two energy vectors (e.g., combined heat and power) have diluted the
notion that ‘bigger’ energy facilities are inherently more economical
(Sebitosi and Okuo, 2010; Li, 2005). As such, smaller and distributed
forms of energy generation are more prevalent. Furthermore, the
physics and the economics of renewable energy necessitate greater
spatial correlation between energy availability, energy conversion, and
energy consumption (see Elliot, 2000). This makes it possible – and in
some cases necessary – to establish short energy procurement,
production, distribution and consumption chains (Pepermans et al.
2005). This suggests the increasing relevance of the ‘local’ scale, and
thus of local actors (see also Fraser et al, 2004; Bagliani, 2010).
It is important to qualify the term ‘increasing’. Surely, given the
decentralized nature of renewable energy, energy production will be
visible to a greater proportion of the population. It stands to reason that
a greater number of protests or public consultation will characterize
future energy decisions. But this does not mean that local actors are
acquiring more power relative to outside interests [4]. In fact, market
evidence supports the opposite claim. Renewable energy ‘subsidy
farming’, which might be conceptualized as a neo-colonial enterprise, is
a common phenomenon. This is a situation in which multi-national
corporations, increasingly of the foreign brand and not always
traditional energy companies, are installing a significant proportion of
renewable energy systems in jurisdictions that subsidize renewable

energy. Opposition to deals struck between Samsung and the
Government of Ontario for wind energy development exemplifies this
phenomena. Indeed, local ownership is not a fundamental element to
the nature of a decentralized energy regime (Pepermans et al, 2005).
Further, there are considerable signs that RETs will simply be mass-
produced in cheap labour countries, and we should be careful to assume
that this economic rhythm will be disturbed simply as a function of
renewable energy research, subsidization and deployment in developed
countries.
That being said, the idea that the local scale and local actors will
be privileged as renewable energy is deployed has some merit when
referring to political organization. At the municipal level in Canada,
‘community energy plans’ are becoming more common (St. Denis and
Parker, 2009), and this socio-spatial strategy is being endorsed by the
federal government (NRCan, 2007). Furthermore, a localized, bottom-
up regulatory approach to renewable energy is accredited with the
relative success of RET deployment and utilization in Germany (Doern
and Eberlein, 2009). The seemingly contradictory effects of devolution
discussed here are, to be sure, a matter of initial conditions and is itself a
geographical issue, but researchers must begin from the premise that
there is ‘nothing inherent about scale’ (Brown and Purcell, 2005) when
addressing the political economy of renewable energy.
In addition to these political-economic (re)configurations,
research has pointed to socio-economic changes as a consequence of
RET deployment. This is mostly a function of direct and indirect
employment creation. Investigations have shown that a significant
share of the expenditures associated with bio-energy systems stays in
the local economy, creating local jobs and increasing local income
(Kammen et al, 2004; Thomassin and Baker, 2000). This is especially
important for single-industry forestry towns that suffer from an ailing
forestry industry: bio-energy applications can provide market
opportunities for woody biomass of all qualities, thus opening otherwise
inaccessible or uneconomical market opportunities. These economic
benefits, however, are not exclusive to a more resource-oriented or
labour intensive energy system such as bio-energy systems. Wind-
farms, which might be misconstrued as ‘dead labour’ given that man-
power is not needed to collect and transport energy feedstock, have also
been shown to generate considerable job growth in the local area
(Valentine, 2010). In a recent study out of the US, Wei et al (2010)

discovered that solar photovoltaic technologies actually create the most
jobs per electricity output. These effects are magnified in jurisdictions
in which RET markets are created through government incentives, but it
is important to note that government incentives might also be
subsidizing foreign economies if a domestic manufacturing industry is
non-existent (Branker and Pearce, 2010). Indeed, the tight coupling
between energy investments and economic growth manifests itself not
only in major energy producing regions (e.g., Dubai), but also at the
very local scale. It is important that we understand the processes
through which this coupling occurs, and ways to capture the full range
of benefits that might accrue locally. This will help to place higher
energy prices, taxes, and the visibility of energy generation within a
favourable context, thus increasing the social acceptability of RETs.
These changes are contingent, not inevitable (Simandan, 2010).
Indeed, the unqualified endorsement of some variant of energy
determinism in terms of socio-spatial organization and patterns of
welfare would be a mistake. Instead, the fruitful research vein we wish
to highlight has to do with the geographical articulation of energy
regimes with ways of living. More specifically, we want to ask what
constitutes an energy efficient form of socio-spatial organization. This
question is fundamental to economic geography because: (a) energy is
an important variable for socio-spatial organization, (b) the economic
manifestation of the second law of thermodynamics and the
environmental effects of our dependence on fossil fuels have jointly led
to our growing reliance on renewable energy, and (c) renewable energy
is localized and site-specific. Preliminary answers suggest a
polynucleated urban form and / or are predicated on the principles of
smart growth and urban densification (Beaumont and Keys, 1982;
Behan et al, 2008). This suggests that, as we begin to deploy RETs and
focus on their efficiency, the “energy problem can be conceptualized, in
one sense, as related to the spatial organization of the urban
environment” (Beaumont and Keys, 1982: 177; see also Cuddihy et al,
2005). Perhaps, then, urban (or, more generally, local) scales should
take on greater emphasis as a unit for analysis in these economic
geographies of renewable energy (see also Zvoleff et al, 2009). In
addition to following the logic discussed above, this scalar orientation
would also help to highlight other localized political-economic energy-
related issues such as the causes and consequences of the hidden
geographies of energy poverty (Buzar, 2007), or of the local

agglomeration of innovative ideas, institutions, and technologies from
which a renewable energy market might flourish.
Toward energy rationality

‘Hydro-carbon man’ (Shaffer, 2009) – a people whose basic
provisions (e.g., comfortable living space, light, nutrition, mobility) and
higher-level desires (e.g., entertainment) are fulfilled almost exclusively
by hydro-carbon based energy resources – is becoming an increasingly
accurate generalization. National energy policies remain chiefly
concerned with maintaining a steady supply of fossil fuels by
encouraging domestic production and / or developing international trade
relations (Simon, 2005). While familiar to developed countries, this
policy concern is increasingly relevant for the developing nations as
well.
The discussions of resource, and thus energy, management
typically juxtapose two variants of rationality: economic rationality and
ecological rationality. The former signifies the pursuit of the
maximization of fitness. Depending on the scale of reference, this may
come to mean personal or collective (e.g., national) fitness. This pursuit
is made in the light of alternative choices, alternative states of affairs,
and the expected decisions of others. Ecological rationality, on the
other hand, signifies the pursuit of human-environment interactions that
do not extend beyond the limits of Earth’s ecological systems. This is
rooted in notions of sustainability, and is less of an anthropocentric
decision-making model.
As suggested above, energy is at the core of the society-nature
relationship. The combustion of fossil fuels is the chief causal factor
behind climate change and unprecedented rates of land-use and land-
cover change (see Slaymaker, 2001). As such, we contend that energy
rationality can help to resolve some of the conflicts between these two
decision-making models discussed above. Examples of how energy
rationality might be encouraged and practiced are beginning to take
shape. Ontario, Canada has recently introduced time-of-use electricity
pricing. At peak hours electricity prices are increased (see Figure 2).
This structures the decision-making environment in which individuals
operate such that the operation of inefficient and fossil-based ‘peak
plants’ which must be run to satisfy peak demands might be avoided.
Carbon taxes have been introduced for the same purpose in some
jurisdictions including Sweden and Finland, making renewable energy

economical and offering market opportunities to alternative forms of
energy (Ericsson et al, 2004). Key to an effective energy-rational policy
environment, however, is to avoid regressive tendencies whereby the
poor are disadvantaged even further given that energy consumes a
greater overall proportion of their income. Two research avenues here
are a) to examine the spatial patterns of renewable energy utilization
using energy-rational incentive structures as the independent variable,
and b) to analyze the socio-economic effects of these policies.
Figure 2: The logistics of Ontario's time-of-use pricing policy

Source: Ontario Energy Board
These said, we would like to move to a higher level of abstraction

and develop more fully our concept of energy rationality by taking into
account not so much the distinction between economic rationality and
ecological rationality, as the more relevant distinctions between
instrumental rationality and epistemic rationality, and between thin
rationality and broad rationality. We begin by pointing out that an
economic geography of renewable energy must make recourse in its
explanatory endeavors to all the three important mechanisms of social
change: constraints, choice, and selection. In geography, maybe because
of too much reliance on social constructionist ideas, we tend to
emphasize the role of constraints and to downplay the role of choice.
We think this situation should be remedied, because as Elster notes
(Elster, 2007: 298):
“Constraints operate before the fact, to make certain choices

unfeasible. Selection operates after the fact, to eliminate those who have
made certain choices. Although both mechanisms contribute to the

explanation of behaviour, they cannot jointly or singly, account for all
of it. Choice remains the core concept in the social sciences”.
Choices can be more or less rational. Therefore, to introduce a
concept of energy rationality is to implicitly reassert the significance of
the mechanism of choice in the explanation of the space-economy of
renewable energy. As we have already suggested, many of the facts that
govern this particular space-economy are counterintuitive (Sterman,
2000), and, therefore, relying on common sense when making
investment decisions in this area means, in the long run, taking a road to
perdition. It is difficult to improve on Gallie’s beautiful description of
the pitfalls of common sense (Gallie, 1978: 106-107):
“Common sense is characterized by a sane but lazy disregard of
difficult, even if very important, questions which it leaves to those whom
it considers tiresomely clever and rather silly people, until the day
comes when men [sic] must either face their difficult questions or
perish. The sane but lazy position may often carry with it real
temporary advantage”.
The history of the energy sector bears testimony to the fact that all
too often the concerned economic agents have taken “the sane but lazy
position” of common sense, in blissful ignorance of the counterintuitive
logic of dynamic complexity that governs the behaviour of real-world
systems. Instead of relying on common sense, we need a wiser stance
(Simandan, 2011b), that gives a fuller acknowledgment to the extent of
our ignorance. As Nickerson observes (Nickerson, 2008: 330):
“What is most important for rationality is an awareness of the
limits of one’s understanding – an accurate appreciation of what one
understands well, what one understands less than well, and what one
does not understand at all.”
But to fully grasp the meanings we want to associate with our
concept of energy rationality, we need to situate it in the state-of-the-art
rationality debates, so as to bring out its intimate bond with
metarationality and with a broader definition of rationality itself. Keith
Stanovich’s words (Stanovich, 2010: 5) help drive home our point:
“To think rationally means taking the appropriate action given
one’s goals and beliefs, and holding beliefs that are commensurate with
available evidence – but it also means adopting appropriate goals in the
first place. Instrumental rationality covers the first of these (taking the
appropriate action given one’s goals) and epistemic rationality covers
the second (holding beliefs that are commensurate with available

evidence), but the third factor (adopting appropriate goals in the first
place) introduces a new issue. The issue is the distinction between a thin
and broad conception of rationality.”
He goes on clarifying the meaning of metarationality and does
so by means of examples from game theory that have a clear relevance
for the economic and environmental tangles that complexify the current
landscape of renewable energy policies (Stanovich, 2010: 159-160):
“The best tools of thought are self-correcting because they
critique themselves. Metarationality consists of bringing rational tools
to bear in a critique of rationality itself...[One] area where rationality
critiques itself is in the Prisoner’s Dilemma or commons-dilemma
situations. In these cases a response that is narrowly rational, in that it
displays dominance over other alternatives, turns out to be
dysfunctional for everyone if all the people involved in a collective
action respond in a way that is narrowly rational for themselves. Many
dilemmas of modern life have this structure – individuals, pursuing their
narrowly rational interests ruin the environment for themselves when
others also act on only the thinnest rational theory. What the Prisoner’s
Dilemma and other commons-dilemmas show is that rationality must
police itself – that there are situations where people might want to bind
themselves to an agreement not to pursue their own interests, so that we
all might obtain a better outcome.”
To sum up, by energy rationality we mean not only having
correct beliefs about the energy domain (epistemic rationality) and
choosing the best means for achieving one’s goals in the energy domain
(instrumental rationality), but also having the wisdom (Simandan,
2011b) to choose the right goals in this domain. To be wise enough to
do so requires overcoming the five attributes of foolishness
(omniscience, omnipotence, invulnerability, selfishness, and
insouciance; cf. Sternberg, 2005), acknowledging one’s ignorance,
balancing short-term concerns with long-term interests, and
remembering that it is not greed alone that makes us human.
“The future will be as grand, and as particular, as we are. We cannot
build a single bridge from here to there, for neither here nor there is a
single point. And there is no abyss to cross”. (Postrel, 1999: 218)
Conclusion
While geography has always mattered for the energy sector (see
Wilbanks, 1982), the relative effects of location and distance on the
economics of energy regimes are increasing as we begin to deploy more
RETs. This re-introduction of the friction of distance is leading to an
energy landscape that is far different from fossil-based regimes, and
which will only be overcome if advanced hydrogen-based regimes or
solar fibre optics come to fruition. This is to say that the new energy
paradigm, based as it is upon the physics and the economics of
renewable energy, is being reflected in the landscape as distributed,
decentralized, and diversified patterns of energy generation. But this
transition will be slow so long as incumbent fossil energy sources
remain privileged by political-economic power holders. Since
economic geographers already study economy-environment
interactions, we are well positioned to provide valuable conceptual and
analytical tools with which to help structure a renewable energy
revolution. Given the site-specificity of renewable energy fluxes and
the localized nature of renewable energy, these tools are most
effectively directed at local and regional scales.
The increased deployment of RETs is beginning to change
patterns of political and socio-economic activities. Understanding these
patterns is crucial to increasing the socio-political acceptability of new
technologies and to avoiding the socially costly unintended
consequences of policy and investment decisions. Indeed, we need to
be sure that analyses are not privileging production at the expense of
consumption (or vice versa). To this end, geographers should strive to
unpack geographical patterns of energy related socio-spatial change and
to examine the causes and consequences of alternative energy policies.
Surely there remain regulatory and technical concerns that are
just as, if not more, important than the geographical and the spatial-
analytical issues that we have highlighted in this paper. The point,
however, was to demonstrate that all of these other variables being
equal, geography is a hugely important limiting factor when it comes to
renewable energy utilization. These spatial characteristics of the
economics of energy use have yet to be fully explored. We hope that
our contribution has provided a theoretical starting point from which
these issues might be addressed.
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[1] For a recent sustained critique of the concept of “lock-in” by an economic

geographer, see Martin (2010).
[2] Exceptions to this rule include low grade coal which crumbles in transit making it
difficult to manage at the plant. Natural gas liquefaction technology is improving such
that its geography is no longer limited to the regional scale.
[3] For an excellent discussion of the disastrous implications for risk management of
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2009.
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broader political context of the neoliberal regulatory frameworks that often dominate
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countries accompanied by greater, and not less, government intervention and
regulation (Hammons et al, 2000).
Year XVI, No. 1, 2010, pp. 38-46
Delimitations and considerations regarding the accounting

information system of the commodity exchanges
A. Vlasiu
Alexandru Vlasiu
PhD in economics – accounting area
Abstract
The accounting information system of the commodity
exchanges is a cohesive organisational structure: a multitude of
processes and procedures, objects and elements, events and
activities that are directly and indirectly related. All these
components are designed with the purpose of providing
information to users, meaning a system that: collects, registers,
stores and processes data to produce information for the
decision factors.
Keywords: accounting information system, commodity
exchanges, globalisation, information, information users and
business.
The accounting information system offers the possibility of

knowing, measuring, controlling and managing all the information
regarding the activity of managing the financial markets.
Globalisation is a process of modification in which the modern
notions of geography, territoriality and nationality have become more and
more dominated by a singular systemic priority – accumulating capital and
maximizing wealth. It is a priority that is based on sustaining and extending
interdependent and interconnected forms of market/ business relations as
being politically neutral and socially detached from the economic
consequences that such global priorities try to encourage as well as
promote.
In the context of globalisation, the accounting information system
of the commodity exchanges is involved not only in conditioning global
fluxes of the capital investments and business resources, but also in
assisting the determination/ measuring of the efficiency of the
organisations and business institutions, organisations and institutions by
which various levels of social, political and economic power are expressed.
Delimitations and considerations … 39
The commodity and stock exchanges operate in a dynamic and

competitive environment, a fact that is due to the globalisation of the
economic activity. The individual and institutional investors wish to
maximize the profits that are registered on the financial markets. Wishing
to earn more, investors are interested in international markets in an attempt
to reduce risks by diversifying portfolios and the access to new products
that are launched by foreign exchanges. In order to satisfy their clients, the
exchanges are in the process of developing, which is characterised by the
financial products innovation.
For the commodity exchanges information is a business resource,
used in order to reduce the uncertainty of transactions and business risks,
promoting the trust in this business, reducing the risk of financial losses
and facilitating control and planning.
Clearly, information is created/ designed with a purpose – namely
in order to: promote order and control; reduce entropy and uncertainty;
minimize waste; and/ or maximize the stockholders’ earnings.
At the commodity exchanges the information is obtained by
processing the data that characterize the exchange transactions. The data is
thus processed to be useful to the exchange as a receiver. The reality of this
information may be more or less correct, thus an improvement of the
financial accounting information, practices and information systems, in
order to ensure their continuous exactness, becomes necessary.
The accounting information system of the commodity exchanges is
a cohesive organisational structure: a multitude of processes and
procedures, objects and elements, events and activities that are directly and
indirectly related. All these components are designed in order to provide
users with information, meaning a system that: collects, registers, stores
and processes data in order to produce information for the decision
factors.
The accounting information system of the commodity exchanges
should have the following related commune objectives/ purposes:
Supporting and reinforcing organisational operations;
Supporting decision taking by internal decisional factors and ensuring
the objective transformation of financial/ economic data in accounting
information;
Fulfilling managing obligations and purchase control, managing and
removing organisational resources (internal control);
Fulfilling political, social and legal responsibilities and encouraging the
alignment to the existing regulatory requirements (external control).
40 A. Vlasiu
The accounting information system of the commodity exchanges must be:

A system of management of the data transformation (procedural/
processing context) having as its purpose collecting data, maintaining
data, managing data, controlling data, generating information. This
system is closely tied to decisions referring to utilising information and
communication technology (software and hardware) and the
development of physical and virtual (non-physical) information
networks;
A hierarchical information system (organisational and relational
context) that is designed to assist in defining business strategies/
policies, to include information in tactical decision making processes,
to provide useful information for operational control purposes;
A transaction processing system (functional context) that is designed to
reflect the cycles of an economic entity, of operating and/ or business
activity – the temporal and spatial moving of resources. This system is
tied to: developing and maintaining proper procedures of internal
control; developing and maintaining fraud management/ risk reduction
and flexible audit strategies.
We can state that the accounting information system of the
commodity exchanges has many users and involves many different groups
of interested parties. Such a system is subjected to a range of economic,
political and social influences and controls – from the interior as well as the
exterior. These influences refer to:
The size of the economic entity;
The knowledge base and intellectual capacity of the economic entity
(and its employees);
The structure/ organisation of the economic entity and the complexity
of the requests and information necessities;
The characteristics/ factors of the internal management;
The availability of the resources of the economic entity.
Such influences include matters relating to:
Political influences, such as the legal requirements of the entity and
other political/ legal requirements that are imposed by various
organisations;
Social influences, such as the requirements regarding the professional,
reporting and other standards;
Economic influences, such as market regulation requirements and other
regulations/ standards;
Technological influences, such as hardware/ software technology
constraints.
The main users of the accounting information of the commodity

exchanges comprise:
The main internal users: accountants; managers; administrators;
system developers (analyst programmers, IT specialists); internal
auditors; other department managers. They are preoccupied by
information regarding: the loss and profit account; financial
declarations and balance sheets; declarations referring to the cash flux;
reports/ performance budgets; activity reports; financial summaries.
The main external users: shareholders; external auditors; the area
regulation authority (NCMV); banks; fiscal organs; suppliers and
creditors; other interest groups such as unions, employee groups and
other social/ political agencies. They are preoccupied by information
referring to: the profit and loss account; balance sheets; statements
referring to the cash flux.
The commodity exchanges have the obligation of organising and
running their own accounting, respectively the financial accounting and
administration accounting.
The norms and accounting regulations that are applicable to the
commodity exchanges, as an entity that is authorised, regulated and
supervised by the National Commission of the Movable Values, are
elaborated and are issued correspondingly by the National Commission of
the Movable Values, with the notification of the Ministry of Economy and
Finances. Elaborating these regulations is done by consulting the proper
professional organisms.
Any economic-financial operation that is done by the commodity
exchanges is recorded at the time of its performing in a document that is
the basis of the accounting records, thus receiving the quality of
justificatory document, based on which the accounting records (journals,
cards and other accounting documents, according to the case) are made.
The commodity exchanges are obligated to keep track of the
operations they perform, for the clients as well as for themselves, a fact for
which they have to make and update at least the following operational
accounts:
• The clients’ account that comprises:
• The cash account,
• The sales/purchases, ins and outs of financial instruments.
• The technical-operational account of the financial instruments,
comprising details referring to:
• Each client;
42 A. Vlasiu
• Each financial instrument.

• Situations that are opened separately on each financial
instrument (e.g. futures, options, etc.) that are updated at least once a
month;
• Situations that reflect the financial instruments which are in
process of transacting as well as the financial instruments that were the
object of discounting the transaction.
• The commodity exchanges also have the obligation of owning:
• Copies of all the notes regarding the clients’ debits and credits;
• The clients’ accounts sheets;
• Documents that is especially important for the society, such as
documents regarding the employed staff (employing requests, contracts
and employee files) and documents that are afferent to the withdrawal
of the authorization of collaborators or employees of the commodity
exchange, specifying the causes that produced them and also the
transactions that generated them.
The commodity exchanges do not have their own chart of accounts,
using the general chart of accounts for companies, being by the profile of
the activity they undertake societies that perform services with their object
of activity in administering financial markets.
The accounting ledgers and financial-accounting forms can be
adapted according to the specifics and necessities of the commodity
exchanges, on the condition of observing the content of information and
the norms of making and using them. These may be pre-printed or edited
using the IT systems of automated data processing.
The commodity exchanges will ensure an internal regime of
numbering the financial-accounting forms, thus:
- The persons in charge of organising and running the accounting of the
commodity exchange will designate, by an internal written decision,
one or several persons, according to case, that will have attributions
regarding allocating and managing the afferent numbers;
- Each form will have a number or a series, according to case, number or
series that must be sequential, established by the commodity exchange.
When allocating numbers, one will keep in mind the organisational
structure, respectively administration, work stations, subsidiaries etc.;
- The commodity exchanges will issue their own procedures of
establishing and/or allocating numbers or series, according to case, by
which the number or series from which the first document is issued will
be mentioned for each financial exercise.
The IT system of automatic data processing regarding each

exchange institution must ensure the processing of the data that are
recorded in accounting according to the applicable accounting regulations,
controlling and storing them using technical media.
When elaborating and adapting the IT programmes of the stock
exchanges, one must keep in mind the following:
a) comprising the current regulations and the possibility of
updating these procedures, according to the modifications
that take place in the legislation, in the processing procedures;
b) adequately knowing the functions of the automatic data
processing system by the involved staff and observing them;
c) managing the products-programme packages, ensuring their
protection against unauthorised access, keeping the
confidentiality of the IT system data;
d) establishing the type of media to store the entry, intermediate
or exit data;
e) solving the possible errors that may appear in the functioning
of the IT system;
f) the complete or random verification of the way of functioning
of the processing procedures that are furnished by the IT
system;
g) the total or random verification of the economic-financial
operations that are registered in accounting, so they are done
strictly according to the provisions of the normative acts that
regulate them;
h) the verification through control tests of the utilised IT
programme.
The IT system of automatic data processing regarding each
exchange institution must ensure the processing of the data that are
registered in accounting according to the applicable accounting regulations,
controlling and storing those using technical media.
The annual financial statements of the commodity exchanges are
made keeping in mind the formats that are provided by the Accounting
Regulations according to the 4th Directive of the European Economic
Communities that are applicable to the entities which are authorised,
regulated and supervised by the NCMV, approved by the Order of the
President of the National Commission of the Movable Values, no. 75/2005,
with its consequent modifications and completions.
The commodity exchanges make and hand in at the NCMV the
annual financial statements, for the accounting financial exercise for the
44 A. Vlasiu
year 2009, according to the Provision no. 02/2007 regarding making and
handing in the annual financial statements by the authorised entities,
regulated and supervised by the National Commission of the Movable
Values, modified by NCMV Order no. 13/ 2010 regarding the approval of
Provision no. 1/2010 for the modification and completion of Provision no.
2/2007 regarding making and handing in the annual financial statements by
the entities that are authorised, regulated and supervised by the National
Commission of the Movable Values, that comprise the following forms:
1. balance sheet(code 10);
2. profit and loss account (code 20);
3. statement of changes in equity;
4. statement of cash flows;
5. explanatory notes to the annual financial statements.
The annual financial statements of the commodity exchanges are
handed in at the NCMV headquarters during a period of maximum 150
days from the end of the financial exercise.
The commodity exchanges that from their creation until the end of
the financial exercise did not have activity will hand in an affidavit to that
effect at the NCMV, during a period of 60 days from the end of the
financial exercise, which will comprise all the identification information of
the society, respectively:
-the complete name, according to the registration certificate;
-the complete address and phone number;
-the registration number at the Registry of Commerce and the code
regarding the activity;
-the fiscal code/ unique registration code;
-the social capital.
A similar affidavit will also be handed in by the commodity
exchanges that are in the process of liquidation, according to the proper
legal provisions.
In order to ensure the information meant for the state institutional
system, a copy of the annual financial situation and of the affidavit will be
also handed in at the subsidiaries of the Ministry of Public Finances, during
a period of 150 days, respectively 60 days from the end of the financial
exercise.
According to the provisions of article 30 from the Law of
accounting no. 82/1991, republished, the annual financial statements of the
commodity exchanges will be accompanied by a written statement of the
people who are responsible for making the annual financial statements and
who confirm that:
a) the accounting policies that are used when making the annual
financial policies are according to the applicable accounting
regulations;
b) the annual financial statements offer a true image of the
financial position, financial performance and other information
regarding the undertaken activity;
c) the legal person undertakes its activity under conditions of
continuity.
After the last G20 reunions of the year 2009, organised as a result
of the financial worldwide crisis, a series of actions that must be urgently
undertaken in the area of commodity exchange accounting have been
presented. They have regarded, mainly, the just evaluation of the financial
instruments, reducing the complexity of the accounting standards referring
to the financial instruments.
Thus, regarding the accounting regulation of the financial
instruments, the International Accounting Standards Board (IASB) has
launched a revision of IAS 39, “Financial instruments: recognition and
evaluation” in three phases:
- classifying and evaluating financial instruments;
- the depreciation of financial instruments;
- risk coverage accounting.
Simplifying the classification of the financial instruments was
firstly wanted:
-financial instruments measured at the amortised cost;
-financial instruments measured at their just value.
Thus, a financial asset or a financial debt will be measured at the
amortised cost if two conditions are met:
-the instrument has classical loan character;
-the instrument is managed based on a contract.
The financial assets or financial debts that do not meet the two
conditions will be evaluated at their just value.
The generally accepted objective of the commodity exchange
accounting is of offering valuable information to the current investors as
well as the potential investors, in order to make investing decisions
regarding the creation, owning or capitalising financial instruments. The
accounting information, through the qualitative attributes that define it, is
useful in the decision process. Due to the complexity and specificity of the
language that is used in the commodity exchange area, an important
mission in “translating” the content of the accounting information, often
46 A. Vlasiu
enigmatic to the average investor, belongs to the financial analysts and

financial investors.
Bibliography
Boczko, T., 2007, Corporate Accounting Information Systems, Financial

Times-Prentice Hall, Pearson Education Limited, London
Cunningham, B.M., Nikolai L.A., Bazley J.D., 2008, Accounting:
Information for Business Decisions (I), Thomson South-Western, Mason
OH
Hall, J.A., 2008, Accounting Information Systems 6e, South-Western,
Cengage Learning, Mason OH;
Shelmo, D.M., 2002, Stock Market Rules – third edition, Mc Graw Hill,
New York ;
Wild, J.J., Larson, K.D., Chiappetta, B. 2008, Fundamental Accounting
Principles 18e, McGraw-Hill/Irwin,New York;
Vlasiu, A., 2010, The Accounting Information System of the Commodity
Exchanges – PhD paper, Timişoara, Romania.
Year XVI, No. 1, 2010, pp. 47-59
Microeconometric models in market research

price optimization
E. Lázár
Ede Lázár
Sapientia University Miercurea - Ciuc, Romania
Abstract
Thanks to the development of information technology the
market researchers faced new challenges: there are new
developments in data collection techniques and in the research
process but also in data analysis methodology. A complex area
of the market research is concerning to the price of a product
or services. We aim to present a methodology able to predict
the demand and the optimum price of a new product or service.
It is based on a binomial logistic regression model which
estimates the multidimensional demand function, which
provides the optimum price as a marginal effect of the price
variable in the model. The optimum price is an optimum in the
sense of maximizes the income. The method of defining the
optimum price is proved throughout a real price researching
project of a new mobile phone service in the Hungarian market
of the mobile phone service providing.
Keywords: pricing methods, optimum price, price elasticity
coefficients, logistic regression
Introduction
Theoretical background
The strong development of the information systems in the last

decades had a strategical effect not only on companies, but it opened new
perspectives to business applications of the quantitative methods. Growing
computing capacities gave the possibility for statisticians to step over the
barrier of the linear models and to develop the business use of many non-
linear methods. The importance of the subject is shown by awarding
economic Nobel prize in 2000 to James J. Heckman and Daniel Mc
48 E. Lázár
Fadden, who had strongly developed the so called microeconometric

models. The new discipline of microeconometrics stays on the wide border
between economics and statistics and deals with the analyze of
microeconomic data regarding to consumer, household and company.
The other discipline involved in this study is the market research.
The optimal pricing is considered by many one of the most important
issues of the marketing Gijsbrechts (1993; Monroe (1990). According to
Monroe (1990: 18) those companies have a successful pricing practice
which deliberately seek the continuous study of the consumers' reaction to
their price related decisions, to understand them, how the consumers
perceive the price and how the shape the value perception. One of the three
major groups of the pricing methods (Bauer-Berács, 2002: 259 p.) is based
on the empirical demand function and the price elasticity of the product or
service. The price determination method which is to be presented in the
study can be categorized in this group, but it can be applied not only in the
saturation stage of the product life cycle, but primarily at the introducing.
The fundamental condition of its application is to exist a relatively wide
range between the break-even point determined by the costs and the market
price - if it is not a really new product. This condition might result in the
case of a natural or artificial monopoly, competitive edge due to a product
or innovation, strong trademark recognition or loyalty monopoly, or the
reduction of costs due to the development of a technology process.
The basis of the demand based pricing is the correct surveying of
the market demand. It is a fundamental question that towards what should
the market research is directed at, the potential consumers based on what
say a price? According to Rekettye (1999) the internal reference price is the
value, which the consumer considers to be appropriate to pay for a given
good. Its extent is mostly influenced by the current prices, historical prices
and the buying situation.
Price researching methods
More price research methods were developed in the market

research to know the reference price.
Cram (2006: 26) enumerated the price research methods divided in
the two groups as it follows:
1. The methods based on the expressed willingness to pay: the
direct questionnaire with open ended question, the Gabor - Granger
method, the Van Westendorp model (PSM), the different forms of the
Conjoint- analyses and the discrete choice models.
Microeconometric models … 49
2. The methods based on the real buying data. Besides the different
data sources here may be mentioned the simulated purchase tests, the store
tests which are able to measure considerably better the reservation price,
than the market research methods from the previous group, because the
purchase situation is placed among the real marketing/mix conditions
(Wertenbroch-Skiera, 2002).
Pritchard (2009) in his excellent article divides in two more groups the
methods based on the willingness to pay:
The premise of the direct price research techniques is that the
interview subjects included in the target market know what the studied
product/service worth for them and they can interpret the question aimed
directly towards the price issue. These include the Gabor-Granger model,
the Van Westendorp model and the model for the accurate determination of
the demand function aiming to maximize the revenue.
The indirect methods ask questions about the whole package taking
into consideration besides the price other product characteristics and from
these take conclusions about the price. Of such kind are the conjoint model
types, the discrete choice models and here may be enumerated the
econometric models.
Within the limits of the study there is no possibility to present in
detail the price research methods and to analyze them. Beyond the
hereabove mentioned methods there appear in the offer of the larger
companies self-developed methods "branded products", but from their
short description it is generally not deductable whether it is about the
adaptation of a commonly known method or an entirely new approach. As
a typical trend it can be observed that the simpler methods (like the Van
Westendorp method) will disappear from the market research practice, and
the Choice -Based Conjoint and other econometric - model based products
become more and more popular. This ground gain is induced by the
development of the increasingly adaptable and user-friendly branded
products and the increasing econometric professional skills of the market
researchers. The traditional, linear model-based conjoint solutions will
deteriorate from the sides of the Choice-Based Conjoint and econometric
models, because they do not apply a simpler survey for the significantly
worse results, as compared. In the future the high/quality data collection
imitating as much as it is possible the purchase situation will be a narrower
cross/section, than the market researcher having econometric professional
skills. Besides these complex models possibly there may exist simpler
methods more competitive in price and speed, like the open-ended question
based or the different purchase situations better imitating experiments.
50 E. Lázár
Logistic regression model

The base model
The logistic regression model is one of the so called qualitative

response models which are used to analyze situations in which a decision
maker can be described as facing a choice among a finite and exhaustive
set of mutually exclusive alternatives. In research terms binomial (or
binary) logistic regression is a form of regression model which is used
when the dependent is a dichotomy (choice between two alternatives) and
the independents are of any type.
Logistic regression has many analogies to linear regression, can be
used to predict a dependent variable on the basis of independents and to
determine the percent of variance in the dependent variable explained by
the independents; to rank the relative importance of independents and to
assess interaction effects. It is more and more popular in part because it
enables the researcher to overcome many of the restrictive assumptions of
OLS regression:
- Logistic regression does not assume a linear relationship between
the dependents and the independents, it may handle non-linear
effects.
- The dependent variable need not be normally distributed (but does
assume its distribution such as normal, Poisson, binomial, gamma).
- The dependent variable need not be homoscedastic.
- Normally distributed error terms are not assumed.
- Logistic regression does not require that the independents be
interval.
The base equation of the logistic regression:
P(Y=1) = exp(b0 + b1x1 +…+ bkxk) / (1+exp(b0 + b1x1 +…+ bkxk)) (1)
where P(Y=1) is the probability of an event occurred, bi are the parameters
of the equation. Another more often referred form of the base equation:
P(Y=1) = 1 / (1+exp(b0 + b1x1 +…+ bkxk)-1) (2)
Maximum likelihood estimation (MLE) is the method used to
estimate the parameter of the logistic regression equation (bi). This
contrasts to the use of ordinary least squares (OLS) estimation of
coefficients in linear regression which seeks to minimize the sum of
squared distances of the data points to the regression line, MLE seeks to
maximize a function, the log likelihood function (LL). A "likelihood" is a
probability of how likely it is that the observed values of the dependent
may be predicted from the observed values of the independents. Like every
probability the likelihood varies between 0 and 1. The log likelihood is its
logarithm and alters from 0 to minus infinite (because the logarithm of a
number less than 1 is negative). MLE is an iterative algorithm which starts
with an initial arbitrary "guesstimate" of what the logit coefficients should
be, the MLE algorithm determines the direction and size change in the logit
coefficients which will increase LL. After this initial function is estimated,
the residuals are tested and a re-estimate is made with an improved
function, and the process is repeated (usually about a half-dozen times)
until convergence is reached (that is, until LL does not change
significantly). The initial function (log likelihood –2*LL (Do)) is given:
Do = -2{(nY=1)ln[P(Y=1)]+ (nY=0)ln[P(Y=0)]} (3)
where nY=1 is the frequency, and P(Y=1) is the probability of an event
occurrence. Multiplication with –2 of the likelihood function is
necessary because thus the function has approximately χ2 distribution and
let us to test if the model changes significantly with introducing a new
independent variable. This test is similar to F probe of the linear regression.
The iteration steps of the parameter estimation continues until the decrease
of the likelihood function is significant.
The marginal effect in the logistic regression model
In our application of the logistic regression model we are

concerned not only on the odds ratio and the causality between variables
but the marginal effect of a predictor variable to the dependent variable. In
the case of linear regression the marginal effect of a xi variable is equal
with the estimated parameter. The situation is different if the used model is
a logistic regression model. Consider the base form of the logistic
regression (2), than the effect of increase with one unit of the variable x is:
δP(y=1|x) / δx = βi*exp(βx) / [1+exp(βx)]2 (4)
Thus it is clear that in contrast to linear regression the increase of x
variable with one unit it is not equal with β, and in the case of a
multidimensional model it effects the other independent variables too. That
consequently involves a problem: the value of the marginal effect changes
case by case, record by record. There are two possible solutions: the
method of fixed values and the method of means. We don’t discuss them in
this study, in our research we used the method of means.
52 E. Lázár
The pricing method based on the binomial logistic regression model

The method
The price researching method based on binomial logistic regression

model has the same optimization point of view and start point as the
previous model, that is the sales revenue from of a product reaches it's
maximum point, where the price elasticity coefficient is minus one. When
using the binomial logistic regression model the logistic regression
equation meaning the demand function is:
(5)
By assigning b for the parameter associated to the optimal price the price
elasticity coefficient may be presented as:
(6)
From this formula it may be easily calculated the value meaning the
optimal price, referred as for the differentiation of the estimated
probability of purchase from the expressed willingness to buy :
(7)
According to the formula (7) the value of the optimal price depends
on the b parameter and the estimated purchase probability, from the y,
meaning that it differs from case to case, as the explaining variables take
new fixed values.
The empirical testing of the binomial logistic regression model based

price researching method
We present the methodology of defining the optimum price

throughout a price researching project data from 2003 which was oriented
towards the evaluation of demand for a new mobile telecommunication
service package in Hungarian market. The main goal of the research was
the pricing of the new tariff package, and the determination of the optimal
price besides maximizing the revenue. To this goal was also subjected the
questionnaire technique, the PC supported personal interview (CAPI -
Computer Aided Personal Interview), which made possible - among other
advantages - the randomized testing of the different prices. The further
advantage of CAPI was that during the quota sampling the required quotas
were precisely respected, so there was no need for posterior data
weighting.[1]
The number of observations of the sample was 400 cases, we tested
during the price test the following price/minute tariffs: 48, 54, 60, 66, 72,
78 HUF. After the presentation of the characteristics of the new tariff
package we presented randomly a price/minute from the six tested prices to
the interviewees, asking them about their willingness to make a contract.
Those, who answered yes were given a higher price with a "degree", those
who answered no got a lower price, and then the price test ended
independently from the second answer. One big advantage of this two-
steps method testing two prices is that the observations number is almost
doubled. (It is just almost, because we did not tested further the price
among those who rejected the lowest price, or accepted the highest price.
So the sample created based on the two price tests increased in number of
cases from 400 to 729.)
It is more important than this, that the questionnaire technique
turned out to be a very successful choice in the case of the direct
application of the price researching method, also. When we specified the
logistic regression model based only on the answers for the first questions
about price in the case of the 400 cases sample, the price of the product was
not significantly influencing the demand. We met at other researches too,
this unpleasant situation for the market researcher, which makes almost
useless the results oriented towards determining the demand and the
optimal price and makes the researcher disbelieving. The fortunate feature
of the two, consecutive price testing methods is that "draws the attention of
the interviewee" about the price, increases the price sensitivity and
consequently the probability of the significant impact of the price. So, the
phenomenon, that the interviewee recognizing the price test, immediately
relocates itself in a bargaining position, the effect of which is considered by
many harmful (Lyon, 2002), at this time proved to be a necessary criteria.
The demand modeling by any econometric model - logistic regression
equation - assumes that the price, as a coefficient of the independent
variable shall be significantly different from zero. However we consider
the use of the "price ladder", that is testing a third price after the second
question is meaningless, in this case it would be indeed a significant
distortion of the price sensitivity, of the slope of demand function.
54 E. Lázár
Model specification
At the applying the method, the first and most important task is the
binomial logistic regression model specification, in which the dependent
variable is the demand, and the explanatory variables are the different
features of the product and the respondents. This equation is the
multivariable demand function of the product, in which we take into
consideration not only the effect of the price on the demand but also the
effect of the other significant variables.
At the construction, specification of the model, it is to be decided
which criteria make a model better than the other. In the case of the linear
regression model our job it is relatively easy by studying the R2, such a
quasi-R2 exists in the case of the logistic regression as well. Without a
detailed examination of the specification criteria we may determine two
groups: the groups of the likelihood function value based and the groups of
methods based on the forecasting accuracy of the model. This latter group
includes the classification table, also very popular in the marketing research
methods practice for its easy readability, which compares the observed
values for the dependent outcome and the predicted values (at a cut-off
value of p=0.50). Besides the classification table of the final model we
presented the b1 parameter of the price, as independent variable and other
important specification indicator, too:
1. table. Classification table of the model
Estimated
No Yes
No 212 58 78,5%
Observed
Yes 26 322 92,5%
Total goodness of fit: 86,4%
b1=0.032 -2LL:420 GF:526
Nagelkerke R2:668
The determinant authors of the relevant econometric literature
mention an important argument against the application of the indicators
derived from the classification table, namely that these are in a large extent
influenced by the distribution of the dependent variable. Like Greene
(2003), Hosmer & Lemeshow (2000) as well, draw the attention that the
goodness of fit value of the classification table is influenced by the relative
proportion of the two values of the dependent variable. They concluded

that always the group with the more elements has the best forecasting, and
this is a point of view, which has not much to do with a model's estimation
accuracy. So, the widely noted statement among market researchers, that is
the logistic regression forecasts better the "negative outcome" of the
dependent variable is due to the fact that in the case of demand researches
the "no" answers - namely the rejection of the purchase - are more frequent.
Although in the practice of the marketing researches is inevitable the
examination of the classification table. In addition to the methodological
considerations we must take in consideration, that this is quality indicator is
easily understandable also for the client. Not to eliminate, but at least to
take in account the here above mentioned problem, we propose to analyze
the histogram comparing the actual observations and the estimated
probabilities.
The practical lessons from the binomial logistic regression model

specification
During the model specification we formulated some practical

statements, propositions which can be hardly found in the econometric
books, but there may be important for the practitioner researchers:
1. In the best fit model there are many explanatory variables which
do not have a significant effect on the dependent variable, but keeping
them under control, the elimination of their direct effects increases the
goodness of fit of the model. During the model specification I examined
the inclusion of every significant variable, and in the final model are
included only those, which increased the hit ratio. This issue draws the
attention above the applied method for the selection of the explanatory
variables. The statistical, econometric programs generally, so the SPSS
also, offer more procedure to include the explanatory variable in the
regression model. There are seven different types of this kind of facilities
available in the SPSS (Enter, Forward Conditional, - LR, - Wald,
Backward Conditional, - LR, - Wald, ), which - especially in the case of the
linear regression model - often give the same model as result, but in our
case the model selection procedure is important. One of the difference
between them is that the Enter method leaves in the model the non-
significant variables also, but the other six facilities offered by the SPSS,
do not.
During the comparison of the model selection procedures, we
conclude that the Enter method results the best model, but this has a price -
56 E. Lázár
which is also very important in the marketing research - the time

requirements of the model specification is much bigger than in the other
cases. Because it is to defined individually in the case of every non-
significant variables, that their inclusion or exclusion from the model will
increase the hit ratio or not. The question is whether in the case of a tight
deadline market research project is worth to choose the more time-
consuming ENTER method resulting in a one or two percentages better hit
ratio, or not.
2. By using a categorical independent variable we obtain a better
hit ratio result, then by using the numerical variable of a "higher measure
level" of the same feature. Practically it is worth to convert the numerical
variable to categorical variable. The explanation for this unusual statement
in the data analyses is, that the independent variables (for ex. income)
effect it is not linear, but there exist some categories (for ex. income
levels), which - besides the given level of the other explanatory variables -
have a significant effect, and other categories do not.
3. The model's hit ratio is increased, if the categorical explanatory
variables have more values, categories. In the market research data
analyses it occurs frequently that the nominal variable having relatively
more categories are "recoded" into variables having less categories. In the
case of the binomial logistic regression model specification, this is not
recommended.
Empirical result: the determination of the optimal price
According to the classification table (table no.1) the model

specification may be considered as successful, the model predicts with a
92,5% certainty the demand for the service, and the total hit ratio is 86,4%.
We will not detail the results of the final model, it's independent variables,
parameters and their statistics, because of their large volume, the most
important result from the point of view of the method is that the coefficient
of the variable meaning the price/minute of the service is significantly
different from zero. This is an indispensable requirement for the method,
without which the research becomes useless. After the model specification,
finding the best model, we determine the optimal price on the basis of the
already known formula:
To calculate the optimal price we need to determine the b

parameter during the estimation procedure, but which shall be the value of
y*? The estimated probability of purchase (y*) differs from case to case, as
the explanatory variables take different fixed values, but in the formula of
the optimal price we need only one value valid for the whole sample, to be
included. It seems to be a handy solution for us to calculate with the sample
average of the values differing from case to case. This is proposed in the
logistic regression special literature (Greene, Hosmer-Lemeshow etc.) for
the calculation of the marginal effect of an independent variable, and taking
into consideration, that the price elasticity coefficient and the optimal price
were determined on the basis of the marginal effect of the price, this
method seems to be indicated. But it can be prove very easily, that the very
different buying tendencies, the different distributions of the estimated
purchase probability could result in the same average demand. The 0.56
average may be the outcome, if 95% of the cases purchase probability is
above 0.5, but vice versa, also. Generally speaking the average it is not a
sufficient statistic for the characterization of a distribution. A better
alternative may be the calculation by using the estimated ratio of the
buyers, the calculation using the probability ratio estimated greater than the
threshold (0.5). We found out the best calculation method an opened
question, but at the level of the actual practice we recommend the second
alternative. Substituting in the here abovementioned formula the estimated
level of the demand and the price variable coefficient we may find the
optimal price (64.2 HUF).
Conclusions and future research directions
The price researching method based on the logistic regression

model compared to simpler methods has the main virtues of the
multidimensional modeling: takes in consideration the joint effects of
complex situations, gives the possibility to eliminate interferences among
the predictor variables. The binomial logistic regression model-based price
researching method may be developed for the other categorical and limited
results variable models, too. As for example for the very often applied type
of the limited results variable model, developed by James Tobin, Nobel
prize awarded economist for the analyses of the demand for the durable
goods, the tobit model. It is indicated the use of the multinomial logit model
also, because the categorical feature of the dependent variable it is
applicable for realistic purchase situations. Of course, at this model too, we
meet the specific econometric problems: one of these hard assumptions is
58 E. Lázár
what is known in the special literature as the Independence of Irrelevant

Alternatives. The solution of this problem it may be the so-called mixed
logit model.
The marketing research problems are also significant: instead of the
price elasticity coefficient presumably we have to examine the cross-price
elasticity, because the multinomial logit quantifies the probability to choose
one alternative related to other alternatives, and to the rejection of the
purchase. The multinomial logistic regression based price research
methodology presumably will show many similarities with the increasingly
popular Choice Based Conjoint. More categorical and limited results
variable models may adapt, such as the probit model, but here the
calculation of the limit holding it is very technically very difficult and
difficult to be interpreted, so the price elasticity coefficient, and the
calculation of the optimal price are also difficult.
The other direction of the possibilities to develop further the
multivariate method is the time-series econometrics application, the
inclusion of the time factor as an independent variable in the demand
model. This development may have a serious practical importance, because
the real demand data are characteristically time-series data. If, besides the
time factor in the model may be included the changing environmental and
marketing mix elements, than this may be a powerful tool for the
marketing information systems and for the corporate price policy.
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[1] This is important, because at the non-linear models, as the logistic regression the
weighting issue is more problematic than in the case of the linear regression.
Year XVI, No. 1, 2010, pp. 60-67
General management systems and methods

in higher education
S. Hanganu
Silvia Hanganu
Abstract
The paper covers aspects of management systems and methods
of the widest applicability in the education system.
The management system having the widest applicability is the
management by objectives, which tracks the orientation of all
managerial activities towards achieving the major goals of
universities, arising from their mission.
The mission of the universities consists of the didactic activity
supported by research.
The management by projects is the management system used
by universities in scientific research because it allows solving
complex problems in a given period of time. The management
by projects is based on distinct organizational components
(team project) which aim to solve complex problems, well-
defined, with innovative character, by the participation of the
best specialists in the field.
Other systems and management methods used in universities
are the management by budgets and the participatory
management.
Keywords: mission, objectives, projects, creativity,
participatory bodies
During its evolution, the management science records a shift from a

theoretical to an applied step, aiming to increase the efficiency and
organizational effectiveness.
Management system consists of a set of principles, rules and
methods for achieving organizational objectives for the proper functioning
of the organization and to increase its efficiency and effectiveness.
General management systems and methods in higher education 61
Management approach is to use concrete way of a management

system or subsystem to increase managerial efficiency and effectiveness.
General management systems and methods with the widest
applicability in higher education institutions are: management by
objectives, management by projects and participatory management.
Management by objectives
Management by objectives aims to orientate the entire management
and organizational activity in order to meet organizational objectives,
closely related to its mission.
In order to achieve the management by objectives, it is necessary to
meet the following principles:
‐ to assume individual responsibility and to be able to direct the
necessary efforts in order to develop the teamwork, which should
satisfy everyone’s ambitions and also those of the whole team.
‐ rigorous determination of the objectives of the organization up to
the performer, who directly participate in their establishment.
‐ partial objectives should be subordinated to the overall objectives
and contribute to their achievement.
Thus, between the manager and its subordinates a tight bond is
created, determined by the setting of goals together, as well as for the
survey of obtaining the results. `
Management by objectives is a complex system of management,
which includes all organizational activities, with the following
components:
‐ objective system, which includes both major objectives of the
organization, as well as those that derive from them,
‐ action programs prepared for all organizational structures, based on
revenue and expense centers. The action programs establish the
activities that will take place, as well as the financial, material and
human resources necessary to achieve the targets,
‐ time schedules, including deadlines for achieving the major goals
and those derived,
‐ income and expenditure budgets developed for each organizational
structure established as a center of revenues and expenses,
‐ catalogs of methods, including methods and techniques set to be
used in accordance with the objectives,
‐ guidelines which reflect the manager's outlook on how to achieve
the objectives. Guidelines are developed for both revenue and
expenditure activity centers, and for all activities, based on the
relevant legislation and the experience of the manager.
62 S. Hanganu
The management by objectives is characterized by direct

communication between managers and subordinates, leading to the
establishment of strong links between them and giving subordinates the
opportunity to participate in making decisions that affect their work.
Therefore, management by objectives focuses on self management.
The major objectives of the organization, as well as of those
derivatives, strategies and operational tactics are subordinated to achieve
the organizational goals and the mission of the organization.
As a chart, in a university, the management by objectives can be
represented as in Figure 1 [1].
The management by objective has a participatory nature, as managers and
subordinates engage together to achieve objectives.
The mission of the university
Overall objectives (strategic)
Academic Administrativ
leadership. The leadership D.G.A.
Senate
Rectoratul
Objectives of the
faculty and Head of the
Management administrative
administrative
mediu compartments
departments
Faculties
councils -
deans
Departments Obiectives of the administrative

Obiectivs compartiments
catedrelor
Head of teaching posts Individual objectives

and departments
The management by objectives has a cyclical nature,

accomplishing some objectives, being followed by the completion of new
targets.
The advantages of using the management by objectives in the
university arise from its participatory nature, which leads to:
‐ improving the relationship between university management and
other members of the academic community, as well as between the
university departments and the assumption of responsibility
together,
‐ engaging the entire university community in clear directions of
action, determined by objectives,
‐ motivates staff in achieving objectives related to the manner of
results assessment,
‐ stimulating the initiative at lower levels of management and
executive staff in the choice of methods, procedures and actions to
achieve goals and improve performance.
Management by projects
The management by projects is based on creating temporary
organizational structures in order to meet specific objectives, well defined.
The management by projects consists in grouping some employees,
specialists in one certain area, for a complete project, within cost, time and
quality.
In the universities, this management system is used primarily in
academic research, an activity which is part of the university mission.
An accurate definition of project management is necessary to
define the notion of project.
The project consists of a set of work processes with the innovative
nature, which aims at fulfilling a mission with a highly specialized degree.
Therefore, the project aims at achieving a prestigious original scientific
research, requiring more people from the university, but it can also attract
specialists in various fields outside the university.
In the management by projects, the organization depends on the
novelty and complexity of the project, on its amplitude and period of
implementation, on the need for specialists from inside and outside the
university, on the projects’ manager personality.
The features of the management by projects are:
‐ uniqueness and complexity of the project and of the obtained
results,
‐ time limitation in project implementation,
64 S. Hanganu
‐ participation of an increasing number of specialists from different

fields,
‐ detailed elaboration of the project requires extensive preparation
activities and organizational, information and special decision
methods,
‐ specific processes involve a wide range of inputs (raw materials,
energy, funds and other resources).
Depending on the complexity of the project, management by
projects may take the form of project management based on individual
responsibility, based on the project management staff or mixed.
In the first case, the implementation of the project is assigned to a
single person, namely the project manager, who coordinates the entire
work and is supported by specialists from different departments of the
university involved in the project.
In the second case a team is formed that will deal exclusively with
the project, the project management is provided by the project manager.
This form of management by project involves the possibility of using
specialists from outside the university.
Joint management by projects lies in combining the two forms
submitted.
To achieve the management by projects, the following steps are
required:
1.) defining the project and all activities necessary to accomplish the
project objectives,
2.) establish organizational structures necessary to accomplish the
project and establish the responsibilities, duties and competences
up to the individual level,
3.) appointment of project manager,
4.) preparation of the organizational environment necessary to achieve
the project,
5.) assessment and monitoring project implementation, throughout its
implementation.
The periodic inspection is aimed to respect the intermediate
deadlines, meeting the limits of funds and expenditure approved,
implementing the project at the expected quality.
Thorough the periodic evaluation of the project one can identify
along the way, any positive deviation and / or negative aiming to integrate
those positives or correcting negative deviations.
Within the management by project, an important role is played by
the project manager. Given the innovative nature of this type of
management, the manager must be a good specialist and also a good

organizer.
Also the project manager must show special decision-making
capabilities in order to make clear decisions, sometimes unique and
unpredictable, on which the project depends.
On the other hand, within the system of management by projects,
the interpersonal communication plays an important role within the team
formed in order accomplish the project.
The use of management by projects by universities has some
advantages, such as solving complex problems by using the best specialists
and through an innovative approach to achieving objectives; allows
affirmation of managers of the university; favors the creation of a
participatory organizational climate, etc.
In Romania, with EU integration, this type of management has
gained an increasingly spread. In higher education, management system
development projects provide the connection between universities and the
socio-economic environment, leading to the development of university
research.
Among modern management systems we can include participatory
management. Participatory management is more than a management
system; it is a state of mind which characterizes competitive firms at global
level and also in Romania. [2]
The participatory management consists of involving both
managers, as well as performers, through institutionalized collective
bodies.
In universities, participatory management bodies are: the senate and
councils of the university senate, faculty councils, councils departments
and offices.
Universities participating bodies are created, usually by voting
among the best and prestigious specialists from the university and beyond.
Management is done in a democratic way, involving teachers and
university researchers, students and other personalities from outside the
institution.
Participatory management system of universities is based on the
following elements:
‐ the organizational structure that provides structural and procedural
support,
‐ the decision-making process that involves all functional structures
of universities in making strategic, tactical and current decisions,
‐ the organizational culture conducive to participatory management,
66 S. Hanganu
‐ the legal framework given by the education law, the University

Charta and other specific legislation that regulates the management
of higher education institutions.
Participatory management from the universities ensure the
participation of staff and students, through their representatives, in order to
establish the objectives and to elaborate strategic, tactical and current
decisions, increasing the confidence of the members of the academic
community in the established goals, ensuring the transparency of
information and helping to create a favorable organizational climate in
order to increase the performances.
Other management systems and methods used in universities are:
‐ the management by budget, which provides planning, monitoring
and evaluation of activities with the budgets of revenues and
expenses,
‐ the budget is the synthesis document, which shows for a given
period (usually one year) the chances of funding (revenue) and the
destination of funds (expenditure) on sources of income, types of
expenditure,
‐ the management by exception, which is based on a selective
approach of problems in view of an efficient labor management.
Conclusions
All these systems and modern management methods are
increasingly used by organizations in all fields, in terms of
competitiveness.
Also, creativity is a key component of business management and an
essential feature of the manager in terms of globalization, a powerful
manifestation of the scientific and technological innovation, of an
increasing competition in all areas, including higher education; creativity is
an essential condition for survival.
Therefore, stimulating the creativity of the managers and of the
staff should be an ongoing concern.
Bibliography
Brătianu, C., Paradigmele managementului universitar/University

management paradigms, Editura Economică, Bucureşti, 2002.
Hanganu, S., Sisteme si metode de management in învăŃământul superior/
Management systems and methods in higher education, Editura
UniversităŃii “Aurel Vlaicu”, Arad, 2008.
Hanganu, S., The management by objectives in the high education

institutions, Volum international/International Volume, Symposium
“Research and Education in Innovation Era”, Universitatea “Aurel Vlaicu”
Arad, 16-18 noiembrie 2006, pag. 91-97, Editura Mirton, Timişoara, 2006.
Nicolescu, O. (ed.), Sisteme, metode şi tehnici manageriale ale
organizaŃiei/ Systems, methods and techniques of organizational
management, Editura Economică, Bucuresti, 2000.
Plumb, I., Androniceanu, A., AbaluŃă, O., Managementul serviciilor
publice/Public services management, editia a II-a, Editura ASE, Bucuresti,
2003.
Zecheru, V., Management în cultura/Management in culture, Editura
Litera International, Bucuresti, 2002.
[1] Hanganu, S., Sisteme si metode de management in invatamantul superior, Editura

Universitatii Aurel Vlaicu, Arad, 2008, pag.18
[2] Nicolescu, O., verboncu, I., management, Editura Economica, Bucuresti, 1999,
pag.362
Year XVI, No. 1, 2010, pp. 68-72
Entrepreneurship, woman and self employed

M. Iacob
Mihaela Ioana Iacob

Abstract
„Feminine traits are called weaknesses. People joke about
them; fools ridicule them; but reasonable persons see very
well that those traits are just the tools for the management of
men, and for the use of men for female designs.” Immanuel
Kant, Anthropology, p. 217
Keywords: entrepreneurship, entrepreneur, difference, self
employed
Entrepreneurship is a process of exploiting opportunities that exist

in the environment or that are created through innovation in an attempt to
create value. It often includes the creation and management of new
business ventures by an individual or a team.( Fayolle, 2002 ) There are
elements in the concept of entrepreneurship that derive from the economic
and social context and from behaviour (is it innate or learned?).
Entrepreneurship involves competitive actions to win the market, involves
acting to exploit opportunities and involves actors to bear risks.
„Who is an entrepreneur?” The agent who unites all means of
production and who finds in the value of the products ... the
reestablishment of the entire capital he employs, and the value of the
wages, the interest and the rent which he pays, as well as the profits
belonging to himself.(Gartner 1989, p. 57)
Entrepreneurs tend to be individuals with high motivation, risk-
taking and proactive behavior, who seek to create value for themselves and
their customers by exploiting innovations, by exploiting opportunities and
perhaps by creating new ventures.
Are women more successful than men as entrepreneurs? In
Romania family and culture appeared to have a large impact on the rate of
Entrepreneurship, woman and self employed 69
female start-ups. A significant difference between reasons given by men

and women to establish an enterprise, relating to career dissatisfaction and
child-rearing: a mother can more easily work at home for her own
enterprise where she seems to care less about making money than men.
It is certainly at least as plausible to posit that marriages in which
the spouses each explore a wider range of “doing and being” have welfare-
enhancing properties that outweigh any losses from lessened specialization.
Such couples are likely to have more joint interests and be better able to
understand and empathize with each other’s problems. It may be less
burdensome for each individual to have a broad range of responsibilities,
shared, than a narrow range entirely on one’s own shoulders. (Iiris Altio
and Albert J. Mills, 2004)
At the level of activities, this may arise from a simple preference
for variety in daily tasks, or from the advantages of diversification as a
form of insurance in the face of uncertainty about future job opportunities,
marital status, health, etc. One might even argue that a partner who resists
developing agency, or resists developing affiliation, is settling for a form of
“being” that is suboptimal
Such psychoanalyses might explain why so many start-ups fail. A
need for control, a sense of distrust, a desire for applause and resorting to
primitive defensive mechanisms, such as splitting, projection, denial and a
flight into action (manic defense) seems to be quite common among
entrepreneurs. How can they be helped?
Romanian business managers would say: „Don’t even try to start
your own business, if there is a risk to fail.” American peers would say: „If
you fail, just try it again.”
The rate or level of entrepreneurship at the societal level depends
upon the opportunities provided by the environment as well as the
capabilities and preferences of the population. These aspects in turn are
influenced by available technology, level of economic development,
culture, institutions and the demography of a society. The focus of this
section will be primarily on the economic and cultural factors.
In the economic literature, other explanations for the rebound in
entrepreneurship in the late twentieth century are based on supply factors
such as tax rates, unemployment, competition and female labor
participation. We identify the following economic variables, prosperity,
female labor share, labor income quota, unemployment and population
density, as economic factors predicting level of entrepreneurship.
A low level of prosperity usually coincides with a low wage level,
implying little pressure to increase efficiency or the average scale of
70 M. Iacob
enterprise. Small firms in crafts and the retail trade are therefore dominant
in such an economy. A major route for ambitious wage earners to increase
their income, then, is to set up a shop and become an entrepreneur.
Economic development subsequently leads to a rise in wages, which
stimulates enterprises to work more efficiently. In a later stage of economic
development, services become more important and a new rise in
entrepreneurship will occur. The advent of information technology, the
availability of capital and the differentiation of markets (niches) lead to the
occurrence of diseconomies of scale. (Audretsch and Thurik, 2000)
In the last few decades, the participation rate of women in the labor
market has increased substantially in most countries. This can be attributed
to changing values and attitudes toward working women and resulting
changes in behavior of working women. However, an increase in the
participation rate does not necessarily imply an increase in the number of
female entrepreneurs. When focusing on the female participation rate
relative to the labor force, it can be said that the increase in participation
rate of women has a negative impact on the level of entrepreneurship.
(Verheul et al., 2000)
There may be a number of factors that explain the fact that a
smaller proportion of working women start their own firms (although this
pattern may again be changing in some of the most economically advanced
societies). In many countries, married women have a shorter employment
history than men, most often due to a break to raise a family, thus reducing
the chance they will become self employed. Furthermore, the life style for
entrepreneurs often requires longer working days, which women cannot
easily combine with their family obligations. Finally, the direction of
causality may also be reversed, in that a high percentage of (male) self-
employment ties down many women in a supportive role of paid (or
unpaid) family worker. Combining these arguments, we predict female
labor share to be negatively related to level of entrepreneurship.
Countries vary in the distribution of income over wages and all
other income categories. Based on expectancy theory and other
psychological theories of motivation, we might reasonably assume that
individuals compare expected profits and wages when weighing the
possibilities of future self-employment or wage-employment. They
probably also consider the risks they will take with either choice.
Relatively high business profits are thus seen as a pull factor for
entrepreneurship.
A pragmatic proxy for the earning differential on the country level
is the „labor income quota”, which measures the share of labor income
Entrepreneurship, woman and self employed 71
(including the compensation of the self-employed for their labor

contribution) in the net national income. A high labor income quota
indicates that a large share of the national income is taken up by wage
earners, leaving less room for income out of company profits. Hence, labor
income quota is expected to correlate negatively with the overall level of
entrepreneurship.
The relationship between entrepreneurship and unemployment is
complex. On the individual level, unemployment (or the threat of it)
primarily acts as a push factor for entrepreneurship. Since the opportunity
costs for unemployed persons to become self-employed are relatively low,
they will make their choice for self-employment sooner. On the other hand,
(high) unemployment may be connected with an economic decline, which
makes prospects for self-employment less profitable. Consistent with past
research, we expect to find an inverse U-shaped relationship between
unemployment and level of entrepreneurship: first a positive relationship,
then changing over to a negative relationship when unemployment gets
beyond a critical level and people get discouraged from starting their own
firms, due to the overall weakness in the economy. (Foti and Vivarelli,
1994)
A very high population density in urban areas explains the birth of
new firms in the services sector. The presence of networks attracts other
new firms in an urban area. Thus, at the higher end, one might expect a
reversal in the relationship between population density and level of
entrepreneurship.
Countries in which people are less satisfied with life as a whole
have a higher level of entrepreneurship. These are societies with larger
power distance, stronger uncertainty avoidance, more bureaucracy, more
corruption and which are relatively poor. People in these countries are less
satisfied with the way their democracy is functioning and with their society
in general. Perhaps people in such countries are more easily forced into
self-employment because they do not feel comfortable in existing
structures and organizations. In other countries, people possibly have more
opportunities to find an appropriate job within existing structures and, as a
result, are less inclined towards starting for themselves.
Conclusions
The cultures of relatively poor countries can often be characterized
by large power distance and low individualism, and often also by strong
uncertainty avoidance. At the same time, their population is often relatively
dissatisfied with society and life in general. All these circumstances give
72 M. Iacob
rise to a high incidence of (small-scale) self-employment. When these

countries develop further economically, they start reaping hitherto
unexploited economies of scale, prosperity rises and dissatisfaction seems
to diminish. The result is a definite decline of level of entrepreneurship.
Bibliography
Altio I. and Mills A. J., 2004, Gender, Identity and the Culture of
Organizations, Routledge, p. 92-113
Audretsch D. B., and Thurik A.R., 2000, ‘What is new about the new
economy: sources of growth in the managed and entrepreneurial
economies’, Industrial and corporate change, 10 (1), 267–315.
Gartner W. B., 1989, Who is an entrepreneur? Is the wrong question,
Entrepreneurship in Theory and Practice, p. 47-68.
Fayolle, A. (2002)," Le management entrepreneurial: mythe ou réalité? ",
Transdisciplinarité : Fondement de la Pensée Managériale Anglo-Saxonne,
Peron, M. (sous la direction de), Paris : Economica, p. 81-107.
Foti A. and Vivarelli M., 1994, An econometric test of the self-
employment model: the case of Italy’, Small Business Economics, 6, 81–93
Nye A., 2004, Understanding Feminist Philosophy, Routledge, p. 12
Verheul I. et al., 2002, An eclectic theory of entrepreneurship,
Entrepreneurship: Determinants and Policy in a European–US
Comparison, Economics of Sciences, Technology and Innovation, vol 27.
Year XVI, No. 1, 2010, pp. 73-83
The influence of socio-economic environment and diversity

of the offer coming from the Slovenian schools of business
and economics programmes, on the motivation for
education of the employees from independent business and
economics schools in Slovenia
J. Starc
Jasmina Starc
Faculty of Business and Management Sciences Novo mesto
School of Business and Management Novo mesto, Slovenia
Abstract
The article deals with some factors which have significant
influence on motivation for education of employees on
independent business and economics schools in Slovenia. In
the article the study of motives for the education of adults on
independent business and economics schools is presented. We
have tried to identify and justify basic theoretical assumptions
about the role of motives which are verified in the empirical
part. In the research the author find out that one of the most
significant factor is socio-economic environment as well as the
offer of study programmes itself. Important roles in the
decision for study and during the study have the spouses /
partners of students, their co-workers and superiors. The
lengths of study, which is three years only, the vicinity of
school or its branch, where they study, to their home also
affect their decisions.
Keywords: socio-economic environment, education,
economics and business study programmes, motivation for
education
Introduction
Motivation of an individual can be understood as psychic energy

accumulated under the influence of external and internal stimuli. This
accumulated psychic energy is then used for an activity, the consequences
of which bring about relaxation and a decrease of accumulated tension.
74 J. Starc
This is how the individual is encouraged to undertake a certain thing.

Under the impact of further stimuli, originating from internal needs and
external influences the quantity of motivational energy increases and forms
the basis for further activities.
In order to understand and prompt learning motivation, we must be
able to resolve dilemmas surrounding it and the relationship between
internal and external motivation.
We talk about external motivation when we learn because of
external consequences which do not necessarily constitute the activity, i.e.
learning. In this case, learning is only a means of achieving positive and
avoiding negative consequences (see [1]). As a rule, external motivation is
not permanent. When the source of external support disappears, the activity
ceases because the individual surrenders to various external stimuli.
External motivation can be defined by the following aspects: easy tasks,
good grades, dependence on the teacher, lecturer or mentor, and following
their judgement. The most expressed external motivation sources are
considered to be those of the social milieu, and of the work place (see [2]).
The appropriateness of educational programmes (colleagues at work,
superiors, partner, relatives, and study colleagues) also plays an important
role. The programmes provide the individual with praise, disapproval,
prizes, acknowledgements, competition and so on.
The goal of internal motivation, however, is the engagement in the
activity itself, while the source of support is located in the individual
wanting to develop his/her abilities, to achieve something of his/her
interest, to master a certain skill, to learn and understand new things (see
[3]). Internal motivation brings satisfaction, it is permanent because it
continues in spite of absence of external substantiation, it is an activity of
higher quality and it yields better results. Among the internal motivation
sources we can list curiosity, a general wish to learn about things or an
interest in a certain area, aspiration to develop one’s potentials, creativity
and mastery of an area of knowledge or skill. Internal motivation is
triggered and maintained by a sense of independence, control of the
situation, belief in one’s abilities and a possibility of choice of subject, area,
task and work tempo. Internal motives depend on individual characteristics
of the person and on one’s expectations about education.
It is difficult to draw a clear line between the two kinds of
motivation. The transition between internal and external motivation is the
so-called efficiency oriented motivation, which is a rather constant human
characteristic.
The influence of socio-economic environment… 75
We expect to find satisfaction in the mastery of demanding

activities, the effects of which are being measured while, on the other hand,
their success is not ensured in advance, and might even contain risk
elements. Efficiency oriented motivation is considered external when the
area of our efficiency is unimportant; but when we endeavour to achieve
high goals in an area of personal interest, then we talk about internal
motivation (see [4]).
All three forms of motivation constitute an important element of
adult learning motivation, however, we should not be developing them
individually or to an excess.
Research methodology
Our research focused on the part-time second-year students of

independent high education institutions – business and economics school in
Slovenia. Because we sought accurate findings about this population, we
took care to acquire representative samples.
The sample of respondents (n = 400) represents 73,8 % of the
whole part-time second year student population, who are studying at five
independent business and economics high education institutions in
Slovenia. We chose second-year students because they were sufficiently
motivated to have finished their first year and thus had a fair amount of
information and experiences.
Results and interpretation
Impact of the narrower socio-economic environment on education

The narrower social environment influences one’s decision to enrol
in part-time studies. This environment includes primary groups such as
family and friends. Here people adopt their basic attitude and relationship
to learning and education in general. They imitate learning habits, and there
is an awakening of their interests for acquiring additional specific
knowledge, skills and habits.
Our population of student respondents lives in their primary social
environment – family. Due to its cultural ways, attitudes and values, this
narrower social environment is an important factor influencing one’s
education and professional development, regardless of age. It provides the
individual with either good or bad study conditions; it either supports or
hinders him/her because of assigning priority to some other values.
76 J. Starc
The literature on this topic includes data about part-time students of

ten years ago, who received only very modest support from their families
in their educational endeavours. The reason can be found in the generally
low appreciation of education in those times. Our data, however, reveal that
the attitude towards education and studying changed for the positive and
that nowadays only very few families hinder their members in their studies
or show indifference to their efforts (4,6 %). Almost all respondents (95,4
%) claim that their families support them or are even extremely supportive.
They find this very important because it guarantees those relatively good
study conditions and a relief from family obligations when preparing for
and taking exams. We believe family support to be an important factor in
the students’ successful management of their study requirements and, last
but not least, in persevering in spite of all other duties they might have as
adults.
Studies take up a great deal of their time and energy, and drain their
willingness to study, which is yet another additional heavy obligation of
every individual, who decided to enrol in part-time studies. All these
obligations deprive the family more than the work place. Thus the family
members need to accept the situation such as it is and the fact that the
studies of one member will have an impact on them as well. These
obligations are mostly absences due to the attendance at lectures and
seminars, frequent afternoon and evening study time, worries, fatigue and
sometimes even the indisposition of the student. However, all these need to
be tolerated by the family, which should try to relieve the student from
some of his/her family duties.
The changes and a constant lack of time and attention can also be
noticed by the student’s friends. S/he is frequently faced by a situation
where a choice must be made whether to spend the evening socialising
with one’s friends or studying. The motivated students will decide to study
and postpone socialising to a later date. However, friends should also show
some understanding and should support the student in the decision to
dedicate his/her free time to studying. The students expect such support
and need to hear their friends’ opinion on how they have made the right
decision, for they certainly do not wish to stop contacting them. Such
support is received by 81,7 % of questioned part-time students.
Impact of the wider socio-economic environment

The wider social environment includes work organisations,
colleagues at work, various societies and clubs. The work organisation is
the social group in which the individual spends half of one’s active time.
Here is the opportunity for meeting different people, some of whom one
finds friendly and compatible while others remain more or less
acquaintances without much social contact.
The impact of work organisations can either be formal or informal.
Its personnel policy encourages the employees to take up studies, as do the
attitude of the management and the momentary needs for human resources
in the company. The informal influences in the company are the co-
workers, who have the power to establish and develop a competitive spirit.
A similar percentage of work organisations and co-workers offer support or
strong support to their fellow students (44,2 % : 43,4 %), a fact which tells
us the organisations are aware of the importance of studies and of
appropriate education of their employees. Good education and qualification
can be seen as a competitive advantage, where employees with high
education can provide quality services to their business partners, customers
and potential buyers.
In spite of all this moral support, however, only very few work
organisations offer their employees any material support, for example
paying their tuition fees. Only 16,5 % and 7,3 % of organisations
participate in the financial part. Since the respondents were not asked to
supply this information, the exact percentage unfortunately remains
unknown.
The decision to take up studies is influenced by the size of the work
organisation. Large and middle-size work organisations employ a large
number of people. Among them there exists certain competitiveness for
chances of promotion because a larger number of employees might be
trying to get the same work post, which is not true of small work
organisations. However, all of them are aware that without good work,
which is undoubtedly also a result of high education and life-long learning,
they do not have much opportunity for advancement on their career ladder.
Due to scientific and technological advances and higher requirements of
the work itself, which dictate education at a tertiary level and not anymore
only at a secondary level, the work organisations frequently need to change
their classification of work posts. Thus, those who are aware of the
importance of education decide to study, whereby they are also aware of
the recognition this will bring them and a possibility to perform better in
their profession or even advance to a better position which also means a
higher salary.
78 J. Starc
Study programmes as a motivation factor

The goal of adult education is to satisfy the needs of the individuals
and society that originate under various circumstances. The goals of
motivation for studying are to satisfy various needs of the individual,
personal, social or economic. The diversity of professional study
programmes at independent high education institutions that offer
appropriate study courses, convenient schedules, locations outside
university towns, good lecturers and teaching methods contribute to higher
motivation.
Respondents were asked to state their opinion about the most
suitable study forms; such that would enable them to acquire good quality
knowledge. We wanted to know which form of acquiring the knowledge
they desire would be most motivating for them. As the most appropriate
form they stated full-time studies (45 %).
We can assume that this form received the highest percentage
because this is the easiest way to acquire knowledge. The full-time student
has no additional responsibilities. Studying to get the desired qualification
is his/her basic task and work. If we compare full-time studies to studying
from work, this is certainly true. The second best way to study is in their
opinion the organisation of lectures and seminars within part-time studies
(28 %), which is the closest to the acquisition of knowledge within full-
time studies, where students also attend lectures and take exams. They
believe that for the working population part-time studies are the most
important way of knowledge acquisition. Lectures are an opportunity to
learn about new things, get new data, exchange experiences, reflect upon
and discuss a specific topic. They see the most relevant element of studies
in the opportunity to connect their experiences with new developments and
to be able to critically assess them.
To summarise, the two predominating traditional forms of
knowledge acquisition are still full-time and part-time studies.
84,2 % of our respondents are enrolled in three-year study
programmes because this suits their educational needs the most. They feel
that a high professional educational institution can provide them with
sufficient education to perform well in their work. This level of education
is also satisfactory for the specific work post they hold. 9,3 % of the
respondents do not possess sufficient will-power for a four-year study
programme, which is quite understandable since four-year programmes
frequently take six years and more, too long for many students. It is a long
period marked by sacrifices, ceaseless studying, as well as long travels and
absences from home and family. Three-year programmes, on the other

hand, last four years at most and are organised in such a way that the
students can complete their studies in three years, the same as full-time
students, which is certainly a strong motivation when deciding about
studies. Programmes are quite intense, part-time students have to possess a
great measure of optimism, will-power and motivation if they want to
finish in such a short time. All part-time students get only one third of the
hours of the full-time programme, which requires them to read a lot of
study literature on their own and prepare for the exams like their full-time
counterparts.
The most frequent reason for deciding about a certain school is the
suitability of the offered programme for the work they would like to
perform (62 %). This could mean a change of the work post, re-
qualification or a work post higher than the one they are occupying now. In
spite of the fact that half the respondents are satisfied with their present
work, additional education is for some of them a means to face new
challenges and take up a different kind of work. Among the respondents
there are also those (30,3 %) who were not employed at the time of our
survey. They choose a programme they find attractive, and believe the
acquisition of professional knowledge will enable them to become
employed and get a job of their choosing. Half of the above number of
respondents (29 %) choose studies at an institution that offers programmes
fitting their present work. 17,3 % of the respondents believe they have
made an appropriate choice because the school or the school unit is located
in the vicinity. We are convinced this to be a very weak motivation factor.
These students have certainly not examined the programme offer carefully
and have not reflected about the possibilities for employment or a better
work post at some later date. It seems they decide to study because they
simply have to and because high professional education is required by the
systemisation of work posts. The renown of an institution contributes to 14
% of the enrolment, while 3,8 % of respondents decide to enrol because
their friends or colleagues did the same.
Satisfaction in one’s choice and decision about studies is one of the
more important external motivators. We wanted to know how many
students were satisfied with their decision to enrol in a certain programme
and we received very good and encouraging answers. More women than
men (χ2 = 10,191 > χ2 0,05) are satisfied with their choice. Married women
have more concerns and doubts when they are deciding where to enrol.
They are namely aware of the necessity to harmonise their family, work
and social obligations. Most of their difficulties lie in family duties where
80 J. Starc
they are well aware they will have to do the work regardless of the
additional study obligations. They are mostly concerned about the time
dimension, how they will manage to fulfil the needs of their family
members and also how their decision will be accepted by the wider
environment and the closest family members. Because they are now in
their second year, they obviously managed to overcome all the initial
difficulties, which contributed to their self-confidence. They have proved
to themselves and to others that they can successfully manage all their
obligations. The male students do not have any such doubts because they
know that their partners will successfully take care of all the family and
other social obligations. Greater satisfaction with their decision to study
was observed in those respondents who attend lectures during the week and
not over the weekend (χ2 = 13,696 > χ2 0,05). Although these students
agreed to the offer of lectures during the weekend, after a year and a half
the situation proved to be too strenuous since they practically did not have
any free weekend. At the end of the work week they are tired from all their
obligations at work and at home, so that they use their last energy to attend
lectures or compulsory seminars. More satisfaction about their decision is
experienced by those who are also satisfied with their lecturers (χ2 = 85,213
> χ2 0,001). Such an opinion is shared by 91.8% of respondents. All the
lecturers should be aware of the importance their attitude and approach to
adult participants plays in their education because the student’s satisfaction
about his/her study choice is strongly influenced by them.
Most of the students who are satisfied with their study choice
intend to finish their studies in prescribed time (χ2 = 26,799 > χ2 0,01). We
suppose them to be highly motivated since the satisfaction with their study
choice stimulates them to finish as soon as possible. The dissatisfied
students mostly complete their studies with a one year delay.
When we tried to establish a connection between satisfaction with
the study choice and a repeated decision to study, we established that the
majority of satisfied students (97,1 %) would again enrol at the same
institution they are attending now (χ2 = 133,755 > χ2 0,001).
Conclusion
Adult education needs to take into account the fact that within its
framework external as well as internal motivation factors originate and
develop. It is of course impossible to draw a sharp line between them, but
they are both extremely important to maintain one’s motivation to study.
Adults experience education as a life’s necessity, and the goals that
motivate them to study have a solid time frame and are clearly defined.
They search for reality and application of knowledge and try to get
information about the contents, study methods and educational forms well
in advance. They decide to study on the basis of their own judgement in
spite of the underlying needs of material, intellectual, social, cultural and
emotional nature.
When studying the specific study motivation factors, we need to
observe individuals in their specific social environment. Study results of all
motivation factors bear a strong social character so that they are usually not
applicable to any other social environment. They depend on the cultural
status of the environment where the individuals reside and work, therefore
the motivation hierarchy changes from one environment to the next. We
speak of external motivation when we learn because of external
consequences, therefore this is not permanent. The individual surrenders
passively to various external stimuli. Among the expressed external
motivation sources we can count all those motivation factors that depend
on the narrower and wider socio-economic environment and on the
suitability of educational programmes.
It frequently happens that the attitude of the family or closest
friends exercises a strong impact on the student’s attitude towards
education, on how much s/he actually values it, which in turn leads to
corresponding consequences. The majority of participants of education live
in an environment which values education highly and ascribes great
importance to it. Work organisations and colleagues at work encourage
individuals for studies to a similar extent. They are a positive factor which
provides especially moral and much less material support. The research did
reveal a similar opinion about the awareness of the importance of education
on the part of the management but without providing any available
financial means for it. The question remains about how to ensure such
means and encourage work organisations to invest in education, motivate
its employees in order to decide to study, and how to convince the state
about the necessity of its involvement. We cannot count on the self-
enlightenment of a company’s management, on the enthusiasm of the state
and on a great desire of employees to study. Although company’s
management staff is willing to invest in its employees, they do not know
how to go about it. The state could assist companies in this respect by
organising seminars for the management staff about the importance of
education of human resources, by encouraging life-long learning as a
positive organisational culture and by developing it as such, by bringing it
closer to its employees so that they would adopt it as its own and not feel
they are being forced into it. This would be the beginning of the
82 J. Starc
development of learning organisations which would encourage education

of their personnel. Together with their employees and the external
environment (educators, teachers, teachers for adults) new knowledge as a
culture of value could be created. Quality education requires a good
knowledge of teaching forms and methods and their appropriate
application. For the adult population these are not prescribed in detail. The
choice and application of methods depends on the contents, the maturity
and previous knowledge of the participants, and on the available teaching
aids. The respondents listed lectures and discussion as the most frequent
and predominating teaching methods. It is of concern that the
predominating ways of knowledge acquisition are distinctly traditional
because the most frequent form – lecture does not enable students to be
active participants of the educational process. They are simply passive
listeners.
To summarise, appropriate instruments for establishing educational
motivation in adults should enable us to place the individual on a scale of
individual motivation factors. We need to carry out interdisciplinary
research of motivation factors for adult education at the state level and at
individual high education institutions, which can encourage motivation by
applying appropriate pedagogical and psychological measures. The
research would disclose the motivation factors that encourage adults in
their decision to take up studies. Such knowledge would in turn enable the
educational institutions to choose better ways for attracting new candidates.
Good study programmes, modern teaching and learning styles, changes in
the traditional approach of part-time education implementation could play
an important encouraging role in strengthening their motivation factors for
studying and in developing new ones.
Bibliography
Aldridge, F., Tuckett, A., What older people learn: the whys and
wherefores of older people learning, Leicester: National Institute of Adult
Continuing Education, 2008.
Anderman, R., Hicks Anderman, L., Classroom motivation, Upper Saddle
River: Merrill, 2010.
Appleby, Y., Bridges into learning for adults who find provision hard to
reach, Leicester: National Institute of Adult, 2008.
Daines, J., Adult learning adult teaching, Nottingham: Department of
Adult Education, 1993.
Edwards, J., Inviting students to learn: 100 tips for talking effectively with
your students, Alexandria, Va., 2010.
Jarvis, P., Adult and continuing education: theory and practice, London,
New York: Routledge, 1995.
Jarvis, P., Ethics and education for adults in a late modern society,
Leicester: National Institute of Adult Continuing Education, 1997.
Jarvis, P., Learning to be a person in society, London, New York:
Routledge, 2009.
Knoll, J.H., Motivation for adult education, Muenchen: Saur, 2004.
McInerney, D. M., Standards in education, Charlotte: Information Age,
2007.
Rossiter, M., Narrative perspectives on adult education, San Francisco:
Jossey-Bass, 2010.
West, L., Beyond fragments: adults, motivation and higher education,
London: Taylor&Francis, 1996.
Wlodkowski, R. J., Enhancing adult motivation to learn, San Francisco:
Jossey Bass, 2008.
Year XVI, No. 1, 2010, pp. 84-95
The importance of ethical norms

in the accounting profession
M. Şimandan
Matei Şimandan
Abstract
This article approaches the problem of ethical principles and
norms referring to the specific case of accounting. In the first
part, we discuss a few aspects of professional or deontological
ethics and its necessity in the organization of the practical
activities of different professions. The second part of the article
insists upon the contractual feature of professional ethics and
upon the way in which the obligations of the professional as
opposed to the demands of the client are perceived. With this
purpose, we discuss the different alternatives of the
professional – client report, by presenting the moral
responsibilities and risks that these can imply in one situation
or another. The last part of the article analyses the practical
meaning of the ethical code of accountant professionals by
highlighting the importance of principles such as: integrity,
objectivity, competence, confidentiality, prudence,
independence and professionalism in respecting the technical
norms connected to the specific of the accounting profession.
Keywords: professional ethics, ethical norms, principles,
ethical code, professional accountant
The notion of professional ethics

As a science which studies moral principles and norms, ethics
acquired a major importance in different professional fields. It becomes
practical through the elaboration of conduct codes typical to professions or
social activities, a situation which specialists call professional ethics. It is
The importance of ethical norms in the accounting profession 85
grounded on the particularities of certain professions, the set of interest and

the professional culture of the community, certain requirements and norms
of moral conduct, as well as the array of principles meant to ensure the
solidarity and reputation of the professional group.
Professional ethics consists in different norms of conduct structured
on deontological codes. The term “norm” may be considered the model,
rule or prescription which regulates the behavior of individuals, groups,
organizations and collectivities. The main feature of ethical norms says
C.Zamfir, consists in the fact that they have their source in the need of a
normative authority and address certain subjects of the norm. To make its
will known by the subject, the given authority enforces a set of norms, and,
in order to make its will effective, it adds a sanction or a punishment (1998,
p.390).
Through their functioning specific, norms can regulate certain
interdictions, namely types of forbidden behavior, recommendations
referring to desirable behavior whose accomplishment is rewarded,
indicators of the minimum performance accepted, the means of doing
something or models of behavior in different situations.
It is interesting to note that the activity of elaborating norms and of
their implementation are associated on the behavior level with rewards
(appreciation, fame, esteem, consideration, promotions etc.) and
punishment given by institutions (amenzi, retrogradation, administrative or
judicial sanctions etc.) or by the branches of the professional community
(reprehension, reprobation, ceased human support, ceased cooperation or
isolation).
Through their specific, moral norms firstly manifest themselves as
norms of professional ethics, functioning close to the values of good and
bad. When moral norms behave like rules, they interact with judicial
norms, which ensure regulated public interest through the law system. That
is, moral rules function through the intervention of public opinion and are
organized through codes of ethical behavior, while judicial norms are
consecrated through the system of laws typical to each society or field of
activity.
This is the basis of deontology as a discipline and as a background
of professional ethics. In every profession, there is a set of typical moral
problems, especially in the case of professions involving inter-human
relationships. When the representatives of a profession are in permanent
communication with other people, there are moral codes typical to the
representatives of each profession. This is the case of the codes of medical
ethics, business ethics, mass-media or the educational system, the ethical
86 M. Şimandan
codes of accounting or public workers, scientific research or law, fiscal

consultancy, audit or the accreditation of the quality of teaching in
universities (cf. Appelbaum si Lauton, 1990; Mercier, 1999; Miroiu si
Beblea, 2001).
Deontological codes contain a set of rules accepted by the members
of the profession in order to ensure the existence of a function recognized
as essential in the activity of an organization (Morar, Macoviciuc, Craciun,
2006). Accepting, acquiring and applying these rules of conduct in the
professional life lead to a rise in the quality standards of that profession,
respect for the law and for those who apply it, as well as for those who
represent the interests of a person or of an organization.
In order to have more authority, the ethical codes of different
professions need to have the silent or explicit consent of each member.
Sometimes, this consent is required when entering a profession; if this
consent is missing, the person will not be accepted or will be excluded if he
or she will violate the principles.
Imposing an body of rules which will guide an institution requires
the existence of a professional organization which becomes the body of
elaboration, application and surveillance of the application of these rules.
When there is no easily identifiable authority, says Nancy Davis, “we can’t
no for sure which are the moral norms (deontological constraints) which
have to govern our behavior. The ethical disagreements will not be solved
if there is no clear set of procedures to establish the means of solving the
conflicts connected to the content of moral norms (2006, p.245).
The codes of professional ethics are grounded on certain values,
principles and laws of conduct of a professional organization which ensure
the moral character of the interactions determined by the professional
activity. Meanwhile, these codes reveal the particular way of manifestation
of the moral values and principles in certain fields of activity, and the fact
that the members of a professional group are connected through an ethical
code which settles the rights, tasks and relationships which should exist
between the members of that particular professional group.
Referring to the results expected of the code of ethical conduct for
professional accountants, Marin Toma and Jacques Potderin (2008) insist
upon the following facts:
- creating and maintaining the prestige of the profession and the
institution represented;
- informing the public about the typical activities of the
profession;
- ensuring ethical references for all those involved in the

professional activity;
- promoting trust in the application of the criteria and procedures
typical to the profession;
- ensuring objectivity in the relationships between the
professionals and the beneficiaries of their services;
- the consolidation of certain values and principles applicable to
that particular field of activity;
- ensuring a coherent background of appreciation, correction and
punishment of situations of violating the stipulated values and
principles.
The problem which emerges from this discussion regards the way
in which the activities of the professionals are regulated and the different
situations which emerge from the relationships between the professionals
and the beneficiaries of their services.
The contractual feature of professional ethics

The analysis of the contractual elements pertaining to professional
ethics involves making a beforehand distinction between profession and
professionalism. The profession is grounded on consistent and prolonged
preparation, involving a thorough knowledge of the theories and practices
of the given field. The role of the profession is to ensure the satisfaction of
social needs, professional practice being acknowledged by the community
which benefits by its results. An important characteristic is the fact that the
standards of initiation, maintenance and promotion of a person in
professional competence are established by the professional body, the
harshest measure of punishment for professional violations being
eliminated by the professional community or the cancellation of the right to
practice.
Professionals who do their work as close as possible to the
demands of the profession attain a recognized status in their field of
activity, thus proving what is usually called professionalism.
Professionalism coagulates the common demands of a profession; it
highlights the identity of the professional group and increases the self
esteem of each member of the given group.
In the interpretation of Mihaela Miroiu and Gabriela Beblea,
professionalism involves the following characteristics (2001, p.34):
- experience in the profession;
- faith in the autonomy of professional decisions and the practice
of that profession;
88 M. Şimandan
- identification with the profession and with those who activate

in the same field;
- devotion to the chosen profession, for a long period of one’s
life;
- the moral obligation to work in the service of the client,
avoiding randomization and preferential treatment;
- certainty in the maintenance of professional standards.
The activity of the professionals of a field is regulated by laws and
certain ethical norms, thus owing the problem of the introduction of ethics
in a profession to the fact that the law usually activates after its violation.
From this point of view, professional ethics sets the practices, rights and
tasks of a professional group, as well as punishing the violation of certain
unprofessional practices.
Professional ethics may be viewed also as a form of social contract
between the professional and the client. That is to say, professionals are
required to do what is necessary, being paid by the beneficiaries to do their
work, as well as they are sometimes required to do activities beyond the
strict limits of their professional obligations.
Professionals follow their own success, as professional prestige and
financial success, considering that their success is certified by maximizing
public welfare. However, says Miroiu and Beblea (2001), as well as
Moraru (2004), there are contradictions between what we may say forms
the professionals’ perspective and the clients’ perspective: the professionals
say that their proficient work deserves its reward, while the clients expect
the professionals to rise to their expectations.
Given these conditions, the clients insist upon the idea of
professional obligation and duty, without the professionals’ obligation to
work beyond their professional duty, except for moral considerations. Here
stems one of the central problems of the relationship professional-client:
allocating responsibility and authority.
In the case of this contractual kind of relationship, we can imagine
the following situations: a) the client has more responsibility and authority;
b) there is equal allocation of responsibility and authority between the
client and the professional; c) the main responsibility and authority go to
the professional (cf. Miroiu and Beblea, 2001, p.36-37).
The idea according to which the client has more authority and
responsibility derives from the fact that the professional is hired by the
client, works for his targets and in the direction established by him.
Although one may think that the professional should be attached to the
targets of the client, there are however certain limits to the attachment for
him, as follows:
- professionals have the role and obligation of the third person,
who limits from the normative point of view the expectations of
the clients;
- professionals aren’t simple executants of the orders of the
client, they have the necessary experience and authority in
terms of knowledge in their field which give them the right to
refuse a client in certain conditions.
Although the situation of the reciprocity between the rights and
obligations between the client and the professional involves an equal share
of responsibilities, the application of this model is difficult due to the
following reasons:
- between the two parties there is usually an inequality in
negotiations, in terms of differences in knowledge or
asymmetry of the necessary information;
- there are situations when the professionals have greater access
to the clients’ information then the other way around, as in the
case of public workers for instance;
- there are cases when the client can have greater power than the
professional, especially in the situation when a local or
governmental authority employs the professional;
- even if between the client and the professional there are
relationships of cooperation, mutual trust and partnership, the
relationship between them remains asymmetrical; this concern
of the professional is actually a paid service, not an amiable
activity.
The situation when the responsibility and the authority go to the
professional as opposed to the client, we have the following
presuppositions:
- the professional acts for the welfare of the client, having a
professional authority that is good for the client;
- the client hasn’t got sufficient knowledge and information to
decide properly, his consent usually being post factum, namely
after he realizes that the professional’s services would bring
him benefits.
The moral risk which emerges in the described situations is that of
violating the personal autonomy and the self determined liberty, a risk that
can be diminished by informing the client, by presenting his alternatives of
90 M. Şimandan
decisions and recommendations which should be taken into consideration

by the client before taking decisions.
What we must insist upon is the fact that the contractual character
of professional ethics also results from the preoccupation of the
professional groups to formulate the values, principles and norms of an
organization explicitly, that is to elaborate ethical codes.
The objectives of such codes address the following important
aspects (cf. Miroiu and Beblea, 2001, p.39):
- it occupies the free space between the values of a professional
community and the law;
- the contribution to the reputation, trust and respect that the
beneficiaries of an activity have for the institution or the person
who offers the given service;
- it represents “a moral contract” between the beneficiary and the
organization, ensuring the cohesion of an institution or
organization;
- it protects the organization from dishonest conduct and it offers
a model of behavior;
- it promotes a positive image of the organization, also being a
means of regulating the devotion of the collaborators;
- it influences the formation of the feeling of pertaining for the
members of the professional group;
- it represents an important background which orients decisions
and actions;
- it connects the contractual relationships with the elements of
trust and responsibility;
- it creates an ethical climate through which actions are perceived
as just from the moral point of view;
- it orients human behavior in the case of moral dilemmas.
The significance of the ethical code of professional accountants

The elaboration of the codes of professional ethics is structured
around central concepts which, in one way or another, appear in most
systems of rules. Just as ethical values and principles, these concepts give
social consistency to the respect for laws and moral norms, as well as for
those involving the interest of the professional community.
Looking at things from this perspective, the Ethical Code of
Professional Accountants in Romania establishes the fundamental
principles of professional ethics and offers a conceptual background for the
application of these principles. Thus, professional accountants are required
to apply the conceptual background in identifying the threats to the

conformity with the fundamental principles, in evaluating their importance
and in the application of protection measures to eliminate them or reduce
them to an acceptable level, so as not to compromise the conformity with
these principles.
To sum up, a professional accountant has to respect the following
fundamental problems: moral integrity, objectivity, professional
competence and prudence, confidentiality and professional behavior.
• Integrity and objectivity

As a central element in solving the problems which are typical to
the profession, integrity involves competence and honesty in professional
and business relationships. Integrity is the fundamental quality of a person
who wishes to profess in accounting, given the fact that the pressures and
temptations are sometimes stronger than in other fields of activity. That is
why the Ethical Code says that a professional accountant “shouldn’t
associate the reports, files or any other information when he realizes that
they contain a significantly false or wrong declaration, they omit or hide
information, or when these omissions lead to errors” (2006, p.28).
Objectivity is the principle which imposes obligations on the
professional accountants not to compromise their profession due to errors,
conflicts of interest or the influence of certain people. No matter the social
position or work done, professional accountants should maintain
objectivity in their professional thinking. Whether it about making
certification reports or fiscal services, or whether it involves drawing up
financial situations or audit services, professional accountants are exposed
to situations which can cause them stress or can diminish their objectivity.
That is why, when selecting the situations and practices which they
will take care of according to the requirements connected to objectivity,
one must avoid relationships which permit the violation of objectivity
through preconceived ideas or other people’s influence. Moreover,
professional accountants are required to base their professional conclusions
and opinions exclusively on analyzed documents according to principles,
indicators, standards or work methodology, as well as other regulations in
the field (cf. The Ethical Code, 2006, p.28).
• Professional competence and prudence

Professional competence means more than the qualification
obtained after graduating a learning institution. It involves specific
92 M. Şimandan
knowledge and skills, but also the ability to use them in the interest of the
employing organization.
Regarding the principle of professional competence and prudence,
the Ethical Code insists upon the obligation of the professional accountant
to keep his professional knowledge and skills to the necessary level “for his
clients and employers to be sure they receive competent and professional
services. Moreover, clients and employers have to be convinced that he
acts with prudence, according to the technical and professional standards
from his field of activity (2006, p.29).
Starting from these requirements, the Ethical Code highlights: “The
maintenance of a level of professional competence requires permanent
awareness and understanding of the relevant evolutions on the professional,
technical and business level. Continuous professional learning forms and
maintains the competences which give the professional accountant the
chance to do competent work in a professional environment” (2006, p.30).
• Confidentiality
The principle of confidentiality requires professional accountants to
refrain from revealing information outside the employing firm or
organization as a consequence of a professional or business relationship, as
from using the information obtained while working in the personal
advantage of a third party.
What is important to highlight is, on the one hand, the obligation of
continuous confidentiality even after the end of the relationship between
the professional accountant, client and employer. On the other hand, the
professional accountant has to be aware of the possibility of information
leaks especially in situations which involve a long term business
association with an associate or a relative. For this reason, he must
maintain the confidentiality of information in front of a possible client or
employer, in the employing firm or organization, as well as in front of the
staff controlled by him and offering him specialized consultancy.
Even when there are fixed conditions when information can be
revealed, one must consider whether the interests of the parties involved
could be prejudiced, if all significant facts are known and can be supported
with proof, what form of communication is most appropriate, whom it
addresses and whether the judicial responsibility of the beneficiaries of this
information is regulated.
Professional thinking is involved even in the situation when the
revealing of information is necessary to prevent infractions. Consequently,
revealing information is justified and compulsory if the presumed
infraction could cause important harm to a third part or to the national

economy.
• Professionalism and independence

Professional behavior requires the professional accountants to
respect the available laws and regulations and to avoid actions which could
discredit the accounting profession. In this category we also find strategies
of marketing and promotion of the activity of the professional accountant,
correctitude regarding his qualification and experience, avoiding conflicts
of interests, accepting situations when he is required to give a second
opinion regarding the way of applying the standards of accounting or
connected to the negotiations on the honorary paid for his services.
A frequently discussed theme in this context is about the honorary
required and the services offered. To prevent possible threats to the
profession, the Ethical Code draws attention to the elements connected to
the determination of the honorary and the services covered by this
honorary, but also on certain types of adjacent remunerations or
commissions which could become a threat to objectivity. The importance
of these threats depends on a series of factors, among which the following
have a special role: the nature of the mission, the concern of the possible
values of the honorary, the basis for determining the honorary and the
context in which the result of the translation is evaluated by a third party
with independent status.
Preventing such threats means taking into consideration a set of
measures of protection which include: a pre-contract written with the client
regarding the basis of remuneration, the presentation of the services offered
by the professional accountant and the basis of remuneration, as well as
accepting certain control procedures of the activity offered by the
accountant.
Conclusions
The following aspects should be highlighted at the end of this
discussion.
Firstly, we have to remember that the ethical principles and norms
have important moral functions: they promote the fundamental
requirements of a certain organization system, correctitude being a demand
of interpersonal relationships; it expresses the body of cumulated
knowledge, many norms having a technical characteristic shaped as
recommendations connected to a set of previous knowledge; it represents a
94 M. Şimandan
means of controlling and evaluating behavior from the perspective of

correct and incorrect application of the given norm; it ensures the creation
of a consensus and the reduction of incertitude, social activities having the
need to set common grounds (defining objectives, action situations or the
means adopted).
Secondly, I have to add that professional ethics can’t codify the
whole complex of deontological norms, either due to the much too general
content, or to the relativity of its moral requirements. Even if the “prestige
of the profession” or the “prejudice of honor”, for instance, are essential to
each profession, deontological codes can’t define these terms though
normative texts. For this reason, the management structures of the
profession have to be constantly preoccupied with the settling of concrete
moral demands when the behavior of professionals could compromise the
trust and respect which the profession needs.
Thirdly, in the case of the accounting profession, the code of ethical
conduct involves not only the demands of integrity, objectivity,
professional competence, prudence, confidentiality, professionalism and
the independence of professional thinking, but also the accomplishment of
professional tasks according to a set of technical norms. Accountants thus
have to respect the professional norms and techniques established by the
International Federation of Accountants (IFAC), the Committee for
International Standards of Accountancy (IASB), the Corpse of Accountant
Experts and Professionals (CECCAR), as well as the given legislation. This
explains the specific of the accountant profession as opposed to the existent
regulations in the codes of ethical conduct or other professions.
Bibliography
Appelbaum, D.; Lauton, S.V., 1990, Ethics and Professions, New Jersey,
Prentice Hall.
***** , 2007, The National Ethical Code of Professional Accountants,
Bucuresti, Editura C.E.C.C.A.R.
Cristea, H., Toma, M., 2003, Doctrine and Deontology in the Accounting
Profession in Romania, Bucuresti, Editura C.E.C.C.A.R.
Davis, N., 2006, Contemporary Deontology, in Peter Singer (coord), Ethics
Treaty, Iasi, Polirom Publishing House, p.235-247.
Mercier, S., 1999, L’etique dans les enterprises, Paris, Editions la
Decouverte et Syos.
Miroiu, M.; Beblea, G., 2001, Introduction in Professional Ethics,
Bucuresti, Trei Publishing House.
Morar, V., 2004, Elementary Moralities, Bucuresti, Paideia Publishing

House.
Morar, V.; Macoviciuc, V.; Craciun, D.; Business Ethics, Bucuresti,
Paideia Publishing House.
***** , 2005, International Standards of Education for Professional
Accountants, Bucuresti, C.E.C.C.A.R. Publishing House.
Toma, M.; Potdevin, J; 2008, Elements of Doctrine and Deontology of the
Accounting Profession, Bucuresti, C.E.C.C.A.R. Publishing House.
Zamfir, C.; Vlasceanu, L. (coord), Dictionary of Sociology, Bucuresti,
Babel Publishing House.
Year XVI, No. 1, 2010, pp. 96-100
Organizational configurations, communication networks

and entrepreneurship in the period of changes
M. N. Spînu
Marian-Nicu Spînu
Abstract
In establishing an optimal communication system for an
organization it is necessary to analyze its
configuration/structure. Several organization
configurations/structures have been defined, formal, informal,
various types of systems have been defined, such as
bureaucracy, adhocracy, etc., some of which have survived.
Combinations of configurations/structures have been proposed
as solutions, as creative bureaucracy, the matrix structure, the
six-part structure, presented in detail in this paper. The
organizations have understood that their configuration and
internal/external operation have communication as a vital
ingredient, which should be organized in an adequate system,
to ensure the organization’s survival and progress.
Keywords: communication, structure, communication
network, entrepreneurship, adaptability, technology
Organizing and communication

In order to survive and become more efficient, any group organizes
its communication. The spontaneous and anarchic exchange of information
rarely takes place in the groups that undertake tasks. Communication is
governed by certain rules and factors as the size of the group, the nature of
the task, the context of the organization.
What are the types of structures a group can use to ensure that
information is transmitted according to its objectives? There are several
forms of organization, several structures. These structures are chosen
basing on factors such as:
- the size of the group
Organizational configurations, communication networks and … 97
- the properties of networks and the organization of the group

- the nature and constraints of the task
- the atmosphere and the affective structure of the group
- the organizational and institutional constraints.
Classification of organizational configurations

Formal structures. These structures have a high degree of
formalization and standardization. They are also called official or
administrative structures, based on laws, regulations. They display three
characteristics: they legitimate and institutionalize authority, ensure the
adherence to a group and organization, as well as to the group discipline,
establish conducts within certain limits, applying sanctions to the contrary.
According to J.A.C. Brown, they are deliberately impersonal, based on
relations of ideal roles, understand people as being a crowd, allowing
flexibility in changing positions and roles, thus increasing efficiency.
The bureaucratic system. Proposed by German sociologist Max
Weber, who considered this system as being the most efficient type of
organization for all organizations, the system bases on a series of principles
(the principle of dividing activities among the members of the organization,
the principle of authority hierarchy, the principle of formal rules and
regulations rationally established, the principle of impersonality and
impartiality, the principle of career advance, the principle of efficiency). The
bureaucratic system displays the following characteristics: it bases on written
laws, rules and regulations, excluding affectivity, it has a rigid hierarchy, the
functions being subordinated to levels of graded authority, it focuses on the
rigorous prescription of conducts. Max Weber states (1970) that this type of
structure has such characteristics as precision, knowledge of files, continuity,
unity, strict subordination, reduction conflicts, material and personnel costs.
This type of structure has positive and negative influences on the activities in
the organization. In practice, the structures of this kind show differences: for
an adequate classification the following have been chosen: the individual, the
group, position and function.
The sixties and seventies insistently point at the collapse and
disappearance of bureaucracy. It served well in the past, as an ideal type, as a
form of organization, but it would not survive as a dominant form of human
organization in the future. Alvin Toffler envisages in 1973 the appearance of
a new organizational system, in conflict with bureaucracy, ready to replace
the old system. Due to technological development, a new form of
organization with a new structure comes into being, called “organically
adapted structure” by Bennis or “adhocracy” by Toffler.
98 M. N. Spînu
Adhocracy is the kinetic organization of the future, in permanent

motion, fed by information, full of transient cells and extremely mobile
individuals. (Toffler, 1973, p.153). Here the particularities of bureaucracy,
such as permanence, stability, order, hierarchy, durability are replaced by
their opposites, transience, mobility, hierarchy crash, permanent motions.
The internal and external mobility of the organization is combined
with the permanent appearance and disappearance of temporary work
groups, vertical communication (the ascendant and descendant
communication types are replaced by the lateral ones) – interdepartmental
ones – the chain of command is eliminated in favor of the experts who take
their own decisions, do not wait for their superiors.
In adhocracy, the individual is subordinated to the task, not to the
organization, freeing himself from bureaucratic constraints. His behavior
becomes flexible, creative and adaptable. He becomes the associate, the
colleague, the equal, not the subordinate. He has initiative, daring, promptly
addresses changes.
Whatever its advantages, adhocracy also meet objections: the high
degree of ambiguity, the limited efficiency, the inadequate transition. From
here, the organizational dilemmas occur. Which of the two organization
forms is better? Neither is perfect. Then, the decision was to combine them,
according to a series of factors: the type of company and community, the
technological and cultural specificity.
Creative bureaucracy – this structure combines the conformism
generated by traditional bureaucracy with the tendency of some people to
intellectually involve themselves in their work more, to own more
autonomy. They have to create an environment to encourage the inter-
functioning, not the ascending, descending hierarchy. The adequate system
proposed by W. Jack Duncan in 1972, the creative bureaucracy, is a
combination between the classical authority system and the laissez-faire
system, the first characterized by impersonality, rigid hierarchy, formality,
whereas the second one, by intense personal involvement and high adapting
capacity to changes. The first has the problem of the “power of anxiety”, the
second one has that of the “excessive aleatory actions”.
Multinational extension, the new technologies of information and
communication, the exigencies of consumers no longer favor the
bureaucratic organization.
Matrix structures – these are a combination of the formal
bureaucratic structure with functions with the formal adhocratic structure
on project teams on operative groups. If the first one is positioned
horizontally, the other one vertically, we will obtain a structural matrix. In
Organizational configurations, communication networks and … 99
1977, Davies and Lawrence promoted this new type of structure, showing
that a single boss and a single chain of command must be replaced with two
bosses and a multiple command system. From the communication point of
view, the matrix structure bases on the following principles:
- principle of combining communication, decision and authority
vertical lines with the horizontal ones (lateral ones)
- principle of the dual activity system (of interacting with both the
manager from the functional compartment, and with the
product/project compartment)
- principle of specialization (skilled people in project teams)
- principle of competitiveness and creativity, BUT
- Conflicts may occur in relation to the allotment of resources and the
division of authority among project groups and specialists on
functions
- The relative dilution of managerial, functional responsibility
- The risk of dividing loyalty for the manager with the superiors of
positions where they belong.
The six part structure, outlined by Henry Mintzberg who starts from
the existence of several structural factors, without which there is no
organizational structure, the configuration bases upon six parts, in his opinion
the maximum six valid coordinating mechanisms in an organization:
1. operating core – consists of personnel that does the work
2. strategic apex – president, executive board that supervise the activity of the
operating core
3. middle line – vice-presidents, middle management, a new form of the
administrative type
4. technostructure – made up of analysts, consultants performing duties of
strategic planning, control, personnel training, production scheduling.
Technostructure is not part of the hierarchical structure
5. support stuff – it has auxiliary activities: public relations, research,
development, prices, legal consulting – this category is not included in the
hierarchical culture.
More specificity is provided to organizational configurations by the
following:
- age and size of organization – the bigger an organization is, the more
elaborate its configuration
- the technical system – the more regulated the technical system is, the
more formal the work relations become
- the environment – the more complex, dynamic the environment is,
the more dynamic the organization’s configuration is.
100 M. N. Spînu
Mintzberg’s conclusion is that even though there is no perfect or best

configuration, it may be considered as such as long as the structural parameters
are internally consistent and along with environmental factors form a coherent
configuration. In a period when we are on the threshold of a different
revolution, a limitless future dictated by science and technology, where
knowledge doubles every 10 years, the power of computers doubles every 18
months (Moore’s Law), the Internet doubles yearly, we are faced with rapid
changes in economy and work and life style that trigger new ones… “These
are the pangs of the instauration of a new era” (Michio Kaku [1], Visions-
Preface, 1999).
In his book, in Preface, Professor Michio Kaku quotes Lester C.
Thurow, former dean of MIT’s Sloan School of Management, who writes: “In
the 21st century, the power of the mind and imagination, invention and the
organizing of the new technologies are the key ingredients” (Lester C.
Thurow, Pg.13, Preface, Visions, 1999). He states further that: “Today
knowledge and skills are the only source of competitive advantage).
Bibliography
Argenti, Paul. A., Corporate Communication, McGraw-Hill, 1994;

Amado, Gilles, Guittet, Andre, Psihologia comunicării în grupuri, Polirom,
Iaşi, 2007;
Choukeir, J., Communication Design for Social Integration,
http://joannachoukeir.wordpress.com, 2008;
Kaku, Michio, Visions – How Science Will Revolutionize the 21st Century and
Beyond, Oxford University Press, 1999;
Neculau, A., coordinator, Psihologie Socială, Aspecte contemporane, Editura
Polirom, Iaşi, 1996;
Păuş, V.A., Comunicare şi resurse umane, Editura Polirom, Bucureşti, 2006;
Van Cuilenburg J.J., Scholten O., Noomen G.W., ŞtiinŃa comunicării, Editura
Humanitas, Bucureşti, 2004;
Zlate, M., Tratat de psihologie organizaŃional-managerială, Vol.I-II, Editura
Polirom, Bucureşti, 2004;
*** Comunicare organizaŃională, http://facultate .regielive. ro/referate/
comunicare.
*** What are the Organizational Configurations. Explanation of
Organizational Configurations of Mintzberg, http://www.12manage.coml
[1] Professor Michio Kaku, Ph.D., University of Princeton, Albert Einstein’s former
student, Professor Kaku is a specialist in quantum physics and author of several books:
Visions, Hyperspace,etc.
Year XVI, No. 1, 2010, pp. 101-110
Interference between electoral cycle and economic cycle

E. Ungureanu, F. C. Burcea
Emilia Ungureanu
Felix-Constantin Burcea
University of Piteşti, Romania
Abstract
The political business cycle can be seen as a business cycle
that results from the manipulation of policy tools (fiscal
policy, monetary policy) by incumbent politicians in hope to
stimulating the economy just prior to an election and thereby
greatly improving their own and their party's re -election
chances or from the competition amongst political parties with
the different ideologies.
The first model on political business cycles was developed by
Nordhaus. It is based on the assumptions that politicians care
only about their re-election and voters judge the incumbent's
performance by the state of the economy.
In this paper are presented the cyclic effects of elections in the
developing countries, being presented also the Romanian case
in the period 1990-2000.
Keywords: political business cycle, elections, developing
countries
JEL Code: E32
Defining the interactions between political processes and economic

activity
The political business cycle can be seen as a business cycle that
results (a) from the manipulation of policy tools (fiscal policy, monetary
policy) by incumbent politicians in hope to stimulating the economy just
prior to an election and thereby greatly improving their own and their
party's re -election chances or (b) from the competition amongst political
parties with the different ideologies. On that account, the theory of political
business cycle investigates the relationship between political cycles and
economic cycles, namely how the timing of elections, the ideological
102 E. Ungureanu, F. C. Burcea
orientation of governments and the nature of competition amongst political

parties influence unemployment, economic growth, inflation, and the use
of various monetary and fiscal policy instruments.
The two main types of the political business cycles are: election
cycles generated by governments manipulating the economy to maximize
re-election chances (opportunistic cycles models), and partisan cycles
generated by the change of governments pursuing different goals (Alesina,
Roubini and Cohen, 1997). Also, in literature, models based on the
syntheses between opportunistic and partisan political behavior have been
build (Fray & Schneider, 1978). Further on, to set out from the
opportunistic-ideological spectrum of political motivation, the models of
the political business cycles can be classified according to the expectations
that individuals are assumed to hold.
This classification allows us to identify four variants in the political
business cycle literature: (i) the pure opportunistic political business cycle;
(ii) the strong partisan theory; (iii) the rational opportunistic political
business cycle and (iv) the weak (rational) partisan theory. In the famous
terms of Anthony Downs (1957, p.28), parties "formulate policies in order
to win elections, rather than win elections in order to formulate policies".
Political parties are interested not in satisfying ideological goals but only in
manipulating the economy to win elections. The election period is taken to
be of fixed length so that there are periodic elections. The economy is
described by the Phillips curve relationship between inflation and
unemployment, such that a greater trade -off in the long run than in the
short-run exists.
However, in transition from the centralized planned economy to a
market economy, despite ideological backgrounds, political parties were
supposed to arrive at a more consistent and comprehensive view o f the
objectives and strategies of economic transition for at least two reasons.
First, there are certain objectives (milestones) of transition that cannot be
ignored by any political party that has to lead a transition from a centrally
planned economy to a market economy. Second, transition has proved to
be a long-term process running beyond electoral cycles. Therefore,
different governments supported by different political parties or coalitions
had to pursue the same objectives for periods of time longer than an
electoral cycle. In Romania, as everybody may notice, the transition
objectives lack consistency and comprehensiveness between governments.
Most governments claimed that the only real economic reform is the one
that started with its own administration. To make this concept effective,
each government wasted time and resources to change laws and
Interference between electoral cycle and economic cycle 103
regulations. This induced uncertainty within the business environment that,

together with the weak capability of governments for policy-making and
implementation, finally transformed Romania into a country of perpetual
problems and promises.
Nordhaus Model
The first model on political business cycles was developed by
Nordhaus (1975). It is based on the assumptions that politicians care only
about their re-election and voters judge the incumbent's performance by the
state of the economy. The economy is characterized by an exploitable
Phillips-curve and the incumbent can directly control the rate of inflation.
Nordhaus assumed that the government was responsible for both monetary
and fiscal policy.
Under the assumption of adaptive or non-rational expectations, the
government has an incentive to pursue expansive economic policies before
elections to enhance its probability of re-election by lowering the
unemployment rate. After elections, the government has to fight inflation
with contractionary monetary policies, thereby raising the unemployment
rate, before switching to expansionary policies again as the next election
approaches. Due to the poor memory of the voters, this cycle might be
repeated endlessly.
Such behavior is called 'opportunistic'. The testable prediction of
the model is that before elections the unemployment rate drops due to
expansive policies, while after elections inflation is high and contractionary
measures are taken. Similar patterns apply to economic instruments. A
common criticism concerned the assumption of adaptive expectations. This
has led to a reformulation of the model by Rogoff and Sibert (1987) who
expanded the framework to a 'rational political business cycle model'
(RPBC). They assume that voters lack information about the competence
of the politicians and in order to appear 'competent', policymakers
manipulate policy instruments. The RPBC model predicts visible cycles in
economic instruments, and short, possibly irregular cycles ('blips') in
economic outcomes such as the inflation rate or the unemployment rate.
Elections can affect economic policy both through their effect on
the incentives facing politicians and through selection. By making
politicians accountable to citizens they increase the incentive to adopt
socially beneficial economic policies. Selection is both a direct
consequence of electoral choice and, more fundamentally, because if
politicians are accountable the profession becomes more attractive for
people who aspire to further the public good and less attractive for people
who are ill-motivated (Besley, 2006). Hence, through both incentives and
selection elections may enhance political motivation to adopt good
policies. Further, an elected government may face lower costs of doing so.
By conferring legitimacy elections might make it easier to face down
vested interests that oppose reform. However, in addition to the structural
change of accountability, elections introduce friction. Elections are periodic
events the timing of which may affect the incentives facing politicians. In
particular, elections as events may disrupt policy. If elections affect policies
both structurally and cyclically the empirical relationship between elections
and policies may appear confused because of opposing effects. Elections
may improve the average level of policies, yet worsen them in the short
run.
Policy relevance
The intuitive explanation concerning the existence of political
business cycles in Eastern European economies is that poor and lower -
educated voters in these countries are more myopic and hence more
susceptible to short -term political manipulation. Seminal analyses confirm
that the Eastern European Countries' governments act similarly with their
European Union Countries counterparts. However, these resemblances in
political behaviors doesn't imply the fact that such the existence of
politically driven business cycles will be eliminate in Eastern European
states, and therefore, not in Romania too.
Independent monetary authorities can eliminate such cycles in
countries with flexible exchange rates. On the other hand, in developing
countries, like Romania, political upheavals may be more frequent, and
interest group politics more fractious, leading to higher discount rates for
politicians, and poor institutional monitoring of performance in public
works may provide considerable room for improvement under political
pressure (Khemani, 2000). In these conditions, from a normative
perspective, institutional mechanisms which are adapted to each country's
institutional framework and which constrain discretionary government
policies, might be worthwhile considering if expansionary policy making
around elections is perceived to be undesirable (Schuknecht, 2000, p.127).
For example, the strengthening of fiscal rules and institutions may well be
a key element towards reducing policy volatility around elections
(Schuknecht, 1998).
Hallenberg and Souza argue that such constraining domestic
institutions can be a strong finance minister or negotiated fiscal contracts.
In their opinion, given that strong finance ministers tend to work best in
countries with one – party governments or in countries where there are two
clearly opposing blocks of parties (currently a rarity in the European
continent), it is likely that only negotiated fiscal contracts will be effective
constraining domestic institutions.
Cyclic Effects of Elections

Elections are periodic events. One effect of an election is to create a
discrete difference between the period prior to the election during which
the government is in power and on which it may be judged by voters, and
the period after the election when it may not be in power. This introduces
an incentive for the government to improve its record by transferring
resources from expenditures that only generate observable benefits after the
election to those that generate observable benefits prior to the election.
There is indeed some evidence in support of the short-term bias of
democratic governments: they invest less than autocracies (Tavares and
Wacziarg, 2001). Reform, by its nature, is a form of investment: short term
political costs are incurred for longer term benefits. An implication is that
as an election approaches the ratio of pre-election to post-election effects of
policy reform falls and so the incentive to reform diminishes. Hence, the
pace of reform might slow, or even become negative, as the election
approaches.
For example, in run-up to the Zambian election of 1991 President
Kaunda increased the money supply by 400 percent, and in the run-up to
the Zimbabwean election of 2008 President Mugabe confiscated foreign
currency bank accounts and distributed the proceeds. Elections are fought
not just on the past record of the government but on promises: they are
occasions when politicians make future policy commitments. In many
developing countries the electorate lacks both the education and
information properly to evaluate these commitments: the media are both
highly partisan and lack the capacity for specialist analysis of economic
policy, and in any case many voters are illiterate.
Elections thus expose the society to the risk of political promises
based on economic populism. For example, in South Africa in 2008 the
electoral contest between Jacob Zuma and Thabo Mbeki for the leadership
of the ruling ANC clearly pitched economic populism versus economic
prudence: populism won by 9:1. A legacy of an election may therefore be a
period in which policy reform is hamstrung by the need to implement some
of these commitments.
Each of these short term effects of elections would give rise to a
cycle, potentially in either the level of policy or the pace of reform. The
shortening horizon would predict a gradual deterioration as the next

election approached, while the legacy of populist commitments would
predict gradual policy improvement. Empirically, there are four
possibilities. Neither of the effects might be significant in which case there
would be no electoral policy cycle. The shortening horizons effect might
predominate, in which case the policy cycle would be a saw-tooth of post-
election deterioration. The populist legacy effect might predominate, in
which case the saw-tooth would have the opposite slope, with gradual post-
election improvement. Finally, the potency of each effect might recede
with the time to the pertinent election, forward-looking for shortening
horizons, backward-looking for populist legacies. Thus, the shortening
horizons effect might matter most in the period immediately prior to an
election, as our examples illustrate, while the populist legacy effect might
matter most in the period immediately after an election. In this case, rather
than a saw-tooth, there would be a genuine cycle in which the level or pace
of improvement of policy was at its peak around the mid-point between
elections.
The relative importance of the two effects also determines how
elections should be dated in empirical analysis. If the only significant effect
is that of shortening horizons then the theory implies that the empirical
measure should be forward-looking: the time to the next election. In this
case, if data are organized as annual observations, an election in January
has virtually no effect in the year of the election and elections in the first
half of the year are better re-assigned to the previous year. Conversely, if
the only significant effect is populist legacy, elections in the second half of
the year are better re-assigned to the next year. Only if the two effects are
similarly potent is the election best left in the year in which it occurred.
The evidence on whether political cycles are important is mixed. In
developed countries, where democracies are more mature and information
is good, the consensus is that there is no cycle. However, there is some
evidence that cycles are significant in developing countries. To date, work
has focused on budget deficits. Shi and Svensson (2006) find that political
budget cycles are significantly more pronounced in developing than in
developed countries. Similarly, Brender and Drazen (2005) show that in
their sample of developed and developing economies political budget
cycles are confined to the “new democracies”. Block (2002) finds that in
developing countries the fiscal deficit increases in election years and is
followed by post-election retrenchments. Economic policy is critical for
prosperity and so how it is shaped is of enormous importance for
developing societies. It is now widely accepted that the struggle for good
economic policies and governance is predominantly an internal process

within these societies rather than something that can be imposed from
outside by means of policy conditionality.
Since the fall of the Soviet Union both pressure from the
international community and internal pressures within these societies have
promoted elections. This first wave of change is now largely complete:
almost all societies have elections. Potentially, elections are the key
institutional technology of democracy than enables citizens to hold
governments to account. While the potential may seem self-evident,
quantitative political science research has become rather skeptical of the
efficacy of democracy in improving economic performance: the broad
conclusion is that there is little if any overall relationship.
More important that this cyclical effect is the structural effect of the
elections. They indeed produce accountability of government to citizens.
The degree to which they do this depends upon their frequency: the more
frequent the better. The net effect of higher frequency has to be computed
while allowing for the implications of each frequency for the cyclical
effects: a lower frequency reduces the adverse effect of an election year
compared to the mid-terms. Frequent elections produce better policy. If
elections are badly conducted they lose their structural efficacy for policy
improvement. This is surely what would be expected. Where governments
resort to illicit means of securing electoral victory, such as bribery, ballot
fraud and voter intimidation, they are released from the discipline of
adopting good policies in order to win votes. Indeed, in order to resort to
such strategies they may well need to adopt bad policies. An election which
is not ‘free and fair’ is a broken technology: it cannot be expected to hold
governments accountable to citizens.
Hence, the frequency and conduct of elections matter. Of course,
accountability to citizens can reasonably be viewed as a good in itself.
However, our results suggest that it is also efficacious for economic policy
and that elections are a key instrument in achieving accountability.
Elections fail to achieve accountability if they are infrequent and mis-
conducted.
For international policy to promote development the results have an
important, if uncomfortable, implication. It is widely accepted that good
economic policy is critical to successful development. In the past the main
approaches to foster good policy have been donor policy conditionality and
technical assistance for ‘capacity-building’ but neither of these has had
much success. The route to policy improvement is through accountability
of governments to their citizens through proper elections. If the process has
failed it is because governments have subverted the electoral process.

Hence, the international community needs to use its influence to reinforce
the regular holding of elections and ensure that they are conducted to high
standards. The task for the international community is thus to promote the
effective accountability of government to citizen. For example,
conditioning aid upon the proper conduct of regular elections appears, on
the basis of our evidence, to be a reasonable use of aid for development.
Romanian case in the 1990-2000 years

Keeping out the structural change from the electoral year 1990
(considered to be the result of one major election of Romanian people
expressed through the December 1989 Revolution), during the period 1991
-2000, the amplitude of the macro structural changes registered the local
minimum points in electoral years (1992, 1996 and 2000) and local
maximum points in the post-electoral years (1993 and 1997).
– During the 1985-1989 periods the Romanian economic macro
structures were relatively blocked, as a result of socialist model using,
through which the economic and political shocks were central controlled
by planning centralized administrative measures.
– The size of the macro structural changes revealed local minimum
points for election years (1992, 1996, 2000). This could be explained by
the fact that the reform process supposes adoption of measures having
usually, unpopular effects. And such effects are, without doubt, undesirable
for the incumbents, mainly in the election years.
– The maximum intensity of structural changes was recorded in
post – electoral years: all political programs proposed the speeding of
economic reforms and, consequently, every new government tried to
promote measures to speed up some economic changes process.
– The apparent atypical situation of the electoral year 1990 could
be explained by the fact that, essentially, the economic evolutions in that
year were also the effect of a political option, of a fundamental option of
the Romanian people, expressed in the December 1989 Revolution. The
high intensity of the structural changes from 1991 - the post-electoral year-
confirms such a hypothesis.
Conclusion
Elections are periodic events. One effect of an election is to create a
discrete difference between the period prior to the election during which
the government is in power and on which it may be judged by voters, and
the period after the election when it may not be in power. Elections in
developing countries have cycle effects on the economic environment. The

effect is not very big, but it deserves to be taken in consideration: from this
point of view, elections are bad news for policy improvements, but not so
bad ones.
For Romania, the macro-economic data suggests that is correct a
hypothesis according to which a significantly connection between the
political behavior of the politicians and economic evolution exists. The
intensity of the structural changes records local minimum points in
electoral years. This fact could be explained by the following phenomenon:
to promote economic reforms means to adopt some measures, which 40
usually are accompanied by unpopular effects. These types of effects are
not those desired by the incumbent governments, especially in election
years.
Bibliography
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Cycles and the Macroeconomy, MIT Press, Cambridge, Mass.
Besley T., (2006) Principled Agents? Princeton University Press.
Block S. A., (2002) Political Business Cycles, Democratization, and
Economic Reform: the Case of Africa. Journal of Development Economics
67, 205-228.
Brender A. and A. Drazen, (2005) Political Budget Cycles in New versus
Established Democracies. Bank of Israel Discussion Paper 2005.04.
Frey, Bruno S. and Friedrich Schneider (1981), Central bank behaviour: A
positive empirical analysis, Journal of Monetary Economics, 7, 291-315.
Hallenberg M., Souza L. -V., (2000), The Political Business Cycles in EU
Accession Countries, Tinbergen Institute Discussion Paper, TI -2000-
085/2.
Khemani S., (2000), Political Cycles in a Developing Economy: effect of
elections in the Indian States, The World Bank, Development Research
Group, Mimeo.
Nordhaus, William D. (1975), The political business cycle, Review of
Economic Studies, 42, 169.190.
Rogoff, Kenneth and Anne Sibert (1988), Elections and macroeconomic
policy cycles, Review of Economic Studies, 55, 1.16.
Schuknecht L., (1998), Fiscal Policy Cycles and the Public Expenditure in
Developing Countries, World Trade Organization, Economic Research and
Analysis Division, Staff Working Paper ERAD-98-06.
Schuknecht L., (2000), Fiscal policy cycles and public expenditure in

developing countries, in Public Choice 102: 115–130, Kluwer Academic
Publishers.
Shi M. and J. Svensson, (2006) Political Budget Cycles: Do They Differ
Across Countries and Why? Journal of Public Economics 90, 1367-1389.
Tavares J. and R. Wacziarg, (2001) How Democracy Affects Growth.
European Economic Review 45, 1341-1378.
Year XVI, No. 1, 2010, pp. 111-123
Understanding labor conflict and industrial relations

in Nigerian academic environment
N. S. Oguzor, A. N. Nosike
Nkasiobi Silas Oguzor

Provost, Federal Collage of Education(Technical), Omoku-Rivers State,
Nigeria
Austin N. Nosike
Senior Research Fellow, The Granada Management Institute, 18140
Granada, Spain
Abstract
The mandates of higher institutions are pursued through its
main functions and activities of teaching, research,
dissemination of existing and new information, and
community services. However, in discharging these
responsibilities, there are always conflicts within and among
the groups of people in the educational system, namely
students, academics, administrators, non academics and their
unions. These categories of people have different purposes
and expectations. The basic element of the paper is the
concept of poor, power and politics otherwise referred to as
the three PPPs in this paper. This paper examined the major
issues, causes and concerns of labor conflict in Nigerian
tertiary institutions. These causes were identified as conflict
among unions, demand for better incentives against the
available resources, breakdown in communication, conflict of
interest, defiance and challenge to authority, over-estimation
of individual freedom in democratic society, demonstrations
against government policies and institutional decisions and
others. Recommendations were made to the authorities to
improve the situation.
Keywords: conflict, labor, Nigeria, tertiary institutions
Introduction
Throughout history staff unrest or uprising has existed. However,
its impact has never been felt as was the case since the 19th century.
Workers today are concerned not just with their immediate adjustment,
but also increasingly concerned with the societal and environmental
factors or forces which seem to impinge on them as member of human
race. Consequently, they participate actively and sometimes aggressively
in organizational development, societal reconstruction and reformation.
Across the globe, the academic communities have been known to
have shaken their political systems for one reason or the other. In sub-
Saharan Africa, staffs’ activism or rebellion has been known to have
threatened governments. It is clear that staff discontent with institutional
authorities, government and the society at large is as old as the
institutions.
It is not a phenomenon limited to a particular area, rather it occurs
all over the world but the form it takes may vary from place to place
depending on the cultural, economic and socio political situation
prevailing in the area in question (Ajayi 1989). Our concern in this paper
is to examine the phenomenon of labor crisis in Nigerian higher
educational institutions in the context of poor, power and politics with
the view of reflecting on some of its nature and causes, with a view to
recommending some solutions.
Conflict revisited
Conflicts are important instruments in organizational development
and learning especially in an organization as the school with a structure
that provides for two or more groups or units with differing nature to
work harmoniously as a team. These categories of people have different
purposes and expectations. The non-academics who perform auxiliary
function might feel unappreciated by the other groups in the system.
Also, the academics have a complex dual role of teaching and research.
These groups though reinforce one another could be a source of much
tension over the individuals division of time, energy and commitment.
Conflicts emanating from individual as grievances usually result with
activities such as disruption of academic calendar and closing down of
institutions. Poor management of conflict has created a lot of problem in
tertiary institutions in Nigeria, culminating into truncated academic
programmes with the attendant effect of elongated academic calendars
(Alabi, 2009).
Understanding labor conflict and industrial relations… 113
Deutsch (1977) defined conflicts as an action which prevents,

obstructs, interferes with, injuries, or renders ineffective another action
with which it is incompatible. For Amusan (1996) conflict is a situation
of disagreement between two parties. Thus, conflict essentially connotes
disagreement, dispute or controversy in ideas or viewpoints held by two
or more individuals or groups. Ejiogu (1990) viewed conflict as mutual
hostility and all kinds of opposition or antagonistic interaction including
disagreements or controversies about ideas, values and way of life.
In view of the above, there appears to be consensus on the following
points:
1. It is obvious that differences among the goals, interests or values of
the parties are important in understanding the emergence of conflict
situation.
2. Goal incompatibility provides the motivation for feuding parties to
engage in conflict.
3. For overt conflict to occur among parties with incompatible goals,
they will have the ability to interfere with the goal attainment of the
other parties.
Conflict in tertiary institution is not limited to one-to-one
relationships rather it involves relationships between and among
groups. For example, the government and organized union in tertiary
institutions. In this regard, Omoluabi (1995) identified some of the
features of conflict as follows:
1. Conflict is a complex multidimensional construct encompassing
different aspects of individuals and group behaviors.
2. There must be at least two issues/views or motives or individuals or
groups or parties for a conflict to have meaning.
3. Parties to a conflict usually have high affective involvement on
issues.
4. The views and interests of parties in a conflict situation are often
polarized.
5. Both parties to a conflict usually have articulate leaders who are
primarily responsible for fostering the development and maintenance
of the conflict.
6. Attempts are occasionally made to resolve conflicts when followers
of leaders to the parties press for a resolution as a result of the negative
impact of the conflict on them.
7. The resolution of conflict sometimes requires a third party.
114 N. S. Oguzor, A. N. Nosike
8. The party would be effective in the conflict resolution exercise if the

party is respected and perceived to be neutral by the fending parties.
9. The resolution of a conflict may be temporary or ending.
Causes of labor restiveness in Nigeria
In most cases conflict between the unions and the government
leads to disruptions in academic calendar, resulting into situations
where some universities are in the middle of the second semester while
others are in the middle of the second semester while others are still in
their first semester. Thus, there is no order, no uniformity in higher
education calendar in Nigeria. The obvious result of incessant closure
of tertiary institutions is still manifesting itself especially in the area of
brain drain and unprecedented movement of lecturers to other countries
(Mohammed & Gbenu, 2007).
Staff of institutions of higher learning take active interest in the
political, social and economic events taking place around them.
Regrettably there have been too many instances when these positive
characteristics for so many reasons, have been misdirected with
unfortunate results of outright confrontation with both institutional
authorities and Government which always led to strike actions and
poor productivity.
The causes of labor unrest are discussed under the following
rubrics:
● Labour Wages and Conditions of Service

The issue of wages and other related matters has been the
strongest factor leading industrial conflict in Nigeria. Wage disputes
cover demand for wage increases, wage and salary structure, failure to
pay wage increases recommended by wage review commissions, and
payment while on strike among others. The conflict related to
conditions of service include demand for improved physical conditions
of work, safety and health, better treatment on the job, more security of
employment, accommodation, retirement schemes and medical
facilities.
The table below shows conflicts involving University workers
(academic and non academic). As observed grievances resulting into
conflicts are usually directed at the governments and university
management.
Table A: Conflict situations involving University Staff (Academic & Non

Academic) and other groups between 1995 and 2001
Date University Groups involved Cause(s) Effects
Non-payment of
June ASUU Vs Suspension of
Univ. of Illorin excess
1995 Univ. Management work
work load allowance
Obafemi Mass failure in the Disruption of
Dec. ASUU Vs Univ.
Awolowo faculty academic
1995 Mgt
Univ. of Pharmacy activities
Stalled negotiation on
April National ASUU Vs. welfare leading
All Universities Strike action
1996 Federal Govt. package to banning of
ASUU
August National ASUU Vs Demand for improved
All Universities Strike action
1999 Federal Govt. condition of service
Non payment of
March NASU Vs Federal certain
All Universities Strike Action
2000 Govt. allowances paid to
academic staff
April Lecturers Vs Edo Demand for increased Close down of
Edo State Univ.
2000 State govt. subvention institution
Opposition to Sacking of 22
April Lecturers Vs Lagos reappointment lecturers
Lagos State Univ.
2000 State Govt. of vice Chancellor for including 6
the second term professors
Non payment of
NASU Vs Federal examination
Oct 2000 All Universities. Strike action
Govt. administration
allowance
Demand for the
ASUU Vs Univ.
Jan. 2001 Univ. of Illorin reinstatement of Strike action
Management
retrenched lecturers
Need for increased
Feb. ASUU Vs Federal
All Universities funding of Strike action
2001 Govt.
universities
Demand for
March University of ASUU Vs Univ. Closure of
reinstatement of
2001 Illorin Mgt Univ.
retrenched lecturers
Physical
May University of Lecturers vs ASUU Non-joining of strike
assaults on
2001 Ibadan Executive be some professors
persons
Source: Adapted from Alabi, A.T (2009) conflicts in Nigerian Universities:
causes and management. Ilorin Journal of Education, 1 (1) 44-48.
Legend:
ASUU: Academic staff Union of Universities; NASU: Non academic Staff
Union of Universities
● Interpretation or violation of agreement

The application of the provisions of collective agreement may be the
source of conflict. The parties involved may take advantage of the ambiguity
to point to the section that favors it or may interpret the ambiguity in its own
favor. Lastly, one party may violate an agreement in form of non-
implementation or non-adherence to the terms of agreement. This was the
case regarding the federal government-ASUU agreement of 1992. It
eventually led to the declaration of an industrial dispute by ASUU in 1996.
The prime objective of the Academic Staff Union Universities (ASUU)
industrial action of 1992 was to avert the total collapse of the university
system in Nigeria. The negotiation between the federal government
culminated into the September 3, 1992 Agreement which addressed three
major areas namely, funding of universities, university autonomy, salary and
non salary conditions of service (Okeke, 1997). The September 1992
agreement was ratified by the President of the Federal republic of Nigeria.
However, statements credited to then Secretary for Education and Youth
Development, Prof. Ben Nwabueze in respect of the September 1992
agreement between the federal Government and ASUU triggered the
dormant old wounds. According to the secretary the Agreement was
tantamount to imperfect obligation and therefore not binding on the Federal
Government. He equally remarked that the immunity of the state, the
necessity and overriding public interest make the September 1992 agreement
impracticable(Okeke, 1997).
● Labor Unionism: diversity and multiplicity

Labor unions existing in tertiary institutions have at different times
been at disagreement with their respective employers (the federal or state
governments) which eventually resulted in improved conditions of service.
In Nigerian tertiary institutions such labor unions include but not Limited to
the Academic Staff Union (COEASU), Academic Staff Union of
Polytechnics (ASUP), Senior Staff Association of Nigerian Universities
(SSANU), Non-academic Staff Union of Educational and Associated
Institutions (NASUEAI) which are the Unions of Universities, Colleges of
Education and Polytechnics.
Multiplicity of labor unions on campus breed conflicts in tertiary
institutions. In the university system, there are four labor unions, namely
Academic Staff Union of Universities (ASUU), Non-Academic Staff Union
of Universities (NASU), Senior Staff Association of Nigerian Universities
(SSANU) and Association of University Technologists of Nigeria
(ASUTON). In Polytechnics, there are Academic Staff Union of Polytechnics
(ASUP), Non Academic Staff Union of Polytechnics (NASUP) and

Polytechnic Senior Staff Association (POSSA) while in colleges of
education, there are Colleges of Education Academic Staff Union
(COEASU) and Colleges of Education Senior Staff Association (CESSA).
The multiplicity of these unions and associations on campuses breed intra-
union conflicts, rivalry as well as engender conflict between various unions
and governments and/or the management of the institutions. This is
evidenced by the prevailing circumstances where one labor union negotiates
and reaches an agreement with government or management only for another
union or other unions to make similar demands on the government or
management of their institutions.
● Inadequate Students Support Service

Apparently because of the high demand for education all levels in
Nigeria, it has been difficult for the institutional authorities or even the
governments to provide certain basic support services needed for the full
realization of the goals of education. These short comings are reflected in the
unrealistic ratio of the available services to the population of the staff in
tertiary institutions. It is a known fact that most institutions are faced with
inadequate financial allocations for quite sometime now due to mis-
management of the economy and decreased revenue due the world oil glut.
Consequently, most of the institutions could not provide services needed for
the ever increasing enrolment in schools.
Some of the identified needs of the staff support services programme
which are seriously affected are transportation, sanitation facilities, food
services, recreational facilities, better advising systems, the need for better
dissemination of information and for more meaningful dialogue between the
authorities and students as well as finance and services. Of particular
emphasis here, and which have been one of the main sources of conflict
between staff and institutional authorities in Nigeria is welfare services.
For example ASUU went on strike in April 2001 to press for
improvements in a wide range of issues including emoluments. Government
officials after signing on behalf of the federal government later reneged on
the agreement thereby precipitating a strike in which 49 lecturers from the
University of Ilorin were sacked for their role in the strike action. Eight years
later, the Supreme Court ruled that five of the striking university of Ilorin
lecturers were wrongly dismissed.
● Unresponsiveness of the Governance

Unresponsive governance constitutes a major instrument of labor
crisis. Failure by the Governments and or individual institutions to implement
policy statements result to anger and frustrations which naturally follow with
equal consequences .No doubt, when staff fail to recognize the effectiveness
and viability of an administration, they become suspicious of all authorities
and are resentful of institutions structures in which they find themselves. For
instance, the table A above depicts strikes by staffs of tertiary institutions in
Nigeria. At a time when the National Economy was considered to be better
(1978), Government introduced new University fees and staff of higher
institutions reacted. Similarly, in 1988, the Federal Government withdrew
the oil subsidy and introduced Structural Adjustment Programme (SAP).
These policies, the staffs argued that they were not necessary at the time in
point and it did not favor the common-man. At the institutional level, there
had been various strikes for one reason or the other (accommodation,
instructional materials, shortage of lecturers and many other instances).
The higher institutions of learning have a large concentration of some
of the most intelligent young people in the society who are exposed to a wide
range of knowledge with unlimited freedom of expression. The radical and
eloquent among them portray government polices as injustice and literally
mobilize the students and demonstrate against government policies. In the
past, Nigerian Lecturers have expressed their dissatisfaction over government
policies in so many ways (writing to the media, traditional rulers, talking to
senior government officials and discussing with influential personalities in
the society).
● Societal gap
The academic and non academic staff of institutions of higher
learning posses traits in several respects. They try to demonstrate their
coming of age and they seem to revolt against certain established norms to
prove to the society that they have arrived. This is mainly due to the
fundamental changes within the social system which are manifested in the
current craze of urbanity and modernity that not only challenge but
obliterated the accepted moral values of the society. However, the failures of
the authorities to understand these traits often lead to conflict between them,
and consequently their explosion at the slightest suggestion that they do not
know what they are doing. This notion of general gap when carried to the
tertiary institutions could serve as a potent source of labor unrest, especially if
the institutional leadership tends to be conservative and strict with staffs.
Who should be blamed for labor crisis in our tertiary institutions?

Staff’s conduct in Nigeria can only be seen against the general background of
the complex social changes which are taking place in it. This is because the
higher institutions are expected to mirror the larger society of which it is a
sub-system. Hence, the higher institution is easily affected by the
psychological, social, economic and political factors within the larger society
and over which the institution has no control. As staffs feel justifiably
aggrieved and resort to tactics resulting to their alleged conduct. The general
causes for staff unrest are deeply rooted in our society. Since the University
– including the staff body is part and parcel or the larger society in which the
University is situated in the reflection of the society, the socio-political
maneuvers in the larger society are experienced in the campus. The case in
point was the 1990 religious disturbances in Kaduna State where Ahmadu
Bello University and Bayero University, Kano took to the street in reaction to
what one would have thought as complete extra University affair.
● The Mass Media

There is no doubt that the mass media has somewhat being a factor
which is known to have facilitated labor unrest, through their manners of
reporting. When a report is in citing or not balanced enough, it can easily set
the students on motion, thinking that they have the support of the press. This
can help to fuel or spread the protest out of proportion. Exposure to
documents, films, and television programmes of all sorts from foreign
countries could have considerable influence on staffs and help to stimulate
the tendency to have liked the staffs of the foreign countries even when the
cultural settings are quite different. The mass media has not helped matters at
all in containing staff unrest. If anything they have contributed in escalating
the unrest. Although staff unrest and labor conflict was not peculiar to the
University, the unbalanced comments from certain quarters – especially the
media, generated into a national issue. A responsive media is a necessity for
solving the perennial incidence of labor conflict in a plural society such as
Nigeria.
● Institutional Power and Management

One major challenge confronting the Nigerian tertiary institutions is
that of poor management. The greatest a challenge facing Nigerian tertiary
institutions however is that of effective leadership. This is because the right
leadership is crucial to the solution of the hitherto enumerated problems.
Leadership is the element that makes the difference between success and
failure in organization. The importance of leadership in Nigerian Higher
Institutions cannot be over emphasized. To a large extent, it affects

motivation and job satisfaction, productivity, organizational success and staff
unionism.
The school organization like other social organizations is prone to
conflict due to power and organizational politics. The adverse consequence
of conflict in tertiary institutions in most case involving organized staff
unions and the federal and state governments the major proprietors of tertiary
institutions in Nigeria, make the understanding of issues bothering on conflict
theories, causes and management very imperative.
Leading can be looked upon as a subset of the management function.
However, it seems to occupy a critical niche in the diagnosis of the problems
of Nigerian tertiary institutions to justify a separate treatment. Ironically,
Nigerian tertiary institutions seem to have shunned the idea of the need for
organized management training especially for the academics. Instead of
encouraging the cultivation of administrative and leadership skills for its
managers, our tertiary institutions traditionally emphasize technical and
academic proficiencies. The result is that some academics assuming
important administrative positions rarely have leadership training or
administrative experience.
The assumption is that a professor would make a good Vice-Chancellor,
Provost, Rector, Dean, Director or a Coordinator. Little accepted is the
notion that academic competence may not necessarily confer leadership and
administrative capability. The culture of higher institutions the world over
seems to exaggerate the importance of the accumulation of knowledge and
research skills per-se over leadership or management abilities. Specialism is
often pursued at the expense of broad mindedness and realism. Expectedly, if
there were any relation between theory and practice (and the tertiary
institutions exist to show that there is) then some measure of management
and leadership training must be advantageous for potential and practicing
academic leaders in assisting them to perform their duties more effectively.
The way forward

Obviously, conflicts are inevitable in any organization more so a school
organization with its complexities, diversities and hard choices. To
effectively avert labor unrest, it is essential that the government and
institutions should constantly seek, create and utilize all possible strategies for
dialogue, mediation, bargaining with staffs generally and staff activities in
particular, so as to gain a better understanding of the basic characteristics of
and factors conducive to labor activism, irrespective of whether or not any
specific issue is currently at stake. An understanding of the characteristics of
activist protest will lead to more effective methods of averting potential

unrest and conflict.
Government (public and institutional authorities) should give
positive consideration to and utilize staff avenues for workers’ participation
in institutional decision-making and management at the heist levels and
opportunities, authorities should exploit to the fullest all communication and
dialogue facilities with their staffs, and provide for continuous review.
Government should continuously examine with institutional authorities, labor
unions and all other envisaged participants, projects, programme and new
avenues with which staffs can voluntarily, or by persuasion participate and
contribute to the socio-economic and political life of the Nigerian society
generally and specific communities in particular on a regular and systematic
basis. All such avenues of participation on contribution should include
systems and awards of public recognition.
Considering the potential of labor activism for spontaneous violence
and disruption, government and institutional authorities should approach such
conflict first, at the preventive level. Early warning mechanisms should be
employed. The preventive level will include communication and feedback of
full available information, thus pre-empting rumor and speculation,
consultation with systematic basis, through predetermined mechanisms and
channels. The curative stage must include a well regulated system of
discipline and sanctions, the use of well equipped law enforcement agents
such as the police but not the army, the application of available sanctions
under the institutions as well as under the State, including any specific lawful
modifications existing at the time against incidents of “creative vandalism”.
As a strategy for improved dialogue, government and institutional
authorities need effective systematized and operational mechanism of
communication in which academic and non academic staff concerns when
formally petitioned, will receive appropriate and reasonably prompt
responses, in which established channels will function and be respected, and
to which exceptions are only deliberately, temporarily and exceptionally
made. Such mechanisms should seek to provide for the development and
maintenance and time scales, and recognized the importance of the
“generation gap” between citizenry’s perspectives and adult’s systematic
attitudes which may need to be bridged. The mechanisms should also be
turned to take note of the “the silent majority” which may be influenced by
“the activist minority’s” mobilization skills. Such mechanisms, at the
institutional, federal and state levels should also encourage labor consultation
as a matter of routine be able to adjust its quality and tempo in times of levels
after ensuring full participation of all relevant persons or bodies.
In the institutional context, a committee should be set up, where

one does not already exist, to perform the task of overall “positive
interaction”, under the Vice-chancellor’s Rector’s, Provost’s and Principal’s
office, with the labor union(s) of the institution, on a regular basis. There
should be personal contact of the staff body with the institutional Head. It
should be chaired by the officer holding overall staff affairs responsibility.
Such an officer should be a senior academic who has the psychology of the
institution-preferably a graduate of the same institution (an alumni).Details of
its composition and operational disposition should be worked out in the light
of the institutional characteristics.
Conclusion
Labor unrest and conflict at the tertiary level of institutions in
Nigeria could be attributed to wages related issues and lack of adequate
provision of certain support services as well as unionism complexities. These
are traceable to personal factors (home circumstance, and financial worries),
academic factors, and facilities, unsuitable residence, poor communication,
unclear institutional structure and policies and undefined regulations), and
external factors (socio political, in equalities, government infringement of
institutional governance and policies, and staffs being increasingly better
informed of standards and practices elsewhere). It should therefore, be upper
most in the minds of all concerned (i.e. the staffs, parents, institutions and the
government) as to how to provide suitable environment through which each
individual within the system can develop to the fullest of his/her abilities and
capabilities in terms of democratic ideals. When adequate support services
are provided in all our tertiary institutions, it will not only assist in increasing
the staffs’ feelings of satisfaction, belongingness, identification and
achievement to reduce if not totally eliminates unrest in Nigerian institutions
of higher learning. The tertiary institutions should strive to lay emphasis on
good working environment and conditions of service, admissions,
registration, records, orientation of new staffs/students, counseling, housing,
food and health services, labor activities and conduct. When these are
provided, it will no doubt help to facilitate the optional coordination and
integration of the academic and non academic needs of the students. Besides,
since the needs of the staffs are not likely to be met all times, they too should
shun strike actions in the bid to seek better solutions to whatever problems
that might be confronting them. These suggestions would facilitate conducive
for teaching and learning. If these recommendations are considered, our
tertiary institutions would be a better place for students, staff and institutional
authorities.
Bibliography
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Management in Nigeria. Nigerian Institute of Management, March/April
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management. Ilorin Journal of
Education. 1(1) 44-48.
Akpofure, E. E. O. (1995), “Student Activism and Federal Government
Policies in Nigerian Tertiary Education 1967 – 78”. Unpublished Ph.D
Thesis, University of Wales, Cardiff.
Amusan, T. A (1996) Sources of conflict in an organization. Journal of
general studies in education I (1), 93-99
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Addresses and papers 1975
85, Northern Nigerian Publishing Company, Maiduguri and Zaria.
Denga, D. I. (1982) Students Counseling: A major solution to campus
unrest, Lagos:Orit Egwa Publishers Ltd.
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Year XVI, No. 1, 2010, pp. 124-129
The role of domotics in daily life

O. I. Maxim, R. S. Cureteanu
Olga Irina Maxim

Radu Silviu Cureteanu
"Aurel Vlaicu" University of Arad, Romania
Abstract
The evolution of human society evolved people's demands
regarding the degree of comfort and safety at home. To this, a
significant contribution has had the housing provision with
various electrical and electronic machineries. Each of them
performs a specific function, satisfies a certain human
need. Taken together with the related complex installations,
such machinery and household equipment can form a "home
automation system", a unitary system, easy to manage.
Keywords: domotics, digital technology, home appliances
Domotics, appeared relatively recently, emerged due to advances in

electronics and informatics. The first elements of domotics occurred 30-35
years ago. It knows a growing popularity in recent one year only. The
explosion of popularity is no stranger to the proliferation of electronics in
our homes, the penetration of computing - computer in homes, which
offered a broad perspective on the application. It allows a coherent and
comprehensive management of all domestic and technical functions of
individual homes.
Domotics term derives from the Latin word "domus" (house) and
the suffix "otios" reminiscent of automation. So Domotics includes a series
of techniques that transforms the house with all appliances and systems in
an intelligent building, automated, where the comfort of the occupants is in
spotlight. [5]
To achieve smart homes is recommended that domotic systems
should be implemented still in the design stage. A very important place
inside the house is occupied by system appliances. A large share of total
The role of domotics in daily life 125
household leisure activity, adversely affecting its use, that could be

channelled to cultural activities, physical recreation and leisure. [1]
Due to the recent refinements, using specialized microprocessors
and specific concepts of automation (such as feedback and fuzzy logic),
appliances, based on information received from the sensors will be able to
determine the optimal operating alone.[7]
Based on the growing number of appliances are the microprocessor
systems that minimize human intervention. Domotics brings the possibility
of connecting these devices to the global system of smart houses and the
possibility of long-distance supervision of all household appliances through
communications networks.[2]
With globalization and the significant growth that information has
for the modern man, human requirements related to appliances focuses
increasingly more on free access to information, one of the causes of
international society. Unhindered access to information will become a
necessity, a very important element in changing lifestyles.[3]
Four devices intended for domestic use are part of the world's top
25 inventions, according to a survey conducted among 4,000 UK adults,
aged between 18 and 65. The result of questionnaire carried out by Tesco
Mobile (UK) to determine the top 100 greatest inventions ever, puts the
washing machine in 12th place, the fridge on 14th place, the freezer on the
17th, and the vacuum on 23rd place. Other devices included in this ranking
are: microwave oven (place 26), kettle / pot (No. 40), air conditioning (No.
45) and drier (51st). All these inventions were considered to be more
important than cycling (52), football game (69) and Facebook
(84). Blender (97) is the device that is lowest in the ranking – over the
broom and waste shovel, office and laundry hook (ranked 98 and 99,
respectively, 100). [11]
Here are the top 50 of the 100 inventions deemed to be the greatest:
1. Wheel 11. Pill
2. Plane 12. Washing machine
3. Bulb 13. Central heat
4. Internet 14. Refrigerator
5. PC 15. Antibiotics
6. Phone 16. Steam engine
7. Penicillin 17. Freezer
8. iPhone 18. Camera
9. Toilet with device for drawing 19. Car
water 20. Glasses
10. Combustion engine 21. Mobile phone
126 O. I. Maxim, R. S. Cureteanu
22. Toilet Paper 37. Scissors

23. Vacuum 38. Paper
24. Train 39. Journey into space
25. Google 40. Heater / pot
26. Microwave 41. Calculator
27. E-mail 42. Bed
28. Pen 43. Remote Control
29. Hot water 44. Roof
30. Shoe 45. Air conditioning
31. Compass 46. SAT NAV
32. Ibuprofen 47. Wi-Fi
33. Toothbrush 48. Cat eyes
34. Hair straightener 49. Matches
35. Laptop 50. Power Steering...
36. Knife and fork
It was found that consumer premium electronics sales lately

increases, while the products positioned on the other segments are facing
falling demand due to market saturation occurred. In Romania, it begins to
shape a growing segment of consumers strongly committed to equip
households with the latest and most powerful models (as technology) of
appliances, some multifunctional. The trend is especially interesting
because, per total, this market has experienced a decline in demand
compared to other years, especially the period 2003 - 2005, when we could
speak about a real boom of sales.[6]
Most of the electronics sales are to retrieve on the medium - low
segment, but figures from 2008 show a clear trend of consumers
purchasing premium products with complex features and unique design. If
in the past we were talking about price as a decisive argument in
purchasing appliances, figures from 2008 shows a representative growing
premium segment.[10]
In this era of digital technology, LG has been delving deeply into
design and research, to create digital appliances that make life easier and
more fun.
Design plays a crucial role in harmonizing technology with human
needs. In an effort to predict emerging needs and deliver innovative
products to the public, LG has developed a comprehensive design
philosophy that boils down to four basic elements: concept, style, interface
and finishing.[8]
Digital technology is becoming an increasingly important tool in

our modern lives. A growing number of products are provided with "smart"
microchips and networking options. Although still in its early stages, this
technology has great potential, requiring the product designers to be
inventive in developing new lifestyle concepts and testing their designs on
a demanding public.
Whirlpool results show an increase of 100% on ceramic plates
segment, a category of premium built-in products. Also, there was a
significant increase of 115% in the segment of "side by side - American
refrigerators” two-door products with an impressive number of functions.
These are the most efficient domestic refrigerators on the market and sold
at specific prices of luxury goods. [13]
Another spectacular growth for Whirlpool, 90%, noted the range of
Emotion products, a premium range of freezers, including LCD panels,
antibacterial filters, several compartments, with a more generous space and
stainless steel finishes.
The new Electrolux range combines the latest trends in European
design with sophisticated technology to create a modern product line and
easy to use for cooking at home.
Each piece of the collection of Electrolux appliances Ebony is
suitable for any type of kitchen, fits perfectly with the areas being in
contrast with black or bright colors, vibrant. In addition to the dark tone of
the collection, the latest technology makes each product from Electrolux
Ebony collection easy to use and more efficient for a busy owner. This
includes electronic touch control, smooth door and a discreet exterior plain
rimless (frame). [8]
For example: Ebony range of induction hobs - the plates are
covered with a black glass with rounded edges that make cooking easier.
All you need to do is to place the container anywhere in the four induction
zone and the hob will detect the presence of the container and will start
heating up. Other special features include "touch" control of the range of
temperature and of a function stop-and-go, allowing the user to leave the
kitchen with the thought that the touch of a button there will be no
possibility of hob overheating.
To the LG Life Soft Research Laboratory established almost 20
years ago, researchers and designers work to predict the future by
examining and identifying the customer's wishes, noting the public's
interest in products and developing concepts and solutions based on this
research.
128 O. I. Maxim, R. S. Cureteanu
LG vacuum cleaners use advanced technology to compress dust

into cubes for easy disposal. Dust goes through ten stages of filtration and a
HEPA filter before reaching the compressor, to meet stringent testing
standards of the British Allergy Foundation (BAF). Moreover, LG vacuum
cleaners are ergonomically designed, controls on / off conveniently placed
on the hose, to make vacuuming easier.
Newest LG vacuum cleaners are provided with the first motorized
dust compression system in the world, which compacts the powder into
solid cubes, which can be removed easily and cleanly. [9]
Rotablade palette inside the dust chamber continuously rotates
from side to side, firmly stiffing the dust. Thereafter, at the filling of the
chamber and the forming of a cube of dust, the digital indicator lights "dust
filling". Removing dust from compressor cubes it’s easy, they can be
removed with a flick of the wrist.
A filter for high-efficiency particulate air (HEPA) is a "shield"
against fine dust particles and odours from the air. It consists of a carbon
odour filter and a HEPA filter 12 or 13, which eliminates 99.97% of dust.
Electrolux has expanded the dust bags range by launching "s-bag
® GREEN", a bag 100% natural, which is produced from corn starch, and
are therefore eco-friendly. The concept of "s-bag ®" was coined in 2001
and was developed by Electrolux in collaboration with Philips. Also, other
manufacturers were invited to join this initiative, "s-bag ®" products are
compatible with vacuum by Electrolux, AEG, Philips, Volta, Tornado and
Zanussi.
About s-bag ® GREEN
• 100% comes from renewable sources;
• It is made from corn starch, no bleaching agents, rubber or recycled
cardboard. Therefore, the raw material used is biodegradable;
• s-bag ® Green has a lifetime 50% higher than other paper vacuum
cleaner bags and is TÜV certified;
• s-bag ® Green provide maximum performance while impacts on
the environment is significantly reduced. Up to 65% less oil and
68% fewer greenhouse gases are emitted during the production
process;
• The packaging bag is also made from 100% recycled material, is
biodegradable.
In the years to come it will be possible to find concept products on
the Romanian market in the field of so-called "living products", with
advanced technology designed to improve the quality of life in ways that
are not yet imagine.
References
[1] Maxim, O. - "Study of electronic and electrical goods", UAV

Publishing House Arad, 2006.
[2] Păsărilă, O., "Prospecting the demand for household goods in
conjunction with lifestyles", Mirton Publishing House, Timişoara, 2003.
[3] Périgorol, M. - "Quality steps - approaches and tools", Technical
Publishing House, Bucharest, 2000.
[4] Plesa, D., A. - "Electrical and electronic commodity research", Editura
ASE, Bucharest, 2001.
[5] Plesa, D., A., - "Domotics and his technical perspectives, economic and
social at the beginning of the third millennium - PhD Thesis", ASE
Bucharest, 2000.
[6] Stanciu, I., Paraian, E., Schileru, I., - "Commodities - The quality and
range of non-food "- Third Edition revised and improved, Oscar Print
Publishing House, Bucharest, 2002.
[7] Stanciu, I., - "Calitology - the science of goods quality - Commodities
Fundamentals", Oscar Print Publishing House, Bucharest, 2002.
[8] Stanciu, I. (coord), Păsărilă, O., etc.- " Calimetrie - Comparative
Analysis of goods quality," University Publishing House, Bucharest, 2004.
[9] www.lg.com
[10] www.wall-street.ro
[11] www.hotnews.ro
[12] www.electrolux.com
[13] www. whirlpool com
Year XVI, No. 1, 2010, pp. 130-138
Instructional technologies
and life-long literacy centers in Nigeria
N. S. Oguzor, H. E. Adebola
Nkasiobi Silas Oguzor

Federal College of Education (Technical), Omoku-Rivers State, Nigeria
Helen E. Adebola
Faculty of Education, Nnamdi Azikiwe University, Awka-Anambra State,
Nigeria
Abstract
Learners in adult literacy centers form a special class of
learners. Usually these learners may include those who have
missed for a variety of reasons, or those who had earlier
dropped out of the system but later drop-in again or those who
are interested in continuing or life-long education and willing
to discover new interests and aptitudes. It is essential therefore
that these learners are made comfortable through the use of
instructional facilities. This study was directed towards
assessing the instructional facilities that are in use in adult
literacy centers in Anambra State. The study which was guided
by two research questions was carried out through the use of
questionnaire. The population of the study was 889 adult
literacy learners from 13 adult literacy centers. 160 adult
learners constituted the sample of the study. Simple random
sampling technique was used in selecting the sample. The data
collected were collated and analyzed in frequency and mean
scores. The result obtained showed that adult literacy centers
in Anambra State use instructional facilities. The study also
revealed that television, video, radio, primers, booklets are in
use in these adult literacy centers. Based on the findings, it was
recommended that modern instructional facilities such as
computers, internet connection, CD-ROM, should be provided
in these adult literacy centers.
Keywords: adult literacy centers, literacy education, life-long,
instructional facilities
Instructional technologies … 131
Introduction
Obidiegwu (2008) stated that although adult learners may face

difficulties in learning because of their psychological, physiological and
sociological advancement with age, their interest could be generated and
excellent result could be achieved in their learning through the use of
appropriate instructional technology. According to Imhabekhai (1998),
instructional facilities used in the adult literacy centers are those materials
which include persons, chalkboard, charts, pictures, laboratory equipments,
tools, chemicals, film projectors and soon which are used by instructors
and facilitators to facilitate the effective transmission of knowledge, skills
and attitude to the learners. The instructional facilities are no doubt of
utmost importance to the learners because they would find their learning
easy and convenient as well. Instructional facilities enables the facilitators
to break down his/her teaching to the level that the learners would
understand which is actually what the adult learners require because adult
learners are faced with a lot of challenges which may distract them from
concentration unless some enabling facilities are utilized in teaching them.
Adult literacy centers in Awka South Local Government Area of Anambra
State was established in providing literacy education for interested
members of the public who wish to equip themselves with the privilege of
furthering their education.
Statement of the problem
To assess means to evaluate. An assessment of instructional

facilities in adult literacy centers in Awka South Local Government Area is
to evaluate objectively the instructional facilities in adult literacy centre.
The adult learners in these literacy centers want to have the skills of
reading and writing which are required for man to function effectively in an
ever changing world. To this end, the study sought to find out learners’
assessment of instructional facilities in adult literacy centers in Awka South
Local Government of Anambra State.
Purpose of the Study
The main purpose of this study was to assess the instructional facilities in
adult literacy centers in Awka South Local Government Area. Specifically,
the study aimed at finding out:
132 N. S. Oguzor, H. E. Adebola
1. The instructional facilities that are in use in adult literacy centers in

Awka South Local Government Area.
2. the uses of instructional facilities in the adult literacy centers.
Research Questions
The following research questions guided the study:
1. What are the instructional facilities that are in use in adult literacy
centers in Awka South Local Government Area?
2. What are instructional facilities in adult literacy centers used for?
Method
The study used the descriptive survey design. The population of the
study was 889 which was made up of all the adult education centers in
Awka South Local Government Area in Anambra State. The simple
random sampling technique was used in selecting 160 respondents from
the centers. The population with the sample is represented in the table
below:
Table 1: Population and Sample of Respondents

S/N Centre Population Sample
Central school adult education centre,
1. 205 37
Awka
2. Ezinato adult education centre, Awka 80 20
Ikwodiakor adult education centre,
3. 75 11
Awka
4. Udoka adult education centre, Awka 90 20
Igwedimma adult education centre,
5. 52 14
Amawbia
Campus III Adult education centre,
6. 50 6
Amawbia
7. Ezike adult education centre, Nibo 41 9
Central School, Nibo (I) adult education
8. 37 7
centre
9. Central school (II) adult education centre 28 3
10. Community adult education centre, Nise 60 12
Isiakpu library adult education centre,
11. 58 5
Nise
12. Ojiagu adult education centre, Mbaukwu 50 3
13. Community adult education centre, 63 13
Umuawulu
Total 889 160
Source: Adult literacy centers, 2010
The instrument for data collection was questionnaire. The questionnaire

was divided into two sections. Section A and B. Section A elicited
information about the personal information about the personal data of the
respondents while section B was on items which relates to the research
questions. The responses of the respondents were elicited using a four point
Likert scale of Strongly Agree (SA), Agree(A), Disagree(D) and Strongly
Disagree(SD). The researchers went personally to the adult literacy centres
to collect data. The instrument was validated by three experts in
Department of Adult Education, Nnamdi Azikiwe University, Awka,
Anambra State. the three experts were requested to validate the instrument
in terms of:
1. clarity of instruction to the respondents.

2. proper wordings of the items and appropriateness and adequacy of
the items in addressing the purpose of the study. Their
recommendations served as guide to modification of items in the
instrument.
The reliability of the instrument was determined utilizing

Crombach Alpha method. The co-efficient alpha for the two sections were
0.96 and 0.96. These values indicate that the instrument was highly
reliable. The researchers distributed 160 questionnaires to the respondents.
The researchers were able to collect 151 questionnaires because 9
questionnaires were wrongly filled. The method adopted for analyzing data
include frequency counts and mean scores in respect of the research
questions. The mean scores as rated by the respondents were ranked to
enable assessment of relative priorities among the items. Decision was
taken adopting the principles of real upper and real limits of the scale value
1 to 4 on the four point Likert scale. Any mean score above 3.0 was
regarded as agreed while any mean score below 3.0 was regarded as
disagree.
Results
The findings of the study are presented in accordance with the research
questions that guided the study.
Research Question 1
What are the instructional facilities that are in use in adult literacy centers
in Awka South Local Government Area?
Answer to this research question is presented in Table 2.
Table 2: Mean Responses of the respondents on the instructional

facilities that are in use in Awka South Local Government Area
S/NO ITEMS SA A D SD TOTAL MEAN DECISION

Adult literacy
centres generally
1. 56 86 6 3 151 3.3 Agree
use instructional
facilities
Awka South
adult literacy
1
2. centre equally 75 52 5 151 3.3 Agree
19
use instructional
facilities
Computers, CD-
ROM are in use
3. 22 73 46 10 151 2.7 Disagree
in adult literacy
centres
Video, television,
radio, cassette
recorder, public
4. address system, 69 58 16 8 151 3.2 Agree
film projection
are in use in adult
literacy centres
Journals, primers,
newspaper,
5. booklets are in 71 44 25 11 151 3.1 Agree
use in adult
literacy centres
Cardboards,
woods, clay, are
6. 68 57 18 8 151 3.2 Agree
in use in adult
literacy centres
The table above shows the collective opinions of all the

respondents used for the study. Items 1, 2, 4, 5 and 6 agreed to the relevant
items on the table. This is because the various mean scores exceed the
decision rule of 3.0, except item 3 which is 2.7. It also implies that there is
actually the availability of instructional facilities in adult literacy centres in
Awka South Local government Area.
Research Question 2
What are the instructional facilities in adult literacy centers used for?
Table 3: Mean responses of the respondents on the uses of

instructional facilities in Awka South Local Government Area
S/NO ITEMS SA A D SD TOTAL MEAN DECISION

The
instructional
facilities in
adult literacy
7 87 58 3 3 151 3.5 Agree
centers in
Awka South
are meant for
instructions
Video,
television,
film
projection,
radio are used
8. for recording, 43 76 25 7 151 3.0 Agree
transmitting
the learners
voice and for
presenting
facts, pictures
Journals,
primers,
newspapers,
booklets are
9. 42 84 15 10 151 3.0 Agree
used for
improving
learners
reading skills
Cardboards,
woods, clay
10. 90 55 4 2 151 3.5 Agree
are used to
display or
draw pictures
that stimulate
reading
Table 3 above shows that all the respondents agreed to the items 7,
8, 9, 10. This implies that all the instructional facilities are meant for what
have been indicated.
Summary of major Findings
The summary of the findings are stated below:

1. Adult literacy centers use instructional facilities.
2. Instructional facilities used in Awka South local government area
include radio, television, video, cassette recorder, primers, journals
and booklets.
Discussion
The respondents agreed that adult literacy centers use instructional

facilities. This finding is consistent with the views of Akude (2004) who
stated that instructional facilities is a strategy developed to solve problem
of learning in adult education. The findings of the study revealed that radio,
television, video, cassette recorder, primers, journals, booklets are the
instructional facilities in Awka South Local Government Area. This
finding corroborates with Nzeneri (2006) who stated that all these
instructional facilities are available in literacy centers to stimulate and
motivate learners. Item 3 on table 3 however indicated that computers, CD-
ROM, and modern technology are not in these literacy centers. This view
requires that modern technologies like computers, internet, CD-ROM need
to be install in all the adult literacy centers. This is because technology is
moving fast and in order not to be left behind in the global world, the adult
literacy centers needed to be equipped with modern instructional facilities.
Omolewa (1981) supported this view by highlighting that adult literacy
centers should be fully equipped with toilets, reading rooms, coffee and tea
rooms, games rooms, snack bars, counseling rooms, music rooms, well
stocked libraries and a few luxuries to serve as attractions to the adult
learners. The findings of the study also showed that instructional facilities
in adult literacy centers are used for instruction. This finding is supported
by Obidiegwu (2008) who stated that video and television appeal to both
sense of sight and hearing. She further stated that television broadcasting
and video provide formal, non-formal and informal education. Haizel

(1979) as quoted in (Nzeneri 1996) maintained that adult educators have to
go beyond the five senses to include “stimulus modis” which is a stimulus
presented to the learners which include human interactions, direct
observation of things, pictorial representation and models.
Conclusion
Adult education facilitators ought to take the use of instructional

facilities in learning seriously. This is important because learners would be
motivated and encouraged when they are taught with instructional
facilities. It can be concluded that provision of relevant and modern
instructional facilities will go a long way in facilitating teaching and
learning in all adult literacy centers.
Recommendations
Based on the findings of this study, the following are recommended:

1. the government through relevant agencies should coordinate or
supervise and monitor the activities of adult education centers. This
is in order to avoid a situation of non-usage of instructional
facilities.
2. Facilitators and adult educators should have the knowledge and
usage of the instructional facilities.
3. Modern instructional facilities like internet, computer, laboratories
should be provided in the adult literacy centers.
Bibliography
Akude, I. (2004).Towards an Efficient Maintenance of Educational Media

Resources for effective delivery. Journal of Education, Science and
Technology 1(1) 86-97.
Imhabekhai, C.I.(1998). Programme Development and Programme
Management in Adult and Non-formal education in Nigeria. Lagos:Amfi
top books.
Nzeneri,I.S.(1996).Handbook on adult education principles and
practice.Onitsha:Goodway.
Obidiegwu, U.J. (2008). Instructional Technology in Adult Education In

Igbo, R.O. (ed). Contemporary Adult Education. Enugu:CIDJAP Printing
press.
Omolewa, M.A. (1981). Adult Education Practice in Nigeria.
Ibadan:Evans Brothers Nigeria Publishing Limited.
Year XVI, No. 1, 2010, pp. 139-145
The crisis is affecting women entrepreneurship

R. Lile, F. Barbu, M. F. Pantea, G. Sanda
Ramona Lile
Florentina Barbu
Mioara Florina Pantea
Grigorie Sanda
Abstract
This article provides an overview of the crisis impact over
women entrepreneurship. Entrepreneurship should be seen as a
key element in the development and revitalization of the
Romanian economy. Women see entrepreneurship as an
opportunity to take advantage of business opportunities, to
improve quality of life. Female entrepreneurial environment is
clearly affected by: high cost of tax credits associated with
instability, which generates fear woman investor impossible
not to reach financial debt payment; access to credit weight in
the case of newly established firms; lack of bank advisors
prepared for "dialogue" with potential investor specialist;
difficulties in accessing grants due to the lack of education of
entrepreneurs and officials from the ministries which are
interested in accessing these funds by business.
Keywords: woman, entrepreneurship, SMEs
Developed countries in Europe, have realized the importance of

newly established enterprises and small and medium enterprises (SMEs) in
economic development. Developing a country is directly proportional to its
business development activities. This goal has led many governments to
develop policies that encourage and stimulate new businesses. Most of the
measures taken by our country were insufficient and inefficient.
Periods of economic liberalism and interventionism more
pronounced in the succeeding capitalist world history, goes along with
those economic theories. Liberalism was seen even by Adam Smith two
140 R. Lile, F. Barbu, M. F. Pantea, G. Sanda
centuries ago as a symbol of capitalist society and the path towards

progress of humanity. But liberalism does not mean freedom to do
anything at all, but the desire to maximize personal profit while respecting
other participants in the economic game.
Interventionism has been applied in conditions of crisis: either
economic crisis or times of war. State interventionism is therefore an
abnormal situation in which markets do not work properly and the basic
mechanisms of the economic system are blocked. Free competition ceases
to be a factor regulating the market when supply and demand balance is not
natural, normal. Consumer desire, that individuals are crumbling economy
simultaneously and inexplicably, only fueled distrust of the market
mechanism. Finally, the system of private finance initiative ceases to
catalyze resources for innovation and creative spirit, characteristic of
capitalism.
Modern society has reached this critical point again:
entrepreneurship is blocked by the immobility of the international financial
system and national and private initiative - only bringing forward the long
term - is replaced by "anti-crisis program" initiated by the state.
Both in times of economic normalcy, especially in the crisis, the
state has shown consistently that most mismanaged resources in human
society. State intervention in the economy translates to wasted resources,
their distribution based on political rather than economic and a great
indifference to the welfare of the individual masses.
This image is just as valid in countries with developed capitalism,
as in the emerging - proof that once established interventionism in the
economy, collapsing rules is instant and general market. Many believe that
the imperfections of the market system have generated financial and
economic crisis and see, therefore, state intervention as the solution for the
recovery of economies affected imperative.
Do not endorse this view, by contrast, believe that the current crisis
is the product of "de-personalize" the spirit of ordinary citizen's property,
the replacement of reckless entrepreneurship of small-scale multinational
corporate system in which private ownership of the corporate colossus
remained only an illusion.
The output of the current financial and economic immobility,
which inevitably causes a downward spiral in economic contraction, the
widespread poverty and blocking of international trade, is small business
entrepreneurship. They have the resources to provide those goods and
services to consumers that they genuinely need and ability to generate
profits distributed to a critical mass of people to resume normal economic
The crisis is affecting women entrepreneurship 141
cycle on an upward spiral to general prosperity. The State need only refrain
from interfering in the economy and enabling the market to generate,
through private initiative, the solutions exit.
But such legislative and regulatory factors are generated mainly by
the Romanian state, by its institutions. These factors directly concerning
laws, regulations, government ordinances, the provisions of a special
nature or other bills relate directly to the business environment. Report
these uneven forces. Regardless of status, industry or closely related
elements that the person contractor, the factors listed company has
discretion within the meaning of change.
Enforcement is one of the most frequent reasons dispute between
companies and the Romanian state, many of the laws, for not research of
consistency between the needs of business environment and what those
needs will be.
Thus, the entrepreneurial environment is affected by the instability
of the tax system - lack of financial legislation simple, clear and stable
financial framework is unfavorable and SME development.
Entrepreneurship should be seen as a key element in the
development and revitalization of the Romanian economy. But instead the
state to support private initiative, has introduced new chore as the flat tax,
bankruptcy measures that have resulted in many small businesses.
President of General Union of Industrialists of Romania (UGIR-
1903), has indicated that the number of firms in services, trade and industry
will go bankrupt by the end of 2010 will be about 100,000, but will in
2011, their number decline to about 50,000. All this happened because of
the crisis and the introduction of the minimum tax of 2,200 lei per year,
respectively 550 lei per quarter.
In Arad county the situation is shown in the following table:
Tabel nr.1 The legal position of companies in the period 2009 - July
2010
Period 2009 Ian-July-
Indicators 2010
Number of firms deleted 981 1144
The number of companies with suspended 3188 1925
work
Number of companies set up 1353 728
The situation reflected in the chart is not encouraging given the fact
that the basis of comparison is only half the full year 2009 and 2010.
The legal position of Arad companies in the period

2009- July 2010
3500
3188
3000
2500
number of entities
1925
2000
2009
ian-iul 2010
1500 1353
1144
981
1000
728
500
0
deleted firms suspended firms new firms
In January 2009 had launched the first inter-regional strategic

project, human resources, in western Romania, a project entitled
suggestively entrepreneurship and equal opportunities. An inter-regional
model for women entrepreneurial school, financed by European Social
Fund - Invest in people, "Contract no. POSDRU/9/3.1/S/5, involving
counties: Maramureş, Satu Mare, Bihor, Arad, Timiş, Caras-Severin.
The overall objective was to promote equal opportunities for
entrepreneurship by encouraging the involvement of women in general and
rural women, especially in the initiation and development of their business
in the context of sustainable development of communities in the counties

located along the border Western Romania. Implementation period:
01/05/2009 to 01/05/2011.
In this project, Aurel Vlaicu University as a partner, has trained a
total of 48 women Arad city manager, Ineu, Lipova, Pecica and Chişineu
Cris to improve managerial skills and entrepreneurial enter in order to
develop existing business, the optimal use of existing market opportunities,
success factors that increase competitiveness, management and marketing
strategies, etc. and promote adaptability, affecting economic performance,
stability and level of SME employment. They also trained a number of 240
women who wish to start their own business from rural Arad, Ineu, Lipova,
Pecica, Chişineu Criş, Craiva, Beliu, Bocsig, Săvârşin, Bata, Ghioroc,
Semlac, Şeitin, Secusigiu, Seleus, Craiva, and Cermei for training in
entrepreneurial culture, increasing the ability to turn business ideas into
action by providing necessary information on business environment and
opportunities locally, developing a business plan, organizing and running a
successful business etc. and support services to start a business, thereby
generating an increased number of business, both in urban and rural areas.
Although they have received excellent advice, staff involvement
from Aurel Vlaicu University, even financial support, most graduates have
expressed reluctance Entrepreneurial School courses in establishing a new
business or business expansion on the grounds that the main obstacle
owned economic crisis existing financial and mistrust in the legal system.
Indeed, in 2009 knew that micro enterprises already pay a flat tax applied
to income. It was 2% in 2007, 2.5% in 2008 and knew that it would have
amounted to 3% in 2009. What they did not know was that the 2010 will
be abolished and all of the SMEs to be subscribers to this false charge
solidarity. These measures have a negative burden on entrepreneurship.
From the investigations carried out on female entrepreneurship in
the Arad county can highlight the following aspects:
• Women Entrepreneurship lacks a concrete program of measures
to ensure the survival of SMEs in the current economic crisis;
• Lack of policy creation and development programs led by
women;
• Difficult access to entrepreneurial training due to high costs and
lack of timely business women;
• Lack of facilities for quality, affordable child care combined, in
some cases, lack family support;
• Bureaucracy existing local and central levels.
Numerous studies have shown that age, employment status,

education, income, social ties and perceptions are some significant socio-
economic factors for the decision to launch a business. So, social aspects
are important factors that motivate the decision to engage in entrepreneurial
activities. However, providing a social status, respect and influence of
examples of successful entrepreneurial business incentives were not
sufficient to bring women from Arad to initiate new business in current
conditions. Female entrepreneurial environment is clearly affected by: -
high cost of tax credits associated with instability, which generates fear
woman investor impossible not to reach financial debt payment - access to
credit weight in the case of newly established firms - lack of bank advisors
prepared for "dialogue" with potential investor specialist - difficulties in
accessing grants due to the lack of education of entrepreneurs and officials
from the ministries which are interested in accessing these funds by
business.
Aware that entrepreneurship contributes to economic growth by
generating jobs and developing innovations, entrepreneurs from Arad
county listed the following grievances:
• Financial legislation, clear and stable business environment to
support entrepreneurship;
• Encourage the creation of new companies by providing a grace
period tax credits based on the business plan and the possibility of
accessing grants, coupled with consistency and transparency in the
legislative and executive activities;
• Create a database for promoting business opportunities, the funds
of all types that can be accessed, the actions of interest to women managers
and popularization of the main action;
• Partnership of local authorities’ female entrepreneurship to solve
community problems and identify external partnerships.
Conclusions
Women see entrepreneurship as an opportunity to take advantage

of business opportunities, to improve quality of life. Business opportunities
are limited, even non-existent in current conditions. Ensuring social status,
respect and influence entrepreneurial success in business examples have
led women to start new business in current conditions. Thus, we can say
that women are more informed decisions; avoiding action is doomed to
failure.
In the current economic context, the main negative factors affecting

the evolution of the female entrepreneurship are legal, social climate, and
policies the International Monetary Fund (IMF) and World Bank.
Government measures only lead to extinction of female entrepreneurship
even though we all know that the resumption of economic growth can only
be sustainable measures, solid and predictable, based on an overall vision.
Bibliography
Arenius P., Minniti, M., A Cross-Country Study of Gender Differences in
Self-Employment. A preliminary draft, GEM Research Conference, 1 – 3
April 2004, Berlin;
Carter S., Anderson S., Shaw E., Women’s business ownership: A review of
the academic, popular and internet literature, Report to the Small Business
Service, RR 002/01 Available at: http://business.king.ac.uk/research
/kbssbs/womsbus.pdf;
Levent T., Masurel E., Nijkamp P., Diversity in Entrepreneurship: Ethnic
and Female roles in urban economic life, International Journal of Social
Economics, 30 (11-12): 1131 – 1161;
Delmar F., Holmquist C., Women’s Entrepreneurship, Issues and Policies’
2nd OECD Conference of Ministers Responsible for Small and Medium-
Sized Enterprises (SMEs) Istanbul, Turkey 3-5 June 2004;
O. Driga, L. Gonzales Esteban,, Antreprenoriatul feminin în România,
Centrul pentru Cercetare în Antreprenoriat şi în Afaceri;
Wagner J., Sternberg R., Start – up activities, individual characteristics,
and the regional Milieu: Lessons for entrepreneurship support policies
from German micro data, The Annals of Regional Science, 38: 219 – 240.
Sima M. G, Factori majori de influenŃă ai competitivităŃii IMM-urilor
româneşti în contextul economiei actuale, Jurnalul Cercetării Doctorale în
ŞtiinŃe Economice , Vol. I nr. 2/2009: 25-35;
*** www.wall-street.ro
*** orcar@ar.onrc.ro
*** www.femeiadeafaceri.ro
Year XVI, No. 1, 2010, pp. 146-151
Companies in specific areas

P. Tărchilă
Petru Tărchilă
Faculty of Humanities and Social Sciences
“Aurel Vlaicu” University, Arad, Romania
Abstract
Throughout time, credit institutions have been represented by
legal persons who work in finance, banking and can operate
like banks, credit cooperatives, electronic money institutions
and savings banks for housing.
Keywords: company, bank, law, contract, bank management
Banking companies
Under Article 11 of Law on Lg.58/98 banking [1], banks can
develop, within the authorization granted, the following activities
(considered to be the main activities of the bank):
a) financial leasing;
b) money transmission services;
c) issuing and administering means of payment;
d) assuming issuance of guarantees and commitments
e) trading for own account or the account of clients, under the law,
with:
-money-market instruments, such as: checks, bills, promissory
notes, certificates of deposit;
-currency;
-futures and options contracts;
-instruments based on the interest rate and currency;
-real estate and other financial instruments
h) mediation, under the law, the offer of securities and other
financial instruments, underwriting and placement of them or by placement
and related services;
i) providing advice on capital structure, business strategy and other
aspects related to it, consulting services on mergers and acquisitions of
companies;
Companies in specific areas 147
j) interbank intermediation;
k) customer portfolio management and advice related to it;
l) safekeeping and administration of securities and other financial
instruments;
m) provision data and credit references in the field;
n)rental of safe deposit boxes
Banks can take place, within the authorization granted, and other
services permitted by applicable law, such as storage assets of investment
funds and investment firms, the distribution of units in investment funds
and shares of investment companies, acting as operator of an electronic
archive of security interests, transactions with precious metals and stones
and objects made of them in office operations, data processing services,
database management or similar services to third parties, participation in
social capital of other entities. [2] Banks can provide ancillary services or
related to activities carried out, such as ownership and management of
movable and immovable property necessary to the activity or use of
employees, and can perform any other activities or operations necessary to
achieve the object of activity authorized without be necessary to include
them in the authorization granted.
Financial leasing is conducted operations since Romania's EU
accession date.
Banks can not perform the following activities:
a) transactions in movable and immovable property, except as provided in
Article 8 [3];
b) pledging their shares in bank debts;
c) granting loans or providing other customer services, conditional sale or
purchase of shares of the bank;
d) loans secured by shares issued by the bank;
e) the receipt of deposits, securities or other valuables, when the bank is in
cessation of payments;
f) loans conditional on acceptance by customers of other services that have
no connection with the operation of that credit.
Bank authorization
Banks, Romanian legal persons, can work only on the basis of the
authorization issued by the National Bank of Romania.
Capital of banking companies is at least equivalent in RON of EUR
5 million (58, paragraph 2). Capital of a bank to be paid, in full and in cash
at the time of subscription.
148 P. Tărchilă
The constitution, capital will be poured into an account at a credit

institution, which will be blocked until the bank registration in the
Commercial Register (58, paragraph 3). When setting up a bank with initial
capital equals capital, unless the new bank is formed resulting from a
reorganization by merger or division. At the opening of a branch will
provide initial capital by providing its endowment of capital by foreign
credit institution. (Article 58, paragraph 4).
Banks are under the legal form of joint stock company, upon
approval of the National Bank of Romania, in compliance with legal
provisions applicable to companies.
Banks, Romanian legal persons, will have its head office and, if
necessary, head office, representing the location of the main center for
leadership and management of statutory activity on the Romanian territory.
Permit application will be submitted to the National Bank of
Romania in the form established by it. Documentation that must
accompany the application deadlines and procedures for authorization will
be established by the Romanian National Bank regulations.
The conditions under which authorization may be granted shall be
regulated by the National Bank of Romania and will refer, without being
limited to:
a) the qualification and professional experience of bank managers;
b) the minimum initial capital;
c) feasibility study, which will include at least the type of operations
conducted and provided to the bank's organizational structure;
d) significant shareholders and founders of the bank;
e) ownership structure;
f) Bank premises;
g) auditor.
Within 4 months of receiving the request, the National Bank of
Romania will approve the establishment of a bank or reject the request and
shall notify the applicant in writing its decision, together with the reasons
behind it, in case of rejection.
Within two months of the notification of approval of incorporation
in order to obtain operating permits will be submitted to the National Bank
of Romania up legal documents attesting to the bank. In the case of banks
that are on the way public subscription, the deadline for these documents is
8 months.[4]
Withdrawal of authorization
National Bank of Romania may withdraw the authorization granted
to a bank, Romanian legal person, or a branch in Romania of a credit
institution with headquarters abroad or at the request of the bank [5], while
shareholders have decided to dissolve and liquidate its request that the
lender foreign, or as punishment or for the following reasons:
a) the bank has started operations for which it was authorized, within one
year of receiving the permit, or has not exercised for more than six months,
the activity of taking deposits;
b) the authorization was granted based on false statements or any other
unlawful means;
c) there was a bank merger or division;
d) the competent authority in the country where foreign credit institution is
established to set up a branch in Romania withdrew its authorization to
conduct banking activities;
e) has passed a decision to shutter the bank's bankruptcy, if it holds the
operating permit delivery of the decision;
f) no longer meets the bank's shareholders conditions provided by law and
rules to ensure a healthy and prudent management of the bank or do not
allow for effective supervision;
g) The National Bank of Romania considers that endangers the interests of
maintaining the permit bank depositors and other creditors of the bank, in
that the bank does not have sufficient equity to the development of normal
activity or there are elements that lead to the conclusion that within a short
bank will not be able to meet obligations to depositors or other creditors or
the bank no longer justify its presence in the market because their activity
does not meet the purpose for which the bank was established and this
activity can be performed only by drawing on resources from interest rates
much higher than those prevailing in the market;
h) the bank's management was not provided at least two persons for a
period not exceeding three months;
i) are not met any other conditions that led to the issuance of the permit.
Organizing and managing the activity of the bank

Organization and management of banks is determined by
incorporation of banks, in accordance with commercial law and banking
law compliance.
In all its official documents to the bank must clearly identify by a
minimum of data: company under which the register of trade, capital,
150 P. Tărchilă
registered address, the unique registration number in the trade register, the
number and date of registration in the register bank.
The Bank is committed by the signature of at least two leaders,
having powers under the articles of association, or at least two employees
of the bank authorized by the management.
Leaders and managers of banks should have a good reputation,
qualification and competence appropriate to achieve the objectives and
prerequisites necessary for the activity of the bank in accordance with the
requirements of the law and rules of prudent and sound banking practices
in order to ensure credibility and viability of the banking system, including
protecting the interests of depositors and other creditors of the bank [6].
Bank management must be ensured at least two people. Leaders
must be employees of the bank may be members of the board of directors.
Bank managers should ensure effective management of daily bank activity,
to exercise sole function for which they were appointed and at least one of
them to prove knowledge of Romanian. They must be licensed in one of
the economic, legal or other area that is circumscribed in the financial and
banking activity and / or have completed graduate courses in one of these
areas and have at least 7 years experience in finance and banking, to be
specific and relevant to the volume of activity undertaken by the bank.
Bank managers may be only individuals. These individuals must
have at least 3 years experience in finance and banking or in another area
may be considered relevant to the bank.
If bank managers on the board of directors, the number of its members
should be set so administrators do not have the capacity to represent the
majority leader.
Apart from the conditions stipulated by the legislation in force in
respect of directors, a person can be elected to the board of a bank, and if
elected, or if the decade of the mandate:
a) is an employee of that bank, except its leaders;
b) is an employee, director or auditor to another credit institution, the
Romanian legal person, unless the bank is a subsidiary of the credit
institution;
c) in the last five years has been withdrawn by the competent authority
approval to conduct a credit institution or has been replaced as a result of
the remedial measures taken by a credit institution;
d) is barred by a legal provision, a court order or decision of another
authority, to conduct a credit institution, a financial institution or an
insurance / reinsurance, or to work in one specific fields institutions
respective.
Bibliography
Carpenaru, S. D - Romanian Commercial Law, 4th Edition, ALL Beck Ed,

Bucharest, 2004
Mazilu, D - Commercial Law, General Part, Lumina Lex Ed, Bucharest,
2009
Tărchilă P - Romanian Commercial Law, Universitary Horizons Printing
House, Timişoara, 2007
Turcu, I - Business Law, Chemarea Printing House, Iaşi, 2002
Turcu, I - Romanian Commercial Law Theory and Practice, Lumina Lex,
Bucharest 2010.
[1] Law no. 58 of March 5, 1998, banking activity, republished in the Official Gazette,
Part I 78 / 24 January 2005, amended by Law nr.131/2006
[2] S.D. Carpenaru, Romanian Commercial Law, All Beck Publishing House, 2004,
Bucharest
[3] Article 13 provides that banks may conduct these transactions in movable and
immovable:
-Operations necessary to the activity;
-Operations with movable and immovable property for improvement of professional
education of employees, organization of leisure and recreation spaces housing
insurance for employees and their families;
-Lease of movable and immovable assets to third parties, provided that the value of
movable and immovable property leased should not exceed 5% of the bank's own
funds that total revenues from these operations do not exceed 5% of total bank income,
less revenues from these operations, these levels can be exceeded in duly justified
cases, only with the approval of the National Bank of Romania;
-transactions in movable and immovable property acquired as a result of the execution
of the debts had forced the bank. Movable and immovable property acquired after the
execution of bank debt will be forced to bacna sold within one year from the date of
acquisition. For justified reasons, the deadline may be extended with the approval of
the National Bank of Romania
[4] D. Mazilu, Course commercial law, general part, Ed Lumina Lex, Bucharest,
2009.
[5] For instance, The decision of the National Bank of Romania no. 461 of 2004
(published in Official Gazette no. 946 of 15 October 2004) on the withdrawal of
authorization Banque Franco Roumaine, Paris-Bucharest Branch. Withdrawal of
authorization was granted on the request of the bank's sole shareholder. Moreover, on
20 October was announced "merger by absorption of Anglo-Romanian Bank Limited,
a member of the group Romanian Commercial Bank (BCR), Frankfurt Bucharest Bank
(BCR former subsidiary in Germany) and Banque Franco-Roumaine (French
subsidiary of BCR ) "
[6] I. Turcu, Business Law, Chemarea Publishing House, 2002, Iasi
Year XVI, No. 1, 2010, pp. 152-168
Competitiveness of enterprises in the globalized world

and the impact of localization
J. Varga
János Varga
Ph.D candidate in economics, Szent Istvan University, Gıdıllı,
Budapest, Hungary
Abstract
The process of globalization creates the possibility for the free
movement of products and factors of production that results in
numerous positive consequences in the world economy.
Today, it has become obvious that even globalization is not
able to ensure the conditions of development for everyone.
Real winners of globalization are global and transnational
companies, because they are able to acquire low-cost labor,
preferences and enter new markets, although at the expense of
domestic economic units and domestic competitiveness.
However, another solution exists to create the opportunity of
development: Localization. The development which has
happened in the past few years in Finland is simply called ’The
Finnish Miracle’. The most important question is to find out
the path to this result and to analyze the role of enterprises in
the process. According to the findings, the answer is
localization. At the same time, in the last few years Hungary
showed a serious economic decline and Hungarian enterprises
had also represented a big role in the process. The greatest
result is: localization is viable also for those countries that
were characterized by the impacts of globalization until now.
Keywords: globalization, localization, competitiveness, small
and medium sized enterprises
1. Facing alternatives: globalization or localization?
The history of mankind has been developing for thousands of years

through the unification and interaction of societies which determined the
Competitiveness of enterprises in the globalized world … 153
existence of groups of people living in different regions under various

geographical, economic and social conditions. Global economic evolution,
as well as the rise of capitalism and the creation of the world market led to
significant quality improvement. The expansion of globalization started
during the 1970’s and closely linked to activities of transnational
companies. This process, due to the coexistence of commodity production
and social development, resulted in the redistribution of surplus value –
mostly in favor of foreign investors. In the new economic era both
liberalization and the neoliberal economic philosophy, through the
elimination of legal and other barriers, contributed to the expansion of the
above process. Many authors argue against globalization; e.g. Susan
George, David Korten and Joseph Stiglitz. Joseph Stiglitz, based on his
years of experience gained at the World Bank, has an insight into
globalization processes, as well as into the role of major international
agencies and national governments that determine such processes. He
experienced that, contrary to its positive effects, globalization has negative
impacts on developing countries, and in particularly on their low-income
people. In addition, he underlined that the method for controlling
globalization processes has to be reconsidered, including international
trade, and directives issued for developing countries. Stiglitz, however,
underlines the role of the government in controlling the flow of economy.
He argues that governments have to insist on a policy that fosters economic
growth – as they have the opportunity to do so. Foreign investments mean
no direct success in growth at all times. As soon as foreign businesses enter
the market, they destroy their domestic competitors – often by destroying
individual aspirations to maintain a family business. David Korten argues
similarly about globalization processes. He insists that real domestic
markets are needed to be created in order to allow the population to
produce and trade real goods and services.
This economic context satisfies real need of the population, has a
positive impact on nature and puts emphasis on health of the workforce,
nevertheless, defines personal satisfaction as a primary measure of success.
Analyzing Korten’s theories local economy can be mentioned as an
alternative for globalization. Capitalism gave a boost to promoting
individual economic interests, striving for personal goals, deepening social
inequality and desperate craving for money. In this world only a few power
nations set rules for world economy and international agencies
autonomously decide on loan conditions. In return they set rules that are
needed to be kept under any circumstances. In this economic context not
the creation of large-scale production, continuous innovation,
154 J. Varga
environmental protection or social well-being plays a major role, but

money making. Having a pile of money no attention is given to fellow
men, nature or national economy and competitiveness. In contrast, as the
evolution of economic theories imply, new values have occurred in
economic thinking. These theories reflect on money as a tool for trade, not
as a genesis for all things. Korten argues that businesses, besides
maximizing their profit, should also pay attention to social interest.
Capitalism stands for a concept that argues that social well-being can be
maximized by the market dominance of global multinational companies
that can, maximize their profits − in the total lack of social control. Such
companies often take advantage of favorable economic conditions, and
move on to another country or continent when circumstances change. In
the meanwhile, however, they pay no tax, keep wages down, exploit
resources, caused harm to the environment, and take their profit out of the
country. When we get to know that a larger foreign company is willing to
heavily invest in a given country, we tend to consider it a great opportunity
to lower unemployment rate by creating new jobs. It should be examined,
however, what price is paid for a few new jobs. James Gustave Speth
argues against globalization and underlines advantages of localization. He
implies that the presently operating capitalist system needs to be redesigned
in a way to be able to support locally owned domestic enterprises that
employ local workers in order to serve social interest. Speth argues that
humans have no chance to live in perfect harmony with nature as long as
economic development remains high political priority, cultural values are
determined by consumption, and there is no effective way of keeping
control of multinational companies. Competitiveness is not only about
business success, but about maximizing social capital and contributing to
the building of a more efficient economy and society. The new economy
uses its resources to regain its formerly exploited supplies and to free
domestic markets. According to Adam Smith’s theory local economies are
built on manufacturers, small and family businesses that have strong social
roots and supply and trade locally needed and produced goods among each
other. He believed that men genuinely care about one another and everyone
should be shielded from any harm. The government is responsible for
sanctioning all who do otherwise. This implies that another solution exists
to promote economic growth: localization. Localization is, basically, a shift
from transnational companies and international agencies to democratically
elected local groups by the redistribution of power and by the reform of
decision making procedures. Local can mean a national state, as well as
part of a national state or a group of national states within a geographical
region. The economic concept of localization builds on the statistical fact

that most of the human needs can be satisfied locally. Long-distance trade
is only a driving force for the expansion of product range and competition
on scarce resources. Localization, without eliminating global components,
stands for subsidiarity. In short it means that the majority of decisions have
to be made locally, and only the most important ones are needed to be
taken to a higher level. Global organizations would still operate but,
contrary to the current model, would have limited authority and could be
controlled locally. In order to ensure appropriate conditions for
localization, paradoxically, global rules have to be applied, however,
significantly different ones as presently. Global networking among local
social groups is crucial, as well as the transfer of knowledge and
information, in order to prevent global problems (e.g. climate change).
Localization involves more than just correcting current regulations; it is
more like a radical systemic change of mainstream economic values that
gives higher priority to social and ecological factors than to market share
and profit. The anti-global alternative, offered by civil organizations, can
be described the shortest as “global localization”. In other words, decisions
have to be made on a local-scale all over the world. Globalization and
localization can influence economic competitiveness differently at national
level. Global economic activity poses minor problems in some countries,
but the rest is facing severe difficulties that make the difference among
countries even more explicit. This presentation focuses on economic
competitiveness based on the comparative analysis of 2 countries – Finland
and Hungary.
2. The concept of competitiveness
Having a look at the World Competitiveness Scoreboard, it can be

noted that those countries that invest in innovation and knowledge, take the
human element into consideration, respect nature and highlight the
importance of social capital are a lot more competitive than those who
compete through low prices, lowering costs and by inflowing foreign
capital. Within the past few years Hungary lost its former position and
ranked as one of the least competitive economies in the region; its
competitiveness dropped substantially. A sole opportunity exists for
countries lagging behind in competitiveness or less developed countries: to
learn from the most competitive countries. The means of their competitive
economic operation is to be examined and if possible their applicable
methods need to be implemented. Analyses at national economic level or
156 J. Varga
examination of merely national economic policies does not suffice, since a

country’s national economic results and competitiveness are significantly
affected by the companies’ performance operating in the country’s
territory. Enterprises’ economic results fundamentally determine the
situation of the economy and society since great majority of domestic
products are produced by this sector and it creates labor force demand for
the labor market. Globalization can be defined as a process within which an
increasingly larger range of resources are available for national economic
organizations simultaneously with widening market opportunities. In this
globalized world, thus in the escalating competition, it turned out that a
good product or service in itself cannot be sufficient for long-term success.
In the harsh competition it is of getting more importance that the
enterprises have the ability to renew their products, services and
technological processes from time to time. Such ambition to renew is a key
motivating factor of the economic organizations’ competitiveness.
Competitiveness is such a feature of a country or a company under which it
is capable of creating more value and thus higher profit than its
competitors. Numerous success factors can be identified in relation to the
evolution of enterprises among which constant ambition to renew,
innovation, new technology, Research & Development and education-
research are particularly important. Hungary is lagging behind in
competitiveness not only as a result of inappropriate economic policy
management but also due to its enterprises. By analyzing Finland’s
situation an example can be found for such a successful national economy
which is competitive due to the development of innovation and knowledge.
3. Localization and competitiveness
3.1. The Finnish miracle

Finland is a highly industrialized country that has a competitive
market economy. It is one of the most developed EU Member States.
Besides luck and serendipity, successful investments and the level of
education also contributed to its dynamic rise. OECD report on Finland
highlights education as a basic factor for GDP growth. However, OECD is
not the only one to praise the Finnish educational system; it is also highly
appreciated by PISA. A parliamentary technology committee report in
1980 proposed significant increase in Research & Development
expenditures. Investment in knowledge capital proved to be a right decision
since without enhancing Research & Development Finnish technological
knowledge could not have kept up with international competition. These
expenditures were made long before the economic crisis and state aids to
education were not decreased during the recession either. Due to European
Union membership the country’s competitiveness further boosted. Finnish
companies recognized economic opportunities created by the EU
accession; which is also shown by their investment enthusiasm into Baltic
countries and other new member states in relation to investments in
production plants and service concepts. These enterprises exploited
opportunities created by globalization as they got access to a much cheaper
labor force in the receiving countries. The evolution of information society
was a key to the country’s success, since technological development had a
great impact on the entire Finnish society. Finland has one of the highest
rates of regular internet users in the world and the number of mobile phone
subscriptions already exceeds the number of fixed line phones’. The most
important Finnish export items are electronic devices, paper industry
products and various chemical products and in addition forestry (producing
specialties, products of quality and high added value) and food industry are
significant.
3.2. Competitive enterprises in knowledge-based economy

In addition to the above discussed, such a significant economic
change, in comparison to the 1990’s, took place also due to the role of the
Nokia company and approx. 300 further supplier companies that played an
important role in this process and thus largely contributed to the
performance of the Finnish economy. It is supplemented by the large scale
R&D program that was initiated by the Finnish government prior to the
Finnish economic crisis in 1990. All these factors jointly contributed to
economic growth that was further enhanced by the European Union
accession in 1995. Finland managed to take advantage of the chances
provided by the EU, and Finnish companies accurately recognized the
inherent opportunities thereof. In the 1990’s a productivity revolution took
place in Finland, as of 1992 productivity annually increased by 3,5 % in the
economic sector, by 7 % in the manufacturing sector, by 15 % in the
electronic sector and by 25 % in the telecommunication sector. This is not
the sole merit of Nokia, it is however the flagship company: near 300
suppliers can be found close to Nokia, nevertheless more than 2700 further
independent Finnish IT companies exist whose majority could keep up
with global competition. Nokia itself also went through large changes by
basing its economic model on the three following elements: new
production and industrial structure, basic innovations in financial matters
158 J. Varga
and the introduction of the innovative network enterprise operating mode.

Besides, Nokia was one of the first enterprises to become a network
enterprise. The company decided to improve simultaneously in production,
process innovation and structural innovation, therefore a closer relationship
was established with subcontractors and clients (among other business
relationships e.g. in logistics and information sharing). In addition to the
establishment of the network structure, increasing Research &
Development expenditures also contributed to the break through: Nokia
expended a significant proportion of its budget to R&D having one third of
its employees working in this field. The company also collaborates with
universities and principally focuses on products and applied research.
Therefore, the secret of Nokia’s success was the company’s reform,
creating thus an enterprise with specific values. These values (customer
satisfaction, respect of individuals, performance and continuous learning)
prevail mainly upon hiring new colleagues, establishment of new business
relations as well as upon product introductions and promotions. Nokia is a
dominant enterprise of Finland but not in the sense that the country would
fully depend on it economically or that the state would be politically
subordinated to it; Nokia’s role is to open a gate for Finnish IT expertise to
the world.
3.3. Competitiveness and economic policy

The Finnish competitiveness lies upon the Finnish innovation
system. Finland reformed its innovation system from the 1960’s and
1970’s systematically, consciously and reasonably progressing. In 1963 the
Science Policy Committee was founded. In 1967 the SITRA national
research & development fund was established. In 1982 it was decided that
R&D expenditures-to-GDP are to be increased from 1,2% to 2,2 % within
ten years (from 1992). In 1983 the TEKES fund (functioning under the
supervision of the ministry of industry and commerce) was founded which
was supposed to finance principally technical R&D activities in
comparison to basic research. In 1986, by merging the Science Policy
Committee founded in 1963 and the Technology Commission founded in
1979, the Science and Technology Policy Committee was established
which is lead directly by the president of the government with the
participation of eight ministers representing fields of utmost importance.
The ten further committee members are university rectors and/or research
executives, in addition, representatives of significant enterprises,
academicians as well as representatives of the TEKES and representatives
of employers and employees. This committee made all strategic decisions
in relation to science and technology and it has been acting as a leading

institution for decades. Its decisions concern human and financial base of
technology and science development, university education and research
policy in technology segments, national R&D investments and throughout
regulation the committee assists to create an open innovation culture. Open
innovation assumes that that firms should not only use internal ideas but to
widely apply external ideas. This notion is defined as a corporate business
model under which an enterprise consciously and regularly uses external
knowledge in certain or all sections of innovation. The importance of the
committee is shown by the fact that the meetings of the committee are
presided by the president of the government. In 1996, partly during the
time of the financial crisis, the country decided to further increase R&D
expenditures-to-GDP until 1999 (to 2,9 %). The gravity of the decision is
attested by the fact that in the meantime most public expenses were
substantially reduced but additional sources were allocated for the purpose.
The purpose was already obtained for 1998 and upon the millennium even
the 3% limit was exceeded making Finland the world’s leading R&D state.
Another peculiarity of the innovation system is the technology oriented
perspective of Finnish university education and research. 27 % of the
Finnish students studied natural sciences or engineering at the time of the
millennium which is twice as much as the average number in the
developed world. Technological researches, however, are not limited to
universities and academies where principally basic researches are carried
out. The above referred TEKES aids economy-oriented research that is
financed by public resources. TEKES finances projects that are expected to
be technologically and economically profitable, created mainly by the
collaboration of universities and enterprises. Beyond high level educational
system and well-considered internal organizational system, the innovation
system can be further characterized by its open culture and regulatory
traditions. Open innovation purports to widely use external ideas in
addition to the firms’ internal ideas. This notion is defined as a corporate
business model under which an enterprise consciously and regularly uses
external knowledge in certain or all sections of innovation. Conscious and
regular cooperation with higher education and research institutions is
crucial in open innovation. One of the most characteristic features of the
Finnish model is, however, the social responsibility not solely at an
individual or smaller community level. It can be seen from the example of
development of the country that development based on education and
innovation includes the best opportunities to break through. For this a
160 J. Varga
supportive economic policy is needed which is capable of creating

appropriate economic environment for national enterprises.
4. Competitiveness of Hungarian enterprises
Many international agencies measure competitiveness. Based on

their reports national economic stability can be measured. Comparing the
ranks achieved by Hungary and Finland on the Competitiveness
Scoreboard the difference is enormous. Having compared the scores
achieved, an enormous difference is realized between Hungary and
Finland. The Institute for Management Development (IMD) publishes its
annual report on the competitiveness of the world’s national economies.
Competitiveness is measured by four basic indicators:
• macroeconomic efficiency,
• government efficiency,
• business efficiency,
• infrastructure based on the availability of basic technological,
educational and human resources of a country.
Results displayed on the two countries:
Figure 1.: The Finnish and Hungarian economic competitiveness level

according to IMD
Hungary’s competitiveness, based on the IMD Report, greatly lags

behind Finnish competitiveness rate. Even though inequality decreased
slightly by 2007, since then the problem has re-occurred by 2009. As long
as the Finnish economic competitiveness, contrary to the crises, has

increased, Hungary’s economy suffered a significant decline. According to
the 2010 IMD survey Hungary moved up to 42nd place. The Finnish
economy has been suffering from mild recession since 2005 that can be
explained by lower levels of government, business and infrastructure
efficiency.
Figure 2.: IMD research area (blue)

Source: www.imd.ch
Based on the performance of 133 national economies, the Swiss

World Economic Forum annually publishes its competitiveness report. The
most important indicators:
1. The Global Competitiveness Index (GCI)
2. Business Competitiveness Index (BCI)
3. Market share Index (MI)
The 12 pillars of the Global Competitiveness Index (GCI):

1. Institutions
2. Infrastructure
3. Macroeconomic stability
4. Health and primary education
5. Higher education and training
6. Goods market efficiency
7. Labor market efficiency
8. Financial market sophistication
9. Technological readiness
10. Market size
11. Business sophistication
12. Innovation
162 J. Varga
The Business Competitiveness Index shows how efficiently

companies work in a country. In terms of Hungary and Finland, based on
the Report, huge differences can be noted.
Figure 3.: The Finnish and Hungarian economic competitiveness level

according to WEF
Hungary’s competitiveness suffered a massive decline during

2001-2009 by dropping 30 places to 58th place. The Finish economy
continued to hold a privileged position, however, lost its top rank to other
countries. Countries that compete through cheap prices only will, sooner or
later, lose their leading role in development. This statement applies to
Hungary more than to Finland, as Hungarian entrepreneurs have to face not
only the disadvantage of inadequate national economic politics, but also
their many weaknesses in particular areas. The European Innovation
Scoreboard annually ranks the performance of Hungarian companies by
their capacity for innovation. The SII index involves the following
indicators:
Hungary Finland
S&E Graduates / 20-29 years 4,80 17,20
Population with tertiary education 15,40 33,20
Participation in lifelong learning 6,00 17,60
Employment in med/high-tech manufacturing 8,27 6,85
Employment in high-tech services 3,14 4,68
Business R&D / GDP 0,36 2,37
SMEs innov co-op 11,10 20,00
Innovation exp 1,40 2,50
ICT expenditure / GDP 9,40 6,60
High-tech manufacturing value added 16,00 24,90
Figure 4.: A few SII indicators applying to the two countries
In terms of education it can be noted that larger percent of the

Finish R&D expenditures in the finance sector is significantly higher in
Finland, but Finnish small and medium sized enterprises collaborate more
extensively with other business, higher education and research institutions,
than enterprises in Hungary.
Figure 5.: Summary Innovation Index (2009)

164 J. Varga
The results detailed in the European Innovation Scoreboard prove

that the innovation efficiency of Hungarian enterprises massively lags
behind not only the Finish but the European efficiency average. Only small
portion of the sector’s revenue is reinvested in innovation and R&D. Only
a few enterprises collaborate with higher education and research
institutions. Globalization, due to the dominance of foreign capital and
trans- and multinational companies, has a strong effect on Hungary’s
economy. In Finland, however, domestic enterprises have a leading role.
They heavily reinvest in innovation, and give major priority to both
education and on-the-job training. The government creates a favorable
economic environment, supports the extension of innovation and R&D and
gives boost to quality education. Increased focus on such pillars to maintain
economic stability, however, is only achievable in Finland due to
‘appropriate’ social conditions. Hungarian enterprises, however, possibly
cannot become as competitive as enterprises in Finland. Small and medium
sized businesses lag way behind multinational companies when it comes to
innovation. Moreover, economic crisis plunged small and medium sized
enterprises, already struggling with financial difficulties, deeper into
recession. In order to find out the main reasons for the crises a national
survey was carried out which examined the factors that influence the level
and result of innovation introduced by small and medium sized businesses.
The so-called INNOTARS research program examines the innovation
activity of Hungarian businesses. This thorough analysis mainly based on
responses given to a questionnaire and on in-depth interviews. We
processed 814 questionnaires and evaluated 85 interviews. Results clearly
indicate that the innovation capacity of small and medium sized enterprises
lag far behind the European average. Within the INNOTARS research
program, most dominantly (82%), micro- and medium sized businesses
returned the questionnaires. The EU accession resulted in the increase of
the competitiveness level of Finland, as businesses could better take
advantage of the opportunities opened up by the EU accession. Hardly
applies the same to the Hungarian businesses. The survey indicates that
national enterprises cannot benefit considerably from collaboration and
innovation opportunities opened up by the EU membership − only 20%
can seize such opportunities. Only 10% of the answerers (814 ppl) said
that innovation opportunities increased due to the EU accession. 44%
answered that they had experienced no change at all. Ca. half of the
businesses (51%), however, carry out no explicit innovation activity
whatsoever. They describe business as a regular routine, and only give a
few thoughts about the possibility of increasing their market share and
level of competitiveness (415 enterprises). Innovation activity is low due to

national tax regulations (67%), but only half of the answerers consider
domestic tax rates high. Access of financing is ranked 2nd (47%) and shows
a significant correlation with high corporate income tax rates. Inefficient
government bureaucracy in tender financing (47%) and risk of investment
return is considered negative. The majority of the companies (81%)
employ less than 10% in their Research and Development departments.
Moreover, unfortunately, every second business has no employees in
R&D. During the last decade almost 75% of enterprises had ongoing
innovation activity, however, nowadays only half of them do so. Interviews
show similar results. The domination of businesses that have no spending
on this sector is significant (37.6%). More than 2/3 of the assessed
companies carry out no R&D activity. Only 20% answered that they have a
group of people managing such tasks. The majority of enterprises have
applied for no financial support since the EU accession (58.82%).
Interviews imply, as almost 1/3rd of the companies highlighted, that poor
national economic conditions are mainly responsible for the lack of
innovation. Inappropriate regulation tools and inadequate supply of
financing can be also stressed. Access to financing was also underlined as
one of the barriers to innovation. 1/5th of the assessed companies say that
untrustworthiness, low level of business ethics and entrepreneurship are
mainly responsible of forming barriers to innovation. Relations with
business partners, and the chamber of commerce and industry play a key
role in success. The importance of collaboration with universities and
research institutions was rarely mentioned. Hungary ranked lower than
Finland on the Competitiveness Scoreboard not only due to its poor
national business sector performance, but due to its low level of education
and high corruption rate. Transparency International regularly ranks
countries and their economies based on their corruption rates. Clearly,
Hungary lags far behind Finland on the scoreboard. The Corruption
Perceptions Index indicates how significant analysts and domestic business
leaders evaluate the level of corruption in a given country. The Index
weighs countries based on 13 indicators using a 0-10 rating scale. Low
score refers to high level of corruption, while high score indicates the
opposite.
166 J. Varga
Figure 6: Corruption Perceptions Index in the two countries
In Hungary, corruption can be underlined as one of the main factors

for a low level of competitiveness. According to a research carried out by
Transparency International, corruption has been growing in Hungary in the
past few years setting up a barrier to competitiveness. Economic politics
could significantly foster innovation activities by imposing better tax
regulations and reducing government bureaucracy. Besides, they find it
important to fight against corruption and to create a more supportive
way of accessing to financing. Lower corporate income tax rates and
breaking the debt cycle would be the key. Many enterprises find lack of
transparency and trustworthiness as well as lack of market
sophistication as the main reasons for the setback. “The base for
innovation and production of goods and value intensive services is a
creative, flexible, innovative, continuously self-training workforce.
Graduates, people with primary education and physical workers are not
professionally experienced to operate at higher levels of efficiency. This
implies that the review of the presently operating education system is
urgent. In order to give a boost to the Hungarian business sector a shift
from theory based education to a system built on hand-on experience
would be preferable. Lack of structure forms a barrier to efficiency. In
order to enhance the spread and accessibility of new products and
inventions new entrepreneurs are needed who can adapt to more

advanced production processes and techniques. The lack of balance,
however, makes inventors patent their inventions abroad. Inventors
know that their inventions will be put into use abroad − means money to
them. Günter Verheugen highlights that micro, small and medium sized
enterprises play a key role in the economy, as they are prospective
employees on the job market, create entrepreneurship and innovation
across the EU, thus can make the job market more sophisticated and the
economy more competitive. Micro, small and medium sized enterprises
play a central role in the Hungarian economy. The structure of the
sector highly influences economic efficiency and the pattern of
employment rates. The government should have given high priority to
supporting small and medium sized enterprises and looked at them as a
important factor to increase economic competitiveness, as SMEs are the
key. The government, however, wants foreign investors. This is the
main cause for the Hungarian economy to lag behind! Economic growth
is only possible if the efficiency of enterprise operations increase
significantly in all sectors. In order to improve efficiency, new
initiatives are needed to be introduced by the government. The Finnish
example illustrates that many sectors need to be similarly improved in
Hungary. This means that the level of competitiveness can be increased
by developing the system of education and on-the-job training, as well
as R&D activities and innovation. Through these steps, both economic
productivity and social well-being can be improved that will result in a
more competitive economy. Garelli, professor of the Institute for
Management Development (IMD) in Lausanne, Switzerland, argues that
competitiveness is only a tool for serving permanent economic success
and social well-being. In details, competitiveness not only stands for
economic growth, but social prosperity, sustainable development, a
corruption-free society and an inspiring and stable social environment.
In cosequently, we have to create a dynamic structure where the
implemented measures, institutions, key actors, as well as the political
structure, personal aspirations, cultural background, and identity all
work in synergy. The above list can form a base for a new economic
order that can be used for the building up of a more successful
economic model in Hungary. This model supports small and medium
sized enterprises, makes bureaucracy more efficient, creates a new
financial system, improves knowledge and skills of employees, and
ensures equity. Besides macroeconomic indicators, the innovation
168 J. Varga
strategy, the education-training system, and business financing methods

have to be revised. James Gustave Speth argues that “many of our
deepst thinkers and many of those most familiar with the scale of
challeanges we face have concluded that the transitions required can be
achieved only in the context of what I will call the rise of a new
consciousness”.
Bibliography
Farkas, P - A globalizáció és fenyegetései, Aula Kiadó – Budapest 2002,

p. 35
Stiglitz, J - A globalizáció és visszáságai, Napvilág Kiadó, Budapest –
2003
Korten, D. C - Gyilkos vagy humánus gazdaság?, Kairosz Kiadó,
Budapest – 2009
Lóránt , K- Amirıl Ricardo nem így álmodott, Magyar Hírlap 2000.
december 23.
Castells, M – Pekka Himanen: The information society and the welfare
state – the finnish model, Oxford University Press, Sitra’s Publication
Series Transparency International www.euraktiv.hu - KKV-k és az
innováció: a versenyképes jövı záloga
European Committee – Az új KKV meghatározás – Vállalkozás és
iparpolitikai kiadványok
Szabó, A - Kis- és középvállalkozások helyzete Magyarországon,
Budapesti Corvinus Egyetem Kisvállalkozás-fejlesztési Központ
Csath, M – A versenyképesség puha tényezıi, www.ujreformkor.hu
www.hatterhatalom.hu - Az "alternatíva" a globalizációval szemben
Az innovációt befolyásoló és kísérı tényezık vizsgálata a hazai kis - és
közepes vállalkozásokban, Head of research: Magdolna Csath –
Kodolányi János University of Applied Sciences, supporting: National
Office of Research Technology (NKTH)
Year XVI, No. 1, 2010, pp. 169-172
Women entrepreneurship and ethics
R. Lile, M. Iacob
Ramona Lile
Mihaela Iacob
Abstract
This paper provides an overview of women entrepreneurship
and the importance of ethical behavior in all business. Ethics
play a major role in today's "arm's length" business
transactions, and in turn, those transactions play a major role in
the lives of all stakeholders. Taking a closer look at today's
business ethics and how each party is affected can benefit all
the participants in this dynamic process.
Keywords: ethics, women, entrepreneurship
According to recent studies, in Romania companies headed by

women are growing by 39%, not much more than those headed by men
31% as a percentage. Although relatively small difference is significant,
says a study by CEBR (Centre for Entrepreneurship & Business Research),
business consulting company.
CEBR study analyzed the demographic coordinates on female
entrepreneurship; women represent more than 50% of the population, from
socio-cultural and entrepreneurial point of view. But all these studies
highlighted the importance of ethical behavior in all businesses, especially
in light of ethical relations between men and woman managers.
Of course, the interesting phenomenon is the development of
female entrepreneurship culture in our country, regardless of the reasons
behind developing such a segment, bringing the Western concepts. As
small businesses grow, through successive stages of organization or legal
status, there is a slow process, but no less interesting, to form a collective
mentality of female entrepreneurs. Not only is the attitude towards women
of other patrons (an area in which skills are starting to weaken sexist), but
170 R. Lile, M. Iacob
also an open recognition of women's natural abilities to coordinate the

work of others, their style easily adaptable to environmental conditions, the
ability to work together and develop networks, the qualities of negotiators
and decision makers, etc.
Business ethics in our contemporary life conditions in a continuous
and endless transition seems paradoxical, unusual and even "offensive." So
if our gaze and hearing by the media, where none of its components does
not let even the slightest ray of hope to save ourselves from the "solid boat"
of corruption and unethical behavior and thriving at the levels existing in
the government, parliamentary and policy to big companies, public
servants or even the corner grocery. Even the blind and the deaf perceive as
powerful the "iceberg" of our moral and civic decay.
Entrepreneurs and business managers are women especially if they
are part of our society. They provide us or other products, services and jobs
we need. Bill Gates and Michael Jordan are extremely successful
individuals and businessmen with huge rewards. Although different, they
have a strong influence on American values and not only. Values affect the
behavior of a businessman and fellow consumers, and ultimately determine
the success or failure of a person or set of individuals. Business people in
most nations today are models of behavior either positive or negative. The
values of American life in the USA, have been strongly influenced by
business, these same influences now, influences also other nations.
Because free enterprise or market economy is now dominant in the world,
many people are pushed, sometimes against their will, to the values of the
market economy. Woman’s, in particular faces a number of difficulties,
and they are particularly ethical.
Involving moral causality analysis and evaluation to clarify
assumptions and investigate the validity of moral arguments. A very
famous and still unfinished meta ethics dispute is interested in the problem,
if a moral rule or duty may be logically derived from an affirmation of
what is outside the normative premises. For example, the real fact that
people typically want to live rather than die, we can assume, or conclude a
right to life or a standard against killing them? The fact that people seek
pleasure, we conclude that it is ethically right or right to pursue pleasure? If
we can not conclude how we should act in the facts of life, it can be
inferred from any set of facts or do we need values, preferences or rules? If
so, then why should we proceed in accordance with them? What is the
basis or reason to prescribe them how to act? General answer to this
question is meta ethics.
Women entrepreneurship and ethics 171
General ethical theory provides a systematic approach and care for

morality, one that finds parallels in ordinary life and common conversation.
It develops and analyzes the kinds of moral arguments that are used in
ordinary language and everyday life, newspapers, magazines, books and
articles on moral issues. From here it is a practical discipline. Like science,
ethics is an ongoing social struggle. It is not a discipline, but a finished or
completed development is a large number of issues in dispute. Certainly
the presence of such disputes, rather indicates that there is no agreement or
consensus, nor is also noted that ethics has produced useful results. Some
results are negative. Some theories that were initially plausible were then
shown to be some mistakes, and the moralities of some popular approaches
have shown that they are questionable. Master theory of ethics, however,
provides the tools necessary to engage intelligently in personal and social
analysis of moral problems.
Special Ethics is presented as an application of general ethics
(which includes descriptive ethics, normative and meta ethics), a first
application to solve specific problems and second to investigate the private
morality of special areas of human hard work. The first is sometimes called
casuistry. Casuistry is the art of resolving difficult moral problems, cases or
dilemmas through a careful application of moral principles. Casuistry uses
the principles and rules that have been developed and justified in general
ethics. It is an important art or skill, but one that has sometimes been held
to lower standards. It can easily degenerate into a search technique on how
we can separate a normative moral from immoral action. People are more
interested in morality in pursuing a moral course of action than looking
how they can meet required minimum necessary for morality. Trying to
determine the final part led frequently too subtle reasoning questionable
actions.
From the latter perspective the book of gentlemen Associate
professor dr. Liviu Gavrilescu and lecturer univ. drd. Traian Titu Fodor,
titled "The Eleven Commandments of Ethical manager" is an interesting
contribution largely pioneering; casuistic ethics are less present to us in a
cohesive and systematic presentation, which makes the work to be a value.
In this paper there are a number of interesting titles such as "Eleven
Commandments of Ethical manager (advertising is a very subtle tone, just
ask yourself, why not ten? And thus are "hung"), then the content reseduce
and we exhort the titles with "hooks" as subtle: "Slipperiness ethical
approach," the benefits arising from improper gifts "," Romania in the
failed to tip the country an environment ", etc., the paper has so many"
172 R. Lile, M. Iacob
hook " Hanging, drawing a warning, without slipping into mockery or

superficiality.
If women in the management of large organizations often fail to
penetrate just copying the style of men (not to be discordant note with most
male leadership structures), the women can express their own businesses
naturally from this point of view is more credible; may even reinforce those
skills typically feminine sensitivity, concern for others, empathy - which
are otherwise in great demand nowadays. It is estimated that more than
ever, the true value of a business man, a women in particular is determined
by results and the type of relationships with others and not according to its
genre. From this perspective, the future of women as owners or managers
should be provided.
Bibliography
Branko Bucar, Miroslav Glas, Robert D. Hisrich , Ethics and

entrepreneurs: An international comparative study , Journal of Business
Venturing, Volume 18, Issue 2, March 2003;
Driga Otilia, Gonzales L. Esteban,, Antreprenoriatul feminin în România,
Centrul pentru Cercetare în Antreprenoriat şi în Afaceri;
Levent T., Masurel E., Nijkamp P., Diversity in Entrepreneurship: Ethnic
and Female roles in urban economic life, International Journal of Social
Economics, 30 (11-12): 1131 – 1161;
*** www.wall-street.ro
*** orcar@ar.onrc.ro
*** www.femeiadeafaceri.ro
Year XVI, No. 1, 2010, pp. 173-184
Agricultural produce processing and marketing: a strategy

for poverty alleviation in the new millennium
A. N. Eze, P. O. Eze
Anthony Nweke Eze,

Department of vocational education
Nnamdi Azikiwe University,
Awka, Anambra state, Nigeria
Peace O. Eze
Anambra State University,
Uli, Anambra state, Nigeria
Abstract
It has been traditionally recognized that agricultural production
has primary role in the alleviation of poverty. However, more
recently, produce processing and preservation and marketing
have received increased attention in food security
considerations of developing countries (Bencini and Watson,
1991). This is due to the fact that although self-sufficiency in
food remains one of the priorities of the Nigerian government,
this objective cannot be solely achieved by increasing
production. This paper therefore examines how agricultural
products processing and marketing can be used as a strategy
for poverty alleviation in the new millennium.
Keywords: agricultural production, government, sustainable
solution, marketing infrastructure
Introduction
Dimension of poverty in Nigeria
It is paradoxical that Nigeria is endowed with an abundance of

resources but the people are poor. Poverty in this sense means the inability
of individuals to attain a level of well-being that is deemed to constitute a
reasonable minimum by the standards of the society (Ravallion, 1992). It is
the absence of means to maintain and enjoy the basic needs of life, a
situation which leads to deprivation and lack of access to food, social
174 A. N. Eze, P. O. Eze
services and productive assets and makes it difficult for individuals to

participate in decision that affect their lives.
Recent data show that the scourge of poverty is severe and
widespread in Nigeria. In 1980, about 27.2% of the population was poor.
The estimate was 43% in 1985 and34% in 1992. Since 1992, poverty has
been on the increase and by 1996; the proportion of Nigerians living in
poverty had reached about 65.6%. Currently, it is estimated that at least 67
million Nigerians were in poverty in 1996 compared to 18.3 million in
1980, indicating growing intensity and severity of poverty.
Poverty in Nigeria is ubiquitous. In 1980, no State of the Federation
reported more than half of its population in poverty. In 1985 eight States
did and in 1992, the number reduced to three States. In 1996, all States but
one moved into the group of more than 50% of population in poverty
(Okunmadewa and Williams, 1999). Poverty has marked urban-rural
dimensions. According to World Bank documents, poverty is highest in
rural areas of Nigeria. The average per capita expenditure of a poor rural
household was estimated as one-fifth of the non-poor in 1992 (FOS et al,
1997). Of the extreme poor, 85% lived in rural area and more than two-
thirds lived on farms. Income inequality is also worse in rural areas with a
Gini coefficient of 45.6 compared with 39.9 for urban Lagos.
Before the discovery of oil, Nigeria’s economy was primarily
agricultural and despite its decreased role as a component of GDP, the
sector continues to employ about 72% of the labour force (FOS et al,
1997). It is therefore nor surprising that 68% of the extreme poor are
dependent on agriculture for their livelihood with the entire attendant poor
infrastructure and poor access to services.
It is therefore only logical that Nigeria should seek to alleviate
poverty on the basis of agricultural production, processing and marketing
with form the major economic activities of the poor in general and women
in particular. Although the role of produce processing and marketing in
rural development has been a continuing theme for discussion, their
specific role in poverty alleviation has not received adequate attention.
There is not always a full understanding of the factors which vitally affect
the success or the failure of these economic activities.
The purpose of this paper is therefore to emphasize the nexus
between agricultural produce processing, marketing and poverty reduction
and present a suitable framework for addressing this connectivity.
Agricultural produce processing and marketing … 175
Produce processing and marketing: historical perspective

Together with storage and transportation, processing is a physical
function of marketing. Processing is the conversion of a commodity from
its raw state to a form acceptable to the buyers or the next stage in the
distribution chain. It involves the transformation of bulky raw, perishable
farm produce into storable concentrated ad more appealing food products
(Kohls and Uhls, 1985). As a marketing function too, processing widens
the demand base for agricultural products and lessens the burden of
transporting bulky raw materials.
Produce processing in Nigeria is traced back to colonial times.
During this time the processing of such commodities as cocoa, palm fruit,
groundnuts, ginger, etc. was considered too technical to be done in Nigeria
and hence as carried out broad. Although these products at one time or the
other held promise as viable instruments to sustainability reduce and
ultimately eradicate poverty, the hope was never realized. The result was
that even though these commodities were produced in the country, the
prices they fetched in international markets remained very low, while the
price of the finished products remained high. The European buyers were in
the unique position of fixing the prices they were willing to pay for the raw
commodity while also enjoying the privilege of fixing the price they would
accept for the processed goods.
This culture of not adding value to tradable was not without grave
consequences both for the agricultural sector and the local producers. The
inestimable financial loss to the country and producer over the years left
much to be desired. It is common knowledge that even presently;
international commodity trade has been structured to benefit the more
technologically advanced nations who process agricultural produce to be
shipped back with added value and at highly inflated prices (Iwu, 1996).
Commodity boards in Nigeria date back to 1947 when the Cocoa
Marketing Board was established, which was quickly followed by the
establishment of the groundnut, cotton and palm produce marketing
boards. The latter were replaced with Regional Marketing Boards, which
became fiscal instruments for regional governments during the 1954-77
eras. In 1977, the regional or State marketing boards were dissolved and in
their place, seven new commodity boards were set up. These were however
dissolved in 1986. Evidence abounds that point to the negative impact of
marketing boards on Nigerian farmers and Nigerian agriculture (Idachaba,
1994). Thus, it is surprising that the level of state intervention in
agricultural markets was one of the main factors identified by organizations
like World Bank as leading to stagnation in agricultural production and
hence increased dependence on food imports and poverty in the 1970s

(Thompson and Terpend, 1993).
The need for processing

Proper processing is essential to produce food of good quality by
avoiding nutrient loss. In addition, processing is carried out as a means of
increasing marketing value of agricultural produce or of improving their
storage potential foe better sales, thus enabling the producer sell when it is
most profitable to do so. The traditional processes with respect to
agricultural produce include threshing, shelling, winnowing, cleaning,
grading, parboiling, husking or hulling, decorticating, milling, drying,
storage, sorting and the turning of commodity into another stage, for
example, cocoa into cocoa butter or powder, palm nuts and coconuts into
oil.
In some developing countries, these operations have been the
starting point for grater industrial development. For example, in Senegal,
groundnut shelling is operated on a highly mechanized scale and its by-
product; shells are used as fuel for the crushing operations. This contrasts
with Nigeria where groundnut shelling is manually operated (Ijere, 1980).
Recently, there are also predictions of considerable exportation of
processed products from developing countries to the more developed. This
is expected to occur both in response to attractive market opportunities
because of lower cost in the developing world and the need to diversify the
export base and earn more foreign exchange (Abbot, 1984).
One neglected area is the canning and drying of fruits and
vegetables. Experts suggest that prospects for fruits and vegetable
processing in Nigeria are good. This is because the country is endowed
with assorted fruits and vegetables and there is hardly any month without
one fruit/vegetable or the other. Again, it is projected that income growth
and urbanization will call for an increasing share of agricultural output to
be processed to a higher degree.
In FAO projections for the year up to 2000, the volume of
agricultural produce processed through primary storage is expected to
double and most growing will be vegetable and fruit processing.
Accelerated domestic demand and export opportunities are expected to
boost activities in this area, thus reducing waste, improving quality
preventing spoilage and greatly alleviating poverty through gainful
employment.
The role of marketing

Marketing facilitates the transition from subsistence agriculture to
commercial production, especially for the myriad of rural small holders. In
the era of market deregulation and export promotion, marketing provides
the impetus for farmers to produce for exports, thereby earning foreign
exchange, for further development of their enterprise and their families.
According to Abbott (1993), an efficient marketing sector does not only
link sellers and buyers but also reacts to the current situation of supply and
demand by stimulating output and consumption, the essentials of economic
development. It widens the demand base and leads to opportunities for new
techniques and innovations. Through enhanced economic activities,
employment is generated, leading to poverty alleviation. This is why an
efficient marketing sector has been described as the most important
multiplier of economic development (Drucher, 1958).
The benefits of the dynamic functions of processing and marketing
could be gleaned from many developing countries. Abbott (1993) describes
the marketing system operated by the Kenya Tea Development Authority
which proves a profitable outlet for 138,000 small growers with incomes
well over above the average for the area. Also, through an efficient
marketing system, not just on the demand side, but for the supply of chicks,
together with feeds, drugs and veterinary service, landless and poor rural
people have been brought into profitable poultry systems. Likewise small
ruminant owners could benefit from marketing initiatives that could
expand outlets for traditional supplies. Fisher folks and fishermen have
benefited from dynamic marketing systems. For instance in 1960 shrimps
caught by Indian fishermen were discarded or used as manure due to the
absence of efficient marketing system. The situation changed in 1980 when
shrimps were exported frozen and earned 45 million dollars from US
markets alone (Abbot, 1988).
The case of asset poor

Much has been learned about asset poverty from rural studies.
There are convincing indications that the most disadvantaged groups are
invariably landless casual laborers for whom work is not available on a
regular basis and households without an able-bodied male (World Bank,
1990). In many parts of Nigeria where population pressure on the land has
been rising, landholding had been found to be an important determinant of
poverty. This has been corroborated by a recent study on “Voice of the
Poor” (cf: Okunmadewa et al, 1999) commissioned by World Bank which
revealed that land constraint is a major cause of poverty in Southeast
Nigeria. However, important for landless poor and other categories of asset
poor such as rural women, is the consideration and assistance inherent from
produce marketing enterprises. It is common knowledge that agricultural
and fish marketing enterprises employ large numbers of people directly.
The economic benefits (employment in particular) derived by rural women
in the processing and marketing of agricultural produce and fish products
are well known.
Problem of agricultural produce marketing

Marketing of agricultural produce in Nigeria is currently plagued
by infrastructural, organizational an administrative problems. These are
discussed below:
Defective infrastructure
Defective infrastructure, particularly roads and transportation
services is a major cause of marketing problems in Nigeria. Ahmed and
Rustagi (1993) estimated that more than half the higher marketing cost in
Africa in comparison with those in Asia is due to inadequate marketing
infrastructure, leading to high transport costs and commodity loss. Some
traders cut down the number of trips that they can make because of
massive increases in transport costs (Thompson and Terpend, 1993). Lack
of ownership of trucks is often the basis for local monopolies in the
transport sector, which can increase transport costs. Many roads suffer
from gross negligence leading to rapid deterioration. As feeder roads
deteriorate progressively, trucks refuse to go into rural area because of the
high cost involved.
The lack of electricity had made cold storage of perishables or
essential seasonal products such as fruits and vegetables impossible.
Likewise the establishment of rural processing outfits. In locations where
government has invested in physical marketing facilities such as storage,
processing, market centers, etc. the policies have been directed towards
government involvement with often doubtful results and much less towards
encouraging private participation and investment (Mitterndorf, 1993).
Organization problems
There are man producers who are scattered all over the rural
landscape. And since they are not yet well organized into cooperative
societies, they lack the bargaining power as a group. Generally,
cooperatives are indispensable tools for improving small producers’
bargaining power in the market. The activities of agricultural marketing
cooperatives may include all the arrangement and preparations which assist
the farmer in disposing of his marketable produce. Regrettable, agricultural
cooperatives in Nigeria have shown a wide gap between their promise and
performance. Some of the reasons are internal and may be specific to some
cooperatives while others are common. Among the latter may include what
Puri (1979) referred to as the bane of adhocism in cooperative policies and
program's leading to the absence of a long term integrated strategy and
resort to frequent and fitful changes in policies. Evidence of the bane of
adhocism could be found in such programs as FEAP, Better Life etc.
Administrative problems
Administrative problems usually arise from the fact that it is
virtually difficult to administer, control or influence large number of
producers, middlemen and retailers who are scattered all over the region
without a co-coordinating central body (Okorie, 1981). Allied to this is the
failure by policy makers in authority to understand marketing link and
concept. There is always the tendency to limit their definition of marketing
to the assembly of produce at rural markets r exports or the flow of produce
from production to consumption. Little is often mentioned about the
strategic role of efficient input supply or the role of marketing in providing
incentives for production or as a multiplier for development (Abbott,
1984).
In spite of several attempts by successive Nigerian governments to
bridge the financial gap in the rural areas, particularly by establishing credit
institutions, there are clear indications that these attempts have led limited
effect (Nweze, 1995; Ijere, 1986). The credit problem of the poor is not
necessarily a problem of high interest rate but of access to the formal
money and capital market. Evidence abounds to show that the poor pay far
higher interest to money lenders than that demanded on the formal capital
market. (Hemmer, 1994; Nweze, 1992).
Storage problems are the most recurrent in Nigerian agricultural
scene. Food losses estimated at 25.30% of total annual production
contribute to inadequate food supply create prices increases and exacerbate
concern about food poverty. A UNICEF household survey in 1991 blames
food insecurity on food consumption imbalance throughout the year and
general food storage during some parts of the year a situation attributed to
in efficient storage facilities (FGN, 1992). To increase the quantity of grain
tored, government planned a Strategic Grain Reserve Programme which
requires 5%, 10% and 85% storage of total annual grain output at the
Federal, State and on-farm levels respectively. The laudable proposal has
been pipe down.
Efficient produce processing and market for poverty alleviation

Sustainable solution to poverty must include strategies that would
enable the poor to earn more for further improvement of themselves and
their resources. As stated earlier, since the majority of the poor are
dependent on agriculture and related occupations for their livelihood, any
poverty alleviation strategy in the new millennium must of necessity by
hinged on increased agricultural production and more profitable produce
processing and marketing.
Rehabilitation of marketing infrastructure

The rehabilitation of marketing infrastructure is of high priority in
any strategy to alleviate poverty. Top in the list of infrastructures is
adequate road network and transportation. Greater emphasis should be
given to the maintenance of feeder roads rather than undue emphasis on
tarred roads that serve urban centers. Road rehabilitation has led o
reduction in marketing costs of up to 60% and the use of relevant inputs in
farm business. Access to efficient storage systems especially on farm
storage or storage in special structures near the farmer’s home would
reduce produce loss and ensure food security because it obviates the
problem of transportation. Adequate storage facilities enable farmers to
avoid having to sell at the low prices usually prevailing just after harvest.
Thus good storage has positive implications for farm income and poverty
reduction.
Improved access to the capital market

A major characteristic of the poor is their lack of access to capital
market. An important condition for improved access for the poor to the
credit system is a deliberate inclusion of the poor in the system of financial
institution.
Some of these credit institutions have not taken advantage of the
saving potentials of traditional areas in designing and implementing a top-
down strategy of credit programs for rural people. Ab initio credit
institutions were designed as credit and not savings institutions, intended to
enjoy government sponsorship in perpetuity, while operating outside
market forces. In the new millennium such banks should be converted to
credit and savings institution inherent in the system.
It is argued also that although the example of the Grameen Bank

Bangladesh cannot be wholly adopted here, it may be necessary to adapt
their approach to our rural areas for improved access for the poor the credit
system through group credit (Hulme, 1990). Encouraging links between
indigenous cooperative associations and formal financial institutions will
substantially improve the access of the poor to credit.
Promoting target-group –specific financial systems

As a basis for the survival of the poor, it might be necessary to
promote target-group-specific financial systems for processing and
marketing. Such target-group-specific financial systems should have long-
term objective of making the recipients “bankable”. By promoting savings
activity, it becomes feasible to link savings to credit engendering habits of
savings among the people.
Access to processing technology

Nigerian researchers should recognize the technologies that are
relevant for the needs of small-holders and to adapt them to the specific
conditions of the various enterprises sites. Marketing research must be
extended and for example, include method of processing, packaging and
storing fruits, vegetables and fish products. To make all this possible, well-
trained advisors should be positioned to function as links between scientists
and small-holders (World Bank, 1990).
Improved access to both sales and input markets

Marketing opportunities of the poor are considerably hampered by
limits on their access to markets. This takes place at both national and
international levels and may be in the form of legal, mental or physical
barriers to market access. In some areas, a demand monopolist may be the
barrier, threatening the earning position of a small-holder. Improving
market access for the poor should include efforts to eliminate power
asymmetries on sales and input markets, to guarantee that the markets
function properly and to grant the poor fair market opportunities (Hammer,
1994). There could also be deliberate attempts to expand the market
connections of small holder agriculture to the processing sectors of agro-
industry input markets and the formal sector.
In addition, the creation of collective market power for the poor by means
of cooperatives and self-help groups can play a role here while a poverty-
oriented development policy should promote these accordingly. According
to Helms (1968), marketing cooperatives can assist in the following ways:
i. Provision of an efficient marketing system in areas in which

suitable marketing facilities do not exist, or of an alternative
marketing outlet to an existing marketing system, which due to
the inefficiency or deliberate extortion does not meet the
requirement of the producer.
ii. Improve the producers’ income by assuring a better return for his
produce through combined bargaining power, price
stabilization low trade margins and the search for better
markets.
iii. Adequate information on new methods of handling storing and
processing aimed at produce improvement.
iv. Assist members with the collection and assembly of produce to be
marketed.
v. Assist with produce storage in order to balance supply with
demand and provide temporary storage while awaiting the
schedule movement or transportation of produce.
The special role of women

Women are critically involved in agricultural processing and
marketing throughout the country. In fact they are so much involved that
any initiatives to reduce poverty cannot ignore them. Processing and
marketing can be extremely labor-intensive and time consuming. Yet the
environment in which women work is usually not supportive.
Labor and energy saving technologies are women’s greatest need.
They also require processing technologies for their commodities which are
not always exactly the same as those of male farmers. (Saito et al, 1994).
Thus, research and technology must of necessity focus more on the needs
of women for increasing their productivity and income.
Establishing of agricultural marketing extension

Since production oriented agricultural extension is now in place in
most parts of the country, although the number of filed workers and their
adequacy may be criticized (Lee, 1993), there is an urgent need to
complement this with an efficient marketing extension network. Such
marketing extension programs should include advice on product planning,
market information, market search for small farmers by Marketing
Extension Workers (MEW), advice on sales timing, improved marketing
practices, promotion of group marketing, advice on establishment and
operations of rural markets etc. The MEW should be trained and positioned
at the District level to cater for thousands of farm households.
Government policies
Processing and marketing improvement require a favorable
economic environment. For example, a price policy that makes import
more expensive is bound to benefit small producers, processors and traders.
It does so by making local output more valuable (Abbott, 1993). The policy
and strategy outlined above have to be supported by policy changes which
facilitate strong participation of the private sector in the planning, financing
and maintenance of processing and marketing infrastructure. For purpose
of sustainability, promotion of self-help at the grass roots level should be
encouraged by government policy.
Conclusion
Poverty is a multi-faceted problem and therefore requires an

integrated approach involving action in all fronts simultaneously. Raising
the productivity and income potentials of the target group must be at the
centre of our strategy in the next millennium.
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JOURNAL OF

ISSN 2068 - 3537

Edited by “AUREL VLAICU” University

Editor in chief: Ph.D Associate Professor Luiela Magdalena Csorba, "Aurel

Associate executive editors

1. Ph.D Professor Tania Matos Gomes Marques, Instituto Politecnico de Leiria,

1. Ph.D Professor Victor Manole, Economic Studies Academy, Bucharest, Romania

1. Ph.D Associate Professor Mihaela Iacob, "Aurel Vlaicu" University of Arad,

The Iceland cloud of volcanic ash - an environmental

Energy, space and society: a reassessment of the changing

Delimitations and considerations regarding the accounting

Microeconometric models in market research

General management systems and methods

Entrepreneurship, woman and self employed………………………..68

The influence of socio-economic environment and diversity of the offer

The importance of ethical norms in the accounting profession….…84

Organizational configurations, communication networks and

Interference between electoral cycle and economic cycle…………...101

Understanding labor conflict and industrial relations

The role of domotics in daily life……………………………………..124

Instructional technologies and life-long literacy centers in Nigeria...130

The crisis is affecting women entrepreneurship……………………..139

Companies in specific areas…………………………………………..146

Competitiveness of enterprises in the globalized world

Women entrepreneurship and ethics ………………………………..169

Agricultural produce processing and marketing: a strategy for

The Iceland cloud of volcanic ash - an environmental

Luiela Magdalena Csorba

Managing businesses so as to minimize the adverse impact on

stimulated by the response of the firms to the public interest. As a result,

compensation or their absence and the possible responsibility of the

The fuel economy achieved by the stationing of aircraft

L. Csorba - Macroeconomie, Editura Gutenberg Univers, Arad, 2009

Energy, space and society: a reassessment of the changing

spatial patterns of socio-economic welfare. We end the

“As change accelerates, so does the speed at which still more

mentioning is that the distribution of energy is uneven over the surface

expressed as, for example, monetary returns on investments, but also of

constructed an energy regime which can, unlike hydropower,

regimes, where the electricity generated by wind or solar technologies is

The geography of RET market opportunities

determination about the location of resource investments. Brown and

Taking geography seriously in renewable energy analysis

delivery are estimated depending on the chosen technology. Given the

Figure 1: A screenshot of RETScreen 4.0 resource data

Given the localized nature of RET viability a key consideration to

Letendre, 2010). Indeed, scale-aware logic must be embedded in

analyses should be conducted with these audiences in mind. This latter

Renewable energy and socio-spatial change

renewable energy systems in jurisdictions that subsidize renewable

(Valentine, 2010). In a recent study out of the US, Wei et al (2010)

geographies of energy poverty (Buzar, 2007), or of the local

Toward energy rationality

jurisdictions including Sweden and Finland, making renewable energy

Figure 2: The logistics of Ontario's time-of-use pricing policy

These said, we would like to move to a higher level of abstraction

“Constraints operate before the fact, to make certain choices

made certain choices. Although both mechanisms contribute to the

the second (holding beliefs that are commensurate with available

Alsema, E.A., Nieuwlaar, E., 2000 - Energy viability of photovoltaic

Chapman, J.D. 1989 - Geography and energy: commercial energy

Helm, D. 2005 - The assessment: the new energy paradigm. Oxford