The European Journal of Applied Economics - 2022 - Vol 19 No 1

Vol. 19 Nº 1

journal.singidunum.ac.rs

Vol. 19 Nº 1 APRIL 2022 journal.singidunum.ac.rs

The Impact of COVID-19 Pandemic on Work Organization pp. 1-15

Internal Audit in COVID-19 Environment: Key Aspects and Perspectives of Remote Auditing pp. 30-41

GDPR and Challenges of Personal Data Protection pp. 55-65

Employees Motivation and Managerial Coaching During the Pandemic COVID-19 at the Research Institute pp. 16-29

Smart Economic Development Within European Countries pp. 42-54

Exploring the Influence of Instagram on Travel Destination Choice pp. 66-80

Global Distribution Systems Versus New Distribution Capability and Internet of Things pp. 81-97

Economic Justification of Applying Information Technologies to the Creation of Smart Citi pp. 98-109

Governmental Investment Into the Environmental Economy in the Western Balkan pp. 121-136

2022

Understanding the Behavioural Intention to Adopt Internet Banking: An Indian Perspective pp. 110-120

Vol. 19 No. 1

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Vol. 19 No. 1 Publisher: Singidunum University E d it o r ia l B o a r d

Professor Milovan Stanišić, Singidunum University, Serbia mstanisic@singidunum.ac.rs Professor Francesco Frangialli, Hong Kong Polytechnic University, Hong Kong frangialli@gmail.com Professor Gunther Friedl, Technische Universität München, Germany gunther.friedl@wi.tu-muenchen.de Professor Karl Ennsfellner, IMC University of Applied Sciences, Krems, Austria (karl.ennsfellner@fh-krems.ac.at Professor Gyorgy Komaromi, International Business School, Budapest, Hungary gyorgy@komaromi.net Professor Vasile Dinu, University of Economic Studies, Bucharest, Romania dinu_cbz@yahoo.com Professor Ada Mirela Tomescu, University of Oradea, Oradea, Romania ada.mirela.tomescu@gmail.com Professor Radojko Lukić, University of Belgrade, Serbia rlukic@ekof.bg.ac.rs Professor Alexandar Angelus, Lincoln University, USA angelus@lincolnuca.edu Professor Milan Milosavljević, Singidunum University, Serbia mmilosavljevic@singidunum.ac.rs Professor Olivera Nikolić, Singidunum University, Serbia onikolic@singidunum.ac.rs Professor Goranka Knežević, Singidunum University, Serbia gknezevic@singidunum.ac.rs Professor Mladen Veinović, Singidunum University, Serbia mveinovic@singidunum.ac.rs Professor Vesselin Blagoev, Varna University of Management, Bulgaria blagoev@vum.bg Professor Michael Minkov, Varna University of Management, Bulgaria minkov@iuc.bg Associate Professor Christine Juen, Austrian Agency for International Mobility and Cooperation in Education, Science and Research, Wien, Austria chrisine.juen@oead.at Associate Professor Anders Steene, Södertörn University, Stockholm/Hudinge, Sweden anders.steene@sh.se Associate Professor Ing. Miriam Jankalová, University of Zilina, Prague, Czech Republic miriam.jankalova@fpedas.uniza.sk Associate Professor Bálint Molnár, Corvinus University of Budapest, Budapest, Hungary molnarba@inf.elte.hu Associate Professor Michael Bukohwo Esiefarienrhe, University of Agriculture, Dept. of Maths/Statistics, Makurdi, Nigeria esiefabukohwo@gmail.com Associate Professor Goh Yen Nee, Graduate School of Business, Universiti Sains Malaysia, Malaysia yngoh@usm.my Associate Professor Blaženka Hadrović Zekić, Faculty of Economics in Osijek, Croatia hadrovic@efos.hr Research Associate Professor Aleksandar Lebl, Research and Development Institute for Telecommunications and Electronics, Belgrade, Serbia lebl@iritel.com Senior Lecturer Nor Yasmin Mhd Bani, Universiti Putra, Malaysia nor_yasmin@upm.edu.my Roberto Micera, PhD, Researcher, National Research Council (CNR), Italy roberto.micera@ismed.cnr.it Assistant Professor Patrick Ulrich, University of Bamberg, Germany patrick.ulrich@uni-bamberg.de Assistant Professor Jerzy Ładysz, Wrocław University of Economics, Poland jerzy.ladysz@ue.wroc.pl Assistant Professor Konstadinos Kutsikos, University of the Aegean, Chios, Greece kutsikos@aegean.gr Assistant Professor Theodoros Stavrinoudis, University of Aegean, Chios, Greece tsta@aegean.gr Assistant Professor Marcin Staniewski, University of Finance and Management, Warsaw, Poland staniewski@vizja.pl Assistant Professor Gresi Sanje, İstanbul Bilgi Üniversitesi, Istanbul, Turkey gresi.sanje@bilgi.edu.tr Assistant Professor Michaeł Biernacki, Wrocław University of Economics, Poland michal.biernacki@ue.wroc.pl Assistant Professor Piotr Luty, Wrocław University of Economics, Poland piotr.luty@ue.wroc.pl Assistant Professor Vânia Costa, Polytechnic Institute of Cávado and Ave, Barcelos, Portugal vcosta@ipca.pt Assistant Professor Tihana Škrinjarić, University of Zagreb, Croatia tskrinjar@net.efzg.hr Luu Tien Dung, PhD, Lecturer - Researcher, Lac Hong University, Dong Nai, Vietnam dunglt@lhu.edu.vn Assistant Professor Dharmendra Singh, Modern College of Business and Science, Oman dharmendra@mcbs.edu.om Associate Professor Slađana Čabrilo, I-Shou University, Kaohsiung City, Taiwan (R.O.C.) sladjana@isu.edu.tw

Ed it o r ia l O f f ice

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Professor Žaklina Spalević, Singidunum University Gordana Dobrijević, Associate Professor, Singidunum University Jovana Maričić, Singidunum University Radmila Suzić, Associate Professor, Singidunum University

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Design: Aleksandar Mihajlović, MA

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ISSN: 2406-2588 The European Journal of Applied Economics is published twice a year.

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CONTENTS 1 - 15 16 - 29 30 - 41 42 - 54 55 - 65 66 - 80 81 - 97 98 - 109 110 - 120 121 - 136

The Impact of COVID-19 Pandemic on Work Organization Andrijana Savić, Gordana Dobrijević

Employees Motivation and Managerial Coaching During the Pandemic COVID-19 at the Research Institute

Tanja Stanković, Tijana Radojević

Internal Audit in COVID-19 Environment: Key Aspects and Perspectives of Remote Auditing

Maja Kljajić, Vule Mizdraković, Blaženka Hadrović Zekić

Smart Economic Development Within European Countries

Andrija Popović, Maja Ivanović Đukić, Ana Milijić

GDPR and Challenges of Personal Data Protection

Žaklina Spalević, Kosana Vićentijević

Exploring the Influence of Instagram on Travel Destination Choice

Aleksandra Tešin, Tatjana Pivac, Snežana Besermenji, Sanja Obradović

Global Distribution Systems Versus New Distribution Capability and Internet of Things

Anđelka Štilić, Miloš Nicić, Angelina Njeguš

Economic Justification of Applying Information Technologies to the Creation of Smart Citi Aleksandar Sandro Cvetković, Vesna Radojčić

Understanding the Behavioural Intention to Adopt Internet Banking: An Indian Perspective Garima Malik, Dharmendra Singh, Nikola Stakić

Governmental Investment Into the Environmental Economy in the Western Balkan Jelena Šogorov Vučković, Dušan Piksiades, Ivan Trifunović

III

IV

EJAE 2022, 19(1): 1 - 15 ISSN 2406-2588 UDK: 005.96:[616.98:578.834 005.961:005.81 DOI: 10.5937/EJAE19-35904 Original paper/Originalni naučni rad

THE IMPACT OF THE COVID-19 PANDEMIC ON WORK ORGANIZATION Andrijana Savić*, Gordana Dobrijević Singidunum University, Belgrade, Serbia

Abstract: In today’s fast-paced environment, business organizations are faced with the need for introducing frequent changes in order to overcome everyday challenges and improve their performance. Organization of work is one of the key elements in the adjustment to market changes, and the basis of enterprise transformation. Apart from continuous market competition, the COVID-19 pandemic and its impacts have brought about a special type of business challenge. The new situation requires even stronger cooperation between management and employees, trusting relationship and understanding of necessary changes in order to maintain business continuity in very challenging pandemic conditions.

Emergencies and numerous changes in response to a challenging situation can very often disrupt normal business organization and operation. This study focuses on the role of remote work (working from home) during the COVID-19 pandemic. The theoretical framework of this paper is based on the relationship between technology, agile organizations and working from home during the coronavirus crisis.

Article info: Received: January 16, 2022 Correction: February 24, 2022 Accepted: March 10, 2022

Keywords: Work organization, organizational change, agile organizations, working from home, COVID-19 crisis.

INTRODUCTION 1

The COVID-19 pandemic has been the most serious public health crisis in the last hundred years, and has also brought about a multidimensional crisis. In only a few months’ time the new circumstances had a ruinous effects on almost every system and organization across the globe.

The need for change in crises is paramount; otherwise, there can be long-term consequences. The continuity of many companies during the pandemic has considerably relied upon the readiness and capability of organizations to quickly switch to and accept practices that best suit the new reality.

1

Partially presented previously at FINIZ 2021 conference http://portal.finiz.singidunum.ac.rs/paper/42610.

*E-mail: andrijanasa@hotmail.com

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The first and most evident effects of the COVID-19 pandemic immediately endangered every company’s operating and business model. Everything became questionable: how and where employees worked, how they interacted with the customers, how to fulfil all customer needs, which products and services were the most advanced, and which could be quickly adapted. In addition to this, other problems arose due to specific measures adopted by governments, such as office closures, movement and traffic restrictions, affecting supply chain and more.

In this article, we focus on some key points that are now fully integrated into new operating models of many companies. We also analyse some successfully implemented processes, which could be of use after the pandemic, and could also be a part of some future operating model.

One of the most prominent impacts of the pandemic is reflected in finding a way of maintaining business continuity and keeping employees safe by having them work from home at the same time.

ORGANIZATION OF WORK DURING CRISIS Historically, stability has always been identified as a success factor. Unfortunately, continuous changes in contemporary world, the increased use of ICT technologies, economic fluctuations and even the pandemic mean this is no longer a good starting point. More and more organizations are trying to remodel their operations towards agility, which will enable them to adjust quickly to emerging trends in their industries (Consultancy.uk, 2021).

In the time when everything is disrupted, companies that are uncapable of changing fast are at risk of being outperformed by those that do know why giving up the traditional processes could be a winning strategy. With the aim of coping with the actual situation, many companies turned to using agile practices, hoping to adapt faster to changing circumstances. Agile organizations are meant to be fast, tough, and flexible. Companies with agile practices should be fully equipped to react to crises such as the COVID-19 pandemic.

A study by McKinsey Company showed that companies that were more agile before the pandemic, i.e. the companies that carried out major changes and had these practices deeply rooted across the whole organization prior to the pandemic, have been much more successful in managing the impact of the COVID-19 crisis. These agile enterprises secured business continuity and even improved their financial performance (McKinsey & Company, 2020).

During the crisis, agile leaders avoided conventional organizational hierarchies and deployed crossfunctional teams formed to deal with specific projects (Figure1). These teams were established with the aim of focusing on specific outcomes, in particular operational challenges caused by the pandemic.

Furthermore, the need for rapid adaptation led to the decentralization of decision making, involving the teams themselves, which meant that leaders had to enable teams to make more decisions. Quicker decision-making calls for the team’s increased empowerment.

Although agile operating models are something completely new for some businesses, the pandemic has caused many organizations to realize their significance and how they can deliver measurable business gains.

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Figure 1. Traditional organization vs. agile organization.

Source: Santos Pereira, C. Durão, N., Fonseca D., Ferreira, M. J.,& Moreira, F. (2020). An Educational Approach for Present and Future of Digital Transformation in Portuguese Organizations. Applied Sciences 10(3), 757-779.

How agile work helps organizations adapt to the pandemic is best illustrated in the study by Bearing Point consultancy (Consultancy.uk, 2021) (Figure 2). Seven of ten businesses said that agile organizational practices had helped them adapt faster to the chaotic business environment of the pandemic period. This allowed more than 60% of agile companies to maintain their pre-pandemic performance during 2020. However, some companies were not able to reap the benefits of agile working practices, especially if they kept some traditional structures.

Figure 2. The advantages of agile organizations in times of crisis and beyond.

82% 71% 61%

59%

56%

55% 42%

2% Virtual working Fast reaction to new Employees are used Continous delivery of Managers trust results is preserved employees working envoirements are to working conditions or already widely used from home during crisis changing customer indepedently and can to facilitate close adapt to be efficient requirements collaboration when working remotely

Fast approval and decision making process, through already reduced bureaucracy and waste

Interdisciplinary teams that can innovate easily

No advantages

Source: Consultancy.uk. (2020, December 14). COVID-19 has accelerated digital transformation by seven years.

Retrieved from https://www.consultancy.uk/news/26372/covid-19-has-accelerated-digital-transformationby-seven-years 3

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TECHNOLOGY AS ENABLER On the whole, in the pre-crisis period, competitive business environment imposed the need for frequent changes. Searching for ways to improve profitability and gain competitive advantage became the most important strategic objective of modern business. Strategies for continuous improvement include reducing costs, improving quality, and trying to identify and respond to customer needs in the fastest way (Deloitte, n.d.). Accordingly, companies today are striving to align their business management strategies with technological resources.

Rapid technological advancement has dramatically transformed business management processes over the last several years. Due to technology, remote work has become more effective, and many companies have encouraged their employees to work from home to avoid personal contact with other team members.

In this context, technology is crucial to connecting people worldwide. Starting from a simple phone call, back in 19th century, to the present day and many applications for video conferences (e.g. Zoom, Webex, MS Teams, etc.), many boundaries have been removed. People can be at different places and still stay connected and be efficient. Technologies are also used to develop many advanced tools that are improving processes, reducing manual work, increasing automation and apply analytics in daily work. These two features played a fundamental role in maintaining activities without interruption.

Finally, consumer behaviour during the pandemic period was a driving force behind technology’s increasing presence. Under lockdown, customers turned to digital channels, from food shopping to financial transactions, so the only contact with consumers was online. As consumers warmed to the idea of using e-commerce, organizations made their best effort to adapt to changing demands.

Consequently, within several months of 2020, an increase in digital products and/or services soared by an average of seven years (Consultancy.uk, 2020).

WORKING FROM HOME Faced with the immense pressure to ensure business continuity and safety of employees, many companies have resorted to remote working as a method to lower the risk of COVID-19 infection.

Working from home (WFH) is a “working arrangement in which an employee fulfils the essential responsibilities of his/her job while remaining at home, using information and communications technology (ICT)” (ILO, 2020). WFH itself is just the tip of the iceberg. In the COVID-19 crisis, it refers to a home-based alternative working arrangement, which implies sharing accountability and duties by employers and employees to preserve business continuity and people’s jobs (ILO, 2020).

Before the pandemic, remote working was not mainstream (Kossek & Lautsch, 2018; Aguilera, Lethiais, Rallet, & Proulhac, 2016; Van der Loop, Willigers, & Haaijer, 2019; Collins, Hislop, and Cartwright, 2016). The idea of working from home was not considered practical for many people because it asks for a calm and quiet space and appropriate digital infrastructure. Nevertheless, some research before the pandemic (OWL Labs, 2018) indicated 25% less staff turnover in companies with “remotefriendly” options (hybrid companies).

Initially, companies have implemented WFH in response to anti-COVID government measures, to restrict face-to-face contact. Once in place however, working from home has changed the perspective of the traditional mode of working, thus becoming a new norm for future operating models.

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These circumstances proved that people skills and readiness to work independently are more important than some formal processes, like working from office during strict business hours.

Companies and their business functions are being affected by digitalization and the constant need to transform. This has especially accelerated during the COVID-19 pandemic, with companies having to improve their digital infrastructure and provide facilities for their employees to work from home.

Companies with a higher level of digitalization were much faster in this imposed transformation and they secured a higher level of business continuity (Nishant, 2021; Dias, Lopes, & Peixoto, 2022).

In addition to required digitalization level, as a main prerequisite to accommodate working from home, there is another crucial aspect. Trust in the workplace is an important factor that has a direct correlation with the working from home outcome. Together with digitalization, organizational trust is a key element to building a work from home policy as the main drive to ensure business continuity, productivity, and job preservation.

Many companies abandoned traditional processes to quickly set up new organization model and permit thousands of employees to work from home. There was a quick shift from voluntary flexibility to a new “forced flexibility,” for both organizations and employees (Franken et al., 2021; Cuerdo-Vilches, Navas-Martín, March, & Oteiza, 2021). From a functional perspective, agile organizations are those that provide a way of working with maximum flexibility and minimum constraints, which allows their employees to work where, when, and how they prefer (McKinsey & Company, 2020).

In a pre-pandemic study (OWL Labs, 2019), the main reasons stated for WFH, from the perspective of employees, were better work-life balance, increased productivity, less stress, avoiding commute and saving money; the 2020 edition revealed a shift in priorities towards fear of getting COVID-19, avoiding commute, decreasing stress, better work-life balance, and increased productivity.

Although organizational factors play a crucial role in organizing WFH, the individual and family factors should not be neglected (Baker, Avery, and Crawford 2007). Among individual factors, selfdiscipline, self-motivation, ability to work self-sufficiently, persistence, self-organization, assertiveness, time management skills, and computer skills stand out (Baruch 2000), as well as gender (Fan & Moen, 2021) and attitudes (Nguyen, 2021). WFH has increased gender inequality, because men avoid typical home distractions more easily than women (Gao, & Sai, 2020; Hodder, 2020; Nash, & Churchill, 2020; Clark et al., 2021; Cotton, Beauregard, & Keles, 2021; Docka-Filipek & Stone, 2021; Frize et al., 2021; Otonkorpi-Lehtoranta, Salin, Hakovirta, & Kaittila, 2021; Johnson, 2022; Thébaud, & Pedulla, 2022).

Additionally, family factors, such as the size of the living space, family living arrangement, the number and age of children, and even pets, influence working from home (Baker, Avery, and Crawford, 2007).

Commute distance is also important (Nguyen, M.H. (2021). However, the pandemic has introduced completely new dynamics into WFH. A study carried out in the Netherlands (van der Lippe & Lippényi, 2020) has shown that co-workers working from home have a negative influence on employee performance. According to the Iometrics & Global Workplace Analytics (2020) study conducted in six countries, the current success factors for remote work are collaboration with teammates, suitable home environment without distractions, appropriate organizational culture, and technology. The results of this study served as a basis to predict future drivers of WFH success: self-discipline, remote collaboration, employee well-being (no stress, enough exercise and sleep), years of experience working from home, career opportunities, and no distractions. It also showed that 2-3 days per week are preferred for WFH. Flexibility, both in scheduling and the amount of time spent at the office, has emerged as one of the most frequently mentioned aspects of WFH success (Ipsos 2021, OWL Labs & Global Workplace Analytics (2021).

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ADVANTAGES AND CHALLENGES OF WORKING FROM HOME Before and during the pandemic there had been several extensive studies on advantages and disadvantages of WFH (e.g.Wang, Liu, Qian, and Parker, 2021; Ipsen, van Veldhoven, Kirchner, and Hansen, 2021; Buffer, 2021; Global Workplace Analytics, 2021; Saatçi, Akyüz, Rintel, & Klokmose, 2020). ILO, 2019; Ipsos, 2011). We have reviewed and summarized 12 of those studies in table 1. The key advantages that appear in most of them are work-life balance, higher productivity, avoiding commuting, less stress, and saving money. The main challenges are loneliness, distractions, poor communication, working longer hours, and IT issues. Several studies point out considerable savings that should not be neglected (Gallup, 2021; Iometrics& Global Workplace Analytics, 2020; Global Workplace Analytics, 2021). The analysis of more than 6000 case studies, research papers and news items has revealed that WFH saves money for both employers ($11 thousand yearly per each employee who works remotely half the time) and employees ($3 thousand yearly per person) (Global Workplace Analytics (2021).

Table 1. Relevant research on advantages and disadvantages of WFH Study

No. of participants

Advantages

Challenges

5,748 Ipsen, van Veldhoven, Kirchner, and Hansen (2021) Six Key Advantages and Disadvantages of Working from Home in Europe during COVID-19

29 EU

Work–life balance Enhanced work performance Greater work control

Home office constraints Work uncertainties Unsatisfactory tools

Ipsos (2021) Workers want more flexibility from their employers after COVID-19

12,500

29 worldwide

Higher productivity

Missing co-workers Distractions Feeling disengaged from work Feeling more burned out by work

Buffer (2021) The 2021 State of Remote Work

2,300

5 worldwide

Flexible schedule Flexibility to work from anywhere Not commuting Time with family Working from home

Not being able to unplug Communication and collaboration problems Loneliness Distractions Staying motivated Different time zones from the rest of the team

Wang, B., Liu, Y., 561 Qian, J. and Parker, S.K. (2021), Achieving Effective Remote Working During the COVID-19 Pandemic: A Work Design Perspective.

6

Countries

China

Conflict between work and home Poor communication Procrastination Loneliness

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Study

No. of participants

Countries

Advantages

OWL Labs & Global Workplace Analytics (2021) The State of Remote Work 2021

2,050

USA

Present for the family Happier Better managing work-life conflict Better mental health Less stressed Feel more trusted

Global Workplace Analytics (2021) The Business Case for Remote Work — For Employers, Employees, the Environment, and Society

More than 6,000 case studies, research papers and news items

USA

Benefits for the environment Increased productivity - employees spend more time working instead of commuting - fewer interruptions than at the office Lower office costs Lower absenteeism Lower turnover Continuity of operations Better health of employees Increased engagement increased diversity (people can be hired globally)

Gallup (2021) Reviewing Remote Work in the U.S. Under COVID-19.

Gallup panel

100,000

USA

Real estate and overhead savings High-talent job candidates Talent retention

Iometrics& Global Workplace Analytics (2020) Global Workfrom-Home Experience Survey

2,865

Worldwide

Using less office space Avoiding commuting Employee productivity Triple bottom line: people, planet profit

Challenges 55% work more than at the office (men more than women) Video call difficulties: - often difficult to participate, - don’t know who is speaking, - cannot see people’s faces, - feel excluded during meetings

Unclear communication Poor collaboration Uncertainty about relationships Feeling isolated Confused about priorities

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Study OWL Labs & Global Workplace Analytics (2020) State of Remote Work, COVID edition

No. of participants 2,025

ILO (2019) Telework in the 21st Century, an Evolutionary perspective.

Countries

Advantages

USA

Saving money (almost $500 monthly per person) Avoiding commute Adds to happiness and job satisfaction Building trust Improves relations between employer and employees

15 worldwide

Working hours and schedules Work-life balance Health and safety Individual and company performance

Challenges Working more hours (on average 26h per month – almost one day more per week) Children at home More meetings than before Not having worked remotely previously

OWL Labs (2018) Global State of Remote Work 2018

3,028

23 worldwide

Better work-life balance Increased productivity Less stress Avoiding commute Saving money Less office drama

Working longer hours More meetings Challenges related to the home environment: interruptions, staying focused, IT issues

Ipsos (2011) The World of Work: Global Study of Online Employees Shows One in Five (17%) Work from Elsewhere

11,384

24 worldwide

Keeping talented f emale employees Less stress Better balance between work and family Higher productivity

Feeling socially isolated The idea that WFH damages chances of promotion

Source: Compiled by authors

There are two main outcomes stemming from working from home (figure 3): “work domain outcome” and “life domain outcome”. Working from home has a positive influence on the work domain, providing flexibility, productivity, and job satisfaction thanks to flexible time to complete employees’ tasks (Vyas and Butakhieo, 2020).

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Figure 3. Working from home.

Source: Vyas, L.& Butakhieo, N. (2020). The impact of working from home during COVID-19 on work and life domains: an exploratory study on Hong Kong. Policy Design and Practice, 4(1). 59-76.

The impact on life domain is both positive and negative. Working from home affects work-life balance, life satisfaction and family satisfaction. For example, it is difficult for many people to make a clear differentiation between working and non-working hours, usually causing burnout (Vyas and Butakhieo, 2020). Additionally, feeling isolated from their co-workers and having the impression that their career advancement is threatened is still a major stumbling block to remote workers (Charalampous, Grant, Tramontano, & Michailidis, 2019; Jansen Perry, Rubino, & Hunter, 2018; Van Zoonen & Sivunen, 2021; Becker et al., 2022).

Considering all of the above, working from home has both positive and negative sides, and a more accurate assessment will become possible after the pandemic, when working from home is no longer mandatory.

WHERE ARE WE COMMUTING? – THE FUTURE OF REMOTE WORK In a survey of almost a thousand top managers conducted in 2020, about three quarters (74%) of them said they would maintain increased homeworking in place after the pandemic (Iod, 2020). This concurs with several other studies that showed that about three-quarters of employees wanted to continue working remotely, at least part of the time (PWC, 2021; Buffer, 2021). WFH is especially popular among knowledge workers (Bürgin, Mayer, Kashev, & Haug, 2021).

A pre-pandemic survey by OWL Labs (2018) showed that employees who worked from home at least one day per month felt happier and more productive than those who did not. That is consistent with the results obtained two years later (OWL Labs & Global Workplace Analytics (2020). Namely, 77% of the respondents claimed that WFH after COVID would make them happier.

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A recent study among 2050 US workers (OWL Labs & Global Workplace Analytics (2021) showed that 37% of the respondents would take a pay cut of more than 10%, and 40% of them would take a pay cut up to 10% if they could work from home. That is a significant increase in comparison to a pre-pandemic study conducted just two years ago (OWL Labs (2019), when 20% of the respondents stated they would take a pay cut of more than 10%, and 24% up to 10% in order to work remotely.

Moreover, about one in three employees said they would leave their current employer if they could not continue working from home, at least part of the time (Ipsos, 2021; OWL Labs & Global Workplace Analytics (2021). It seems that organization and implementation of remote work can be a determining factor regarding a company’s ability to recruit and retain talented employees. All this suggests that hybrid workplaces will be the norm in the future.

CONCLUSIONS It is obvious that the world will never be the same after coronavirus pandemic. COVID-19 brought abrupt changes to people’s lives, organizations and societies in many different ways.

COVID-19 has accelerated working model transformation. Companies that were more conservative, in terms of change and IT transition, found it much more challenging to adapt to new circumstances.

However, companies that were agile and advanced in technological infrastructure quickly adopted the practices that best suit the new reality.

The spread of the coronavirus has forced all employers to provide alternative working methods that will not endanger the health of employees and at the same time ensure business continuity by practicing social distancing at the workplace or implementing working from home.

Working from home has modified the traditional way of working and created new long-term practices.

The changes that companies made during the crisis period could give them confidence to initiate broader transformations after the crisis, towards more flexible workplaces.

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Retrieved September 12, 2021, from https://www.mckinsey.com/business-functions/ organization/ourinsights/how-covid-19-is-redefining-the-next-normal-operating-model Nash, M. & Churchill, B. (2020). Caring during COVID-19: A gendered analysis of Australian university responses to managing remote working and caring responsibilities. Gender, Work & Organization, 27(5), 833-846. https://doi.org/10.1111/gwao.12484 Nguyen, M.H. (2021). Factors influencing home-based telework in Hanoi (Vietnam) during and after the COVID-19 era. Transportation, 48, 3207–3238. https://doi.org/10.1007/ s11116-021-10169-5 Nishant, R. (2021). Technological advancement in the era of COVID-19. SAGE Open Medicine, 9, 1-4. https:// doi.org/10.1177%2F20503121211000912 Organisation for Economic Co-operation and Development (2020, July 15). Coronavirus (COVID-19): SME policy responses. Retrieved September 15, 2021, from https://www.oecd.org/coronavirus/policy-responses/ coronavirus-covid-19-sme-policy-responses-04440101/#section-d1e258 Otonkorpi-Lehtoranta, K., Salin, M., Hakovirta, M. & Kaittila, A. (2021). Gendering boundary work: Experiences of work–family practices among Finnish working parents during COVID-19 lockdown. Gender, Work & Organization,1-17. https://doi.org/10.1111/gwao.12773 OWL Labs & Global Workplace Analytics (2020). State of Remote Work, COVID edition. Retrieved January 3, 2022, from https://globalworkplaceanalytics.com/whitepapers OWL Labs (2018). Global State of Remote Work 2018. Retrieved January 3, 2022, from 2019 State of Remote Work Report (owllabs.com) OWL Labs (2019). State of Remote Work 2019. Retrieved January 3, 2022, from 2019 State of Remote Work Report (owllabs.com) PWC (2021). PwC’s US Remote Work Survey - January 12, 2021, Retrieved January 4, 2022, from https://www. pwc.com/us/en/library/covid-19/us-remote-work-survey.html?ts=1618344783904 Saatçi, B., Akyüz, K., Rintel, S. & Klokmose, C.N. (2020). (Re)Configuring Hybrid Meetings: Moving from UserCentered Design to Meeting-Centered Design. Computer Supported Cooperative Work, 29, 769–794. https://doi.org/10.1007/s10606-020-09385-x Sands, L. (2021, March 23). Working from home: 6 benefits for SMEs. Breathe. Retrieved September 14, 2021, from https://www.breathehr.com/en-gb/blog/topic/remote-working/working-from-home-6-benefits-for-smes Santos Pereira, C. Durão, N., Fonseca D.,Ferreira, M. J.,& Moreira, F. (2020). An Educational Approach for Present and Future of Digital Transformation in Portuguese Organizations. Applied Sciences, 10(3), 757-779. http://dx.doi.org/10.3390/app10030757 Thébaud, S., & Pedulla, D. S. (2022). When Do Work-Family Policies Work? Unpacking the Effects of Stigma and Financial Costs for Men and Women. Work and Occupations. 49(2), 229-263. https://doi. org/10.1177/07308884211069914

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Van der Lippe, T., Lippényi, Z. (2020). Co-workers working from home and individual and team performance.

New Technology, Work and Employment, 35(1), 60-79. https://doi. org/10.1111/ntwe.12153 Van der Loop, H., Willigers, J.& Haaijer, R. (2019). Empirical Estimation of Effects of Flexible Working on Mobility and Congestion in the Netherlands 2000 to 2016. Transportation Research Record, 2673 (6), 557-565. https://doi.org/10.1177%2F0361198119845889 Van Zoonen, W. & Sivunen, A.E. (2021). The impact of remote work and mediated communication frequency on isolation and psychological distress. European Journal of Work and Organizational Psychology. https:// doi.org/10.1080/1359432X.2021.2002299 Vyas, L.& Butakhieo, N. (2020). The impact of working from home during COVID-19 on work and life domains: an exploratory study on Hong Kong. Policy Design and Practice, 4(1), 59-76. https://doi.org/10.1080/25 741292.2020.1863560 Wang, B., Liu, Y., Qian, J. and Parker, S.K. (2021). Achieving Effective Remote Working During the COVID-19 Pandemic: A Work Design Perspective. Applied Psychology, 70(1),16-59. https://doi.org/10.1111/apps.12290 Zhang, T.& Gerlowski, D.&Acs, Z. (2021, April 25). Working from home: small business performance and Covid-19 pandemic. Small Business Economics. Retrieved September 11, 2021, from https://link.springer. com/article/10.1007/s11187-021-00493-6

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UTICAJ PANDEMIJE COVID-19 NA ORGANIZACIJU RADA

Rezime: U današnjem okruženju koje se brzo razvija, poslovne organizacije su suočene sa potrebom za čestim promenama kako bi prevazišle svakodnevne izazove i poboljšale svoje performanse. Organizacija rada je jedan od ključnih elemenata u prilagođavanju tržišnim promenama i osnova transformacije preduzeća. Pored kontinuirane tržišne utakmice, pandemija COVID-19 i njene posledice donele su i posebnu vrstu poslovnog izazova. Nove okolnosti zahtevaju još izraženiju usklađenost menadžmenta i zaposlenih, njihovu punu povezanost i razumevanje neophodnih promena, kako bi se održao kontinuitet poslovanja u veoma izazovnim pandemijskim uslovima. Vanredno stanje i brojne promene kao odgovor na izazovnu situaciju vrlo često mogu poremetiti normalno uređenje ili funkcionisanje poslovanja. Ovaj rad se fokusira na ulogu rada na daljinu (rad od kuće) tokom pandemije COVID-19. Teorijski okvir ovog rada zasniva se na povezanosti između tehnologije, agilnih organizacija i rada od kuće tokom krize izazvane korona virusom.

Ključne reči: Organizacija rada, organizacione promene, agilne organizacije, rad od kuće, COVID-19 kriza.

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EJAE 2022, 19(1): 16 - 29 ISSN 2406-2588 UDK: 005.96:[616.98:578.834 005.32:331.101.3 005.963 DOI: 10.5937/EJAE19-35560 Original paper/Originalni naučni rad

EMPLOYEES MOTIVATION AND MANAGERIAL COACHING DURING THE PANDEMIC COVID-19 AT THE RESEARCH INSTITUTE Tanja Stanković*, Tijana Radojević Mining and Metallurgy Institute Bor, Bor, Serbia

Abstract:

Article info:

Company survival depends on its ability to adapt to the changes that have their own dynamics and development pace; it is the transition from the present to the future, desired endpoint. The activities of the organization's management could lose the meaning if there is lack of motivation. In situation like this, implementation cannot be successful.

Motivation factors for advancement, work and organizational changes are numerous, but the communication between employees and management is the most important. As this communication is closely related to management coaching, manager’s coaching skills become crucial for the ultimate success and motivation of the organization. This research aims to show the importance of motivating employees to improve and learn new skills during work and identify the best individuals who will transfer their knowledge to employees and who can become internal trainers. The article provides an overview of the coaching and motivation for learning, and it offers insight into how the observed example will develop in the future.

Received: January 10, 2022 Correction: February 24, 2022 Accepted: March 22, 2022

Keywords: management and employee communication, employee motivation, coaching skills, managerial coaching.

INTRODUCTION Employee’s consolidation in a mutual venture is a subject of top management, and a part of our society.1 There are many definitions of management, from management, leadership, to organization.

Etymologically, the word management comes from the Italian word manege-iare, which is derived from the Latin word hand (manus), therefore, handling, guidance, leading. The phrase management derives from the base of English words man and age, which associate us with the management of an experienced man. Management is described differently in many course books as a function, process, cooperation, ability, shaping. The success of any organization depends on numerous factors. This is where the connection between employees and management is established. Good management has a positive effect on employees’ motivation, which depends on communication between them.

1

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Partially presented previously at FINIZ 2021 conference https://portal.finiz.singidunum.ac.rs/paper/42613.

*E-mail: tanja.stankovic.16@singimail.rs

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STANKOVIĆ. T., RADOJEVIĆ. T.  EMPLOYEES MOTIVATION AND MANAGERIAL COACHING DURING THE PANDEMIC COVID-19 AT RESEARCH INSTITUTE

Good mutual communication is one of the ways to create work environment which is highly motivated (Varma, 2017). The motivation of employees within the organization depends on several factors such as job satisfaction, a fairness atmosphere, commitment, and loyalty to the organization (Diamantidis, Chatzoglou, 2019). These factors can be strongly influenced by supervisors through numerous activities and processes that create a favorable work environment, as well as successful communication with employees. For purpose of achieving productive communication between employees and management, managers must have special coaching skills (listening, support, feedback and asking precise questions) and based on those, to conduct a specific managerial coaching process. Coaching is believed to be the most effective way to help employees, teams or individuals achieve optimal performance while working (MacLennan, 2017). Coaching is a tool for organization and leadership growth, very supportive for potential management or employees. Focused on tasks, coaching has a special duration agenda for changing behaviors and skills of the employee (Garvey, Strokes, Megginson, 2016) and generally, represents mentoring.

After a brief review of employee motivation in general, and its dependence on communication within the organization, this paper specifically addresses the topics of managerial coaching and coaching skills of managers and their impact on employee motivation within the observed research institute.

The processing was performed based on the reviewed cited literature as well as based on the practical research on this topic in MMI.

LITERATURE REVIEW Inspiration, or motivation at all, symbolizes strength within one personality that conditions certain instrumental actions to achieve set goals and it is directly dependent on communication between management and employees. Most of the authors see motivation as a process of meeting personal needs including these steps: ◆ Unmet needs ◆ Easing of tensity ◆ Searching for solutions ◆ Meeting needs ◆ Activity It is easy to conclude, based on the above-mentioned steps that employees are doing their best to ease the tension and continue with the progress. The motivation of management and individual leaders is important as well as the motivation for change of all members of the organization. In addition to knowledge, abilities, or skills, motivation is needed to perform any job. Regardless of the choice of theory, inspired individuals will invest more effort in their work than those unmotivated (Radojević, Stanković, Rajin, 2020). Lack of motivation and resistance to change are regular and expected phenomena, both in private life and in the business world. The desire for things to remain the same and unchanged is part of human nature, so it is not unusual for people to resist the change even in a situation of improvement of the living environment, work process, or life in general. The reason for such a state and behavior of people is, mainly, insecurity due to the unknown circumstances that cause stress. We could recognize a similar situation during the current COVID-19 pandemic, while sentimental managerial leadership can drive mindful response to employees concerns about healthcare, delayed pay, job insecurity.

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All this can trigger high stress (Oruh, Mordi, Dibia, Ajonbadi, 2021) and that is why the connection between well-being of employees and described workplace is very important as it affects cardiovascular health (Wright, Huang, 2012). Nowadays, expectations of employees are changing as they face post COVID-19 situations (Diab-Bahman, Al-Enzi, 2020). Moreover, there are situations when the current situation in the company is unbearable, and even then, there is opposition to and deprecation of the upcoming or new changes. Anyone who is determined to implement the change in the organization must be prepared to face resistance. That is why motivation of all employees is very important.

Recognized term for all factors that affect the organization and management of people and their habits, is management. It is desirable to create conditions in which the qualities of employees will become recognizable, to look for chances to extract potential from the people. Motivation is the willingness of a person to meet the goal while fulfilling personal needs (Ferjan, 1998). Today, most of the theories of motivation in use have been developed in the USA. Nevertheless, all theories do not apply to all cultures. In some cultures, the priority is a secure job and lifelong employment, ahead of challenges, career, and social needs. Therefore, the factors that motivate employees in the USA will not be equally important for workers beyond its borders (Adler and Gunderson, 2007).

There is no unique solution to motivate employees. A famous quote from the founder of China’s social media, Jack Ma: “Opportunities lie in the place where the complaints are” teaches us that solutions and opportunities should not be sought, because they exist, the market should only be listened to. Even in a hopeless situation, new opportunities for success can be created, and the outcome is a motivated employee who is ready to seize the opportunity. Employee motivation is influenced by many internal factors (the character of an individual, work habits) and external factors (living standard, moral and values system, socio-economic development) (Rahimić, Resić, Kožo, 2012). Productive communication as an essential task of the managers implies informing employees about the success of the colleagues, the course of changes in the enterprise, and lowering feelings of uncertainty and insecurity. Communication as the exchange of information must be planned and well organized by top management, teams, services. To motivate employees during any communication, managers are using channels or media of communication like internal newspapers, emails, bulletin boards, meetings, face-to-face conversations, or persuasion of the employee, but employee’s emotions should not be used (Janićijević, 2014). While motivating employees, we must not forget that internal communication is a vital factor. If not set as a condition, better relationship between management and employees are not possible. In that case, we say that there is no bilateral communication. Then the human potential leaves the organization, so it remains without support for the planned organizational changes.

When talking about changes in a company, the most complex are those that have many different aspects: ◆ knowledge management programs ◆ innovation programs ◆ learning programs These, together with proactive transformational leadership and healthy work environment, lead to positive changes and greater motivation among employees (Džamić, 2016).

Organizational culture and job satisfaction, also have positive effects on motivation, with organizational culture not having a direct impact on work performance. Such findings can serve as a basis for creating strategies to improve performance and employee credibility (Sapta, Muafi, Setini, 2021).

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STANKOVIĆ. T., RADOJEVIĆ. T.  EMPLOYEES MOTIVATION AND MANAGERIAL COACHING DURING THE PANDEMIC COVID-19 AT RESEARCH INSTITUTE

Fair atmosphere in observed example is closely related to leaders and managers. From this point of view, successful managing is connected to communication and person’s inner motivation (Gilley, Gilley, McMillan, 2009).

Effective internal communication is required by a successful organizational change. Participative communication directly contributes to effective commitment to change and behavioral support of employees (Neill, Men, Yue, 2019).

If there is no efficient communication, it is difficult to influence the motivation of employees. That is why a good balance of these two factors is indispensable.

As the liaison between employees and management is closely related to management coaching, for management coaching to be successful, the manager must have good coaching skills that are important to motivate employees and succeed together with them.

MANAGERIAL COACHING AND MANAGER COACHING SKILLS MANAGERIAL COACHING Managerial coaching arose and evolved as a reaction to a transition in responsibility for people development from HR functions to management. It is not a surprise that many definitions of managerial coaching emphasize the role of leaders in facilitating development of their employees. It is not recommended to bring together the leaders who spend all their time telling subordinates how to do their jobs better and the leaders who encourage the employees to work and perform better, with those managers who seek a way to relieve change within people with whom they work. Some authors believe that there are no differences between training, planning, managerial coaching, and the communication process. A perspective like this imparts limited insight as to the specific developmental needs of managerial coaches (Lawrence, 2017). The relationship between managerial coaching, coaches and employee performance during work is mediated by psychological capital (Novitasari, 2021). By revealing effects of employees’ psychological satisfaction for competency and cognition, it can be explained how direction-giving language influences the trust of employee (Men, Qin, Jin, 2021). Employee trust is linked to engagement at work and has a stake in leaders’ consistence between action and words (Wang, Hsieh, 2013).

Behavior of the supervisor or coach, on work and off work, is important to the employees who expect to be trained by them. Also, trust in the leader and management has different effects on the employees in an organization (Yang, Mossholder, 2010).

Coaching of employee is a time-consuming process and certainly is not a process of repairing or fixing something. Understanding the needs or business perspectives is all about the coaching.

With coaching, or training, the motivation of workers develops, the fluctuation decreases because the trained workers become attached to their occupations and become safer at work, they become more satisfied because completed tasks evoke complacency (McCarthy, Milner, 2019). There are numerous benefits that comes out from employees’ desire to work for the employer that provides development opportunities or training (Ognjanović, 2021). By training themselves, one acquires working conditions.

The purpose of tutoring is to get an encouraged employee who is ready to meet the organizational and personal needs.

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“Although managerial coaching is often considered as a ‘cut down’, shortened or simplified version of external coaching, the role of the managerial coach is, more challenging than the external coach, in a way that managerial coaching may be more usefully considered as a discrete and equally demanding discipline, although related to external coaching” (Lawrence, 2017).

Coaching directs people and is good for them and their forthcoming business trends. Investment in coaching is costly discipline, yet worthy.

For instance, a Bersin by Deloitte research showed that organizations with senior leaders who coach effectively and frequently improve their business results by 21% when compared to those who never implemented coaching (https://www2.deloitte.com/content/dam/Deloitte/ca/Documents/audit/ ca-audit-abm-scotia-high-impact-leadership.pdf ).

Senior leaders, based on Mining and Metallurgy Institute (MMI) Bor research, are evolving themselves, improving their leadership competencies and communication skills, keeping an eye on the latest successful team leading tools. They enjoy greater confidence while building better relations among employees. They always devise an action plan which is easy to implement regardless of a problem or a goal. Experienced managers in MMI have the power to better motivate employees and to conduct managerial coaching better.

Another positive side of coaching is preparing the workers for various career changes, because one certificate and one job position are, sometimes, insufficient, so they are willing to look for another, better job or they decide to become entrepreneurs. Usually, that is a younger person with a high school diploma, with coaching and leadership skills, successful at work and with adequate finances (Mali, Kuzmanović, Nikolić, Tarek, Stojanović 2021). The most engaged are those who have an extensive education and skills that can be used in different situations.

From all that has been said, we can conclude that managerial coaching is the liberation and encouragement of human power to strengthen the performance of an individual or a team. Coaching by managers holds immediate influence on improving the employees’ function and lifestyle, achievement, sense of satisfaction during work, dedication to employer and career.

COACHING SKILLS OF MANAGERS Satisfaction with accomplishments at work is an important indicator of motivation, but employees are a vital factor in the success of a modern society. That is why it is crucial to manage and coach them carefully.

Helping the coach to express the plans and views means trust and understanding through lectures and critical situations recognition. All this implies the development of emotional and intellectual understanding (Lancer, Clutterbuck, Megginson, 2016), skills that a coach already possesses.

Any organization that wants to lead its staff successfully, inevitably needs a good manager and leader who has coaching skills that will be passed on to employees. The multiple and portable skills of managers are the basis of good management.

Four skills that appear to present a particular challenge to the managerial coach are: (Lawrence, 2017) ◆ Communication skills ◆ Negotiation skills ◆ Mentoring skills ◆ Good relationship among the workers 20

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Slowing down and making employees reasonable and cooperative is a great coaching skill. A good coach increases awareness, creates an atmosphere with greater confidence and helps leaders to set goals and priorities. Coaching is all about changing leaders and their employee's lives and businesses for the better. It is believed that coaching is the most effective way to help employees, teams or individuals achieve optimal performance while working (MacLennan, 2017).

Very often, people make decisions based on assumptions, and the coach is there to listen to what is said, to give feedback and ask the right question based on that.

Making a manager a good internal or external coach requires a person with sensibility, preparedness, and inspiration for helping colleagues, clients or friends to solve problems and improve current state of affairs.

By using coaching abilities, the coach educates managers and employees how to learn and obtain the required skills. The coach learns how to find, transform, and use information into new knowledge that will be used during the work. Modern concept of coaching draws on three aspects of learning, theoretical, practical, and productive to develop wisdom and new knowledges (Garvey, Stokes, Megginson, 2014).

Be they external or internal, coaches support leaders to govern their company and employee challenges.

An external coach is engaged by the company to fulfill its expectancy within the established deadlines.

They have accredited mentoring approaches and expertise in skills that meet the requirements of the client. Their recruitment is costly, they are rigid, and their main disadvantage is a lack of knowledge about the ethics and culture of the company (Rogers, 2012).

On the other hand, an internal coach is trained within the organization, cost-effective and popular.

They are acquainted with the demands of the company and the employees, knowing one another from long or close contact.

While coaching, the manager participates; he is not controlling or giving out orders. During such a process, the coach challenges themselves as well. A talented coach can use intuition, always actively listens to the employees, and demonstrates empathy. With these preconditions fulfilled, the manager gains good feedback, sets smart goals, and in the end, he will build a rapport (Grant, 2006). Described coach evaluates with curiosity, regular check-ins, and method tools, he sets the goals and provides a structure.

Recently, leaders who coach have been recognized as one of the most critical aspects of strategical leadership for studying (Ellinger, Ellinger, 2021).

Investing in coaching training generates expected return. Regardless of how great the need for a coach is, managers can still be unprepared and suspicious when it comes to their own training.

(Ladyshewsky, 2010).

Moreover, if managers have had a positive experience when being coached, they are more likely to want their coworkers to expand their coaching skills and undergo coaching. Training in coaching skills is a good first step, but it is not enough. Companies need to build a coaching supportive culture to assure uninterrupted and endless application and modeling of mentoring patterns (McCarthy and Milner, 2013).

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We can summarize that the skills of a successful coach are: ◆ Distinctive ability to communicate (ability to exchange information) (Krstic, Skorup, Gavric, 2017) ◆ Precise judgment (the ability to judge and decide wisely and objectively) ◆ Ability to take appropriate actions (self-motivation) ◆ Not invading the privacy of others (unjustifiable intrusion into another’s personal life without consent) ◆ Incentive spread of tacit knowledge (knowledge found in the minds of successful, learned and specialized individuals who transfer their knowledge to others) (Kaljevic, Boljanovic, Vicentijevic, Zizovic, 2015) In addition to the above skills, it is necessary for a coach to be trustworthy, to take responsibility for his actions, to maintain dignity and calmness, to possess good manners. Matching the look with the wardrobe is also an important detail. With motivation and communication skills, managers can negatively or positively affect the employees, depending on how motivated they are. Motivation, empathy, and social proficiency are the epithets that describe people who distinguish themselves (Goleman, 2020). In this context, the coach with a great influence can initiate successful management and positive organizational changes, and vice versa.

MANAGERIAL COACHING IN MINING AND METALLURGY INSTITUTE BOR (MMI) Conducted practical research in MMI presented in this paper was performed by applying methods of data collection through observations and survey, as well as analysis of the content of relevant sites, reports and legal regulations. Among the 250 employees, MMI has 48 doctoral students and 25 PhD’s, well equipped with services that have managed to secure a place among the best institutes in the region (https://irmbor.co.rs/en/about-us/employees). As an institute that invests a lot in development, training, education of their staff, doctoral studies etc., it can be considered as a learning organization.

A large number of PhD candidates and PhDs, as well as of experienced engineers, ranks this institute among the best ones. It can be learned from MMI how to move through different economic situations that are conditioned by various factors, including the impact of the pandemic. Within its activity MMI performs the development of the scientific-research projects in the fields of geology, mining, metallurgy, technology, expertise, studies, and projects of interdisciplinary character providing the technological infrastructure development of interest in the Republic of Serbia.

The growth of economic activities in Bor district, primarily in Bor and Majdanpek, is conditioned by the arrival of a strategic partner and a huge investment in capacity building in mining. That caused for all employees to be engaged with the large company that bought the former RTB Bor, but it also conditioned that its partners and suppliers of materials and services work with increased capacity. To put into operation as quickly and efficiently as possible every plant in Bor and Majdanpek, the Chinese partner invested huge funds, which required MMI engagement to a far greater extent than would be the case under normal circumstances prior to the strategic partner arrival. Specific conditions that arose expressed on higher intellectual-type benefits that caused good earnings and better solvency to MMI. And then the COVID-19 pandemic happened. The whole world has been exposed to a terrible pandemic with significant consequences on people, their incomes and state treasury (Spalević, Stanišić, 2021). The world counts 195 states and all of them faced challenges and started to adjust to the unexpected changes with the view to their well-being, mental health, individual concern for family, work survival or technical issues. The most affected were communities, consumers, and employees, but other stakeholders 22

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have also been influenced and are striving to reset and adapt to this crisis (Carroll, 2021). This was unexpected scenario for all, governments across the globe, companies, individuals (Jarosz, 2021), and it was no different in Serbia, in MMI. With all the recommended security measures implemented during the impact of the pandemic - wearing masks, distancing, reduced travels, online meetings etc. – they came up with the idea of organizing an internal training named „Teach the teacher” so that external experts could transfer their knowledge to the mid-level management who will pass on the knowledge to the groups of employees. The goal of the coaching was to spread knowledge of English, computer skills, ethics through communication with other cultures, designing and field sampling. The employees were responsible to themselves and their colleagues, with the motto „safety first”. Training has become a standard method of work in which all the employees took an active participation in panel discussions, group work, and case study analysis. An electronic attendance record was always kept, which was later used as a form of motivation through rewards such as paid leave, better pay, employment of an educated family member, paid schooling. All these procedures of MMI management are designed to increase productivity during pandemics and better understanding with a strategic partner. MMI management has created conditions in which the qualities of a future leader can become visible, and thus usable.

SURVEY ON EMPLOYEES’ ATTITUDES TOWARDS MOTIVATION AND COACHING IN MMI BOR Practical research of the employees’ attitudes towards the motivation for engaging in MMI in relation to coaching was performed based on the analysis of the case study of the conducted trainings in 2020-21 during the ongoing global pandemic COVID-19. Due to the impossibility of sending employees for training and development, MMI found a way to organize internal training and encourage employees by influence of internal managers, who are experts in specific areas described in its activities, to improve their habits, motivation, and knowledge. The questionnaire compiled was based on the searched electronic data sources and examples were used in similar previous research. The survey was conducted on a sample of 50 respondents, employed in MMI using a questionnaire that contained 5 general and 10 specific items grouped into two parts: ◆ Attitudes of employees about coaching practice in MMI and ◆ Attitudes of employees about coaching skills of managers in MMI Each of the questions asked required a simple answer with one of the 5 options offered (1 - Completely incorrect, 2 - Mostly incorrect, 3 - I'm not sure, 4 - Mostly correct, 5 - Quite true).

The answers were classified into one of the following three groups of answers that indicate the degree of motivation of MMI employees in the context of coaching and coaching skills of management: ◆ Motivated (answers with options 4 and 5), ◆ Insufficiently motivated (answers with option 3) ◆ Unmotivated (answers with options 2 and 1).

Considering the number of employees who worked in shifts during the COVID-19 pandemic, 55 printed copies of the questionnaire were made available to the employees, and 50 employees completed the questionnaire. The questionnaire, had the following appearance and content:

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Table 1. Coaching and motivation of the employees in MMI Bor – Questionnaire QUESTIONNAIRE EMPLOYEE MOTIVATION AND COACHING IN MMI BOR The questionnaire in front of you is used to collect data on the motivation of MMI employees, which will be used exclusively for the purpose of preparing a scientific paper: Employees motivation degree in the context of managerial coaching during the COVID-19 pandemic The questionnaire has two parts: I Data of the respondent II Attitudes about motivation and management coaching The questionnaire is anonymous.

I am grateful for your cooperation!

I DATA OF THE RESPONDENT Please answer the following questions by circling one option: Gender (M / F): Age:

- 30

30-40

40-50

50-60

60 +

Years of service:

- 5

5-10

10-20

20-30

30 +

Professional qualifications:

Medium

Higher

High

MSc

Title:

Untitled

Professional

Research

PhD Scientific

II ATTITUDES ABOUT MOTIVATION AND MANAGEMENT COACHING Please enter a number next to each question that indicates how much you agree, with the following statements: 1 - completely incorrect, 2 - mostly incorrect, 3 - not sure, 4 - mostly correct, 5 - quite true QUESTIONS /ATTITUDES I

ATTITUDES ABOUT MANAGEMENT COACHING

1.

I am satisfied with the organization of internal training in 2020

2.

Internal training organized in 2020 was purposeful for my working activities

3.

There has been enough internal training in previous years

4.

The training I attended had its use in practice

5.

It would be useful to have various new trainings in the future

II

ATTITUDES ABOUT MANAGERS COACHING SKILLS

1.

I am satisfied with the knowledge and presentation of the external trainers

2.

I am satisfied with the quality of knowledge transfer by the internal trainers

3.

Knowledge of the internal trainers is at a high level regarding quality and useful training

4.

Skills of the internal trainers are at a high level regarding quality and useful training

5.

In the future I could pass on the acquired knowledge to the younger colleagues

Source: Authors’ work 24

Answers 1-5

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All the questions asked were answered by respondents. After receiving the answers, a sample of respondents who filled in the questionnaire was reviewed and then all their answers were analyzed in detail. The analysis of the answers based on all asked questions, questions groups and survey level led to the conclusions presented in the next part of the paper.

FINDINGS AND SUGGESTIONS FOR IMPROVING THE PRACTICE OF MOTIVATION AND COACHING IN MMI By analyzing the sample of MMI employees who filled in the questionnaire within the conducted survey, it was determined and concluded that it is sufficiently representative.

Considering the age, the sample consists of employees between 30 and 55 years of age. The sample included the employees having 5 to 25 years of work experience. Regarding title and education, the sample is dominated by the employees holding the master and PhD titles. When it comes to gender, gender equality is achieved in the MMI, women and men equally enjoy the same rights and opportunities in all business segments, including participation in the decision-making process. After the detailed analysis of the answers from the questionnaire, the following conclusions were adopted: 1) The answers to the questions from group I indicate that the MMI employees perceive coaching management differently in the context of its impact on work motivation and greater engagement: ◆ 57% of the total number of the employees is motivated to work and be additionally engagement with the support of management coaching (the answers with options 4 and 5). ◆ 36% of the total number of the employees circled the option 3 (I'm not sure) and they can be classified as relatively motivated for work and additional engagement with the support of management coaching. ◆ 7% of the total number of the employees could be classified as unmotivated for work and additional engagement with the support of management coaching.

2) Based on the answers from the group II (Attitudes about managers coaching skills), it can be concluded that employees perceive managers coaching skills differently in terms of the impact on their greater motivation: ◆ 50% of the total number of the employees answered by choosing options 4 and 5 (mostly correct and quite true) and they can be classified as motivated for work and additional engagement based on the perception of managers coaching skills. ◆ 37% of the total number of employees can be classified into a group of relatively motivated for work and additional engagement based on the perception of coaching skills of managers. ◆ 13% of the total number of employees are classified as unmotivated for work and additional engagement based on the perception of coaching skills of managers, answers with options 1 and 2 (incorrect and mostly incorrect).

At the level of the entire questionnaire, it can be concluded that the MMI employees are relatively well motivated to engage with the support of management coaching and based on the coaching skills of managers. Based on the answers (options 4 and 5), 53% of the total number of the employees are motivated. 37% of the total number of the employees is relatively motivated based on the total number of responses with option 3. Based on the total number of negative responses (options 1 and 2) only 10% of the employees can be considered unmotivated. Since unmotivated people are not committed 25

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to the success of the company, the suggestion is that a person’s characteristics should be explored as they show a future impact on coach implementation. Coaches must constantly strike a balance between their own moral principles, benefits and reputation for the company and employee satisfaction.

Morality is the capital of a good person, and for a company, reputation is absolutely everything. That is why the motivation of managers and coaches is a key factor in the development of employee interest (Cvijanović, Mihailović, Pejanović, 2012).

In respect of all shortcomings and constraint of this research and based on its findings, it is justified to suggest several measures, for the upcoming work of MMI, that would contribute to increasing employee motivation with the support of management and based on coaching skills of the managers: ◆ Enlarge the number of internal trainings by areas of activity ◆ Enlarge the number of managers who coach ◆ Improve the coaching skills of the internal coaches ◆ Determine what motivates the employee daily ◆ Praise good results and employee’s advancement ◆ Align business with the pandemic movement MMI has confidence in its people, believes in cost-effectiveness in development and additional employees’ education to easily adapt to any change. It should be stated that it is necessary to continuously improve the communication between management and employees, which, among other things, implies good managerial coaching and developed coaching skills of managers. It is also very important to build an atmosphere of trust with a strategic partner who has certainly contributed to improving the employee’s lifestyle.

Employees of MMI are motivated to work and engage through internal training or management coaching. However, the perception of management coaching is somewhat more positive (57%) than the perception of managers coaching skills themselves (50%).

Finally, it can be said that about half of the employees in MMI are certainly motivated to engage and work with the help of management coaching discipline whenever the need arises.

CONCLUSIONS This research is established on the reviewed and cited literature on the theory of the relationship between employee motivation and managerial coaching conducted by its management, as well as based on original research conducted on this topic. The pandemic continues to affect all aspects of our personal lives, our families, our professions, research. It has forced the world community to turn to the use of many other learning opportunities to gather new information and learning articles and stay close to the rest of the world.

During the coronavirus (COVID-19) pandemic, we realized that every business requires special measures to protect their infrastructure and workers from effects an emergency situation could cause.

Emergencies could be the result of natural events, man-made or some diseases such as the COVID-19.

MMI promotes team spirit, knowledge sharing and absolutely is prepared for emergencies like this, if the situation with pandemic continues. This scientific institute also worked on rising expertise, creating a safe work environment, continuously giving feedback to the employees and, most importantly, regularly praising employees to facilitate mutual communication and motivate for further victories in work and to gain new knowledge.

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The recommendations given to the future practitioners and theorists in this field are as follows: ◆ Studies should focus on motivation of employees in the process of upskilling or reskilling during training or work. ◆ Some aspects of motivation for training and learning in the workplace should be studied more in the future and aligned with possible emergencies. Being prepared for emergencies brings a better position to recover and continue operations should disaster or disease strike ◆ Both, the internal and the external coaches must be trained in continuity and keep in touch with new achievements and cognitions in the area in which they are professional.

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STANKOVIĆ. T., RADOJEVIĆ. T.  EMPLOYEES MOTIVATION AND MANAGERIAL COACHING DURING THE PANDEMIC COVID-19 AT RESEARCH INSTITUTE

MOTIVACIJA ZAPOSLENIH I MENADŽMENT KOUČING TOKOM PANDEMIJE COVID-19 U ISTRAŽIVAČKOM INSTITUTU Rezime: Opstanak kompanije zavisi od njene sposobnosti da se prilagođava promenama koje imaju svoju dinamiku i tempo razvoja; to je prelaz iz sadašnjosti ka budućnosti, ka željenom ishodu. Aktivnosti menadžmenta organizacije mogu izgubiti smisao ukoliko nema motivacije. U ovakvoj situaciji implementacija ne može biti uspešna. Faktori motivacije za napredovanjem, radom i organizacionim promenama su brojni, ali komunikacija između zaposlenih i menadžmenta je najvažnija. Kako je ova komunikacija usko povezana sa menadžment koučingom, veštine menadžerskog koučinga postaju ključne za konačni uspeh i motivaciju organizacije. Cilj ovog istraživanja je da pokaže značaj motivisanja zaposlenih da napreduju i stiču nove veštine tokom rada i da identifikuje najbolje pojedince koji će svoja znanja preneti zaposlenima i koji mogu da postanu interni treneri. U radu je prikazan pregled koučinga i motivacije za učenje i dat je uvid u to kako izučavani primer može da se razvija u budućnosti.

Ključne reči: menadžment i komunikacija zaposlenih, motivacija zaposlenih, veštine koučinga, menadžerski koučing.

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EJAE 2022, 19(1): 30 - 41 ISSN 2406-2588 UDK: 657.63:[004:007 005.332:[616.98:578.834 DOI: 10.5937/EJAE19-35881 Original paper/Originalni naučni rad

INTERNAL AUDIT IN THE COVID-19 ENVIRONMENT: KEY ASPECTS AND PERSPECTIVES OF REMOTE AUDITING Maja Kljajić*, Vule Mizdraković, Blaženka Hadrović Zekić Singidunum University, Belgrade, Serbia

Abstract: It was very difficult to predict the global pandemic caused by the new coronavirus COVID-19 disease that spread around the world. There is no doubt that the pandemic will have a serious impact on worldwide economy because besides causing a health crisis, the pandemic threatens to generate an economic and financial crisis. Therefore, the management of service providing entities were faced with a challenge of finding a model to perform their business activities and take care of the employees’ health at the same time. This paper discusses possible solutions related to internal audit as a service providing profession. The research findings in the field have led to the conclusion that auditors can take advantage of this business environment to undergo complete digital transformation and make extensive use of remote auditing, since the function of internal audit can be further improved by using new information and communication technologies. The results of the research, which was focused on the opinions of certified internal auditors from the Republic of Serbia, showed that the advantages of remote auditing in internal audit outweighed the disadvantages. During the pandemic, the quality level of performed audits either increased or stayed the same, as well as the level of trust of audit client management, whereas savings in time and a decrease of travel-related costs were substantial.

Article info: Received: January 1, 2022 Correction: February 24, 2022 Accepted: March 10, 2022

Keywords: remote auditing, pandemic, internal auditor, digital transformation, ICT.

INTRODUCTION This paper is a result of a short presentation and later discussion related to a study on internal audit in the time of the COVID-19 pandemic, which took place at the International Scientific Conference FINIZ held in Belgrade at the end of 2021. One of the conclusions was that the emergence of a global pandemic caused by the COVID-19 brought with it additional precariousness, risks and challenges to the already fast-paced environment, and changed current business conditions in all industries 30

*E-mail: mkljajic@singidunum.ac.rs

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(Barac, Plant, Kunz, & Kirsten, 2021), (Hao, Xue, Yau, & Zhang , 2022) and (Tang, 2022). Namely, countries around the world have restricted, and at one moment, even banned office work in their companies (Albitar, Gerged, Kikhia, & Hussainey, 2020). For example, the Government of the Republic of Serbia passed the Decree on organizing work during the state of emergency (Official Gazette of RS, 2020) which obliges organizing work from home, or harmonizing business hours when it is not possible to organize work from home during the state of emergency. As it has been said, all industries have been affected by the global pandemic, the financial impact of which will be felt even after it ends (Roska, 2021) and (Adnan & Hasan, 2021). For example, the impact on the Gross Domestic Product in the Republic of Serbia can already be observed if the figures from 2019 (GDP rate: +4.2) and 2020 (GDP rate: -1.0) are compared (The Serbian Business Registers Agency, 2020). To prevent additional losses, business entities should adapt to the current business environment and increase their operational capacity.

Workforce is one of the key elements in such situations, because their innovative way of thinking and willingness to use modern information and communication technology (ICT) to a larger extent will be reflected on the adaptability of a business entity (Stanisic, Spahic, & Tomin, 2018). Internal audit is focused on the comprehensive operations of the entity, where constant control of business activities is carried out as follows: monitoring, verification and improvement of performing activities; identification of the risks to which the entity is, or may be exposed; assessment and evaluation of the internal controls; and providing appropriate recommendations to address deficiencies and recognised irregularities (Bae, Choi, Lamoreuax, & Lee, 2020). This paper discusses how internal auditors should respond to the current business environment and at the same time provide the same or higher level of quality of their services. In order to be given an insight into internal audit work in the Republic of Serbia during the COVID-19 pandemic, a survey has been conducted and the results will show opinions of certified internal auditors on the impact of the pandemic on internal audit and the advantages and disadvantages of remote internal auditing in practice.

THE EFFECTS OF THE COVID-19 PANDEMIC ON INTERNAL AUDIT The need for reliable information is vital to any business entity and its strategic and decision-making process (Vitezic & Pertlic, 2021). In that regard, the role of internal auditors is of great importance, given the fact that their results can be used to meet the information needs of stakeholders in a company, primarily those of the business owner and different levels of management, but also those of the supervisory, executive and audit boards. According to the International Standard on Auditing 610 - Using the Work of Internal Auditors, the external auditor refers to the work of internal auditors, which indicates that the external auditor is one of the users of internal audit services. The main difference between internal and external audit is that the service of the latter is always outsourced, that is to say an external auditor will be hired by a business entity to perform their audits (Mizdrakovic, Kljajic, & Hadrovic Zekic, 2021). However, internal audit as a function of an entity should be part of it, and an internal auditor who is employed in that entity is expected to perform their activities for the needs of the supreme governing body. However, modern business conditions and the possibility of achieving maximum efficiency and effectiveness in the market have imposed the need to entrust the task of internal audit to business entities that provide internal audit services as their main business activity (so-called internal audit outsourcing). In that case, the internal auditor will not be a permanent employee, and instead will be hired on the basis of a service contract. This is an important factor in adapting to the current business environment, as outsourced internal auditors have probably already been using ICT in their work to a greater extent, trying to minimise their physical presence at the entity’s premises.

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Even before the global pandemic, the accounting and auditing profession were faced with a challenge of revising the strategy and methodology of performing activities, as well as introducing a complex process of digitization and digital transformation so as to improve the quality of accounting and audit services (Tiberius & Hirth, 2019; Bauer, Humphreys, & Trotman, 2022). Digital transformation and other new technologies had already affected many internal audit functions before the outbreak of the pandemic (Serag & Daoud, 2021). Tusek (2019) and Sheldon (2019) state that the accelerated application of digital technology has brought numerous and fundamental changes in business models, strategies, organizational structure, business processes and their adaptation to the digital age. As no process takes place overnight, adapting to the new circumstances and conditions is slow due to both limited resources and employees’ resistance to change (Chan, Chiu, & Vasarhelyi, 2018). However, the pandemic has abruptly confronted auditors with a new approach to work and accelerated digitization in performing activities (Agoglia & Krishnan, 2022). Therefore, they face new, unexpected and unknown inherent risks that they have to deal with when conducting their audit engagements (Tusek, Ježovita, & Halar, 2020).

Furthermore, standard setters and regulatory bodies reacted to the changes in business environment by revising the issued standards and providing additional guidelines for auditors and accountants. Namely, there was a significant impact on the activities of accountants and auditors with regard to preparing financial statements in accordance with International Financial Reporting Standards (IFRS), as well as audits in accordance with International Standards on Auditing (ISA). In March 2020, the International Auditing and Assurance Standards Board (IAASB) issued the first statement on the work during the global pandemic caused by the COVID-19. The Board stated that the audit, whether internal or external, should be performed in accordance with the required standards. It was also stated that auditors might need to consider developing alternative procedures to gather sufficient and appropriate audit evidence to support their audit opinion or to amend the audit opinion (IAASB, 2020). The areas that the IAASB considered particularly important in this regard are as follows: auditor reporting; going concern; subsequent events; auditing accounting estimates; considerations for public sector auditing. By September 2021, a total of 17 communications in the form of accounting and auditing guidelines were issued in the time of COVID-19, indicating possible changes needed to be made (IAASB, 2020). The Institute of Internal Auditors stated the following changes that chief internal auditors could expect during a pandemic in terms of the way the internal audit process is conducted (Audit Executive Center, 2020): -

increased use of data analysis procedures (Data Analytics);

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increased use of agile audit techniques (Agile Auditing Techniques);

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providing advisory engagements;

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identifying ways to save costs (Cost Management);

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reducing the time needed to complete internal audit engagement;

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increasing the use of audit software packages and ICT;

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investing in automation of the internal audit process;

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increasing the use of robotic process automation.

In addition to this, the IAASB conducted a survey on a sample of 486 chief internal auditors and internal audit officers from the United States and Canada in 2020. The regulating body investigated perceptions of the long-term effects of the COVID-19 pandemic on the efficiency and effectiveness of internal audit functions. The results of the research showed that the key areas of action of internal auditors on which the COVID-19 pandemic will have long-term effects are the following: budgets of internal audit functions, frequency of risk assessment and updating of internal audit plans with the audit committee, and increasing demand for certain competencies and skills (IAASB, 2020).

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THE ROLE AND SIGNIFICANCE OF REMOTE AUDITING CONCEPT In times of crisis, the function of internal audit is crucial in the process of risk management and control, because the auditor can provide relevant advice and assessments that correspond to the organizational structure of the observed entity. Therefore, internal auditors should be part of crisis management teams in companies in order to adequately respond to all challenges and provide advisory support to management. Internal auditors are expected to pay special attention to employees, processes and technology when conducting a pandemic impact analysis on the company's operations (Audit Board, 2020). They are also expected to work on related internal controls to minimize these risks (Pempal IACOP, 2020) and (Tadesse & Murthy, 2021). Although most companies have Disaster Recovery and Business Continuity Plans in place, it was impossible to predict a crisis-like situation caused by the current global pandemic. Namely, business entities lacked the key resources and employees who had to switch to online work (Teeter, Alles, & Vasarhelyi, 2010), (Audit Board, 2020) and (KPMG, 2020).

As has already been mentioned, the auditing profession faced unexpected challenges due to the fact that with the outbreak of the COVID-19 pandemic, both internal and external auditors had to switch to different working methods in order to perform their activities. In this way, traditional auditing has been replaced by remote auditing, requiring modification of the audit methodology and application of advanced data analysis techniques. Internal auditors are faced with increased requirements for consulting engagements, as well as significant changes in business processes that have led to previously non-existent risks. Thus, remote auditing gives rise to the need for updating and making significant changes in strategic, annual and individual plans (Tusek, et al., 2020).

Remote auditing, also known as virtual auditing, is a method of conducting an audit using modern technology to obtain audit evidence. Teeter, Alles, & Vasarhelyi (2010) define remote audit as “the process by which internal auditors link information and communication technologies with data analytics to collect and evaluate electronic evidence, interact with the auditee and report on the accuracy of financial data and internal controls, independently from the auditor's physical location". Unlike traditional auditing, remote auditing is performed either partially or completely off-site. In this regard, we can distinguish between two main approaches for conducting a remote auditing: partial remote audit and full remote audit.

Partial remote audit is a combination of remote procedures and on-site procedures. Remote procedures follow the standard part of the audit using technological tools to access the necessary evidence and collect a limited number of surveys or interviews from employees or third parties, as well as other visual evidence. The on-site procedures aim at verifying the conclusions drawn on the basis of remote procedures and to conduct additional tests of issues that could not be verified through the remote audit process. On the other hand, a full remote audit is performed by using modern information technologies for gathering evidence. A full remote audit should be in line with standard auditing procedures and ivolve using technological instruments and tools to access the necessary evidence, including interviews, and using appropriate sampling techniques (Serag & Daoud, 2021).

The way of doing business ex-ante the COVID-19 pandemic mostly required personal visits of remote areas in order to collect the necessary data. Therefore, the auditor had to make additional efforts to reach a particular auditee and perform the necessary tasks. Significant travel-related efforts and costs are the primary reason why remote audit (without personal presence) has attracted both internal and external auditors (Christ, Eulerich, Krane, & Wood, 2021). Commonly mentioned advantages of remote auditing are reflected in the following: time and money savings by using ICT, avoiding personal visits 33

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of remote areas, increasing the scope of audit, increased efficiency of the audit team, double-check of documents leading to more relevant evidence, increased use of ICT strengthening documentation and reporting, and the fact that logistics related to auditing are not needed anymore (Serag & Daoud, 2021).

LITERATURE REVIEW When it comes to the literature in this field, there has been some research done on the topic and the following text provides a brief overview of it. Eulerich, Wagener, & Wood (2021) presented in their research the results of a survey conducted in 2020, involving 271 German internal auditors that conducted remote and traditional audits. Based on their responses, the research showed that internal auditors did not notice any differences in the efficiency and effectiveness of stakeholders' trust in the results of remote and traditional audits. In addition to this, the research showed that there was a positive correlation between the perception of efficiency and effectiveness and internal auditor's experience with remote audits – that is to say, the perception of efficiency and effectiveness increased as the internal auditor's experience with remote audits increased. Additional analyses showed that the expected success of remote auditing primarily depended on the auditee support.

From the standpoint of the impact of remote audit on the level of quality of provided internal audit services, the authors have conflicting opinions. The first group of authors conclude in their work that the quality of audit will be reduced (Bennett & Hatfield, 2018), (Saiewitz, 2018), (Saiewitz & Kida, 2018) and (Abu Saleem, 2021). The mentioned authors observed in their works that personal interactions are important for the quality of the audit. More specifically, when the auditor visits the auditee, they can get better conclusions through non-verbal communication and elicit additional answers, as opposed to interactions via e-mail. Therefore, audit clients and third parties believe that auditors' personal requests are more urgent and important than e-mail requests; they also expect bigger number of questions in live interactions.

On the other hand, authors Hawkins (2017) and Carlisle (2018) suggest that remote auditing would in fact improve audit quality. The former claims that the auditor will be more neutral in remote auditing as they will not be influenced by the auditee management and will try to find their own source of information to confirm the claims given in financial reporting. The latter claims that when auditors are not physically present at the auditee premises they will show higher level of scepticism, as opposed to traditional audit when the auditor may place too much reliance on the auditee management presentations.

RESEARCH METHODOLOGY In order to gain some insight into internal audit practice in the Republic of Serbia in the time of COVID-19, a questionnaire was prepared and distributed to certified internal auditors who attended the 8th annual International Scientific conference FINIZ 2021 and its special session related to internal audit. Association of Internal Auditors of Serbia was a partner in organizing the session and its members were the main respondents in this research. Responses were provided by 39 out of 80 attendees, which is app. 48.75% response rate. The previously published scientific papers served as a basis for defining questions in this survey. The questionnaire consisted of 14 questions, three of which were general ones, whereas the remaining questions were directed to the experience of the respondents in traditional and remote internal auditing. Three questions were open-ended, where the respondents were required to elaborate on their opinions about the effects of the pandemic on internal control and the advantages and disadvantages of remote auditing.

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RESEARCH RESULTS AND DISCUSSION The results show that the highest number of respondents (61.5%) had between 10 - 20 years of work experience, and none of them had less than five years of experience. As regards gender, there was an almost equal percentage of female and male respondents, although only app. 30% of the initial number of attendees of the session were males. As presumed, 76.9% of respondents were employed as internal auditors, and 64.6% performed internal audit in the entity where they are employed. The remaining 7.7% of respondents were IT auditors and 15.4% were principals of audit companies.

Figure 1. Performing internal audit process during the pandemic

Source: Authors’ data

The figure above reveals that app. only 8% of the respondents performed internal audit process at their workplace during the pandemic. The highest percentage of the respondents (53.8%) performed the procedures online from home (full remote auditing), while close to 38% worked from their office but carried out one part of their activities online (documentation review, analyses of procedures, communication with clients or other employees…). Nevertheless, the respondents who performed at least some of the procedures from home claimed that the number of activities stayed the same (58.3%), whereas one quarter of the respondents claimed that the number of activities increased due to online work. A number of respondents (6 of 39) stated that the level of workload was actually lower than before the pandemic. However, 61.54% of the respondents were under the impression that the pandemic had had an impact on internal audit procedures to some extent; 30.77% of the respondents did not share that opinion, while 7.7% of them were indecisive. It is interesting to notice that the same number of respondents who claimed that internal audit had been affected by the pandemic also added that due to the pandemic they were forced to make use of information technologies for the first time, or to a greater extent. It can be assumed that introducing new types of information technologies or making greater use of the existing ones was the main effect of the pandemic on internal audit.

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The respondents were indecisive when it came to the impact of the pandemic on the quality level of internal audit. However, the highest percentage of the respondents (46.2%) claimed that the quality level was the same as it had been before the pandemic. On the other hand, 38.5% of them considered that internal audit performance during the pandemic was of greater quality. These results are in line with authors Carlisle (2018) and Hawkins (2017) who concluded that remote auditing would improve the quality of internal audit. A small number of the respondents (15.4%) believed that the quality level decreased as a result of the pandemic.

Although not all of the respondents were able to recognize the positive effects of the pandemic on internal audit, the ones who did named the following: -

Higher commitment to internal audit client;

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Introduction of online communication at all levels (digitalization);

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Faster communication using different online platforms;

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Easier organization and conduct of meetings online;

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Improvement of technical skills and knowledge;

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Auditors have a more objective approach to internal audit procedures;

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Higher efficiency and better focus on internal audit procedures;

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Use of information technologies for quicker and easier data transfer;

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Deadlines are easier to meet due to faster acquisition of electronic documentation;

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Already scanned documentation for review;

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Some audit procedures can be conducted online;

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More comfortable work from home;

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More flexible working hours (auditors are not required to be present at office at all times).

The respondents’ answers are in line with the literature in the field where almost all previously recognised positive effects of the pandemic on internal audit process were named (Serag & Daoud, 2021). When it comes to the advantages and disadvantages of internal audit performed online, the respondents believed that remote auditing had more advantages then disadvantages. The following table gives a summary of the respondents’ suggestions as to what might be the pros and cons of performing internal audit from home.

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Table 1. Advantages and disadvantages of remote auditing Advantages

Disadvantages

Higher degree of objectivity in audit process

Lack of direct communication with the client management and employees

The client is more willing to provide additional information in comparison to traditional audit

Direct insight into a business process is impossible

Higher flexibility in conducting audit procedures

Inadequate risk assessment

Better communication and focus on procedures

Some parts of internal audit should be performed entirely in person

Better management of resources (time and travel costs) Lack of team work and communication Less involvement in non-audit activities

The client is more motivated to provide certain types of documentation when required in person

Easier access to documentation

The social aspect of working at home

Flexible working hours Deeper understanding of auditor procedures and more analytical approach The risk associated with the process is lower and the quality of services is higher Source: Authors’ data

It is important to mention that some of the suggestions were brought up more often than others.

When it comes to the advantages, it seems that better communications, flexibility, better time management and travel-related costs savings were the most common answers. On the other hand, about one third of the respondents didn’t mention any disadvantages of remote internal audit. However, one disadvantage that was mentioned the most was the lack of direct communication with audit client management and employees. It is interesting that none of the respondents mentioned the decreased level of trust of client management in remote auditing. The previous research showed that this might be the case in some situations. The answers to the final question in this survey showed that 61.5% of the respondents claimed that the level of trust is the same as it had been before the outbreak of the COVID-19 pandemic; 7.7% of them claimed that the level was either higher or lower than before the pandemic, whereas the rest of the respondents were indecisive.

CONCLUSION The spread of the pandemic caused by the COVID-19 has brought with it new business conditions around the world. While countries were struggling to adopt timely measures to combat it, business entities still had to make important decisions that would help them to continue their businesses. The pandemic’s global economic and financial impact is likely to be felt in all industries and activities, even after the end of the pandemic. This led the management of companies to put special emphasis on their employees during the pandemic by introducing special protection measures in the form of remote work, in an effort to suppress the spread of this type of coronavirus. It can be concluded that internal auditors 37

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should see the current COVID-19 environment as an opportunity to improve their effectiveness and efficiency through digital transformation. Authors in this field mention different advantages of using remote auditing concept, with cost and time savings being the most important ones. Moreover, internal auditors may be more neutral compared to when they use traditional audit techniques, as they will show greater scepticism towards the auditee. It can be concluded that the research results in this paper are in line with those of the existing literature in the field. Namely, a high proportion of certified internal auditors from the Republic of Serbia performed the process completely online from their homes during the pandemic. In their answers they stated that the number of activities stayed the same, that the pandemic had definitely had an impact on internal audit (at least to some extent), that the quality level of the provided services increased or remained the same, and that on the whole, there were many advantages to remote auditing. The most noticeable advantages are as follows: flexibility of procedures, travel-related efforts and costs, times savings and flexible office hours. Finally, it can be concluded that remote auditing might bring about smarter ways of performing internal auditing in the future and that might have a positive effect on employees’ willingness to adapt to new business environment.

AKNOWLEDGMENT The would like to express their gratitude to Association of Internal Auditors of Serbia for providing professional suggestions and support during this research.

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Mizdraković, V., Kljajić, M., Hadrović Zekic, B. (2021). Internal auditing in Covid-19 environment: Is remote auditing a solution?. In International Scientific Conference FINIZ (pp. 3-7). Belgrade, Serbia: Singidunum University. https://doi.org/10.15308/finiz-2021-3-7 Official Gazette of RS, 31/20. (2020). Legal information system of the Republic of Serbia. Decree on organizing the work of employers during a state of emergency 31/2020-3. Retrieved November 10, 2021. from https:// pravno-informacioni-sistem.rs/SlGlasnikPortal/eli/rep/sgrs/vlada/uredba/ 2020/31/2/reg.

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INTERNA REVIZIJA U DOBA COVID-19: KLJUČNI ASPEKTI I PERSPEKTIVE REVIZIJE NA DALJINU Rezime: Bilo je veoma teško predvideti globalnu pandemiju izazvanu novim virusom COVID-19 koji se rasplamsao širom sveta. Nema sumnje da će pandemija imati ozbiljne posledice na svetsku ekonomiju, jer osim što je zdravstvena, pandemija preti da preraste u ekonomsku i finansijsku krizu. Zbog toga je uprava uslužnih privrednih društava bila u dilemi pri izboru adekvatnog modela obavljanja poslovnih aktivnosti i brizi o zdravlju svojih zaposlenih. U ovom radu se razmatraju moguća rešenja vezana za internu reviziju, kao jednu od uslužnih profesija. Rezultati istraživanja autora iz ove oblasti upućuju na zaključak da bi revizori mogli da iskoriste novo poslovno okruženje kao priliku za potpunu digitalnu transformaciju, kao i široku upotrebu revizije na daljinu, budući da se funkcija interne revizije može dodatno unaprediti korišćenjem novih informaciono-komunikacionih tehnologija. Rezultati istraživanja fokusiranog na stavove ovlašćenih internih revizora iz Republike Srbije pokazali su da prednosti revizije na daljinu u internoj reviziji prevladavaju nad nedostacima. Za vreme pandemije, nivo kvaliteta izvršenih usluga revizije je povećan ili ostao nepromenjen, kao i nivo poverenja menadžmenta klijenata revizije, dok je smanjenje putnih troškova i ušteda vremena znatna.

Ključne reči: revizija na daljinu, globalna pandemija, interni revizor, digitalna transformacija, informaciono-komunikacione tehnologije.

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EJAE 2022, 19(1): 42 - 54 ISSN 2406-2588 UDK: 330.341.1:[004:007(4) DOI: 10.5937/EJAE19-33906 Original paper/Originalni naučni rad

SMART ECONOMIC DEVELOPMENT IN EUROPEAN COUNTRIES Andrija Popović*, Maja Ivanović Đukić, Ana Milijić Innovation Center, University of Niš, Niš, Serbia

Abstract:

Article info:

Industry 4.0 is a set of digital and physical technologies and cyberphysical systems that create new values at the macroeconomic and microeconomic levels. It is causing significant changes and developments in the industrial sector worldwide. This research aims to determine the impact of Industry 4.0 on socio-economic development by establishing the correlation between Industry 4.0 Index and the UNDP Human Development Index (HDI). Following the correlation analysis, country clusters will be formed based on the implementation of I4.0 and socio-economic development. There is a strong correlation between the implementation of Industry 4.0 and socio-economic development at the European level, while all countries can be placed within three significant clusters. This paper confirms the positive impact of Industry 4.0 on socio-economic development. It also provides institutional and business stakeholders with an objective incentive to implement the core I4.0 technologies faster.

Received: September 12, 2021 Correction: November 16, 2021 Accepted: January 25, 2022

Keywords: Industry 4.0, Economic Development, Industry 4.0 Index, Smart Development, Europe.

JEL Classification: O140, O330.

INTRODUCTION Over the centuries, the world has gone through three major industrial revolutions and recently has entered the fourth one, widely known as Industry 4.0 (I4.0). Every industrial revolution has profoundly changed the world economy and social dynamics. However, the potential of Industry 4.0 to change the socio-economic landscape has been proven through the implementation of many disruptive technologies connecting people, machines, and objects (Müller et al., 2018). These technologies are transforming business practices and aspects of human well-being through smart, informed, and sustainable solutions, leading to increased productivity, lower costs, and overall, a more sustainable economy and society (Author 1, 2020; Stock & Seliger, 2016; Stock et al., 2018).

Cyber-physical systems and their integration into socio-economic systems define the present and future of economic development (Schwab, 2016; Lasi et al., 2014). Due to this fact, most countries have adopted the strategic approach towards developing, implementing, and utilising I4.0 technologies to 42

*E-mail: andrija.m.popovic@gmail.com

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increase their competitiveness on the global scale and in the regional integration process (Soltovski et al., 2020; Zhou et al., 2015; Czifra & Molnar, 2020; Author 1, 2020). Even though Industry 4.0 has been accepted as the way forward, the operationalisation and evaluation of this process are yet to be clearly defined.

Many authors and companies have tried to establish a framework to evaluate the readiness for Industry 4.0 and provide guidelines for successful implementation of this concept (Vrchota & Pech, 2019; Lucato et al., 2019; Machado et al., 2019; PwC, 2020; BCG, 2020; Deloitte, 2020). However, most of the work was done at the micro level. The emphasis was mainly on the readiness evaluation based on the internal factors, enabling companies to estimate their position and following steps for successful integration of digital and physical systems. The macro-level approach was avoided due to the nature of I4.0 technologies and a lack of adequate aggregated data at the national and regional levels. On the other hand, Atik & Ünlü (2019) defined Industry 4.0 Index to evaluate the performance of European economies in the transition towards Industry 4.0 and made a step forward in the detailed empirical analysis of the effects of I4.0 on the overall socio-economic performance. However, the research and the empirical evidence at the macro level is still scarce.

This paper aims to improve understanding of the impact of I4.0 technologies at the national and regional level, putting particular emphasis on the effects on European countries. Relying on the Industry 4.0 Index, this paper will estimate the correlation between the implementation of Industry 4.0 and socio-economic development represented by the Human Development Index (HDI) (UNDP, 2021).

Additionally, analysed countries will be divided into clusters to determine whether the strong performance in implementing I4.0 technologies coincides with high socio-economic standards and establish good benchmarks for the countries lagging behind.

LITERATURE REVIEW Ever since it was formally named "Industry 4.0" in 2011 (Zhou et al., 2015), the Fourth Industrial Revolution has been a topic of interest for academics, businessmen, and policymakers. Within a decade, both theoretical and empirical research focused on Industry 4.0 provided frameworks, guidance, and models for faster and more effective implementation of I4.0 technologies.

Theoretical discussions and inquiries about the effects of the technological transformation of Industry 4.0 comprised the main body of research over the last decade (Schwab, 2016; Li et al., 2017; Soltovski et al., 2020; Author 1, 2020). However, in the last couple of years, the interest in the actual results of the implemented technologies has started a new wave of empirical research. The scope of the research has been narrowed down, focusing both on the industry and the wide spectre of effects on socio-economic development.

One significant endeavour in the academic and business community was to develop an adequate indicator for measuring the readiness for the implementation of I4.0 and its effects. With regard to establishing the readiness check framework, the business community was faster. Many international organisations and companies offer different evaluation models primarily oriented towards companies (PwC, 2015; BCG, 2020; Deloitte, 2020; Acatech, 2020).

On the other hand, the academic community was not hasty and took its time to establish statistical foundations before offering models and indicators for Industry 4.0 performance evaluation. In their attempts to develop guidelines for assessment, some authors took micro-perspective with a focus on a specific national economy (Zhou et al., 2015; Vasin et al., 2018). Multiple authors relied on a micro-level 43

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approach but did not constrain their research by national borders. Machado et al. (2019) narrowed the focus of their research down to seven companies, disregarding their country of origin and international presence. Lucato et al. (2019) developed a micro-oriented I4.0 readiness check model based on lean manufacturing practices. Vrchota & Pech (2019) designed the Industry 4.0 Index (VPi4) that companies can use for self-evaluation.

Even though the academic and business communities have moved forward in assessing the implementation and effects of Industry 4.0, there is still a lack of research on the impact at macro level. With the exception of Atik & Ünlü (2019), who designed the Industry 4.0 Index based on the ten indicators observed within 33 European countries, authors rarely take a birds-eye view on the overall socio-economic effects of I4.0. This research gap offers multiple research paths which can contribute to the understanding of this encompassing contemporary phenomenon.

METHODOLOGY This paper aims to provide an insight into the effects of Industry 4.0 on the socio-economic development represented by the Human Development Index (HDI), measured by the Industry 4.0 Index (Atik & Ünlü, 2019),. For this purpose, the research relies on quantitative and qualitative approaches to analyse the secondary data collected from the UNDP Human Development Data Center and the research conducted by the Atik & Ünlü (2019).

Taking into consideration the lack of statistical data for the underlying 10 indicators within the last 10 years, we will rely on the derived Industry 4.0 Index data provided by the aforementioned authors.

This index was built on the following indicators (Atik & Ünlü, 2019): ◆ Enterprises that have ERP software package ◆ Enterprises using Customer Relationship Management (CRM) ◆ Sharing supply chain management information ◆ Enterprises giving portable devices for a mobile connection to the internet ◆ Enterprises having received orders online ◆ Enterprises using software solutions like Customer Relationship Management (CRM) ◆ Enterprises that have ERP software package to share information between different functional areas ◆ Enterprises with broadband access ◆ Enterprises using the internet in communication with public institutions ◆ Enterprises using the Cloud Computing applications Additionally, instead of analysing individual aspects of economic development, this paper focuses on widely accepted and encompassing Human Development Index (HDI). "HDI is a summary measure of average achievement in key dimensions of human development: a long and healthy life, being knowledgeable and have a decent standard of living" (UNDP, 2021). Both indicators represent 2016 to preserve data and analysis reliability.

The two underlying hypotheses tested in this paper can be expressed as follows:

44

H1.

There is a strong correlation between Industry 4.0 and socio-economic development.

H2.

European countries can be grouped into major clusters based on the implementation of Industry 4.0 and economic development

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Based on the selected indicators, the research in this paper is structured as follows: 1.

Correlation analysis between selected indicators

2.

Simple Linear Correlation for the pair of selected indicators

3.

K-Means Cluster Analysis

4.

Descriptive Statistics for Defined Clusters

The correlation analysis will provide information about potential correlation and the extent of the correlation between the implementation of Industry 4.0 and economic development. In this phase of research, selected indicators need to fulfil normality requirements. Since both indicators are measured on a scale from 0 to 1, there is no need for additional transformation of variables.

Depending on the results, we will perform a regression analysis subsequently to determine the model representing the connection between these two composite indexes. Firstly, we will be testing the assumptions needed for performing linear regression, including linearity of data, normality of residuals, homoscedasticity, and independence of residuals error terms (Freedman et al., 2003). Only if the assumptions are met will we perform linear regression.

Following these two analyses, K-means clustering will be performed for the data sample. Based on the results, countries will be divided into the most suitable number of clusters. Afterwards, we will apply descriptive statistics to each Cluster.

For the purposes of the analysis, we have used R Statistical Software (version 4.1.0) and R Studio (version 1.4.1717).

RESULTS This section of the paper provides an overview of the collected data and statistical analysis, and it is broken down into four parts. The first segment introduces the results of the correlation analysis between the Industry 4.0 Index and HDI. The second segment presents the linear regression results, the third one shows the K-means clustering results, and the fourth will provide descriptive statistics for each Cluster.

Correlation Analysis In order to determine whether the variables to be used for the correlation analysis follow a normal distribution the Shapiro-Wilk test was used (Shapiro & Wilk, 1965). Based on the Shapiro-Wilk test results presented in Table 1, both indicators have a p-value higher than the significance level of alpha (.05). We can conclude that both Industry 4.0 Index and HDI are suitable for the correlation analysis.

Table 1. The Shapiro-Wilk Test Result.

Variable

W

p-value

Industry 4.0 Index

.979

.7479

Human Development Index

.947

.1081

Source: Data analysis performed by the author using R

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We have performed a Pearson correlation analysis between Industry 4.0 Index and HDI. We have used Cohen's standard to evaluate the correlation coefficient for determining the strength of the relationship. A weak association is represented by the absolute values of correlation coefficients between .10 and .29, coefficients between .30 and .49 represent a medium association, and a strong correlation is represented by the coefficients of .50 and above (Cohen et al., 2014).

The correlation analysis shows a significant positive correlation between Industry 4.0 Index and HDI (rp = .7546, p < .001). The correlation coefficient between the two variables was .7546, indicating a large effect size. This correlation indicates that as Industry 4.0 Index increases, HDI tends to increase.

The correlation was examined on the basis of the significance level of alpha (.05), and the results are shown in Table 2.

Table 2. Pearson Correlation Results Confidence interval

Variable 1

Variable 2

p-value

Correlation coefficient (rp)

Lower

Upper

Industry 4.0 Index

HDI

3.924e-07

.7546

.5551

.8720

Source: Correlation analysis performed by the author using R

Regression Analysis In order to perform a regression analysis, a simple linear regression model needs to meet the assumptions of linearity of data, normality of residuals, homoscedasticity, and independence of residuals error terms (Freedman et al., 2003). Therefore, we have tested the data for these assumptions, and the results are shown in Figure 1.

Figure 1. Assumptions for Linear Regression

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Model HDI = 0 + 1(Industry 4.0 Index): Considering the sample size, Figure 1 provides necessary information for testing the assumptions that Model 1 needs to meet. ◆ Residuals vs Fitted Plot shows no visible pattern. Therefore, we can assume the linear relationship between variables. ◆ Normal Q-Q Plot shows that residuals follow the straight line, meaning that we can assume normality. ◆ Scale-Location Plot shows that in Model 1 residual points are scattered relatively equally along the line. Thus, we can assume homoscedasticity. ◆ Residuals vs Leverage Plot shows that there are no observations with absolute values exceeding three standard deviations identified by Gareth et al. (2013) as possible outliers. Furthermore, according to Bruce & Bruce (2017), and based on the leverage statistic 2(p+1)/n, where p is the number of independent variables, and n indicates the number of observations taken into consideration, there are two possible leverage points with leverage statistic above .1212. These possible leverage points are North Macedonia and Romania (Figure 2). However, due to the nature of the research and composition of indicators, we can assume independence of residuals error terms.

Figure 2. Assessment of Leverage Points

Having concluded that the assumptions for a simple linear regression are met, the analysis was performed. The results are presented in Table 3.

Table 3. Simple Linear Regression (Industry 4.0 Index ~ HDI Model).

Independent Variable

Dependent Variable

0

1

Std. Error

R2

P (t-test)

N

Industry 4.0 Index

HDI

-1.8554

2.6957

.4212

.5694

3.924e-07

33

Source: Correlation analysis performed by the author using R

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A simple linear regression was calculated to predict HDI based on Industry 4.0 Index. A significant regression equation was found (F (1,31) = 40.99, p < .000), with an R2 of .5694. Predicted HDI is changing for -1.8554 + 2.6957 (Industry 4.0 Index) % when Industry 4.0 Index is measured in %. In other words, this model shows that a 0.01 change in Industry 4.0 Index will cause a .026957 change in HDI.

K-Means Clustering Clustering is a broad set of techniques for identifying subgroups of observations in a set. K-means clustering is one of the most commonly used clustering methods (Friedman, 2017). It aims at separating n observations into k clusters in which each observation belongs to the Cluster with the closest average, serving as a sample of the Cluster. Clustering will allow us to identify subgroups among European countries based on Industry 4.0 Index and HDI. Figure 3. Optimal Number of Cluster - Elbow Method

The first step in K-means cluster analysis is identifying the number of clusters. The optimal number of clusters can be identified by using the Elbow method, and based on the analysis shown in Figure 3, the optimal number of clusters for the analysis in this paper is four.

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Figure 4. Clusters

After running the K-Means algorithm through R, we have identified four groups of countries (Figure 4) that significantly differ in terms of the implementation of Industry 4.0 and slightly less pronounced differences in economic development.

Cluster 1. Bulgaria, Hungary, Romania, and Turkey Cluster 2. Greece, Latvia, North Macedonia, Poland, and Serbia Cluster 3. Croatia, Cyprus, Czech Republic, Estonia, France, Iceland, Ireland, Italy, Luxembourg, Malta, Portugal, Slovakia, Slovenia, Spain, and the UK Cluster 4. Austria, Belgium, Denmark, Finland, Germany, Lithuania, Netherlands, Norway, and Sweden

Clusters – Descriptive Statistics Considering that identified clusters vary in size and that they are relatively small for more complex analysis, only the basic descriptive statistical results will be presented in this part (Table 4).

Table 4. Clusters - Descriptive Statistics Clusters

Industry 4.0 Index Min

Mean

HDI Max

Min

Mean

Max

Cluster 1

.1532

.2249

.2742

.8080

.8207

.8440

Cluster 2

.3168

.3674

.3938

.7650

.8314

.8740

Cluster 3

.4554

.5370

.6026

.8410

.8917

.9430

Cluster 4

.6552

.7346

.8340

.8670

.9269

.9500

Source: Correlation analysis performed by the author using R

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Results presented in Table 4 show that in Cluster 1 the lowest implementation of I4.0 is recorded in Romania, while the highest level is recorded in Hungary. On the other hand, in terms of socioeconomic development, Turkey ranks last, following closely behind Bulgaria, while Hungary holds the top spot in this regard.

Within Cluster 2 Latvia has the lowest Industry 4.0 Index, while Poland has the highest level of I4.0 implementation. We should note that the gap regarding the level of adoption of I4.0 is relatively narrow. In terms of development, North Macedonia ranks lowest, while Greece is leading the Cluster.

Cluster 3 shows a more significant gap between the countries in terms of the operationalisation of Industry 4.0. Ireland is leading the group, while Italy is lagging behind. It is important to note that this Cluster is structured from countries showing high levels of development on the HDI scale. Ireland is leading in this regard as well, while Croatia is lagging behind.

Powerful and highly industrialized countries comprise Cluster 4. Within this Cluster, the lowest level of the implementation of I4.0 technologies is recorded in Austria, while surprisingly, the highest level of adoption is not recorded in the origin country of Industry 4.0 (Germany), but Denmark. In terms of socio-economic development, with the exception of Lithuania, which has a slightly lower HDI, all other countries are amongst the most developed countries in the world.

DISCUSSION AND CONCLUSION Through this research, we have aimed to prove a correlation between the implementation of I4.0 technologies into economies, measured by Industry 4.0 Index, and socio-economic development measured by HDI. Additionally, we have developed a linear model to assess the effects of Industry 4.0 implementation on the HDI and, based on the values of Industry 4.0 Index and HDI, have performed cluster analysis identifying four major country clusters.

Having analysed the current literature and available data sources regarding the implementation of Industry 4.0 and evaluation of the readiness and effects on the national economies, we have noticed a lack of comprehensive systems and models which can provide reliable and comprehensive estimates.

The data for monitoring Industry 4.0 implementation is scarce and inconsistent, limiting the possible research to specific points in time instead of continual development (Zhou et al., 2015; Stock et al., 2018; Lucato et al., 2019; Vrchota & Pech, 2019; Atik & Ünlü, 2019). On the other hand, socio-economic development data have a long track record, and are continually improved by introducing additional aspects relevant to human development (UNDP, 2021).

The available data indicate that European countries widely differ in terms of the implementation of Industry 4.0. Traditional innovators, Central and Western European, are leading the pack based on Industry 4.0 index, while Bulgaria, Hungary, Romania, and Turkey are lagging behind. However, the direct effect of Industry 4.0 on individual countries is questionable due to overlapping results within clusters. There are countries with intermediate Industry 4.0 Index with high HDI and vice versa. The results relating to individual countries are understandable, considering the fact that both indicators used are composite indexes.

Correlation analysis and simple linear regression conducted on the sample of 33 European countries showed a strong positive correlation between Industry 4.0 Index and HDI, which can be expressed by the following model HDI = - 1.8554 + 2.6967 (Industry 4.0 Index). Based on these results, we can conclude that there is a strong positive correlation between Industry 4.0 and socio-economic development at the European level.

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The subsequent K-means cluster analysis showed that it is possible to group countries based on the Industry 4.0 Index and HDI. We have identified four major clusters, which can be classified as Innovators and Early Adopters (Cluster 4), Early Majority (Cluster 3), Late Majority (Cluster 2), and Laggards (Cluster 4). Based on cluster analysis, we can conclude that fast implementation of Industry 4.0 might be significantly beneficial for countries with lower levels of socio-economic development, as opposed to the ones with higher levels of development, where the benefits are diffused due to the influence of other factors.

In short, we can conclude the following: ◆ Data and scientific framework regarding the implementation of Industry 4.0 and its effects on socio-economic development are lacking. ◆ There is a strong correlation between Industry 4.0 Index and HDI at the European level, although the same cannot be confirmed at the national level. ◆ For each 0.01 ratio change in Industry 4.0 Index, we can expect a 0.026967 change in the ratio of HDI. ◆ Countries can be grouped within four major clusters based on the levels of Industry 4.0 implementation and socio-economic development (Innovators and Early Adopters, Early Majority, Late Majority and Laggards).

The results of this paper are relevant for academic and business communities, as well as policymakers.

From a scientific standpoint, this paper contributes to an attractive but shallowly researched area. The research has been primarily focused on the micro-level, while the macro-level orientation has been neglected. This paper aims to narrow the gap between these two levels of inquiry. Contribution to the business community can be seen through the indication of future development in the European area.

Thus, business leaders can base their decisions on reliable and scientific data. Finally, perhaps the most significant contribution is to policymakers. This research is an inquiry into the impact of technologies on the overall development and provides relevant data for the development of future policies.

ACKNOWLEDGEMENTS This research was supported by the Ministry of Education, Science and Technological Development.

Contract Number: 451-03-68/2020-14/200371.

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REFERENCES Atik, H., & Ünlü, F. (2019). The measurement of industry 4.0 performance through industry 4.0 index: an empirical investigation for Turkey and European countries. Procedia Computer Science, 158, 852-860. https:// doi.org/10.1016/j.procs.2019.09.123 Boston Consulting Group. (2020). Industry 4.0. Retrieved August 19, 2021, from: https://www.bcg. com/capabilities/manufacturing/industry-4.0 Bruce, P., & Bruce, A. (2017). Practical statistics for data scientists: 50 essential concepts. Farnham, UK: "O'Reilly Media Inc. Cohen, P., West, S. G., & Aiken, L. S. (2014). Applied multiple regression/correlation analysis for the behavioral sciences. New York, Psychology press. https://doi.org/10.4324/9781410606266 Czifra, G., & Molnár, Z. (2020). Covid-19 and industry 4.0. Research Papers Faculty of Materials Science and Technology in Trnava, 28(46), 36-45. https://doi.org/10.2478/rput-2020-0005 Deloitte Development LLC. (2020). Industry 4.0: At the intersection of readiness and responsibility. Retrieved August 15, 2021, from: https://www2.deloitte.com/za/en/pages/about-deloitte/articles/ industry-4-0-readinessreport.html Freedman, D., Pisani, R., & Purves, R. (2007). Statistics (international student edition). Hoboken, USA: John Wiley & Sons Inc. Gonçalves Machado, C., Winroth, M., Carlsson, D., Almström, P., Centerholt, V., & Hallin, M. (2019). Industry 4.0 readiness in manufacturing companies: challenges and enablers towards increased digitalisation.

Procedia Cirp, 81, 1113-1118. https://doi.org/10.1016/j.procir.2019.03.262 Hastie, T., Tibshirani, R., & Friedman, J., (2017). The elements of statistical learning: Data mining, inference, and prediction. Cham: Springer Nature Switzerland AG. https://doi.org/10.1007/978-0-387-84858-7 Industry 4.0: Self Assessment. (2020). Berlin: PwC. Retrieved August 15, 2021, from: https://i40-self-assessment. pwc.de/i40/ James, G., Witten, D., Hastie, T., Tibshirani, R., (2013). An introduction to statistical learning: with applications.

Cham: Springer Nature Switzerland AG. https://doi.org/10.1007/978-1-4614-7138-7 Lasi, H., Fettke, P., Kemper, H. G., Feld, T., & Hoffmann, M. (2014). Industry 4.0. Business & information systems engineering, 6(4), 239-242. https://doi.org/10.1007/s12599-014-0334-4 Li, G., Hou, Y., & Wu, A. (2017). Fourth Industrial Revolution: technological drivers, impacts and coping methods.

Chinese Geographical Science, 27(4), 626-637. https://doi.org/10.1007/s11769-017-0890-x Lucato, W. C., Pacchini, A. P. T., Facchini, F., & Mummolo, G. (2019). Model to evaluate the Industry 4.0 readiness degree in Industrial Companies. IFAC-PapersOnLine, 52(13), 1808-1813. https://doi.org/10.1016/j. ifacol.2019.11.464 Müller, J. M., Kiel, D., & Voigt, K. I. (2018). What drives the implementation of Industry 4.0? The role of opportunities and challenges in the context of sustainability. Sustainability, 10(1), 247. https://doi.org/10.3390/ su10010247 Popović, A., (2020). Implications of the Fourth Industrial Revolution on sustainable development. Economics of Sustainable Development, 4(1), 45-60. DOI: 10.5937/ESD2001045P Schuh, G., Anderl, R., Dumitrescu, R., Krüger, A., & Ten Hompel M., (2020). Industrie 4.0 Maturity Index Managing the Digital Transformation of Companies. Munich: ACATECH – National Academy of Science and Engineering. Retrieved August 29, 2021, from https://boundarysys.com/wp-content/uploads/2021/03/ Acat-ech_Maturity_Index_2020-IAN.pdf Schwab, K. (2016). The Fourth Industrial Revolution. Cologny, Switzerland: World Economic Forum.

Shapiro, S. S., & Wilk, M. B. (1965). An analysis of variance test for normality (complete samples). Biometrika, 52(3–4), 591–611. https://doi.org/10.1093/biomet/52.3-4.591 52

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Soltovski, R., Rodrigues, T. V., De Resende, L. M. M., Pontes, J., & Tadashi Yoshino, R., (2020). Industry 4.0 risks: a theoretical framework from the perspectives of sustainability. The Journal of Engineering and Exact Sciences, 6 (5), 0695-0703. https://doi.org/10.18540/jcecvl6iss5pp0695-0703 Stock, T., & Seliger, G. (2016). Opportunities of sustainable manufacturing in industry 4.0. Procedia Cirp, 40, 536-541. https://doi.org/10.1016/j.procir.2016.01.129 Stock, T., Obenaus, M., Kunz, S., & Kohl, H. (2018). Industry 4.0 as enabler for a sustainable development: A qualitative assessment of its ecological and social potential. Process Safety and Environmental Protection, 118, 254-267. https://doi.org/10.1016/j.psep.2018.06.026 Human Development Index. (2021). New York, USA: Human Development Data Center, United Nations Development Programme. Retrieved August 14, 2021, from: http://hdr.undp.org/en/data Vasin, S., Gamidullaeva, L., Shkarupeta, E., Palatkin, I., & Vasina, T. (2018). Emerging Trends and Opportunities for Industry 4.0 Development in Russia. European Research Studies Journal, 21(3), 63-76. Retrieved August 14, 2021, from: https://www.ersj.eu/dmdocuments/2018_XXI_3_5.pdf Vrchota, J., & Pech, M. (2019). Readiness of enterprises in Czech Republic to implement industry 4.0: Index of industry 4.0. Applied Sciences, 9(24), 5405. https://doi.org/10.3390/app9245405 Zhou, K., Liu, T., & Zhou, L. (2015). Industry 4.0: Towards future industrial opportunities and challenges. In Tang, Z., et al. (Eds.) 12th International Conference on fuzzy systems and knowledge discovery - FSKD (pp.

2147-2152). Zhangjiajie, China: IEEE Circuits and Systems Society.

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PAMETAN PRIVREDNI RAZVOJ U EVROPSKIM ZEMLJAMA

Rezime: Industrija 4.0 je skup digitalnih i fizičkih tehnologija i sajber-fizičkih sistema koji stvaraju nove vrednosti na makroekonomskom i mikroekonomskom nivou. To izaziva značajne promene i razvoj u okviru industrijskog sektora širom sveta. Ovo istraživanje ima za cilj da utvrdi uticaj Industrije 4.0 na društveno-ekonomski razvoj uspostavljanjem korelacije između Indeksa industrije 4.0 i Indeksa humanog razvoja UNDP-a (HDI). Nakon analize korelacije, biće formirani klasteri zemalja prema njihovim rezultatima u implementaciji I4.0 i društvenoekonomskom razvoju. Postoji jaka korelacija između implementacije Industrije 4.0 i društveno-ekonomskog razvoja na nivou evropskih zemalja, dok se sve zemlje mogu svrstati u tri značajna klastera. Ovaj rad potvrđuje pozitivan uticaj industrije 4.0 na društveno-ekonomski razvoj. Takođe pruža institucionalnim i poslovnim akterima objektivan podsticaj za bržu primenu osnovnih tehnologija I4.0.

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Ključne reči: Industrija 4.0, Privredni razvoj, Indeks Industrije 4.0, Pametan razvoj, Evropa.

Klasifikacija JEL: O140, O330.

EJAE 2022, 19(1): 55 - 65 ISSN 2406-2588 UDK: 342.738(4-672EU) 342.727(4-672EU) 004.056.5:34(4-672EU) DOI: 10.5937/EJAE19-36596 Original paper/Originalni naučni rad

GDPR AND CHALLENGES OF PERSONAL DATA PROTECTION Žaklina Spalević*, Kosana Vićentijević Singidunum University, Belgrade, Serbia

Abstract: This paper discusses the challenges of implementing GDPR regulation in the EU and the Republic of Serbia. The regulations governing the issue of personal data protection are outlined. Emphasis is placed on reconciling this issue in the Republic of Serbia with EU legislation.

The aim of this paper is to look at GDPR regulations from several standpoints of the business of taxpayers. It is necessary to include all segments of a business entity in the implementation of this regulation, as well as bodies at the national level. It is necessary to adopt by-laws in order to fully implement the Law on Personal Data Protection in the Republic of Serbia.

Article info: Received: February 22, 2022 Correction: February 24, 2022 Accepted: March 17, 2022 Keywords: GDPR, personal data, compliance, data protection.

INTRODUCTION Personal data protection mechanisms have changed during the development of society. The area of personal data protection at European level was last regulated in 1995. Viewed from the perspective of technological and social development, the daily activities of people on a large scale have changed under the influence of information and communication technologies. Information and communication technologies have enabled networking, centralization of data and the availability of data online. Viewed from the perspective of local governments and the government sector, almost every sector has been digitized since the last regulation of personal data protection. This practically means that all personal information about citizens is stored digitally either on a local newsletter or centralized and can be accessed from anywhere (Pannadai, 2019). Furthermore, from the perspective of a personal user, the expansion of web services in the domain of communication, social networks, electronic payments, electronic bookings, electronic wallets has led to the exchange of a large amount of information containing personal data of users of such services. For example, Facebook is one of a number of popular social networks used on a daily basis with 1.3 billion users, which leads to a huge daily exchange of information. *E-mail: zspalevic@singidunum.ac.rs

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If we add to this other social networks, as well as the information of telecommunication operators about communication of their users, data collected through cookies, existence of Big Date etc., it is clear that personal data is treated as a trading resource. This practically means that whoever owns the personal data of the inhabitants of the planet has a kind of domination as well (Rašić, 2017).

A step forward in the protection of personal data was the introduction of General Data Protection Regulation (GDPR), adopted in 2016. However, this regulation came into force in 2018, and the delay in its implementation was due to the need for adaptation and adaptation. After an adjustment period, Veritas tested the degree of adaptation success. Based on the survey, only 2% of the respondents fully adapted their way of doing business to GDPR, although 31% said they had fully implemented EU Regulation 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of individuals with regard to the processing of personal data and on the free movement of such data and repealing Directive 95/46/EC (general data protection regulation) as of May 25, 2018. The GDPR regulation deserves special attention: legal, economic, digital, accounting, auditing and other aspects of the digital business environment. GDPR gives the EU residents control over their personal data, wherever their data is located in the world. Not only does the GDPR standardize regulations across the EU and the European Economic Area, it also affects all businesses that process data from the EU countries (Daigle & Khan, 2020). All EU companies are subject to GDPR. Given the global scope of today's digitalisation and e-commerce, the impact of GDPR will surely be tracked and the regulation will be implemented by companies around the world, located beyond the EU’s borders. GDPR replaces Data Protection Directive 95/46 / EC and is designed to: - harmonize personal data privacy laws across the EU, - protect and empower all EU citizens with regard to data privacy, - reshape the way organizations across the region access data privacy.

GDPR represents the most important change in data privacy regulation in the last 20 years. As such, it is fundamentally reshaping the way personal data is processed in every sector, from healthcare to banking and beyond, not only in the EU, but around the world, depending on what data is processed and where it is processed. The importance of the right to the protection of personal data (in relation to health) is also underlined by the case law of the European Court of Human Rights and the EU Court of Justice (Bevanda & Čolaković, 2016). GPDR basically requires both individuals and organizations and institutions that collect and process personal data to properly list, categorize and code the data. In this way, the information about users that is considered personal, as well as any combination of facts that can be used to identify an individual must be adequately treated. The implementation of GDPR provides individuals with greater control over their personal data and imposes many obligations on companies that collect and analyze personal data. Personal data means any information that can be used to identify an individual accurately, including but not limited to: name, Unique Master Citizen Number, location data, physical, physiological, genetic, mental, economic, social, cultural or any other factor (Badovinac, 2018).

Compliance with GDPR is binding on all businesses. It is therefore vital for businesses to be able to provide evidence of their internal framework and transparency regarding their data processing practices, with data collection, utilization, storage and erasure across the data management lifecycle (He & Wu, 2019). Over the years, businesses have invested in control frameworks to increase compliance with data protection. Business applications that exist outside these frameworks can compromise the overall security and compliance of the entity.

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It is for these reasons that GDPR requires the revision of business models in companies that offer their goods and services to EU residents. Companies that collect personal data before processing must obtain the consent of individuals for their use and it is necessary that individuals be informed of the purpose of collecting their personal data.

Serbia has been waiting for a long time to pass a new Law on Personal Data Protection, which would incorporate GDPR principles into the domestic legal framework and align this area with EU standards.

This is crucial for the adequate exercise of citizens' rights and the development of domestic companies using personal information in their business, because this is the only way to ensure legal certainty. The Ministry of Justice task force tasked with drafting the new law was formed back in 2013, but following one unsuccessful attempt from 2015 until 2018, it failed to prepare a normative solution that would be in line with the European regulation (Hoofnagle, et al., 2019). However, due to the need for compliance with EU law and standards for the protection of personal data, the Law on Personal Data Protection (“Official Gazette of the Republic of Serbia”, No. 87/2018) was adopted in the Republic of Serbia due to the need for new solutions and elimination of the deficiencies of the current law. This law was adopted in November 2018, and came into effect on August 21, 2019.

The authors have presented the topic of their paper clearly, indicating its scope and presenting the objectives and organization of the paper. The novelty of the research presented in the paper should be emphasized and the subject well documented in the up-to-date literature (Starchon & Pikulik, 2019).

GDPR IN AN INTERNATIONAL ENVIRONMENT The protection of personal data is subject to the legal provisions of the People's Republic of China.

In June 2017, China introduced a law that bridges the gap between cyber security and personal data protection. This law is actually the average set of provisions of the EU Network and Information Systems (NIS) Directives and GDPR. In many aspects, the Cybersecurity Law of the People's Republic of China (CSL) complies with the GDPR – for example, requiring consent to collect data and protect against code loss (Brodin, 2019). CSL also prescribes other important considerations for multinationals as "critical" categories, such as utilities and banks, that store personal data collected in China (domestically), which may require repatriation of data from overseas Cloud services. In addition, companies must undergo a review by the regulatory body to transfer large amounts of personal data abroad. Any business entity in China may be exposed to the risk of compliance with CSL regulations . Legal and IT teams are already working to comply with GDPR regulations, and the internal audit is in a position to provide security for conducting top-down risk assessments (Voigt, P., & Bussche, 2017). In this process, internal auditors consider how likely it is that a businesses will comply by using a technology gap analysis to review the existing controls and identify key areas that need improvement, and consult with them about the practical implementation of new controls and processes in GDPR implementation. The following are some key issues when implementing and monitoring GDPR compliance: - whether a risk assessment has been carried out to understand if the economic component is GDPR compliant and where further compliance work is required, - whether the business entity has mapped the database of personal data (as opposed to asset data), - whether the business entity's cyber parameters are secure and encrypted, - whether the business entity processes personal data on a large scale and whether an internal Data Protection Officer (DPO) is qualified to protect the data, 57

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- whether there is a reporting procedure for the relevant national authorities for misuse of personal data, - whether the business entity has established an awareness program and training of employees in the management, security and disclosure of personal data, - whether data protection principles are incorporated into contracts with relevant third parties.

GDPR has certain requirements regarding the transfer of personal data outside the EU. One is that data can be transferred to countries deemed to have adequate legal safeguards. Currently, the USA has weak personal data protection laws and does not meet this requirement (George, et al., 2019), though a program known as the EU-US Privacy Shield certified that companies from the US have the appropriate controls to receive personal information from EU businesses. However, a group of MEPs called off this possibility, arguing that it was not an adequate safeguard mechanism and should be implemented when the weaknesses in the program are fully taken care of. European companies therefore need to keep an eye on the development of their US partners (Greze, 2019).

An example of GDPR application is large IT companies that have aligned their software solutions with GDPR. SAP has assessed the need to implement new procedures in its SAP SuccessFactors HCM Suite (Finck & Pallas, 2020). SAP has taken into account that in order to comply with GDPR, it will need to specifically record the personal data of employees. In doing so, the personal data domain at SAP included basic personal information as well as bank accounts, human resources data, employee qualifications, education details, salary levels and social security data. Also, records are kept of all details about access to the system by the employees, as well as all the authority in the system. The package created in this way is set up in SAP Cloud, where data security is ensured by encrypting them. Another example of implementing GDPR is visible in Oracle. Oracle noted that GDPR rigor would require the coordination of many entities such as legal and human resources, marketing, security and IT. Many IT infrastructure domains also need to be analyzed to find personal information, such as: structured data, different types of files, MAC or IP addresses and metadata. Oracle's announcements are also aimed at improving security controls (Roote & Chakravaty, 2018). Only 27% of businesses in the EU are GDPR compliant after the date indicated as mandatory (25/05/2018). At the end of 2018, compliance rates are estimated at 93%, 74% of respondents pointed out, according to a TrustArc survey (Gulczynska, 2021). GDPR also takes into account new technologies not covered by the Directive such as Big Data, mobile applications, social networks, etc.

In the Republic of Croatia, on the basis of the competences established by the Law on Implementation of the General Data Protection Regulation ("Official Gazette", no. 42/18), the Agency for Personal Data Protection was established to ensure the implementation of EU Regulation 2016/679. The Agency acts independently of the executive and legislative branches, not receiving instructions and orders from any state body. The independence of the Agency is enshrined in the Convention on the Protection of Individuals with regard to Automatic Data Processing (Council of Europe Convention 108 ) and the Additional Protocol to the Convention for the Protection of Personal Data pertaining to the automatic processing of personal data concerning supervisory authorities and the international exchange of data (Starcevic, K., et al., 2018). The main tasks of the Agency are to act effectively in fulfilling all rights and obligations in the field of personal data protection imposed on the Republic of Croatia as a member of the EU and the Council of Europe, increasing the responsibility of all participants in the process of processing personal data related to the application of the regulations covered by the legal framework for personal data protection in the Republic of Croatia, alongside appropriate implementation of information security measures.

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CONTRIBUTION OF EU REGULATION 2016/679 (GDPR) TO THE PROTECTION OF PERSONAL DATA Data processing, especially personal data, new IT tools and the digital market have increased the need for better privacy protection of new digital products and services. The solution is set out in a new reform of the EU framework for the protection of personal data, which changes the ways in which personal data is managed and implemented at the same time in all organizations that have personal data of EU citizens (Voss & Houser, 2019). The EU General Data Protection Regulation 2016/679 has been in force since 25 May 2018. GDPR has significantly changed the rules that define personal data, introducing new concepts and compliance, planning, implementation, maintenance compliance, and risk assessment. The key premise of the development of the modern digital economy is based on the accelerated development of information and communication technologies, while responding to new challenges and threats to privacy and protection of personal data (Čizmić & Boban, 2018). Today, 250 million people use the internet in the EU (Burri & Schar, 2016). More and more personal information is online, whether it is online banking, shopping, social networks or electronic tax refunds. Individuals have the right to the protection and storage of personal data. There are a number of potential risks: unauthorized disclosure, identity theft, or cyberbullying (Chambers & Barger-Walliser, 2021).

Compared to the previous regulation (Data Protection Directive), the importance of applying the principles is more pronounced, the definitions are clearer, and at the same time extended by certain, modern principles of personal data protection (Weber, et al., 2020). Unlike the previous Directive, where the principles were primarily concerned with data quality, the Regulation binds the principles to the processing of personal data. The principles of the Regulation, which are also covered by the previous regulation, are as follows: the principle of legality, fair processing and transparency, the principle of purpose limitation, the principle of minimum data processing, the principle of accuracy, the principle of limitation of data storage (Yu, 2021). However, the principle of integrity and confidentiality is an integral part of the Regulation and covers the protection of data by technical and organizational measures, informing the supervisory authority and persons to whom the data belong in case of a data breach.

However, probably the most important principle is the principle of responsibility, which introduces the obligation of the operator to prove that they comply with all principles. Only those taxpayers who can successfully prove compliance will avoid liability for any irregularities in the application of regulations (Mraznica, 2017). The protection of personal data is a fundamental right of every individual in the EU. The entry into force of Regulation 2016/679 allows for the control of personal data and the improvement of security on the Internet and in other databases (Casagran & Vermeulen, 2021).

New EU individuals' rights resulting from GDPR include: - the right to receive clear and comprehensible information about who processes personal data, what data is processed and why it is processed (article 12-14 GDPR), - the right of access to personal data held by a business entity about an individual (article 15 GDPR), - the right to require the natural person to transfer all personal data to another provider (article 20 GDPR), - the right to "delete" – an individual may request the deletion of personal data if he / she does not want to be further processed and the business entity does not have a justified reason to hold them (article 17 GDPR), - when a business operator seeks the consent of an individual for data processing, it must clearly state this (article 4. paragraph 11. and article 7 GDPR), 59

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- articles 33 i 34 GDPR regulate the situation of theft or loss of personal data, stipulating that the business entity must notify the individual and the appropriate data protection supervisory authority, and that the business entity that does not do so may be fined, - article 8 GDPR regulates better protection of children online, and others.

The GDPR rules of May 2018 include improving the resolution of the implementation of personal data protection in several aspects: clarity, user consent, greater transparency, greater rights, stronger implementation (Table 1).

Table 1. A new era of data protection in the EU Prior to the implementation of EU Regulation 2016/679

With the entry into force of EU Regulation 2016/679

CLEAR LANGUAGE Often businesses explain their privacy policies in lenghty and complicated terms.

Privacy policies will have to be written in a clear, straightforward language.

CONSENT FROM USER Businesses sometimes assume that the user’s silence The user will need to give an affirmative consentbefore means consent to data processing, or they hide a his/her data can be used by a business. Silence is no request for consent in long, legalistic, terms and consent. conditions — that nobody reads.

MORE TRANSPARENCY The user might not be informed when his/her data is Businesses will need to clearly inform the user about transferred outside the EU such transfers.

Sometimes businesses collect and process personal Businesses will be able to collect and process data only data for different purposes than for the reason initially for a well-defined purpose. They will have to inform the announced without informing the user about it. user about new purposes for processing.

Businesses use algorithms to make decisions about the Businesses will have to inform the user whether the user based on his/her personal data (e.g. when applying decision is automated and give him/her a possibility for a loan); the user is often unaware about this. to contest it.

STRONGER RIGHTS Often businesses do not inform users when there is a Businesses will have to inform users without delay in data breach, for instance when the data is stolen. case of harmful data breach.

Often the user cannot take his/her data from a business The user will be able to move his/her data, for instance and move it to another competing service. to another social media platform.

It can be difficult for the user to get a copy of the data The user will have the right to access and get a copy of businesses keep about him/her. his/her data, a business has on him/her.

It may be difficult for a user to have his/her data Users will have a clearly defined “right to be forgotten” deleted. (right to erasure), with clear safeguards.

STRONGER ENFORCEMENT Data protection authorities have limited means and The European Data Protection Board grouping all 28 powers to cooperate. data protection authorities, will have the powers to provide guidance and interpretationand adopt binding decisions in case several EU countries are concerned by the same case.

Authorities have no or limited fines at their disposal in The 28 data protection authorities will have harmonised case a business violates the rules. powers and will be able to impose fines to businesses up to 20 million EUR or 4% of a company’s worldwide turnover.

Source: Adapted from https://ec.europa.eu/commission/sites/beta-political/files/data-protection-factsheetchanges_hr.pdf 60

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IMPLEMENTATION OF GDPR IN THE REPUBLIC OF SERBIA The irreversable trend of the technology integration improves the quality of communications, refines the development of technologies, but also has an important task in establishing models of data protection, especially personal ones (Wrigley, 2021). The key objective of EU data protection law reform is to protect the most valuable part of the individual and the concept of individuality as opposed to universality. The first Personal Data Protection Act („Official Gazette of the Republic of Serbia“, no. 97/2008, 104/2009 (the second law), 68/2012- Decision of the Constitutional court and 107/2012) in the Republic of Serbia was enacted in 2008. Due to compliance with EU regulations on personal data protection, a new Law on Personal Data Protection was adopted in 2018 in the Republic of Serbia (Presthus & Sonslien, 2020). Personal Data Protection Act („Official Gazette of the Repblic of Serbia“, no. 87/2018) should ensure respect for the fundamental rights and freedoms of natural persons, in particular their right to the protection of personal data, establish a clear legal framework in the field of personal data protection in the Republic of Serbia, regulate the processing of personal data, rights, obligations and responsibilities of data controllers, the data processor and all recipients of data, as well as the jurisdiction and position of an independent authority for the protection of personal data. This Law was only a basic regulation, and it was necessary to harmonize it with a whole series of legal acts and by-laws within nine months from the day the Law entered into force. (21/11/2018). Businesses also needed time to prepare and adapt to the implementation of the Law on Personal Data Protection.

The Law incorporates the basic principles of GDPR through Article 5 (Figure 1).

Figure 1. Basic principles of GDPR The Principles of Lawfulness, Fairness, and Transparency

The Principle of Integrity and Confidentiality

The Principle of Data Minimization

Basic Principles of the GDPR

The Principle of Purpose Limitation

The Principle of Storage Limitation

The Principle of Trueness, Accuracy

This Law (Article 2) provides protection of the fundamental rights and freedoms of natural persons, in particular their right to the protection of personal data. According to Article 4, paragraph 1. Item 1) "personal data" means any information relating to an individual whose identity is determined or identifiable, directly or indirectly, especially based on an identity mark, such as name and identification number, data location, an identifier in electronic communications networks, or one or more features of his physical, physiological, genetic, mental, economic, cultural and social identity (Rademacher, 2020).

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“Processing of personal data” in Article 2, Paragraph 1, Item 3), is defined as any activity or set of actions performed automatically or non-automated with personal data or their sets, such as collecting, recording, sorting, grouping , that is, structuring, storing, depicting or modifying, disclosing, seeing, using, detecting by transmitting or delivering, duplicating, expanding or otherwise making available, comparing, limiting, deleting or destroying (Hubig, 2020).

One of the main goals of GDPR is to further strengthen the rights to the protection of personal data, that is to say, to give individuals greater control over their personal data. Fines are provided for all offenses specified in the Act (Krivokapic, et al., 2019). The infringements may be commited by the operators, processors having legal capacity, entrepreneurs, natural persons, responsible legal persons, state bodies, territorial autonomy bodies, local self-government units, responsible persons in representative offices or business units and foreign legal entities (Andonovic, & Prlja, 2020). When it comes to sanctions imposed on those who violate of the provisions of this law, the regulation significantly tightened the regime of administrative fines in case of non-compliance with obligations. The degree of punishment is defined depending on the type of offense. For example, fines can be imposed up to € 10 million. In the case of companies, the penalty may be imposed up to 2% of the total annual worldwide turnover for the previous financial year (Gligorijević, M., Popović, R., & Maksimović, 2018).

The fines defined in this way can be imposed in the case of irregularities recorded in the domain of technical, organizational capacity as well as inaccuracies in the field of record keeping, impact assessment and the appointment of persons. In case of violation of basic processing principles, rights of persons, data transfer, non-compliance with the order of the supervising regulator, a fine of up to 20 million euros can be imposed; if a company is involved, the amount of the penalty may go up to 4% of the total annual turnover worldwide for the previous financial year (Klar, 2020). In addition to the monetary regulations, the regulation also prescribes other types of sanctions that give the supervisory regulatory body additional powers. For example, the regulatory body has at its disposal appropriate measures that can range from corrective measures and the operator's compliance with the prescribed obligations to the possibility of prohibiting the use of personal data. The prohibition on the processing of personal data may include further processing, transfer, orders for deletion of data, corrections, and even withdrawal of quality certificates.

CONCLUSIONS Digitization and new ways of processing personal data have prompted the adoption of a new instrument that will protect the rights and personal freedoms of individuals regarding the processing of their personal data. The EU Data Protection Regulation 2016/679 or GDPR represents an advance in the field of personal data protection. The impact of GDPR is primarily seen in the fact that its adoption ensures a uniform treatment of data protection supervisory authorities, leading to a simpler and more equal protection of the rights of all individuals in the EU. New definitions and simplified existing ones define biometric and genetic data, more accurately describe existing concepts, strengthen the rights of respondents and reduce and simplify certain administrative obligations of personal data controllers, strengthen supervision and the possibility of imposing penalties on bodies responsible for personal data protection.

In this paper we have presented some of the main challenges before the implementation of the Law on Personal Data Protection in the Republic of Serbia.

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The study of GDPR application in this paper can serve as a continuation of research on this topic, for different views of this topic from the aspect of internal audit, external audit, accounting, IT sector, and other activities involved in the implementation and supervision of this regulation.

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He, L., Lu, Y., & Wu, He. (2019). The Impact of GDPR on Global Technology Development. Journal of Global Information Technology Management. 22(1), 1-6. https://doi.org/10.1080/1097198X.2019.1569186 Hoofnagle, C., Sloot, B., & Borgesius Frederik. (2019). The European Union general data protection regulation: what it is and what it means. Information & Communications Technology Law. 28(1), 65-98. https://doi. org/10.1080/13600834.2019.1573501 Hubig, C. (2020). Benefits and Limits of Autonomous Systems in Public Security. European Journal for Security Research. 5, 25–37. https://doi.org/10.1007/s41125-019-00057-6 Klar, M. (2020). Binding Effects of the European General Data Protection Regulation (GDPR) on U.S. Companies.

Hastings science technology law journal. 11(2), 101-154. Retrieved December 17, 2021 from https://repository.uchastings.edu/cgi/viewcontent.cgi?article=1095&context= hastings_science_technology_law_journal Krivokapić, D., Adamović, J., Tasić, D., Petrovski, A., Kalezić, P., & Krivokapić, Dj. (2019). Vodic kroz zakon o zastiti podataka o licnosti GDPR – tumačenje novog pravnog okvira. Misija OEBS-a u Srbiji SHARE fondacija. Retrieved December 17, 2021 from https://www.sharefoundation.info/Documents/vodic_ zzpl_gdpr_share_2019.pdf Mraznica, E. (2017). GDPR – Novi izazov zaštite podataka o ličnosti. Bankarstvo, 47(4), 166-177. Retrieved November 17, 2021. from https://scindeks-clanci.ceon.rs/data/pdf/1451-4354/2017/1451-43541704166M.pdf Pannagai, P. (2019). GDPR: A Privacy Regime. International Journal od Trend in Scientific Research and Development. 3(4), 713-716. https://doi.org/10.31142/ijtsrd23460 Presthus, W., & Sonslien, K. (2020). An analysis of violations and sanctions following the GDPR. International Journal of Information Systems and Project Management, 9(1), 38-53. https://doi.org/10.12821/ijispm090102 Rademacher, T. (2020). Of New Technologies and Old Laws: Do We Need a Right to Violate the Law? European Journal for Security Research. 5, 39–58. https://doi.org/10.1007/s41125-019-00064-7 Rašić, M. (2017). Šta je to GDPR i zašto se tiče i srpskih kompanija koje posluju sa ličnim podacima? Retrieved November 29, 2021. from https://www.netokracija.rs/gdpr-definicija-uredba-136384 Starčević, K., Glavas, J., & Crnkovic, B. (2018). Implementation of the general data protection regulation in companies in the republic of Croatia. Ekonomski Vjesnik, 31(1), 163-176. Retrieved November 15, 2021. from https://hrcak.srce.hr/202007 Starchon, P., & Pikulik, T. (2019). GDPR principles in Data protection encourage pseudonymization through most popular and full-personalized devices - mobile phones. Procedia Computer Science. 151. 303-312. https://doi.org/10.1016/j.procs.2019.04.043 Vanberg, A., & Unver M. (2017). The right to data portability in the GDPR and EU competition law : odd couple or dynamic duo? European Journal of Law and Technology, 8(1). Retrieved November 8, 2021. from https:// ejlt.org/index.php/ejlt/article/view/546/727 Voigt, P., & Bussche, A. (2017). The EU General Data Protection Regulation (GDPR). Cham, Switzerland: Springer International Publishing AG. Voss, G., & Houser, K. (2019). Personal Data and the GDPR: Providing a Competitive Advantage for U.S. Companies. American Business Law Journal. 56(2), 287-344. https://doi.org/10.1111/ablj.12139 Weber, P., Zhang, N., & Wu, H. (2020). A comparative analysis of personal data protection regulations between the EU and China. Electronic Commerce Research, 20, 565–587. https://doi.org/10.1007/s10660-020-09422-3 Wrigley, S., (2021). B v Latvijas Republikas Saeima: GDPR Limits Publishing of Information about Drivers Who Receive Penalty Points. European Data Protection Law Review, 7(4). 609-613. https://doi.org/10.21552/ edpl/2021/4/18 Yu, X., (2021). The three legal dimensions of China’s big data governance. Journal of Chinese Governance. https:// doi.org/10.1080/23812346.2021.1988267

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GDPR I IZAZOVI U VEZI SA ZAŠTITOM LIČNIH PODATAKA

Rezime: U radu se razmatraju izazovi implementacije GDPR regulative u EU i Republici Srbiji. Navedeni su propisi koji uređuju pitanje zaštite podataka o ličnosti. Akcenat je stavljen na usklađivanje ovog pitanja u Republici Srbiji sa zakonodavstvom EU. Cilj ovog rada je da sagleda GDPR propise sa više stanovišta poslovanja poreskih obveznika. U sprovođenje ovog propisa neophodno je uključiti sve segmente privrednog subjekta, kao i organe na nacionalnom nivou. Neophodno je doneti podzakonska akta kako bi se Zakon o zaštiti podataka o ličnosti u Republici Srbiji u potpunosti primenio.

Ključne reči: GDPR, lični podaci, usklađenost, zaštita podataka.

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EJAE 2022, 19(1): 66 - 80 ISSN 2406-2588 UDK: 338.487:659.1]:004.738.5 DOI: 10.5937/EJAE19-33584 Original paper/Originalni naučni rad

EXPLORING THE INFLUENCE OF INSTAGRAM ON TRAVEL DESTINATION CHOICE Aleksandra Tešin*, Tatjana Pivac, Snežana Besermenji, Sanja Obradović University of Novi Sad, Faculty of Sciences, Department of Geography, Tourism and Hotel Management, Novi Sad, Serbia

Abstract: The emergence of social media has brought great changes to the tourism industry. Various such platforms have become an almost inevitable tool in all phases of travel, including organization of travel, during travel, and post-travel. Given the growing popularity and widespread use of social networks, their influence on users is becoming the focus of many studies. Since Instagram is one of the most widely used social media, the main goal of this research was to find out how much it affects the choice of travel destination. To achieve that, a survey was conducted among 853 participants. The target group included people between 18 and 54 years of age, who are the most frequent users of Instagram. The findings showed that Instagram is an important source of information and inspiration in the destination selection process. In addition, it has been found that travel-related content is one of the most followed on Instagram and that it definitely increases the interest of users to visit certain destinations. The paper also discusses the influence of Instagram on the choice of travel destination depending on certain sociodemographic characteristics of respondents.

Article info: Received: August 17, 2021 Correction: September 17, 2021 Accepted: November 8, 2021

Keywords: social media, Instagram, travel, destination choice.

INTRODUCTION Travel planning is a process that involves three phases: information search, information processing, and a decision making (Choi et al., 2012). People search for information using different channels that have changed and evolved over time (Ho et al., 2012; Almeida-Santana & Moreno-Gil, 2017). In the late 19th century, people made travel decisions based on information published in magazines and journals, but they also relied on friends and family members (Little et al., 2011). At the beginning of the 20th century, radio and television appeared, and with the advent of the Internet and the development of Information Communication Technologies, the way consumers plan and choose travel-related products changed significantly (Chung & Koo, 2015). In addition, the emergence of social media has enabled travelers to share their experiences and has become the most common source of information when making travel plans (Ayeh et al., 2013).

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*E-mail: tesin.sanja@gmail.com

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The main role of the travel information search is to support individual decision making and the choice of a specific product or destination (Crompton, 1992). Decision making is complex and involves numerous decisions, like whether to travel, when, how long to stay, how much to spend, what to see and do, as well as where to go (Nuraeni et al., 2015). Destination selection is a process of choosing a destination based on its capability to satisfy the tourists’ needs (Tham et al., 2013). According to Crompton (1977), the choice of destination is influenced by constraints such as time, money and skills, and destination image. In general, two categories of destination characteristics are considered to influence decision making: activities that can be undertaken (e.g. outdoor recreation, sports, cultural activities, shopping, nightlife) and attributes of the destination (e.g. accessibility, safety, climate, availability and quality of accommodation, residents' attitude toward tourists, existence of language barriers) (Um & Crompton, 1992). The attitudes of the individual (Jalilvand & Samiei, 2012), the experience they wish to create for themselves (Nuraeni et al., 2015), and their gender, age and personality also play an important role when deciding where to travel (Wu et al., 2011).

Later, with the development of technology and the evolution of information channels, it became apparent that consumer behavior is also influenced by virtual communities (Fotis et al., 2011). The role of social networks has expanded from platforms for connecting people to a massive data source that affects decision-making process (Maghrebi et al., 2016). Today, social media usage is one of the most popular online activities practiced by 3.6 billion people worldwide and is projected to reach 4.41 billion users in 2025 (Clement, 2020a). One of the most popular social networks today is Instagram which gathers over 1 billion monthly active accounts (Clement, 2020b). It is one of the fastest growing photo and video-sharing platforms (Sheldon & Bryant, 2016) and is an essential research medium in tourism industry (Sedera et al., 2017). The aim of this paper was to explore the apparent influence that Instagram has when making travel decisions (Marc et al., 2021). The paper focused on whether the content on Instagram influences people to choose certain travel destinations. Furthermore, the authors wanted to analyze the role of Instagram in travel planning, as well as to reveal potential differences in respondents’ answers depending on their sociodemographic characteristics. The results can help destination management organizations and other companies in travel industry to recognize the importance of social networks as a means of promoting destinations.

LITERATURE REVIEW Social media has triggered major changes in the tourism journey. Tourists consult social media regarding the organization of travel, during the travel, and post-travel (Book et al., 2018). Through all three phases, social media has a relevant role in shaping traveler's preferences and choices (Tham et al., 2020). Before traveling, tourists use social networks as a means to gather tourism-related information (Liu et al., 2013; Almeida-Santana & Moreno-Gil, 2017). Zhang et al. (2018) emphasized that social media could be an effective tool to raise awareness and interest towards the destination. Further, during the travel, tourists use social media platforms to stay connected with friends and family (Fotis et al., 2011) and to share their experience. People mainly do so to keep others aware of the travel-related content such as location, services, products, activities, etc. (Hernandez-Mendez et al., 2015). Some researchers (Osei et al., 2018) state that social media have become a platform for presenting social selfimage, and that the shared tourism experience speaks to how an individual is portrayed. In addition, Kang and Schuett (2013) pointed out that sharing travel experiences on social media plays a key role as a marketing information source. In the post-travel phase, people use social networks to preserve 67

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their travel experiences. Also, at this stage, travelers share opinions on what they liked or disliked about their journey (Fakharyan et al., 2012) or help others by giving advice or useful tips (Lee et al., 2014).

However, other people may use social networks after the trip to look back on the whole experience and relive the memories through the published content (Tham et al., 2020).

One of the most important decisions made at the beginning of a travel journey is related to the choice of destination. Destination selection is a complex process affected by many factors. In order to decide, tourists make a cognitive and emotional assessment of the destination, in accordance with the motive and purpose of the trip (Woodside & Lysonski, 1989). During this process, the most important role is played by information that helps tourists to eliminate some destinations and choose the one that suits them best (Nyman et al., 2018). As a rich and accessible source of information, social media have the potential to influence travel decisions. Nowadays, sharing experiences online (through photos, videos, reviews, and check-ins) has become a usual practice. Such information generated by many users from different perspectives generates an authentic preview of the destination (Marc et al., 2021).

Instagram is considered one of the most popular travel-related social media which plays a big role in creating travel inspiration and arousing interest in the destination (Barbe et al., 2019). It has the ability to convey feelings through photographs which excite interest in travel and lead to travel decisions.

In addition, the visual content on Instagram contributes to the creation of the brand and the positive image of a destination, which is certainly one of the factors influencing the choice of travel destination (Iglesias-Sánchez et al., 2020).

Previous authors have also discussed the impact of social media on travel destination choices (Fotis et al., 2011; Fakharyan et al., 2012; Jalilvand et al., 2012; Jacobsen & Munar, 2012; Simms, 2012; Davies & Cairncross, 2013; Tham et al., 2013; Liu et al., 2013; Shu & Scott, 2014; Hernandez-Mendez et al., 2015; Kavoura & Stavrianeas, 2015; Huang et al., 2017; Lim et al., 2017; Osei et al., 2018; Tham et al., 2020). The focus was mainly on various travel related forums, blogs, sites, certain social networks, with Facebook being the most common subject of research. Given the growing popularity of Instagram, its influence on the choice of a travel destination has become interesting for some authors in the last few years (Terttunen, 2017; Parsons, 2017; Le, 2018; Granberg, 2019; Hanifah, 2019; Lutes, 2019). However, most of these studies include only the Millennials’ point of view and base the results on a relatively small sample. Thus, some of the previously mentioned authors (Granberg, 2019; Lutes, 2019; Hanifah, 2019) recommended that a more extensive and representative sample of Instagram users should be included. Additionally, these studies were conducted between 2017 and 2019, but data on social media become outdated fast when the changes happen fast. Therefore, this study aimed to fill that gap and try to provide more accurate information to destination management organizations. The main goal was to reveal how people use Instagram for travel purposes and whether the content they see encourages them to travel and choose certain destinations.

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METHODOLOGY Study sample The study was conducted in Serbia, on a sample of 853 respondents. The research primarily involved 857 people, however, four were left out since they stated that they are not users of the Instagram social network. The target group included people aged 18 to 54, who are the most frequent Instagram users.

According to (Clement, 2020c), the four largest age group on Instagram are: 18-24 (29.3%), 25-34 (33.8%), 35-44 (15.9%) and 45-54 (8.1%). Therefore, it was considered appropriate to include participants from these age groups and cover a more extensive sample than the previously mentioned studies.

Convenience sampling was a combined with the snowball technique, since respondents were asked to share the questionnaire with other people.

Procedure The research was conducted in August 2020 using an online questionnaire, which was distributed via e-mail and social media (Facebook and Instagram). The respondents were informed of the general purpose of the study and that participation is anonymous and voluntary, as well as that the results will be used only for scientific and research purposes.

Instrument The questionnaire consists of 14 questions, which are systematically divided into five groups. The first part is related to the socio-demographic characteristics of the respondents including gender, age, and education. The second part covers general questions related to the frequency and characteristics of travel (frequency of travel, sources of information). The third part contains questions related to certain elements in the process of choosing a travel destination. The aim was to determine which elements are important to the respondents when choosing a travel destination (photos and videos, informational text/ description of destination, user reviews and comments, and recommendations from family or friends or someone they know) as well as how important it is for them to watch photos and videos of different destinations before deciding where to travel. The answers were measured by the 5-point Likert scale.

The fourth part of the questionnaire refers to the general use of Instagram (purpose, frequency of use, and time spent online). Questions from this and the previous segment were taken and adapted from Terttunen (2017). The last part aimed to reveal whether Instagram has an impact on travel plans. The focus was on measuring the impact of Instagram content on the choice of travel destination. Questions and statements were taken and adapted from the previous studies (Terttunen, 2017; Parsons, 2017; Le, 2018; Granberg, 2019; Hanifah, 2019; Lutes, 2019). The answers were also measured by the 5-point Likert scale (1 – strongly disagree, 2 – disagree, 3 – neither agree nor disagree, 4 – agree and 5 – strongly agree). In addition, it was important to determine when and for what purposes respondents use Instagram when it comes to travel.

In order to obtain the requested data, respondents’ answers were processed through the IBM SPSS Statistics (descriptive statistical analysis, T-test, correlation analysis and ANOVA test).

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RESULTS AND DISCUSSION Sociodemographic characteristics of respondents The first results showed the sociodemographic structure of the respondents. Thus, the majority of respondents are women (75%) and the average age is 27 years (range = 18 – 54; SD = 7.1767). More than half of the respondents (57%) hold a bachelor's degree, 23.8% hold a high school degree, and 19.1% hold a master's or Ph.D. degree. Gender imbalance within the sample is noticeable, which can be considered as one of the weaknesses of this study.

Travel information and destination choice In terms of general travel information, it was found that the majority of respondents (69.4%) travel several times a year, 18.8% travel once a year and 8% of them travel once a month. Only 3.9% of respondents stated that they rarely travel - once every few years. Regarding the source of travel information, the most common source are social media platforms (80.1%), such as Facebook, Instagram, Youtube, Pinterest, and TripAdvisor. Also, 52% of respondents get information through various travel blogs, and 61% trust the recommendations of people they know. Respondents also use official travel websites (31.5%) and travel agencies (25%), while traditional media such as brochures and guides (14.2%) and television, newspapers, and magazines are less represented (13.7%).

The next part of the research is related to examining the importance of certain elements in the process of choosing a travel destination. Initially, the goal was to determine what influences the choice of travel destination the most. Respondents agreed that the choice of travel destination is equally influenced by photos and videos, informational on/description of destination, and recommendations (Mean = 4). However, what stands out are the reviews and comments (Mean = 4.2; SD = 0.9413) which the respondents take into account the most when selecting a destination. The aim was also to examine how important it is for respondents to look at photos and videos when selecting destination. They rated it from 1 to 5 and the results showed that it plays a significant role in the destination selection process (Mean = 4.3; SD = 0.9567).

These results showed that during the planning phase, the most common information tools are social networks. It means that these platforms are largely replacing traditional ways of communication and promotion. However, the second most common answer is the recommendations of people they know. This confirms the claims of some authors (Jacobsen & Munar, 2012; Munar & Jacobsen, 2013; Ho et al., 2012) that traditional word-of-mouth communication is still a crucial information source for travel planning and decision-making. The same is true for the factors that influence the choice of travel destination, where reviews and comments stand out. Besides, the results showed that photos and videos play a significant role when choosing a destination selection process. In the light of that, the results supported the findings of Terttunen (2017) regarding the importance that photos and videos have in the travel planning process.

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Use of Instagram Before analyzing the influence of Instagram on the choice of destination, it was necessary to examine several elements related to the general use of that social network. The first question in this regard was related to the primary reasons why respondents have an Instagram account (Table 1).

Table 1. Primary reasons for having an Instagram account.

Reasons

Percentage (%)

Share my photos and experiences with others

59.9

Keep my friends and family up to date

13.2

Get followers

3

I use it to memorize and relive my experiences through the photos and videos I share

60.8

Meet other people

18.6

I use it as a source of information and inspiration

65

I like to look at the photos

60

Other For work

1.6

Entertainment/leisure

1.6

Communication, socialization and contacts

1.5

Activism

0.1

In addition to the basic function of Instagram as a photo-sharing platform, respondents mostly use it as a source of inspiration and information. These results support previous researchers (Wang & Pizam, 2011; Ayeh et al., 2013) who stated that people do almost all of the travel information search and booking online. Therefore, social networks have great potential and can be effective marketing tools for destination marketers (Granberg, 2019). Lange-Faria and Elliot (2012) also pointed out that Instagram is a platform where potential tourists can expand their knowledge and get more interested in a destination. The fact is that with the expansion of social networks, more and more people are turning to these information and communication platforms (Tsimonis & Dimitriadis, 2014) and find it as a useful tool for travel inspiration (Le, 2018).

When it comes to the frequency of using Instagram, the majority of respondents use it multiple times a day (Table 2). Only 12% of respondents use it once a day, while a small number of respondents use Instagram less often. Most respondents spend more than 30 minutes that social network. Given that respondents are generally very active users of Instagram and spend a lot of time online, it can be considered that they can potentially be influenced by the content of this social network.

Furthermore, it turned out that travel related content is one of the most followed on Instagram in general and that the respondents mostly watch such posts. In this regard, it is not surprising that the majority of respondents believe that they have found new travel destinations via Instagram, which confirms the previous results (Granberg, 2019).

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Table 2. Frequency of using Instagram and time spent online.

Frequency of using

Percentage (%)

Time spent online

Percentage (%)

Multiple times daily

79

More than 30 minutes

36.3

Daily

12

About 20 minutes

19.3

Every few days

5.4

About 10 minutes

16.9

Weekly

1.6

5 – 10 minutes

19

Monthly

1.3

Less than 5 minuets

8.4

Every couple of months

0.7

Instagram and travel destination choice The final part of the research refers to examining the impact of Instagram on travel planning, and especially on the choice of destination. Initially, respondents were asked if they watch travel-related posts on Instagram. The results showed that 53.8% of respondents watch these posts very often, and 34% watch them sometimes. Furthermore, 10% of respondents rarely look at travel-related posts, while only 1.9% never pay attention to such content on Instagram. Respondents were also asked some questions regarding Instagram and travel destinations (Table 3). One of them was about discovering new destinations via Instagram. The majority of respondents believe that they have found new travel destinations via Instagram, which confirms the previous results (Granberg, 2019). However, it is noticeable that there is a certain percentage of those who have not found new destinations through this social network, which is not negligible.

The results also showed that Instagram raises the interest of respondents to visit the destination they see on the posts. The fact that a very small number of respondents stated that the content of Instagram does not affect them in that context also contributes to this. Additionally, viewing content on Instagram does not attract some respondents to a specific destination but rather motivates them to travel in general (15.8%).

Table 3. Questions regarding Instagram and travel destinations.

Have you discovered new destinations/places when using Instagram app?

Percentage (%)

Yes, I often discover new places

28.7

Yes, I have discovered some

45.5

Yes, once No, I haven't discovered any new places

7.7 18.1

Do the photos you see on Instagram raise any interest in traveling to those destinations?

Yes, definitely! I want to visit the place/places!

36

I got interested in the place/places

44

They certainly make me want to travel They don't have any effect on me 72

15.8 4.2

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The main part of the research was related to the examination of the degree of respondents’ agreement with the statements related to the potential impact of Instagram on travel planning and especially the choice of travel destination. In terms of statements scale, the item analysis showed high scale reliability (α = 0.899). The data in Table 4 show that none of the claims have high scores. However, respondents agree the most (4) with the statement „Seeing travel related posts makes me want to travel“. The following statements from the table (Seeing a post of a specific destination makes me want to visit the place; Instagram is a good source of inspiration when choosing a travel destination) have approximately the same rating as the first one. Regarding the other five statements, respondents were mostly indecisive and could not assess whether or not they agreed with those statements. On the other hand, the respondents showed a certain level of disagreement with the last few statements shown in Table 4, given that they were rated below 3.

Table 4. Descriptive statistics of statements regarding the influence of Instagram on the choice of travel destination. α = 0.899 Statement

Mean

Std. Deviation

4

1.1577

Seeing a post of a specific destination makes me want to visit the place

3.9

1.0942

Instagram is a good source of inspiration when choosing a travel destination

3.8

1.0423

I would try a new travel destination if my friends raved about it on Instagram.

3.5

1.1794

Seeing travel experiences on Instagram can shape my opinion about travel brands (i.e. hotels, restaurants, services etc.) and destinations

3.3

1.1673

I find new travel destination via Instagram

3.2

1.2130

I would try a new travel destination if my friends posted on Instagram that they have been there

3

1.2620

Influencers’/travel bloggers posts on Instagram motivate me to visit a certain destination

2.8

1.3682

I would avoid a particular destination if my friends kept posting on Instagram about it.

2.7

1.3009

Instagram is one of the primary sources of travel information

2.7

1.1889

I plan a trip with the information I found on Instagram

2.5

1.1294

The use of influencers increases trust in a destination

2.3

1.2859

Seeing travel-related posts makes me want to travel

Results of the independent samples t-test The analysis of the results included the examination of potential differences in respondents’ answers to statements about the influence of Instagram on travel planning depending on their sociodemographic characteristics. The first step was to investigate the gender differences and conduct an independent samples t-test. The results revealed that in the case of several claims, there were statistically significant differences in responses relative to the gender of the respondents. Therefore, it was shown that women agree much more with the statements listed in Table 5, compared to men.

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Table 5. Results of the independent samples t-test.

Statement

t

p

Seeing travel-related posts makes me want to travel

-8.693

0.00

Seeing a post of a specific destination makes me want to visit the place

-8.485

0.00

Instagram is a good source of inspiration when choosing a travel destination

-4.357

0.00

I would try a new travel destination if my friends raved about it on Instagram.

-2.563

0.01

I find new travel destination via Instagram

-3.543

0.00

Influencers’/travel bloggers posts on Instagram motivate me to visit a certain destination

-6.733

0.00

The use of influencers increase trust in a destination

-4.243

0.00

Results of correlation analysis Correlation analysis was performed in order to determine whether respondents’ answers differed by age. The results showed the presence of a negative correlation in several statements shown in Table 6.

This means that as they get older, respondents are less in agreement with claims about finding new destinations through Instagram, using it as a source of information and inspiration, and raising interest in traveling under the influence of Instagram posts. Also, the older they get, the less their travel decisions are influenced by friends' posts about visiting a particular destination.

Table 6. Results of correlation analysis.

Statements I find new travel destination via Instagram

-0.094**

Instagram is one of the primary sources for travel information

-0.098**

Instagram is a good source of inspiration when choosing a travel destination

-0.205**

Seeing travel related posts makes me want to travel

-0.130**

Seeing a post of a specific destination makes me want to visit the place

-0.114**

I would try a new travel destination if my friends posted on Instagram that they have been there

-0.068**

* The correlation is significant at the level of p = 0.05 ** The correlation is significant at the level of p = 0.01

74

Pearson correlation coefficient (r)

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Results of ANOVA test The first application of the ANOVA test aimed to analyze how much the frequency of travel affects the degree of agreement or disagreement with statements related to the use of Instagram in travel planning and destination selection. It was found that respondents who travel several times a year, more often tend to discover new destinations via Instagram, compared to those who travel less frequently (once a year or once every few years). On the other hand, travel-related Instagram posts are less likely to raise interest in travel for respondents who often travel (once a month), unlike respondents who travel less frequently (several times or once a year).

Statistically significant differences in respondents’ answers were also shown in the case of comparisons depending on the frequency of using Instagram (1-Every couple of months, 2- Once a month, 3-Once a week, 4-Every few days, 5-Once a day, 6-Multiple times daily) (Table 7). The assumption was that the respondents who use Instagram most often will agree more with the offered statements, so the goal was to prove it with concrete results.

Table 7. Results of ANOVA test (frequency of using Instagram).

Statements

F-value

LSD post-hoc test

I find new travel destination via Instagram

12.318*

1<5,6 6>1,2,3,4,5

Instagram is one of the primary sources for travel information

8.961*

1<5,6 6>1,2,3,4,5

Instagram is a good source of inspiration when choosing a travel destination

14.636*

5, 6>1,2,3,4

I plan a trip with the information I found on Instagram

5.251*

5.6>4 6>1,4,5

The use of influencers increase trust in a destination

5.872*

6>2,4,5

Influencers’/travel bloggers’ posts on Instagram motivate me to visit a certain destination

6.325*

6>2,4,5

Seeing travel related posts makes me want to travel

8.567*

6>1,2,3,4,5

Seeing a post of a specific destination makes me want to visit the place

8.393*

6>1,2,3,4,5

Seeing travel experiences on Instagram can shape my opinion about travel brands (i.e. hotels, restaurants, services etc.) and destinations

2.373*

6>2

I would try a new travel destination if my friends posted on Instagram that they have been there

2.058

/

I would try a new travel destination if my friends raved about it on Instagram.

3.060*

6>4

I would avoid a particular destination if my friends kept posting on Instagram about it.

0.617

/

* p<0.05

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The test results showed that statistically significant differences exist in all claims except two (I would try a new travel destination if my friends posted on Instagram that they have been there; I would avoid a particular destination if my friends kept posting on Instagram about it). As can be seen from Table 7, respondents who use Instagram more often feel that using this social network influences their travel plans. Respondents who use Instagram once a day or multiple times per day stand out in particular and show the highest level of agreement to the claims offered.

CONCLUSIONS Based on the results of the main part of the study, it can be summarized that there is a medium level of Instagram influence on travel plans. It is noticeable that the findings are very similar to those

by Terttunen (2017). In this light, watching travel-related posts has the most influence on respondents' decision to travel in general. Additionally, respondents partially agree that Instagram posts of a specific destination makes them want to visit the place and that this social network is a good source of inspiration when choosing a travel destination. Also, a certain level of influence is exerted by friends’ posts about a destination. What has also been noted is that Instagram has significantly more influence on women’s travel plans and destination selection. When it comes to age, Instagram has been shown to have the greatest impact on younger people, especially when finding new destinations, gathering information, and inspiring and raising travel interest. It has also been proven that those who travel frequently, more often discover new destinations via Instagram. The assumption that Instagram has the most influence on travel plans and destination selection in the case of active users of this social network has also been confirmed.

The results of this study showed that Instagram influences the choice of travel destination to some extent. Respondents may not yet be aware of the real impact of this social network on the travel planning process and that it is maybe yet to expand. Given that Instagram has been widely used by the general population that spends a lot of time online, it can be concluded that Instagram is a good source of information and promotion, which should be valued. It is one of the main inspiration sources when choosing a travel destination. There is also a possibility to provide users with direct links for booking and connect them to a destination post. Instagram plays a big role in creating the brand and image of a destination, as well as highlighting its attractiveness through visual effects. Therefore, DMOs should apply an appropriate strategy in presenting the destination in order to inspire tourists to visit it. This further leads to an increased number of visitors and consequently other potential benefits per destination (economic and socio-cultural). Since there are less developed countries that do not have developed destination management organizations, this can also serve as a trigger for the initial establishment process. The limitation of the study is certainly the gender imbalance within the sample. Nowadays, the share of Instagram users is almost gender-equal, so future research should include an approximate number of participants of both sexes. Furthermore, travel-related content in general was analyzed, which is also one of the weaknesses. Given the variety of Instagram sources that provide such content, in the future, the focus may be on a particular profile (e.g., travel companies, NTO, DMO, travel bloggers) or a type of photo or video related to tourism. It would be useful to include qualitative research to better understand the type of content and social media presentations that influences the decision to visit a particular destination the most. Another suggestion is to examine the potential negative side of Instagram, whether it leads to overcrowded destinations or deters tourists from visiting them.

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ACKNOWLEDGEMENTS The authors acknowledge financial support of the Ministry of Education, Science and Technological Development of the Republic of Serbia (Grant No. 451-03-9/2021-14/ 200125).

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ISTRAŽIVANJE UTICAJA INSTAGRAMA NA IZBOR DESTINACIJE ZA PUTOVANJE Rezime: Pojava društvenih medija dovela je velikih promena u turističkoj industriji. Različite platforme tog tipa postale su gotovo neizbežno sredstvo u svim fazama putovanja, uključujući organizaciju putovanja, tok putovanja i povratak s putovanja. S obzirom na sve veću popularnost i široku upotrebu društvenih mreža, njihov uticaj na korisnike postaje fokus mnogih studija. Pošto je Instagram jedan od najčešće korišćenih društvenih medija, glavni cilj ovog istraživanja bio je da se otkrije koliko utiče na izbor destinacije za putovanje. Da bi se to postiglo, sprovedena je anketa među 853 učesnika. Ciljnu grupu činila su lica između 18 i 54 godine starosti, koji su najčešći korisnici Instagrama.

Rezultati su pokazali da je Instagram važan izvor informacija i inspiracije u procesu odabira destinacije. Pored toga, utvrđeno je da je sadržaj vezan za putovanja jedan od najpraćenijih na Instagramu i da definitivno povećava interesovanje korisnika da posete određene destinacije. U radu se razmatra i uticaj Instagrama na izbor destinacije putovanja u zavisnosti od određenih sociodemografskih karakteristika ispitanika.

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Ključne reči: društveni mediji, Instagram, putovanje, izbor destinacije.

EJAE 2022, 19(1): 81 - 97 ISSN 2406-2588 UDK: 004:338.48 DOI: 10.5937/EJAE19-36420 Original paper/Originalni naučni rad

GLOBAL DISTRIBUTION SYSTEMS VERSUS NEW DISTRIBUTION CAPABILITY AND INTERNET OF THINGS Anđelka Štilić*, Miloš Nicić, Angelina Njeguš The College of Tourism, Academy of Applied Studies, Belgrade, Serbia

Abstract: In the present environment, to access data and processes, each airline provides its interface and establishes its process flows. Aggregation of direct connect platforms based on NDC, including LCC, necessitates a transformation in the traditional business model of global distribution systems. There is a relationship between airline service qualities and overall service quality and/or satisfaction and promoted NDC was and continues to be the foundation for developing new customer experience for air carriers' products throughout all retail channels, and even a tool for broadening air carrier internet sites' functionalities to all retail channels. The trend of integrating the Internet connectivity into previously unconnected “things” accelerates the demand for easy access to services via external APIs. The authors envisioned that the Tourism 4.0 technologies would play a key role in the process of evolution of the tourist industry and that asking AI assistants to book a holiday and display virtual reality amenities on a TV screen to help make an informed or inspired selection would soon be functional reality. Full implementation of the NDC standard and the necessity to integrate “4.0 technology” services in the booking processes was foreseen through the conducted survey as the opportunity for additional revenue. The utilisation of the survey's results could be seen as a starting point for uncovering and assessing features, attitudes, and behaviours in tourism industry for decision-making objectives of the various tourism companies. The paper's conclusion is stating that travel and tourism industries must explore ways to proactively overturn decades of outdated travel distribution processes, and even though the full use of ever-developing technology in the travel and aviation industry is still in the future, they must plan ahead for these significant turning points.

*E-mail: andjelka@visokaturisticka.edu.rs

Article info: Received: February 12, 2022 Correction: March 7, 2022 Accepted: March 17, 2022

Keywords: Global Distribution Systems, New Distribution Capability, Tourism 4.0 technologies.

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INTRODUCTION Due to the accelerated development of information technologies, and the needs of today’s global customer travellers, the International Air Transport Association (IATA) began to review the current distribution standards, on which existing Global Distribution Systems (GDSs) are based. GDSs and some airline systems still use teletype (TTY) messages (for communications between different CRS and GDS systems) and/or EDIFACT (Electronic Data Interchange for Administration, Commerce and Transport) protocol for message format and syntax. This was the reason why IATA introduced the New Distribution Capability (NDC) project, which is based on the Open Axis XML (eXtensible Markup Language) schema that ensures robustness and transparency of data exchange. NDC is and will continue to transform the traditional distribution model, and enable airlines to create and distribute relevant offers to the customer regardless of the distribution channel (New Distribution Capability, 2017). Features that could be viewed and booked using GDS such as on-board amenities (e.g. meals, extra-legroom class seats) or ancillary services (e.g. extra bags, priority boarding), with NDC will be, and in part already are, directly offered to the customer. Some of the benefits of the NDC are access to full services of the airlines including low-cost carriers (LCC), transparent offer and shopping experience, facilitation of products and services differentiation, access to rich travel content etc. In order to realize the current situation, this paper researched air-travel customers’ habits and needs, analysed the perspective of the NDC implementation and span of additional revenue possibilities in the tourism market through the Tourism 4.0 technologies.

The paper is structured as follows: In the first section, the Background on IATA’s NDC initiative is introduced. The sections to follow review the related literature and work in the field of NDC implementations. The research is presented through methodology and results as the next section, and finally, discussion and conclusions are presented.

BACKGOUND The concept of offering services through a cluster of cloud servers rather than a powerful but single mainframe has expanded the possibilities for air carrier distribution and many other industries (Vagdevi and Guruprasad, 2015; Bingemer, 2018a; Figure 1), thus the introduction of cloud computing could be considered as a milestone moment in air carrier service delivery history (Avram, 2014).

Figure 1. The landscape of airline distribution, pre-NDC (Durivaux, 2018)

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As creating and sustaining a centralised proprietary GDS architecture required large initial capital, cloud computing significantly reduced the distribution technology entry barrier (Vagdevi and Guruprasad, 2015). The ability to provide travel agencies with the Internet service, which is based on a cloud and which allows them to access air carrier distribution channels without having to install vendor-specific equipment in their offices, as was previously the case, enabled travel agencies to provide the offers of multiple air carriers, vacation and business rentals, car rentals, and other services - all presented from the cloud of a GDS provider (Bingemer, 2018a). From the standpoint of a travel agency, simplicity of access via the basic Internet browser reduced hostility to necessary changes and GDS made the various airline options as close to each other as possible for comparison, reducing the complexity of the search for travel agencies and agents themselves. Today, it is incorrect to assume that any of the GDS reflects the whole of all flights.

The expanding number of low-cost operators supplying additional products and services outside of GDS indicated that full-service carriers did not need to rely on GDS., The three key Gds`, Amadeus, Sabre, and Travelport, dominated the air carrier market distribution for a long time. However, with the emergence of the International Air Transport Association's (short: IATA) New Distribution Capability (short: NDC) and Direct Connect's, all of this changed (Bingemer, 2018b; Krishnamurthy & Krishnan, 2021).

Numerous airline clients have recognised that ancillary services could be beneficial in terms of creating a complete offer and generating additional profits, thus, airlines typically provide ancillary services first on-air carrier websites as in this manner, they have complete authority over their products (Bingemer, 2018b). Naturally, ancillary services offered are not harmonised among airlines as they are often used to differentiate an airline among others. In the case of ancillary services, GDS needs for standardisation and airline needs to offer diversity evolved into the NDC standard, which was firstly presented in the symposium in 2012 (World Passenger Symposium) as "IATA Resolution 787 on enhanced airline distribution" (Brecke and Steppler, 2013).

The relationship between air-line service qualities and overall service quality and/or satisfaction is the existing one (Štilić & Nicić, 2021) and NDC was marketed as the base for creating a new experience for the customers when buying airline products across all supply chains, as well as a tool for expanding the functionality of air carrier Internet sites throughout all retail channels (Westermann, 2013; Bingemer, 2018b). NDC could be observed as a mechanism to "place the airline at the heart of an interactive offergeneration process" (Jäckel & Maier, 2016).

The NDC process returns the offer creation process from the GDS to the airline companies (Bingemer, 2018a), and the air companies use NDC to aggregate all product components into an airline offer and deliver it directly (Figure 2). Implementation of the NDC standard takes the offer development process away from the GDS and back to the air companies, which then combine all product aspects into an offer.

Given the importance of differentiating upmarket airline services, the time-to-market for ancillary services is crucial according to Avram (2017).

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Figure 2. NDC landscape of airline distribution (Durivaux, 2018)

The goal of NDC is for airlines to provide the greatest customer experience possible while also maximizing value-generating prospects from airline retailing. This demands a change away from legacy standards and “artefacts” like electronic tickets, e-miscellaneous documents (EMD), and passenger name records (PNR) and towards offers and orders similar to those found in the Internet sales (IATA, 2021a).

By addressing the travel industry's current distribution limitations, such as product differentiation and time-to-market, access to full and rich air content, and finally, a transparent shopping experience, NDC enables the travel industry to transform the way air products are retailed to corporations, leisure, and business travellers (IATA, 2021b).

The focus of market stakeholders' communication on the NDC has changed from determining if a solution other than the GDS is required to how airline distribution must evolve in the light of digitalization, including a priority on distribution innovation (Bingemer, 2018a). Intending to provide travel agents with a "one plug" in connecting several Direct Connects at the same time (Davis, 2017), starting from 2015 (Taylor, 2017), Lufthansa Group, British Airways (BA) and Air France (AF) “had joined the approach to lever a GDS fee to compensate their distribution cost and to offer an NDC API at the same time” (Bingemer, 2018a).

To access its data and processes in the present environment, each airline provides its interface (API) and establishes its process flows. As each Direct Connect involves the adoption of a particular NDC connector, this results in a lack of spread throughout travel agencies (Bingemer, 2018a).

Even though the GDS remains the most important sole supplier of air carrier information, especially for international routes, we could see GDS separating as a single source of truth for mainland air travels, like in Europe, where LCCs are making significant sales and profits that are outside the GDS. This is not to say that the GDS has no future - but the market requires transformation (Bingemer, 2018a).

LITERATURE REVIEW A literature review was conducted using Google Scholar, as a free to use database that offers a variety of all electronic resources on a specific topic. The search was limited to journal articles published in 2021 with search keywords new, distribution, capacity, and NDC. The search revealed around 143 publications, 14 of which are presented herein.

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The appropriate circumstances, the right time, and the suitable fare were offered by Buyruk and Güner (2021) as three crucial decision-making aspects for a future booking. Muzaffer Buyruk and Ertan Güner concluded that technological limits, such as GDS and their access to passenger data, precluded airlines from creating customised offers for travellers (Buyruk & Güner, 2021). Recent technological advancements, such as the IATA's NDC, were cited in the authors' research as a major possibility for customers to discover specialised offers throughout the booking process. According to Juhasz (2021), with IATA's NDC, booking class and rates submitted into GDS will no longer be needed, and the objective of an airline company revenue management (RM) would change from maximising fares availability to producing optimised quoted pricing for each product sold by the carrier.

Even though Westermann (2021) states that modernization via IATA's NDC is getting popular and that NDC is being adopted by an increasing number of airlines, Krishnamurthy and Krishnan (2021) were examining the consequences of the transition from GDS to NDC and according to their study, NDC adoption has been too gradual, particularly among air carriers. Presently, most air carriers' ancillary pricing are manual, with prices usually defined by analysts via rival company benchmarking as well as past and present market research. The Kummara et al.(2021) ML model presented in their study is successfully embedded with marketing and distribution systems to apply the pricing structure of ancillary services and offers in direct, indirect, and systems with NDC. Dadoun et al. (2021) believe that the use of recommender systems in the aviation sector is still in its early stages. In the context of IATA's NDC standard, they highlighted why this has been the concern and why it is expected to revolutionise. They made the argument that recommendation engines, as an element of the Offer Management System, are critical to providing customer loyalty because of their ability to comprehend and respond to travellers' needs across all customer experience during the customers travel, and they saw the use of latest innovations in AI Technology in the travel industry across contextually relevant and personally tailored offers to customers as an essential potential (Dadoun et al., 2021). Wang et al. (2021) even provided an early optimization strategy in pricing “a-lacarte” and packaging a variety of flight and ancillary services. With the introduction of IATA's NDC, airlines would be able to advertise each and every rate from a continuous range according to Szymański et al. (2021). The idea of continuous pricing might boost sales by "capturing" more of the surplus value through the opportunity to provide more specific fares which are connected to the customer's ability and willingness to pay, as stated by Szymański et al., (2021). The article by Stephan Bingemer and Ralf Vogler looks at how carriers may help with co-creation in the travel industry. The authors of the article give insight on the downfalls and obstacles that come with this process, making it an excellent real-world example in digital disruption and technology adapt to changes for all industry sectors, and they see the biggest challenge as a need to organise the shift from aged to modern systems (Bingemer & Vogler, 2021).

Daft et al. (2021) propose design replicating online marketplace methods as a promising technique in carriers' attempt to reclaim income and preserve the significance in a digitalizing society. The article synthesises important offer management principles, highlights carriers' primary hurdles to offer managing acceptance, and proposes requirements for carriers' shift from simple flight suppliers to airline merchants (Daft et al., 2021). According to Oancea (2021), the influence of COVID-19 on the industry has underlined the need to develop new methods of sales services that are less dependent on historical information and more responsive to the observed reality of purchase behaviour and competitive environment. The author states that the carriers will have to react immediately with inventory modifications in the COVID-19 era, as well as to better analyse customer behaviour concerning a purchasing intention and target each customer with an optimal offer in real-time.

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According to Darrow (2021), the tourism industry needs to step away from controlled learning that is based on large amounts of data and towards structures that acquire knowledge with a few records, as well as away from centrally managed (even if cloud-based) machine learning and towards distributed AI, and away from recommendation systems and towards marketplace strategies. The article presents the belief that the procedures have taken a major step with the modern generation of AI, with recommendation systems learning client preferences in order to personalise services better. This is considered ideal for IATA's NDC initiative for the airline sector (Darrow, 2021), and the tourist sector as a whole.

The author foresees different shifts to hotels, rent-a-car companies, tourist attractions, tours and events, through distributed AI and different market approaches.

NDC IMPLEMENTATION The deregulation of full-service airlines' services, which began approximately 15 years ago in order to be competitive with LCCs, added complexity to travel planning. Since then, airlines have been in control of generating the offers themselves, through their direct selling and now with NDC, benefiting from extra information from the search context on what the customer is searching for. Thanks to the implementation of the Standard, it is now feasible to integrate NDC-enabled content with the airline's retail system and offer/order systems, ensuring fewer and more relevant offers and that the offer is even more tailored to the needs of the customer in accordance with the airline's merchandising goal.

Full implementation of the NDC standard could be seen as the opportunity for additional revenue for local and global OTA, as well as for the traditional travel agencies. The application of the NDC standard could also be seen as a help for individual travel agents and the whole tourism industry in understanding the reality of the positive changes. Some of the benefits are more obvious than others, but all of them are relevant to all included in the travel process.

It becomes considerably more efficient for airlines adopting NDC to just provide new ancillary offers since they can categorise them with almost no restrictions and/or without having to comply with the standard SSR codes. A European airline, for example, has used this chance to present flavourful and more tempting in-flight dishes than the conventional IATA meals, such as "Gluten-free". This freedom to experiment may be applied to offer and characterise all sorts of services; nevertheless, certain airlines might very well take this liberty to innovate to its final extreme like selling bags checked in by the kilogram, new package of services including baggage weights and seats or check-in and security fast-track.

NDC's core goal has always been to make the selling of airline tickets easier. If a consumer wishes to cancel an order placed on an airline website, the process of sending an email, phoning the helpdesk, or talking with the venture is unnecessary - in the digital age, a single "cancel order" button streamlines this process. In the travel sector, on the other hand, the great majority of travel sellers have had to cope with complicated processes for decades, needing to memorise four separate cryptic orders to cancel a flight ticket, depending on whether cancellation is made after the reservation, during the void period, or after completion of the reservation. NDC offers this "cancel button" for travel, eliminating the need for the numerous command lines and making transactions – simplified. It also entails being able to draw from a larger range of employees, allowing them to do such procedures more swiftly and with greater flexibility. All calculations in NDC are handled by the air carriers: there is no possibility of a travel agent miscalculating refunds and risking charges from an airline when all they have to do is press a button. This NDC feature saves travel companies a substantial amount of money and processing time.

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Airlines can determine pricing in real-time, dynamic pricing, using NDC. In comparison to pricing computed using outdated technologies, this should benefit travel companies. One European carrier, for example, generates its seat rates dynamically, which means that costs fluctuate based on a range of parameters such as passenger demand and trip context.

Additional details, such as "Did you know that opting for this higher cost fare family as opposed to economy class will earn you Silver rank on your FF program?" might be the determining factor in convincing a customer to book. There are customers who'd like to know, "How many miles will I get with this booking?" (Raffin, 2021). So far, the only option for the travel agent has been to visit the airline's website, locate the miles calculator, and re-enter the origin, destination, class, and tier status.

This is both inefficient and impractical.

Airlines may use NDC placeholders to describe their fares and services to travel vendors and consumers upfront and many are actively implementing this feature in which the offer can be contextualised and brought to attention by the passenger or travel agent. By simplifying promotional messages, as a result, promotional information such as free upgrades and branded in-flight services would no longer be missed because they will be delivered directly to the target audience when they are needed and expected.

As an example, we could consider a long-haul journey with four cabins: Economy, Premium Economy, Business, and First. While some airlines grant universal upgrades to all passengers throughout the season, others are more strategic. The former has a habit of flooding the upgrade area of the lowest Economy fare with up to nine additional options: luggage, limited or unlimited fares within every upper cabin class. On the latter, certain carriers, for example, consider the context: if no cabin class is specified as a search criterion, the carrier may conclude that the customer is seeking the cheapest tickets. As a result, the carrier will not offer the customer an upgrade from Economy or Premium Economy to First Class for thousands of euros (Raffin, 2021). Curating the number of offers that are presented is also an excellent technique to create a pleasant traveller experience in the digital medium.

The ability for airlines to provide local language explanations of their offers and fare conditions is a rarely used NDC capability. Aside from the fact that terms and conditions must be in local languages in some countries, many travel providers are not fluent in English. Having localised text for travel sellers and travellers, especially for airlines that provide extensive information on their fare groups, would allow them to deliver a better service to customers and travel marketers while remaining consistent with the airline's image. At present moment, this option exists and is being used only by several airlines.

Airlines can also use these text frames to advertise business specials: "Did you know that thanks to our partnership with agency 123, you can enjoy an 8% reduction on our general rate and another week to pay for the ticket?" These features could allow the company to demonstrate its additional value while simultaneously promoting the airline.

For understanding that investments in NDC are not there just to display some text and Frequent Flyer (FF) information, one needs to look beyond (Raffin, 2021). The fact that airlines may "push" messages to travel vendors or travellers throughout the process is already a significant change in comparison to the traditional EDIFACT market. The fact that this messaging may be dynamically computed extends the opportunity to interact with customers, and from the real-life examples, many sectors such as Solution Management, Retail Customer & Traveller Solutions and Retail could widely benefit, as presented by Raffin (2021).

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In addition, it is critical to supply a Frequent Flyer identity as early in the booking procedure as possible, rather than only after the booking is almost done, as is typically done with outdated EDIFACT systems. When creating an offer, Frequent Flyer tailored offers and Frequent Flyer mileage accrual information would allow certain airlines to provide a discount or apply unique conditions to individual accounts, which was technically impossible with the outdated communication protocol. Customers could receive additional details from travel providers that use NDC, such as how many Frequent Flyer points they will earn with particular trips, so the process of selecting a flight could greatly differ. A prominent Southeast Asian airline, among others, has adopted the concept: they provide the mileage gain value right in each deal summary, as early as in the shopping or upgrading process.

Some of the benefits of adopting and implementing NDC exist today and are already available through the GDS platforms and the examples of the benefits are already here, documented and currently available – so travel sellers could start benefiting from them even today (Raffin, 2021).

Travelport was the first GDS to reach level 3 compliance, which allowed it to act as an aggregator for NDC services. Its first NDC solution, intended for airline businesses, was released in 2017 via a roadmap. Amadeus asserts that they would integrate their content, including NDC, well within the booking system for the customers' easier use. Amadeus believes that the NDC is merely one piece in a larger transformation that the whole travel industry is preparing for. As part of its 'Beyond NDC' program, Sabre Corporation has also obtained level 4 certification, and improving its capabilities for travel providers is a result of this (Krishnamurthy & Krishnan, 2021).

RESEARCH METHODOLOGY Data collection The advancement of digital media and technology, primarily the Internet and social media, is providing the travel industry with a variety of new opportunities. The travel industry, including carriers and accommodation providers, have been able to handle their distribution network in a much more productive and cost-effective manner as a result of the most recent technology breakthroughs. Airlines' capacity to evaluate performance across channels has increased due to the shifting environment of travel online retailing and the prevalence of IT systems that capture, register, and interpret information in a variety of manners. As they optimise communications and transactions, airlines are frequently able to swiftly modify offers, and their pricing is generally dependent on a number of scenarios and circumstances (Camilleri, 2018).

The research on passenger habits and needs during booking processes was conducted with the goal to obtain data on span of possibilities for additional revenue during initial airline reservations.

Question selection was derived from the concept of the research subject and the questionnaire itself was in electronic format, where the interviewer filled out the form.

Data for the study on passenger needs and habits in the reservation process was gathered in December 2021 by primary data collection method through the survey. The study involved answers from 388 random real-time passengers in Belgrade Nikola Tesla airport check-in zone, travelling to different destinations with different carriers.

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The survey research in this study was observed using a comparatively high number of pre-determined samples of respondents. The planned selection was solely to identify a physical place for conducting a survey, in order to interview persons who travel by plane. Respondents were selected at random from a specific location (the Belgrade airport check-in zone) to represent the general public's perspective on the matter.

The survey was conducted methodically, using face-to-face interviews and a survey that required respondents to answer pre-determined questions. The approach resulted in the simultaneous gathering of mixed method data in the model, with both open and closed-ended questions and various types of information. The survey was designed on the premise that gathering a variety of data sets is the most effective way to gain a comprehensive picture of a research subject (Creswell, 2014). The type of information gathered by the survey is personal information, past and prospective behaviour and attitudes.

The results of this survey can be utilised in scientific study, but they can also be used in business research to uncover and assess features, attitudes, and behaviours in tourist industries for decisionmaking objectives.

Result analyses: Passenger habits and needs The study involved answers from 388 subjects, out of which the majority of respondents were female (76.3%), as ones who were responsible for the booking process for the whole party. The age of survey participants ranged from 18 to 65, with a mean age of about 36 years old.

All respondents in the survey have booked airline services before, apart from one whose booking and air travel were the first for the group.

The fact that the majority of the respondents were not familiar with the terms GDS, IATA and NDC, respectively 63.9%, 38.1% and 70.1%, presented in Figure 3, provided their impartial answers considering the motivation of the survey.

Figure 3. Knowing the terms GDS, IATA and NDC

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Respondents stated that when it came to their previous travels, by far most used booking channel was the airline's website (67%), followed by global OTAs (21.6%), traditional travel agencies (9.3%) and local OTAs (2.1%). The distribution of the answers is presented in Figure 4.

Figure 4. Count of “How did you usually book flight tickets in the past?”

The price was cited by 304 (78.35 percent) respondents as the primary reason for using their preferred reservation channel, in an open question/answer form. Other responses included statements like booking safety, speed of reservation, simplicity.

Adding ancillary services during the booking process (presented in Figures 5 and Figure 6), like additional baggage (38.1%), preferred seat (15.5%), on flight services (4.1%), transit services (4.1%) and post-flight services (6.2%), with 42.3% of the respondents stated that they use the airline's loyalty programs, clearly implied that there were plenty of opportunities for NDC implementation and revenue management (RM) benefits. As a considerable percentage of the respondents in the survey did not use ancillary services, one could ask: Were the ancillary services even offered on time?

Figure 5. Ancillary services and booking habits

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Figure 6. Distribution of ancillary services booked during the reservation process

The booking channel that respondents stated they would use for future travels did not differ much from their past selection, but there were still some changes and the distribution of the answers is presented in Figure 7. When comparing the former and future methods of booking a journey (Figure 4 and Figure 7), that is the channel for bookings, 40 respondents (10.3 percent) changed their minds.

Seventy percent of them (28 respondents) indicated a shift from OTA to direct booking through the airline's website, while 30 percent (12 respondents) said that their future travel reservation channel would be OTA rather than the airline's direct channel. Interestingly enough, in both cases of change of preference, respondents stated that the decision was made in the current Covid era because, in their opinion, altering the channel of the reservation would make it easier for them to modify the reservation, cancel a trip, or claim a refund. In the open question/answer form that followed, participants stated that the reason for this change emerged in the Covid era and the main problems were flights cancellations, travel and borders restrictions, which all resulted in a need for reservation modifications and refunds.

Figure 7. Count of “In the future, how do you intend to book flight tickets?”

The research analysis resulted in important criteria for possibilities and directions of future development in distribution capabilities and showed the passenger need for the application of NDC standard in terms of local and global OTA, as well as the traditional travel agencies to stay competitive.

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DISCUSION The Internet of Things (IoT) concept, AI, Big Data, VR, Augmented Reality (AR) and Blockchain are the most influential technical innovations (Gasiorowski-Denis, 2016) of the present and future of the travel industry. The trend of integrating the Internet connectivity with previously unconnected “things” accelerates the demand for easy access to services via external APIs. High-tech is expected to take an active role in the development of the tourism industry: robots carrying out health and security checks, employee-free front desk services, check-in/out aided by Artificial Intelligence (AI), self-service rentals, etc., many of which have already been achieved in COVID-19 era.

High-tech solutions are connected to a network that is relevant to a single passenger and protocols or systems that can handle traveller identification, travel information, location information, payment method, personal details, satisfaction records and engagements in a single logic framework – to be required. As the usage of Industry 4.0 technologies expands, particularly in the tourism industry, a standard that ensures new possibilities is necessary. The NDC and Direct Connects are appropriate for this scenario since they are significantly closer to all high-tech infrastructures. The standards or systems must be adaptive enough for it to serve operations not just in the travel industry, but in all the industries that influence the overall experience of a traveller (Bingemer, 2018a).

The most-used channel for air-travel related reservations, as per conducted research, corresponds to the increasing number of airline’s general efforts on modernization via IATA's NDC standard (Westermann, 2021). To stay on the market, this occurrence represents both a need and opportunity for GDS’ to transform.

When observing that the price was cited by 78.35% of the respondents as the primary reason for using their preferred reservation channel, followed by booking safety, speed of reservation and simplicity of the reservation process, we could conclude that providing an optimization strategy in pricing (Wang et al., 2021) with the introduction of IATA's NDC, the providers could profit from being able to advertise each rate from a continuous range (Szymański et al., 2021) and from the opportunity to provide more specific fares which are connected to the customer's ability and willingness to pay (Szymański et al., 2021).

With only a small number of survey respondents (10%) changing their minds about booking channels for reservations in the future, we could agree with the argument that Offer Management Systems with recommendation engines are critical to providing customer loyalty (Dadoun et al., 2021).

If we observe three crucial decision-making aspects for the future booking: the appropriate circumstances, the right time, and the suitable fare (Buyruk & Güner, 2021), at present, the opportunity of NDC implementation and RM benefits are not yet met. Presented in Figure 5 and Figure 6, a considerable percentage of the respondents in the survey did not use ancillary services and therefore we are asking ourselves whether this is a tech issue. The latest innovations (Industry and Tourism 4.0) made possible

by NDC in the travel industry across contextually relevant and truly personally tailored offers to customers (Dadoun et al., 2021) is yet to be for air carriers, OTAs, traditional travel agencies and local OTAs.

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Figure 8. The Internet of things (Yankova, 2020)

A widespread use of 4.0 technologies in the future (Figure 8), like airline virtualization (Castiglioni et al., 2018) requires the full implementation of a standard that is both flexible and simple to adopt. To realize the benefits of such a distribution system, airlines must first connect their IT systems internally to provide the ancillary services that they may already sell through NDC-based Direct Connects (Bingemer, 2018a). Travel and tourism industries must explore ways to proactively overturn decades of outdated travel distribution processes (Camilleri, 2018), and while the use of 4.0 technology in the travel and aviation economy is still in the future, they all must plan ahead for these significant turning moments.

With Big Data, hi-tech-based customer care solutions such as digital assistants, voice analytics, AI, and machine learning, inter alia, are assisting companies in meeting rising consumer demands while also gaining loyal clients. Once it comes to high-touch services, business intelligence technologies can assemble and convey the exact combination of information needed to attract a customer in purchase.

CONCLUSION The implementation of Direct Connect to the GDS providers' system portfolios is more than just advanced technologies. Grouping Direct Connects (including LCC) that are based on the NDC, could very well necessitate a shift from the traditional Global distribution business strategy, because NDC is “just” a standard rather than a software or a specific product. NDC requires the tech-solution providers to develop products based on it. These partners might include both GDSs and newcomers to the distribution field. NDC is indeed very attractive to newcomers to the sector since it establishes a norm that could be used to synchronise information for all Direct Connect carriers and to maximise travel company performance.

Terms of the Internet technology today enable effective aggregation of many products from various sources based on decentralised applications. While a Direct Connect may be considered as a technological segmentation, this does not mean going back to the CRS era because contemporary technologies have overcome prior faults (Bingemer, 2018a).

GDS companies are conscious of the fact that not every air carrier will fully migrate to the NDC, and that some will do so gradually, so the GDS will continue to play a vital part in the travel industry's future. However, as more airlines use NDC to their benefit, it is currently unknown whether GDS NDC aggregators would provide carriers full access to customer data (Krishnamurthy & Krishnan, 2021).

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It is probably a good idea to remember that a PNR is the traveller's property, not that of a GDS. In perspective, aviation pioneers could lead focus groups to analyse the vast volumes of data being collected and/or push start-ups to discover how everyone may benefit. The aviation market is completely underserved in terms of box mobile, chatbots, and AI (Misquitta, 2019). To ask Cortana, Siri, Alexa or Google Assistant to book your holiday and display Virtual Reality (VR) amenities on your mobile or TV screen to help you make an informed or inspired selection - is becoming a functional reality.

Targeted directly at a modern consumer, the possibilities of distribution process enabled by the NDC and the competitiveness of the tourist offer are determined by the extent of inclusion of the Tourism 4.0 concept, as it portrays an evolutionary process in the tourism industry.

Nowadays customers want personalized experiences throughout every stage of their journey, so companies are using the technology to meet that desire. The objective is to identify the appropriate technology and exploit it at the right moment, in the correct manner, and by the relevant players, since exceptional customer experiences originate from the strategic introduction of high-tech supported by human touch (TELUS International, 2021).

The fact is that a high-tech strategy will not ensure success on its own – web searches, online customer support platforms, and keyless accessibility will not create an experience that will cause consumers and guests to enthuse on their trip, hotel stay, or rental reservation. They will improve customer experience by minimizing customer time and energy, and they will hardly produce brand advocates. Travel companies could do so by making quality, old-fashioned human relations, especially if things get particularly sensitive and complex.

Customers, no matter how tech-savvy they have got, still want a personal touch- to create a close relationship in cyberspace, when dealing with their preferred products and companies. This is especially true for the modern tourist, who places a premium on the experience. Generation Y values experience three times more than obtaining a good deal, and one-quarter of Millennial tourists would rather spend money on an experience or event than a product (TELUS International, 2021), so in today's world, choosing between high-tech and high-touch is thankfully not a necessity.

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Dadoun, A., Defoin-Platel, M., Fiig, T., Landra, C., & Troncy, R. (2021). How recommender systems can transform airline offer construction and retailing. Journal of Revenue and Pricing Management, 20(3), 301-315. https://doi.org/10.1057/s41272-021-00313-2 Daft, J., Albers, S., & Stabenow, S. (2021). From product-oriented flight providers to customer-centric retailers: a dynamic offering framework and implementation guidelines for airlines. Journal of Revenue and Pricing Management, 20(6), 615-625. https://doi.org/10.1057/s41272-021-00345-8 Darrow, R. M. (2021). The future of AI in the market. Journal of Revenue and Pricing Management, 20(3), 381386. https://doi.org/10.1057/s41272-021-00321-2 Davies, P. (2017, November 3). Air France-KLM confirms GDS fee. Travel Weekly. https://travelweekly.co.uk/ articles/291369/air-france-klm-confirms-gds-fee Durivaux, T. (2018). Web services technologies for IATA's new distribution capability (NDC). Retrieved December 9, 2021, from https://airtechzone.iata.org/docs/Data%20Formats%20-%20 Paradigms%20-%20GraphQL.pdf Gasiorowski-Denis, E. (2016). How the Internet of Things will change our lives. ISO News, 5.

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Juhasz, B. (2021). Optimal prices for multiple products in classless revenue management. Journal of Revenue and Pricing Management, 20(5), 588-595. https://doi.org/10.1057/s41272-021-00282-6 Krishnamurthy, J., & Krishnan, Y. (2021). New Distribution Capability (NDC) and its Effects on Travel Industry in Oman. International Journal of Research in Entrepreneurship & Business Studies, 2(3), 15-26. https:// doi.org/10.47259/ijrebs.232 Kummara, M. R., Guntreddy, B. R., Vega, I. G., & Tai, Y. H. (2021). Dynamic pricing of ancillaries using machine learning: one step closer to full offer optimization. Journal of Revenue and Pricing Management, 20(6), 646-653. https://doi.org/10.1057/s41272-021-00347-6 Misquitta, L. (2019). Demystifying NDC. SSRN Electronic Journal. http://dx.doi.org/10.2139/ssrn.3408587 New Distribution Capability. (2017, April 6). PROLOGIS. https://www.prologis.aero/competences/distributionand-e-ticketing/new-distribution-capability/ Oancea, O. (2021). The implications of behavioural economics for pricing in a world of offer optimisation. Journal of Revenue and Pricing Management, 20(6), 626-633. https://doi.org/10.1057/s41272-021-00348-5 O'Connell, J. F., & Warnock-Smith, D. (2013). An investigation into traveler preferences and acceptance levels of airline ancillary revenues. Journal of Air Transport Management, 33, 12-21. https://doi.org/10.1016/j. jairtraman.2013.06.006 Raffin, J. (2021, November, 22). Nine concrete ways that NDC is adding value to travel sellers’ lives today, beyond access to exclusive fares. Retrieved December 5, 2021, from https://amadeus.com/en/insights/blog/nineconcrete-ways-NDC-adds-value- to-travel-sellers Scotti, D., Dresner, M., & Martini, G. (2016). Baggage fees, operational performance and customer satisfaction in the US air transport industry. Journal of Air Transport Management, 55, 139-146. https://doi.org/10.1016/j. jairtraman.2016.05.006 95

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Štilić, A., & Nicić, M. (2021). Should I look or should I book. Turističko poslovanje, 28, 85-91. https://doi. org/10.5937/turpos0-35298 Szymański, B., Belobaba, P. P., & Papen, A. (2021). Continuous pricing algorithms for airline RM: revenue gains and competitive impacts. Journal of Revenue and Pricing Management, 20, 669-688. https://doi. org/10.1057/s41272-021-00350-x Taylor, I. (2017, October 27). BA-Iberia to add GDS fee next week. Travel Weekly. Retrieved December 5, 2021, from https://travelweekly.co.uk/ articles/290872/ba-iberia-to-add-gds-fee-next-week TELUS International. (2021, July 29). A high-tech, high-touch CX approach: Travel & hospitality. Retrieved October 21, 2021, from https://www. telusinternational.com/articles/high-touch-cx-travel-hospitality Vagdevi, P., & Guruprasad, H. S. (2015). A study on cloud computing in aviation and aerospace. International Journal of computer science & Engineering Technology, 6(3), 94-98. Retrieved October 1, 2021, from http:// www.ijcset.com/docs/IJCSET15-06-03-072.pdf Wang, K. K., Wittman, M. D., & Bockelie, A. (2021). Dynamic offer generation in airline revenue management.

Journal of Revenue and Pricing Management, 20(6), 654-668. https://doi.org/10.1057/s41272-021-00350-x Westermann, D. (2013). The potential impact of IATA’s New Distribution Capability (NDC) on revenue management and pricing. Journal of Revenue and Pricing Management, 12(6), 565-568. https://doi.org/10.1057/rpm.2013.23 Westermann, D. (2021). Pricing and revenue management in a world of offer optimization. Journal of Revenue and Pricing Management, 20(6), 609-610. https://doi.org/10.1057/s41272-021-00343-w Wittmer, A., & Rowley, E. (2014). Customer value of purchasable supplementary services: The case of a European full network carrier's economy class. Journal of Air Transport Management, 34, 17-23. https://doi. org/10.1016/j.jairtraman.2013.07.002 Yankova, M. (2020, October 29). Linked Data Paths To A Smart Tourism Journey. Ontotext. Retrieved October 31, 2021, from https://www.onto- text.com/blog/linked-data-paths-smart-tourism-journey/ Yeoman, I. (2021). Pricing and revenue management relationships. Journal of Revenue and Pricing Management, 20(5), 529-529. https://doi.org/10.1057/s41272-021-00354-7

Acronyms • AI - Artificial Intelligence • API - Application programming interface • AR - Augmented Reality • EDIFACT - Electronic Data Interchange for Administration Commerce and Transport • EMD - E-miscellaneous documents • FF - Frequent Flyer • GDS - Global Distribution System • IATA - International Air Transport Association • IoT - Internet of Things • LCC - Low-Cost Carrier • NDC - New Distribution Capability • PNR - Passenger name records • SSR - Special Service Request • TTY - TeleType • VR - Virtual Reality • XML - eXtensible Markup Language

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GLOBALNI SISTEMI DISTRIBUCIJE U ODNOSU NA NOVE MOGUĆNOSTI DISTRIBUCIJE I INTERNET STVARI Rezime: U sadašnjem okruženju, svaka avio-kompanija obezbeđuje svoj interfejs i uspostavlja načine funkcionisanja za pristupanje podacima i procesima.

Agregacija platformi za direktno povezivanje zasnovanih na NSD, uključujući NP, zahteva transformaciju u tradicionalnom poslovnom modelu globalnih distributivnih sistema. Postoji odnos između kvaliteta usluga avioprevoznika i ukupnog kvaliteta usluge i/ili zadovoljstva, a unapređeni NSD je bio i nastavlja da bude osnova za razvoj novog korisničkog iskustva u vezi sa proizvodima avio-prevoznika u svim maloprodajnim kanalima, pa čak i alat za proširenje funkcionalnosti internet sajtova avio-prevoznika na sve maloprodajne kanale. Trend integracije internet konekcije u ranije nepovezane “stvari” ubrzava potražnju za lakim pristupom uslugama preko eksternih IPA. Autori su predvideli da će Turizam 4.0 tehnologije imati ključnu ulogu u procesu evolucije turističke industrije i da će traženje pomoći od veštačke inteligencije da nam rezerviše odmor i na TV-u prikaže sadržaje virtuelne realnosti , kako bi nam pomogla da napravimo informisan i inspirisan izbor, uskoro biti funkcionalna stvarnost. Potpuna implementacija NSD standarda i neophodnost integrisanja usluga “4.0 tehnologije” u procese rezervacije je kroz sprovedeno istraživanje predviđeno kao mogućnost za dodatni prihod. Korišćenje rezultata ankete može se posmatrati kao polazna tačka za otkrivanje i procenu karakteristika, stavova i ponašanja u turističkoj industriji u cilju donošenja odluka različitih turističkih kompanija. U zaključku rada se navodi da industrije putovanja i turizma moraju da istraže načine da proaktivno preokrenu decenije zastarelih procesa distribucije putovanja i iako je potpuna iskorišćenost tehnologije koja se stalno razvija u idustriji putovanja i avioindustriji još uvek u budućnosti, moraju unapred planirati ove značajne prekretnice.

Ključne reči: Globalni distributivni sistemi, Nova sposobnost distribucije, Turizam 4.0 tehnologije.

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EJAE 2022, 19(1): 98 - 109 ISSN 2406-2588 UDK: 316.334.56:502.131.1 711.45:004.7 DOI: 10.5937/EJAE19-36597 Original paper/Originalni naučni rad

ECONOMIC JUSTIFICATION OF APPLYING INFORMATION TECHNOLOGIES TO THE CREATION OF SMART CITIES Aleksandar Sandro Cvetković*, Vesna Radojčić Sinergija University, Faculty of computing and informatics, Bijeljina, Bosnia and Herzegovina

Abstract: Modern technologies, in addition to making people's lives easier, faster and better, enable the combination of different technologies to develop solutions to various problems. Global warming is one of the biggest and most dangerous problems facing planet earth. If global warming were presented as a coin, then air pollution and climate change would be two sides of the same coin. Climate change is primarily a problem that has arisen due to the large amount of carbon dioxide (CO2) in the atmosphere. Carbon overload occurs mainly due to the combustion of fossil fuels such as coal, oil and gas, or the cutting and burning of forests. There are other harmful gases but CO2 stands out because it poses the greatest risk of irreversible change if it continues to accumulate in the atmosphere. This paper presents a number of different solutions by combining modern technologies for the problem of CO2 emissions globally, where Bosnia and Herzegovina is particularly singled out as one of the countries with the most polluted air in Europe and with the highest mortality rate associated with air pollution. Smart cities use digital technologies, aim to improve the quality of human life and to enable the protection of the environment. The concept of a smart city is described as a set of modern technologies, examples of leading smart cities in the world are given, as well as the advantages of implementing such a solution.

Article info: Received: February 22, 2022 Correction: March 18, 2022 Accepted: March 23, 2022

Keywords: smart city, air pollution, climate change, reducing carbon dioxide emissions, global warming, CO2 emissions.

INTRODUCTION Technology has always been significant and has had an impact in the development of any sector, ranging from military, police, industry, scientific research, business, and households to individual users.

Over the years, technology has revolutionized our world and created tools and resources, putting useful information at our fingertips (Dirks, et al., 2010). Compared to what it was like before, technology today tends toward multifunctionality and connectivity. For instance, mobile phones were mostly used 98

*E-mail: ascvetkovic@sinergija.edu.ba

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for making calls and sending text messages, whereas today they can be used as computers, TVs and clocks. The question is, can modern technologies be used to solve major global problems affecting cities, countries, regions, continents or the entire planet? Bosnia and Herzegovina has the most polluted air in Europe. In addition to being one of the most polluted countries in the world, it is also among the top three countries with the highest percentage of air pollution-related mortality. Bosnia and Herzegovina faces a number of challenges in the field of air quality and its citizens are exposed to the level of air pollution, to which a number of different sources of emissions make their contribution, with CO2 being the most dominant (Bomba, et al. 2018).

Modern technologies today allow the combination of multiple technologies to develop solutions to specific problems in any field. One of these solutions is the concept of a smart city that solves most of the problems that today's cities face. Cities have never faced greater challenges as various problems arise such as: pollution, access to infrastructure, traffic congestion, mobility, safety and health of residents.

The implementation of the smart city makes a significant contribution to reducing CO2 emissions (Curzon, et al. 2019). Which means that if more smart cities are implemented, significantly higher contributions will be made to reducing CO2 emissions.

THE PHENOMENON OF SMART CITIES Any city investing in development through the implementation of modern technologies can become a smart city. Smart cities use modern technologies to enable smart mobility where there is a strong Information and Communication Technologies (ICT) infrastructure and quality transportation conditions. They seek to connect all Internet of Things (IoT) facilities to the Internet and provide cloud-based services. The general idea is to use the Internet, smartphones and applications in combination with new technologies to help solve problems or to create solutions to most of the problems that cities are facing or are just about to face (Mishra & Chakraborty, 2019). Also, smart cities aim to make all relevant city-related information available to all citizens at your fingertips (Aelenei et al., 2016). The complete concept of a smart city is based on the construction of an example of a modern city whose structure can later be transferred to other cities. The use of modern technologies such as wireless networks and many internet based applications have changed the urban lifestyle that people are already accustomed to. Such technologies make smart cities a reality.

FEATURED EXAMPLES FOR SMART CITIES IN THE WORLD The ranking of smart cities in the world is complex as it involves many different factors, and therefore there is currently no precise ranking to determine which city is currently the best smart city in the world. According to the IESE Cities in Motion Index 2019 research (Berrone & Ricart, 2019), London - United Kingdom stands out as the best smart city in the world in all dimensions. Second best is New York City - USA, and third - Amsterdam - Netherlands.

London is a well-positioned city in all dimensions and has a great overall balance. The city earned first place for human capital and international outreach (Schneider, & Stubinger, 2020). Furthermore, London is in the top 10 for dimensions of mobility and transportation, governance, technology, and urban planning (Mehta, et al., 2022). On the other hand, its worst performance is seen in the dimension of social cohesion.

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New York City is one of the largest cities in the world. It represents the second most populous city in North America, after Mexico City. It is the world's most important economic center and is the city with the highest GDP, with almost 7,000 high-tech firms standing out for its integrated technology services, such as LinkNYC's free Wi-Fi service (Visvizi, et al., 2018). New York City has a leading position in the economic dimension, but it has succeeded in being among the top places for human capital, urban planning, international outreach, technology, and mobility and transportation.

Amsterdam is a major financial and cultural center in the country with international outreach. It also performs well overall and stands out among top 20 dimensions, especially in terms of economy, technology, urban planning, international outreach, and mobility and transportation (Patel & Doshi, 2019). There are other smart cities that stand out because they have great potential: Singapore, Zurich, Oslo, Barcelona, Paris, Tokyo, Toronto, Reykjavik, Seoul, Hong Kong, Buenos Aires, Madrid, Santiago.

BENEFITS OF SMART CITIES The city of Bijeljina is distinguished by its geographical location, ideal size and represents a constantly developing and investing city. This type of city has the potential to apply modern technology and become a smart city (Sergi, et al. 2019). The reason for this is that the smart city implementation not only contributes to the reduction of CO2 emissions at the level of Bosnia and Herzegovina, but also makes significant contributions such as cost reductions, facilitating wider service delivery, new business opportunities, easier access to information, better citizen involvement, personalized and better quality services for citizens, better relations with other cities, increased connectivity and better cooperation processes, better management and support in helping each other more effectively (Eremia, Toma, & Sanduleac, 2017). Also one of the key goals of smart cities is to attract a large number of new residents and visitors who will invest in the city which further leads to improving the quality of life and developing a good economic environment (Dahiya, & Kumar, 2017).

ECONOMIC AND CLIMATE ASPECTS OF SMART CITIES Harmful gases and global climate change represent the latest challenges that people face on a daily basis. Carbon dioxide (CO2) comes from a variety of sources, and the way we live significantly affects the environment. People rely on the use of energy that usually comes from fossil fuel combustion. Fossil fuel is a natural fuel such as oil, coal or gas. Combustion of fossil fuels generates emissions, including CO2, which has a serious impact on global warming by damaging the Earth's envelope. The Earth's wrap serves as a bedding for the earth and allows heat to flow in and out of the earth. However, as CO2 is collected in the atmosphere, heat is retained within the Earth from which global warming is slowly coming (Chauhan, et al. 2016). Precisely because CO2 emissions prevent heat from coming out, this phenomenon is called the greenhouse effect. Industrialization and global human population growth have resulted in an increased demand for energy, which means that the number of emissions released into the atmosphere has risen (Abutabenjeh, et al., 2021). CO2 is one of many gases that merge with the air from natural sources and those that come from human activity such as car-driving. When looking at CO2 emissions globally (Figure 1), we can conclude that global CO2 emissions increased by almost 40% between 2000 and 2016, regardless of the approximately 10% decline in emissions in Europe and North America. Global CO2 emissions are likely to increase by 10% above 2016 levels by 2040.

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On the other hand, CO2 emissions in Europe and North America are likely to fall by around 15% by 2040 compared to 2016. China has seen an increase of about 60% from 2000 to 2016, emissions will grow by 2030, after which they will be in decline and then return to the 2016 level in 2040. Emissions that are outside North America, Europe and China will increase by about 35% from 2016 to 2040, while the share of global emissions by 2040 will be 50%.

Figure 1. Global variation of CO2 emissions

Figure 2. All sectors contributing to restrain CO2 emissions growth

Electricity production accounts for about 40% of CO2 emissions in terms of energy. Switching to smaller energy sources such as e.g. wind, solar, nuclear or natural gas will help reduce the CO2 intensity of electricity delivered by more than 30%. Transport accounts for about 25% of CO2 emissions, and is expected to experience a slight increase by 2040 due to the expansion of commercial transport activities 101

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(Albino, et al., 2015). CO2 emissions for light-duty vehicles are expected to fall by approximately 10% from 2025 to 2040, as conventional vehicles and electric cars have a significant share. Industrial sector activities account for about 30% of CO2 emissions, efficiency gains and growing use of less carbonintensive energy will help reduce Gross Domestic Product's (GDP) by about 50%. The use of technology makes it possible to achieve more with less effort (Badgett, et al. 2019).

Global energy demand is growing more slowly than global GDP, which implies a decline in energy intensity (the amount of energy used to produce a unit of GDP). From 2000 to 2016, energy intensity dropped by about 1% per year, and the improvement rate from 2016 to 2040 is likely to approach 2% on a yearly level. Meanwhile, the carbon intensity (CO2 content per unit of energy used) is fairly flat, with the pace of improvement likely to run from 2016 to 2040 (Caragliu & Del, 2019). The combined effect is reflected in the reduced carbon intensity of the world economy (tonnes of CO2 per unit of GDP), which is expected to be 40% lower by 2040, while global energy demand will increase by about 25%.

Total CO2 emissions from all fixed and mobile energy sources in BiH for 1990 amounted to about 24.9 million tonnes. In 1990, CO2 emissions in the Republic of Srpska were estimated at around 8.1 million tonnes. Total CO2 emissions in the Republic of Srpska in 2005 were 4.5 million tonnes or 32.3% of total BiH emissions (Government, 2012).

Figure 3. CO2 emissions for the period 1990 to 2001 in Bosnia and Herzegovina

Source: (Radusin, Senad, Cero, Abdurahmanović, & Vukmir, 2013)

The graph (Figure 3) shows CO2 emissions from 1990 to 2001. It can be seen that the analysis of this chart deviates from the charts of most countries. Instead of the normal growth of CO2 emissions, we see a decrease in emissions here during the war period (12% in 1993 compared to the base year 1990).

This graph also shows that the CO2 emissions for 1990 in BiH amounted to about 34.04 Gg CO2, which, if converted to tonnes, amounts to 34.04 million tonnes. If this result is compared with the previously mentioned according to which the CO2 emissions for 1990 in BiH amounted to 24.9 million tonnes, we get a deviation. Also, according to the source (Worldometers, 2019) CO2 emissions for 1990 in Bosnia and Herzegovina amounted to 24,446,896 tonnes which means that there is no exact number recorded, however, it is estimated that total CO2 emissions ranged from 24 to 34 million tonnes. The latest figures are for 2016, where total CO2 emissions were 25,674,120 tonnes. Therefore, in 2016, the level of CO2 emissions exceeded the highest level, recorded for the first time in 1990, which is why this year was especially observed.

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Figure 4. CO2 % emissions by sector for the period 1990 to 2001 in Bosnia and Herzegovina

In 2007, the International Energy Agency (IEA) estimated that CO2 emissions were 16.3 million tonnes. The energy sector emitted 52%, construction and agriculture 16%, transport 14%, industry 13% and households 5%. These results indicate that emissions have tripled since 1995. A 21% increase occurred between 2000 and 2004 when the economy began to recover. Coal is the leading source of emissions at 75%, followed by petroleum products at 21% and natural gas at 4% (Centar za Politike i Upravljanje, 2010).

Electricity in Bosnia and Herzegovina is produced in thermal power plants and amounts to 60% of the total energy production for 2015. Production in thermal power plants for 2016 amounted to a record 10,608 GWh, which is 1,896 GWh, 21.8% more than the year before. These thermal power plants use domestic coal and have fairly high CO2 emissions (1.3t CO2 / MWh) (BOSNIA AND HERZEGOVINA COUNCIL, 2017).

The following shows CO2 emissions from 2010 to 2025, determined on the basis of final energy consumption data in both the Republic of Srpska and the Federation of BiH (Table 1).

Table 1. Overview of CO2 emissions from different central heating systems Administrative unit

2010.

2015.

2020.

2025.

Republic of Srpska

132,275.9

155,385.5

142,265.5

156,939.2

Federation of BiH

236,750.5

218,129.7

264,043.5

311,547.4

Bosnia and Herzegovina

369,026.4

373,515.2

406,309.0

468,486.6

Solar and wind energy, as well as other renewable energy sources, will play a greater role for the future of humans, however, oil and gas cannot be replaced immediately because it is a time-consuming process (Criado, et al. 2020). Therefore, it is necessary to develop a temporary solution for fossil fuels to operate in a cleaner and more environmentally responsible manner.

There are several solutions to the problem of CO2 emissions in Bosnia and Herzegovina. The most significant source of CO2 emissions is the energy sector, which contributes 75% to CO2 emissions. The potential for reducing greenhouse gas emissions in this sector is greatest. Such challenges can be seen as development opportunities where: 103

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◆ energy efficiency and greater use of renewable energy are introduced, ◆ use of clean development mechanisms, ◆ joining the European greenhouse gas emission trading system, ◆ development and application of CO2 separation and storage technologies, ◆ reconstruction i.e. construction of new non-coal thermal power plants.

The implementation of a smart city structure to a particular city, such as Bijeljina, Bosnia and Herzegovina, enables increased energy efficiency and introduces greater use of renewable energy sources.

Wind, water and solar energy, which are renewable resources, can be used to reduce CO2 emissions.

With such application comes the use of clean development mechanisms.

The development of the CO2 industry is a quality solution for reducing CO2 emissions in Bosnia and Herzegovina. The industry is based on the collection, storage and sale of CO2 emissions (Hatcher & Hammond, 2018). The inclusion of Bosnia and Herzegovina in the European Emissions Trading Scheme allows not only the reduction of CO2 emissions and the earning of money, but also the opportunity to bring Bosnia and Herzegovina closer to European standards.

One of the options for solving the CO2 emissions problem is the development and implementation of CO2 emission extraction and storage technologies (Harrison, et al., 2010). These technologies allow CO2 emissions to be collected during emission and packed in tanks, which would later be transported by trucks to appropriate locations. Tanks typically release CO2 emissions deep into the ground.

In addition, the process of air filtration, i.e. the collection of CO2 emissions already in the air, is also one of the possible solutions to this problem for Bosnia and Herzegovina. At a time when the amount of CO2 emissions was not so high, it was enough to pay attention when it came to CO2 emissions, but since people did not such thing, it is now necessary to apply reverse engineering to suck up particles from the air, and also enable the storage of CO2 emissions during broadcasting. Particle aspirators are called "Carbon capture".

Since electricity in Bosnia and Herzegovina is mostly produced in thermal power plants, the solution is to replace existing coal-fired thermal power plants with new more efficient ones, which have lower emissions and promote the use of renewable energy sources. In addition, a temporary filter setup is possible.

Apart from all these solutions aimed at reducing CO2 emissions, lack of greenery in some cities of Bosnia and Herzegovina, including Bijeljina, is one of the causes of major air pollution. Humans exhales carbon dioxide CO2 and inhales oxygen, while plants inhale carbon dioxide and release oxygen. Greater use of greenery, plants, trees and flowers can make a significant contribution to reducing CO2 emissions in Bosnia and Herzegovina as well as in the city of Bijeljina. Currently, only forests contribute to clean air.

Each city should have as many trees, small and large parks as possible. Modern architects are slowly starting to design buildings that consist of greenery, such as various types of trees and flowers. Buildings like this play a big role in the implementation of smart cities. Some cities already boast buildings of this type. One of the problems of the town of Bijeljina is the large presence of buildings without parking and green spaces, the construction of a large number of buildings, while completely neglecting green spaces or removing existing ones to make room for new buildings. The number of buildings increases as the number of greenery decreases and the air gets worse. The construction of a synthetic forest that has the role of sucking in CO2 emissions and providing oxygen to citizens also exists as a possible option for solving the CO2 emissions problem in the city of Bijeljina and other cities across Bosnia and Herzegovina.

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In 2008, an initiative to reduce CO2 emissions was launched. Each signature created a goal to meet or exceed the EU's 20% CO2 reduction target by 2020. The proposed projects for achieving this goal are mainly from the following sectors: building, district heating systems, local production of electricity from renewable energy sources, local transport, lighting, etc (Batty, et al., 2012).

In 2013, almost 5,000 signatures were obtained across Europe, including 15 municipalities / cities from Bosnia and Herzegovina: Banja Luka, Bihać, Bijeljina, Gradiška, Kakanj, Laktaši, Livno, Prijedor, Sarajevo, Travnik, Trebinje, Tuzla, Zenica, Zvornik and Živinice.

(Table 2) shows a list of cities and municipalities from Bosnia and Herzegovina whose mayors and chiefs have signed and supported this initiative. For each city / municipality, the number of inhabitants, the date on which the initiative was accepted and officially endorsed, as well as the percentage of the overall CO2 reduction target, are shown.

Table 2. Signatures collected from the mayors and chiefs in Bosnia and Herzegovina Population

Acceptance

Formal confirmation

Overall objective of reducing CO2 emissions

250,000

30.01.2009.

30.03.2010.

20%

61,287

17.12.2010.

14.06.2012.

20%

Bijeljina

153,000

21.10.2010.

04.10.2011.

31%

Gradiška

62,000

14.04.2011.

28.02.2012.

28%

Laktaši

40,000

18.03.2011.

18.03.2011.

21%

Livno

40,600

30.03.2011

22.05.2012.

20%

Prijedor

105,000

01.11.2010.

08.11.2011.

20%

Sarajevo

300,000

10.03.2009.

22.01.2011.

20%

Travnik

55,000

15.03.2011.

16.03.2012.

20%

Trebinje

36,000

30.12.2010.

07.12.2011.

22%

Tuzla

174,000

03.02.2010.

13.07.2011.

21%

Zenica

127,000

29.12.2010.

29.12.2011.

20%

Zvornik

65,000

12.05.2011.

12.05.2011.

20%

Signatory Banja Luka Bihać

Source: (Petrović, 2014)

CONCLUSIONS A smart solution can be found for every new challenge. The concept of a smart city is presented as a solution to any problems that current cities face or will encounter.

One of these problems, if not the biggest problem at the moment, is global warming, which is caused by the enormous amount of CO2 emission in the atmosphere. This type of problem is a global problem and a major challenge for the whole of Europe, and especially for Bosnia and Herzegovina and its cities and citizens. Compared to CO2 emissions globally, it is concluded that there are many different solutions to the problem of CO2 emissions that can be used individually or collectively.

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Therefore, the best and most demanding solution would be a proposal to develop a completely new industry that will be engaged in the collection of CO2 emissions and their sale. There are two ways to collect CO2 emissions, the first is to suck in CO2 emissions from the air and the second is to collect CO2 emissions during broadcast. The CO2 emissions collected could be used in combination with hydrogen derived from water using renewable sources to produce hydrocarbons such as gasoline and kerosene, i.e. aviation fuels. After combustion of these fuels, the process is repeated, carbon dioxide is released again into the atmosphere from where it was originally collected, and CO2 emissions are collected again.

In this way, a sustainable process is achieved.

Also, the city of Bijeljina is presented as a potential city that could implement all modern technologies in order to become a smart city. This solution not only solves the problem of CO2 emissions in the town of Bijeljina, but at the level of the entire state of Bosnia and Herzegovina, of course, on condition that this technology is applied in most cities. In addition, it enables air filtration for the population, provides an opportunity for the development of a completely new industry and the potential for job creation, better living conditions in the country, which would prevent the problem of people moving abroad in large numbers.

More urban technology projects have been implemented and planned for medium-sized cities than for small and large cities. It is best to implement smart technology for mid-sized cities that are not yet fully developed but contain all the key components needed for implementation, due to investment while they are still in the planning and construction stages. Also, because the city during this period has a simple infrastructure and because there is certainly more space to build a better quality city base.

Smaller cities can also implement smart technology, but they do not benefit much from that implementation because they cannot utilize the full potential because they are underdeveloped. Again, big cities can implement smart technology, but they have complicated infrastructure and implementation would be long and demanding.

Every smart city must also have smart residents who will use the modern technologies and benefits that the smart city provides as planned. In general, there is a need to raise awareness among people about the harmful effects of environmental pollution on everyone.

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REFERENCES Abutabenjeh, S., Nukpezah, J., & Azah, A. (2021). Do Smart Cities Technologies Contribute to Local Economic Development? Economic Development Quarterly, 36(1), 3-16. https://doi.org/10.1177/08912424211053599 Aelenei, L., Ferreira, A., Monteiro, S. C., Gomes, R., Gonçalves, H., Camelo, S., & Silva, C. (2016). Smart City: A systematic approach towards a sustainable urban transformation. Energy Procedia, 91, 970-979. https:// doi.org/10.1016/j.egypro.2016.06.264 Albino, V., Berardi, U., & Dangelico, R. M. (2015). Smart cities: Definitions, dimensions, performance, and initiatives. Journal of Urban Technology, 22(1), 3-21. https://doi.org/10.1080/10630732.20 14.942092 Lee Badgett, M. V., Waaldijk, K., & Van Der Meulen Rodgers, Y.,. (2019). The relationship between lgbt inclusion and economic development: Macro-level evidence. World Development, 120, 1-14. https://doi. org/10.1016/j.worlddev.2019.03.011 Batty, M., Axhausen, K. W., Giannotti, F., Pozdnoukhov, A., Bazzani, A., Wachowicz, M., & Portugali, W. (2012). Smart cities of the future. The European Physical Journal Special Topics, 214, 481–518. https://doi. org/10.1140/epjst/e2012-01703-3 Berrone, P., & Ricart, J. E. (2019). IESE Cities in Motion Index 2019. IESE Business School University of Navarra. https://dx.doi.org/10.15581/018.ST -509 Bomba, A., Kunanets, N., Nazaruk, M., Pasichnyk, V., & Veretennikova N. (2018). Information Technologies of Modeling Processes for Preparation of Professionals in Smart Cities. In Hu, Z., Petoukhov, S., Dychka, I., & He M., (Eds.). First International Conference on Computer Science, Engineering and Education Applications. (pp. 702-712). Kiev: Springer International Publishing.

Bosna i Hercegovina - Izveštaj o razvoju BiH, (2017). Sarajevo: Bosna i Hercegovina Vijeće Ministara - Direkcija za ekonomsko planiranje.

Caragliu, A., & Del Bo, C. F. (2019). Smart innovative cities: The impact of smart city policies on urban innovation.

Technological Forecasting and Social Change, 142, 373-383. https://doi.org/10.1016/j.techfore.2018.07.022 Izveštaj o politikama energetskog sektora u Bosni i Hercegovini, (2010). Sarajevo: Centar za Politike i Upravljanje.

Chauhan, S., Agarwal, N., & Kar, A. K. (2016). Addressing big data challenges in smart cities: A systematic literature review, info: Digital policy. Regulation and Governance, 18(4), 73–90. https://doi.org/10.1108/ info-03-2016-0012 Curzon, J., Almehmadi, A., & Khatib, K. (2019). A survey of privacy enhancing technologies for smart cities.

Pervasive and Mobile Computing, 55, 76-95. https://doi.org/10.1016/j.pmcj.2019.03.001 Criado, J. I., Dias, T. F., Sano, H., Rojas-Martín, F., Silvan, A., & Filho, A. I. (2020). Public innovation and living labs in action: A comparative analysis in post-new public management contexts. International Journal of Public Administration, 44(6), 1-14. https://doi.org/10.1080/01900692.2020.1729181 Dahiya, B., & Kumar, V. (2017). Smart Economy in Smart Cities. Part of the Advances in 21st Century Human Settlements book series (ACHS), 3-76.

Dirks, S., Gurdgiev, C., & Keeling, M. (2010). Smarter cities for smarter growth: How cities can optimize their systems for the Talent – Based – Economy, 1-24. New York: IBM Global Business Services New York.

Eremia, M., Toma, L., & Sanduleac, M. (2017). The Smart City Concept in the 21st Century. Procedia Engineering, 181, 12-19. https://doi.org/10.1016/j.proeng.2017.02.357 Exxon Mobile. (2018). 2018 Outlook of Energy: A View to 2040. Irving: Exxon Mobil Corporation.

Energy Strategy of Republic of Srpska up to 2030, (2012). Banja Luka: The Republic of Srpska Government.

Harrison, C., Eckman, B., Hamilton, R., Hartswick, P., Kalagnanam, J., Paraszczak, J., & Williams, P. (2010).

Foundations for Smarter Cities. IBM Journal of Research and Development, 54(4), 1–16. DOI: 10.1147/ JRD.2010.2048257

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Hatcher, W., & Hammond, A. (2018). Nonprofit economic development organizations and the institutional arrangement of local economic development. Journal of Public and Nonprofit Affairs, 4(1), 21-40. https:// doi.org/10.20899/jpna.4.1.21-40 Mehta, S., Bhushan, B., & Kumar, R. (2022). Machine Learning Approaches for Smart City Applications: Emergence, Challenges and Opportunities. Recent Advances in Internet of Things and Machine Learning. 147163. https://doi.org/10.1007/978-3-030-90119-6_12 Mishra, K., & Chakraborty, C. (2019). A Novel Approach Toward Enhancing the Quality of Life in Smart Cities Using Clouds and IoT-Based Technologies. In: Farsi, M., Daneshkhah, A., Hosseinian-Far, A., Jahankhani, H. (eds). Digital Twin Technologies and Smart Cities (pp. 19-35). Cham: Springer.

Patel, Y., Doshi, N. (2019). Social implications of smart cities. Procedia Computer Science. 155. 692-697. https:// doi.org/10.1016/j.procs.2019.08.099 Petrović, S. (2014). Pregled zakonskih obaveza jedinica lokalne samouprave u oblasti upravljanja energijom, energetske efikasnosti, primjene obnovljivih izvora energije, lokalnih planova enrgetske efikasnosti I emisija CO2, koje proizilaze iz usvojenih zakona o energetskoj efikasnosti. Sarajevo/Banja Luka: GFA Consulting Group GmbH and Integration.

Radusin, S., Senad, O., Cero, M., Abdurahmanović, I., & Vukmir, G. (2013). Drugi nacionalni izveštaj bosne i hercegovine u skladu s okvirnom konvencijom ujedinjenih nacija. Sarajevo: Savet Ministara Bosne I Hercegovine.

Schneider, L., & Stubinger, J. (2020). Understanding Smart City—A Data-Driven Literature Review. Sustainability, 12(20), 8460. https://doi.org/10.3390/su12208460 Sergi, N., Berezin, A., Gorodnova, N., & Andronova, I. (2019). Smart Cities and Economic Growth in Russia. In Sergi, B.S. (Eds.). Modeling Economic Growth in Contemporary Russia Emerald Publishing Limited, (pp.

249-272). Bingley: Emerald Publishing Limited.

Visvizi, A., Lytras, M., Damiani, E., Mathkour, H. (2018). Policy making for smart cities: innovation and social inclusive economic growth for sustainability. Journal of Science and Technology Policy Management. 9(2).

126-133. https://doi.org/10.1108/JSTPM-07-2018-079 Worldometers. (2019). Bosnia and Herzegovina CO2 emissions. Retrieved from Worldometers: https://www. worldometers.info/co2-emissions/bosnia-and-herzegovina-co2-emissions/

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EKONOMSKA OPRAVDANOST PRIMENE INFORMACIONIH TEHNOLOGIJA NA STVARANJE PAMETNIH GRADOVA Rezime: Savremene tehnologije, osim što olakšavaju, odnosno čine život ljudi bržim i kvalitetnijim, takođe omogućavaju upotrebu različitih tehnologija u cilju rešavanja različitih problema. Globalno zagrevanje je jedan od najvećih i najopasnijih problema sa kojima se planeta suočava. Ako bi se globalno zagrevanje predstavilo kao lice, onda bi zagađenje vazduha i klimatske promene bilo naličje. Klimatske promene su pre svega problem koji je nastao kao posledica velike količine ugljen-dioksida (CO2) u atmosferi. Preopterećenje ugljenikom nastaje uglavnom zbog sagorevanja fosilnih goriva kao što su ugalj, nafta i gas, ili seče i spaljivanja šuma. Postoje i drugi štetni gasovi, ali CO2 preovlađuje jer predstavlja najveći rizik od nepovratnih promena ukoliko nastavi da se akumulira u atmosferi. Ovaj rad predstavlja niz različitih rešenja problema emisije CO2 na globalnom nivou kombinovanjem savremenih tehnologija, pri čemu je Bosna i Hercegovina posebno izdvojena kao jedna od zemalja sa najzagađenijim vazduhom u Evropi kao i zemlja sa najvećom stopom mortaliteta, što je posledica zagađenja vazduha. Pametni gradovi koriste digitalne tehnologije, imaju za cilj da unaprede kvalitet ljudskog života i da omoguće zaštitu životne sredine. Koncept pametnog grada je opisan kao skup savremenih tehnologija, dati su primeri vodećih pametnih gradova u svetu, kao i prednosti implementacije ovakvog rešenja.

Ključne reči: pametan grad, zagađenje vazduha, klimatske promene, smanjenje emisije ugljen-dioksida, globalno zagrevanje, emisija CO2.

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EJAE 2022, 19(1): 110 - 120 ISSN 2406-2588 UDK: 004.738.5:336.71(540) DOI: 10.5937/EJAE19-35277 Original paper/Originalni naučni rad

UNDERSTANDING THE BEHAVIOURAL INTENTION TO ADOPT INTERNET BANKING: AN INDIAN PERSPECTIVE Garima Malik*, Dharmendra Singh, Nikola Stakić Amity University, Uttar Pradesh, India

Abstract: Internet banking gives banks colossal advantages as far as cost reserve funds, better client connections, and individual contributions from the opposition. This study expects to recognize the components that essentially influence the intention of bank clients to utilize Internet banking administrations in India. The examination proposed a complete model called Internet banking Adoption in India, which was an implicit part based on the "Brought together Theory of Acceptance and Use of Technology" (UTAUT) and three extra factors that were recognized as setting delicate. A self-made survey with 100 samples on the impact of behavioral intention to adopt Internet banking was conducted using surveys available on the Internet. A statistical tool like Chi-Square, correlation and regression was performed on SPSS software for further analysis. According to the TAM Model, perceived trust, perceived risk, and perceived ease of use was taken into consideration to rate the behavioral intention for adopting Internet banking in day-to-day life.

Article info: Received: December 7, 2021 Correction: February 9, 2022 Accepted: March 21, 2022

Keywords: Internet banking, behavioral factors, adoption, India.

INTRODUCTION One of the business areas that has been fundamentally affected by the advancement of the Internet is banking. With web-based banking, banks can understand clear advantages, for example, lower working costs, fast market development, effective client relationships with the board, and better help. Internet banking has been proved valuable for banking clients as far as cost reserve funds, time investment funds, brisk grievance goal, and better banking administrations, expanding their banking efficiency accordingly. The reasoning behind the innovative turn of events and upset in banking in India is that in recent years, banking as help has developed from gracefully headed to request driven. Banks in India have acknowledged in the post-advancement time that they have to utilize the most recent innovation to remain serious and furnish their customers with the best administrations.

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*E-mail: gkmalik@amity.edu

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MALIK. G., SINGH. D., STAKIĆ. N.  UNDERSTANDING THE BEHAVIOURAL INTENTION TO ADOPT INTERNET BANKING: AN INDIAN PERSPECTIVE

Generally, banks have extended their customary branches to increase a more prominent piece of the overall industry. Along these lines, the new movement of mechanical advancement gave banks progressive occasions to give their banking administrations, for example, ATMs, Internet banking, versatile banking, etc. All client fragments of the bank have broadly embraced a portion of these advancements. Paces of the utilization of different channels were low, particularly in non-industrial nations like India, where Internet entrance is developing quickly. The adoption of Internet banking services is very beneficial for customers through the customer being able to access banking services at any time throughout the year (Xue et al., 2011; Raza, S. A et al., 2020; Patel, K. J., & Patel, H. J. 2018).

In the emerging economy, especially in India, banks are still finding difficulties to fully maximize the befits of Internet banking and convince the customer not only to adopt but also to continue the usage of Internet banking (Alhassany & Faisal, 2018; Kesharwani & Bisht, 2018). This study is among the few studies on behavioural intention to adopt Internet banking in an emerging economy like India.

The study has captured the hurdles in the development path of Internet banking in India.

Following this introduction section, this paper is structured as follows: Section 2 discusses behavioral intention and the determinants of Internet banking adoption. Section 3 summarizes the literature on the given area, and Section 4 elucidates the research methodology and result in summary. Section 5 emphasizes the managerial implications of the paper. Section 6 concludes the paper with a brief overview of the future research directions and limitations of this study.

BEHAVIOURAL INTENTION AND DETERMINANTS OF ADOPTION The past two decades have seen many studies which have provided theoretical frameworks and models regarding the acceptance of information technology (IT) and information systems (IS). The Technology Acceptance Model (TAM) is the most common theory employed for describing individuals’ acceptance towards information systems (Lee et al., 2003). Other popular predictive models are the Theory of Reasoned Action (TRA), the Theory of Planned Behavior (TPB), Social Cognitive Theory (SCT), and the Extended Technology Acceptance Model (TAM2). Although these theories have made significant contributions to the study of IT adoption, they have some limitations. According to the theory of innovation (DOI), this study postulates that based on TPB (Theory of Perceived Behaviour) and diffusion, according to the theory of innovation (DOI), a person's intention to use Internet banking is determined by attitude, control of perceived behavior, and subjective norms. Attitude is explained by sub-constructions of perceived utility, perceived ease of use, and perceived safety risk, perceived behavioral control” is analyzed by sub-constructions of self-efficacy and enabling environment. Finally, subjective norms are explained by sub-constructions of social influence.

In TAM and its variants, attitudes towards technology are seen as an essential precursor of behavioral intention, while social variables are explicitly neglected, and people are expected to keep them in mind (Namahoot, K. S., & Laohavichien, T, 2018; Hassan, M. U., Iqbal, A., & Iqbal, Z , 2018). Perceived ease of use is a cognitive belief that can be defined as the degree of confidence that using a particular structure will be stress-free.

Concerns about trust and security have been identified as the main obstacles to the adoption of Internet banking (Kingshott, 2018; Hamakhan, 2020). The introduction of technological innovations such as mobile banking and Internet banking means that financial institutions will need to consider how to mitigate operational risks. Another issue with Internet banking is the issue of trust in webbased banking. Morgan and Hunt (1994) depicted trust as the establishment, everything being equal.

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Trust is the readiness to get powerless against others (Rousseau et al. 1998). This weakness has gotten more hazardous and questionable, particularly with cash (McKnight and Chervany, 2001). The absence of trust influences the ability of clients to purchase items and administrations via the Internet (Friedman et al., 2000), particularly in the Middle East (Alkailani and Kumar, 2012; Alkailani et al., 2013). Trust has been one obstruction that keeps individuals from utilizing innovation (Nor and Pearson, 2007) due to hacking classified private data and wholesale fraud. This further affected customer trust in Internet banking (Kramer, 1999). More prominent dependence on Internet banking will lessen follow-up and case costs (Fortin et al., 2004). Trust altogether impacts the eagerness or aim of buyers to utilize Internet banking. (Suh et al., 2007). In view of the conversation over, the analyst predicts that there is a factual connection between purchaser certainty and Internet banking.

As financial banking administrations move away from banking specialist organizations and banks become more virtualized, remote access innovations and Internet foundations have driven clients to lose direct association with bank representatives; subsequently, that has constrained them to virtualize the further assistance (Bauer and Hein, 2006). This new experience and the new financial exchange preparing climate will make dread and vulnerability among clients.

One of the theories of technology adoption used to define self-efficacy is the theory of planned behavior. “Self-efficacy” refers to people's beliefs in their ability to perform specific actions. The Theory of Planned Behaviour, which is an extension of TRA, removes obstacles in managing practices over which people do not have adequate volitional control. TPB extends TRA (Theory of Intelligent Action) to consider conditions where people do not entirely control the situation. According to the TPB, human actions are guided by three types of considerations: (a) behavioral beliefs about the likely outcomes of the behavior and the evaluation of those outcomes; (b) normative perceptions about the normative expectations of others and the motivation to satisfy those expectations; and (c) control perceptions about the resources and capabilities that the individual has (or does not have), as well as anticipated barriers or impediments to the performance of the target behavior.”

LITERATURE REVIEW Explanations behind the protection from electronic banking featured that "trouble of utilization", "pointless use," and "security concerns" are vital variables. (Mahmud, 2016). This investigation looks at how clients see and use Internet banking (IB) in Jordan. An all-encompassing model dependent on the Technology Adoption Model (TAM) was created, and three additional builds were added to the model; be specific Presumed Risk (PR), Perceived Confidence (PT), and Bank Strength (BC). This investigation experimentally tests the capacity of the model to anticipate client goals to acknowledge and utilize Internet banking. The outcomes uphold the all-inclusive TAM show and affirm its vigor in foreseeing the client's aim to acknowledge and utilize Internet banking. (Saibaba S., 2014) Inspected the components affecting the acknowledgment of Internet banking administrations by banking clients in Hyderabad. Exploration has indicated that clients' inspirational mentalities towards Internet banking innovation can impact their utilization goals. This examination also found that Indian bank advertisers need to convey the advantages of web-based banking through different promotion crusades, making banking sites straightforward, advantageous, and sufficiently secure to urge their customers to do Internet banking. Some authors (Singhal & Padhmanabhan, 2008; Rahi S et al., 2018) inspected the principal factors that drive Indian bank clients to utilize Internet banking dependent on their view of different Internet-related applications. They found that utility solicitations, security, reserves move, 112

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utility transactions, and ticket reservations were the top components, with over half of respondents concurring that web-based banking is advantageous, adaptable, and gives transaction-related advantages. Khare et al., (2010) analyzed the function of character qualities in Internet banking appropriation in India. It is accounted for those singular contrasts between banking clients will impact their view of the properties of web-based banking and its advantages. The suggestion is that Indian banks need to consider singular contrasts when planning and improving web-based banking destinations to encourage dynamic. (Shah, 2011) Directed an examination to decide the components that impact the spread of Internet banking in Gujarat, India. The outcomes demonstrated that banking needs, seen danger, security, and cost investment funds were the primary elements driving clients to utilize Internet banking. Moreover, the examination found that Indian banks need to instruct their clients about Internet banking administrations and their advantages to acknowledge them better. Another significant finding of this examination was the effect of the information on Internet banking administrations and its advantages in its selection. (Ramayah & Rouibah, 2009; Zolait, A. H. S, 2010; Rahi S et al., 2018) Analyzed the elements impacting an individual's expectation to utilize Internet banking in Penang utilizing TAM utilizing extra factors including related knowledge, transaction volume, earlier framework preparing, and outside weights (Mutahar, A. M et al., 2018; Aboobucker, I., & Bao, Y et al., 2018). Exploration has demonstrated that apparent value and convenience significantly affect the client's aim to utilize Internet banking.

Current Internet banking clients have discovered this new banking channel to be a more advantageous type of banking administration than non-clients. Different boundaries seen as essentially unique in the two gatherings were similar - PC capability and multifaceted nature. The issues of openness, security, and saw monetary advantages of Internet banking didn't contrast among clients and non-clients. (Tan & Teo, 2000; Sharma, R. et al., 2020; Keskar, M. Y., & Pandey, N. 2018) applied the Decomposition Theory of Planned Behaviour (DTPB) model to comprehend the significant variables that decide how clients mean to utilize Internet banking in Singapore.

Regarding the examination, the free factors were recognized: demeanor, abstract standards, and saw conduct control, which influence the reliant variable, that is, the expectations to utilize Internet banking administrations. This investigation found that disposition conviction and saw social control factors altogether impacted clients' goals to utilize Internet banking. Among the relationship factors, unpredictability alone didn't significantly affect business insight. On account of apparent social control, mechanical help was not a critical factor. A significant finding of this study is that the impact of companions, family, or associates on the reception of Internet banking administrations, that is, abstract standards, on the expectations to utilize Internet banking administrations was not critical.

METHODOLOGY AND ANALYSIS This research is needed for gathering relevant data to help digital banking players work towards developing digital banking services that will satisfy and draw in more potential users. There is a need to measure the factors that contribute to customers’ intention to adopt Internet banking so that banks will be able to accordingly design their operational strategies for customers to increase Internet banking usage in the future. The bank also needs to understand customers' approaches to leverage technology and gain a competitive advantage. Understanding the suitable strategy mechanism can also positively drive customers' behavior towards Internet banking. Other factors such as perceived security and risk could play a crucial role in using Internet banking.

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Since the project's main objective is to study the impact of behavioral intention to adopt Internet banking, the exploration procedure embraced is founded on 27 essential information with which you can gather the latest and exact direct data. Secondary information data was utilized to help essential information when necessary. An appropriate random population sample (100 respondents) was selected for this study based on convenience. Some data was also obtained through online surveys using Google Docs and forms.

A self-administered questionnaire technique was used to collect the data from NCR. The convenience sampling method was used for selecting the target respondents for the study sample. Size of the study was 100, representing the customers of various nationalised and non-nationalised banks having the experience of using Internet banking services at least from the last two years and continuing the services form the same bank. A simple percentage analysis was used to calculate the percentage of satisfaction levels in the total number of respondents, which was then carried down to the SPSS statistical tool for further analysis. Segment subtleties such as age, gender, and annual income were thought about. The information was sorted out in the exceed expectations sheet, Tables were framed and frequencies were determined.

Table 1. Reliability Test Cronbach's Alpha

N of Items

.823

15

Source: Authors’ calculation

Cronbach’s Alpha reliability test shows that the variables are internally consistent. As Cronbach’s Alpha is .823, greater than .7, it signifies that the data collected is reliable and can be used for further analysis (Table 1).

The Chi-square statistic is most generally used to assess Independence tests whilst using a crosstabulation (also called a bivariate table). Cross-tabulation affords the distributions of two specific variables simultaneously, with the intersections of the kinds of the variables acting inside the cells of the desk.

Table 2. Chi-Square Analysis Value

df

Asymptotic Significance (2-sided)

Pearson Chi-Square

8.049a

8

.429

Likelihood Ratio

8.955

8

.346

Linear-by-Linear Association

.000

1

.997

N of Valid Cases

100

Source: Authors’ calculation

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The value for Chi-square of analysis for Gender and Factors for adoption behavior towards Internet banking is significant at 0.01 level, (χ2= 8.049, p= 0.03). To study the association between analysis for Gender and Factors for adoption behaviour towards Internet banking, the result showed the value for Chi-square of analysis for Gender and Factors for adoption behavior towards Internet banking is significant at 0.01 level, (χ2= 8.049, p= 0.03).

Table 3. Regression between behavioral intentions towards Internet banking and Perceived Trust, Perceived Risk and Perceived Ease of Use Model Summary Model

R

R Square

Adjusted R Square

Std. Error of the Estimate

1

.871a

.759

.732

.71698

a. Predictors: (Constant), PEO3, PT1, PR1, PT2, PT4, PR3, PT3, PR2, PEO1, PEO2 Source: Authors’ calculation

The regression analysis is used for the analysis of impact between behavior intentions towards Internet banking and Perceived Trust, Perceived Risk, and Perceived Ease of Use. The values of R square (.759) and adjusted R square (.732) are close, which signifies that the data collected is adequate.

Table 4. Anova Table ANOVAa

1

Model

Sum of Squares

Regression

143.831

Residual Total

Mean Square

F

10

14.383

27.979

45.751

89

.514

189.582

99

df

Sig. .000b

a. Dependent Variable: AIB b. Predictors: (Constant), PEO3, PT1, PR1, PT2, PT4, PR3, PT3, PR2, PEO1, PEO2 Source: Authors’ calculation

The regression value between behavior intentions to adopt Internet banking and Perceived Trust, Perceived Risk and Perceived Ease of Use is 143.831 at 0.01 level with Factors for adoption behavior towards Internet banking as a dependent variable and Factors for adoption behavior towards Internet banking and Perceived Trust, Perceived Risk and Perceived Ease as Independent variables. As the p-value or significance value is <0.05, i.e., .000, it signifies that behavior intentions towards Internet banking have a positive effect on Perceived Trust(PT), Perceived Risk(PR), and Perceived Ease of Use(PEO).

The result showed that the regression value between behavior intentions to adopt Internet banking and PT, PR and PEO is 143.831 at 0.01 level with Factors for adoption behavior towards Internet banking as a dependent variable, and Factors for adoption behavior towards Internet banking and Perceived Trust, Perceived Risk and Perceived Ease as Independent variables. As the p-value or significance value is <0.05, i.e., .000, it signifies that behavior intentions towards Internet banking have a positive effect on Perceived Trust(PT), Perceived Risk(PR), and Perceived Ease of Use(PEO).

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MANAGERIAL IMPLICATIONS This study provides several managerial and theoretical implications in Internet banking services.

From a managerial perspective, results imply that meeting expectations per customer requirement is critical to improving their satisfaction. Findings suggest that consumers will be ready to adopt Internet banking services if the bank provides services as per customer expectations. Knowledge of Internet banking services is essential for customers to switch to Internet banking. To attract more potential customers, bank clerks at branches should provide information about Internet banking. The information should include time savings, convenience, anywhere, anytime, at low cost. The Internet banking framework must be underlying so that clients can confide in it.

Furthermore, banks ought to give their clients complete help when confronted with the issue of Internet banking. Another core value for making an Internet banking site easy to use is that customers should find that all the services available on the Internet banking website can be accessed quickly and easily whenever they want. Banks should regularly conduct online banking customer surveys and opinions to attract more Internet banking customers. Banks must implement a high-quality Internet infrastructure to attract more potential customers.

CONCLUSION A self-made survey with 100 samples on the impact of behavioral intention to adopt Internet banking was conveyed using surveys available on the web. A descriptive analysis based on demographic data was performed. Key demographic data included their age, gender, marital status, and occupation. For an in-depth analysis, all the essential factors related to the topic were rated on the Likert scale from 1 to 5, categorizing the point from strongly disagree to strongly agree on the scale. Statistical tools like Chi-Square, correlation, and regression were performed on SPSS software for further analysis. The outcomes revealed that the participants for the study were below 25 years, i.e., the youths, out of which most were males. An equivalent number of single people and married couples took part in this study, and the maximum were students by occupation. In terms of preference behavior towards Internet banking, maximum respondents voted for a Yes option, and maximum respondents were found to use Internet banking daily. It is depicted that, on average, people have been able to successfully and willingly adopt Internet banking in day-to-day life. According to the TAM Model, PT, PR, and POE were considered for rating the behavioral intention for adopting Internet banking in day-to-day life. On average, people were willing to adopt the modern behavior of Internet banking and can rely on it; they find it easy to use and can also take the minimal amount of risk in terms of adoption of Internet banking.

SUGGESTIONS AND FUTURE RESEARCH Digital banking specially Internet banking is the pillar of banking sector. A developing economy, such as India, requires a growing amount of savings to flow to corporate businesses. In the past few years, the adoption and uses of Internet banking has been increased. Internet banking places great emphasis on being the principal driver of a country's economic development. Hence, a person must be financially aware and literate in order to understand the features and characteristics of digital payments. The adoption capacity level of a person is explicitly or indirectly linked to core characteristics 116

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such as knowledge level, level of interest, and level of engagement, all of which play a critical role in completing an effective transaction. Financially knowledgeable individuals may make good use of the financial alternatives by analyzing the associated pros and cons, and ultimately selecting the ultimate option that best match them. For enhancing the uses of Internet banking, banks should implement the following mentioned suggestions, accordingly: ◆ The bank ought not to relax; all things being equal, it should be imaginative and inventive, making new items or administrations and advertising systems that can invigorate interest in the utilization of Internet banking administrations. ◆ Knowledge of Internet banking services is very important for customers to switch to Internet banking. To attract more potential customers, bank clerks at branches should provide information about Internet banking. The information should include time savings, convenience, anywhere, anytime, low cost. ◆ The Internet banking framework must be underlying in such a way that clients can confide in it. Your Internet banking framework ought not to be dependent upon startling personal time or regular dissents of administration. Furthermore, banks ought to give their clients complete help when confronted with the issue of Internet banking. ◆ Another core value for making an Internet banking site that is easy to use is that customers should find that all the services available on the Internet banking website can be accessed quickly and easily whenever they want. ◆ Banks should regularly conduct online banking customer surveys and opinions to attract more Internet banking customers.

In the context of the future research this study can be extended by: ◆ Different factors influencing individual behavior can be taken like Influence. ◆ Using larger and diversified sample and also considering two different countries for the sample

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REFERENCES Alalwan, A., Dwivedi, Y., Rana, N., Algharabat, R. (2018). Examining factors influencing Jordanian customers’ intentions and adoption of Internet banking: Extending UTAUT2 with risk. Journal of Retailing and Consumer Services, 40, 125-138. https://doi.org/10.1016/j.jretconser.2017.08.026 Alhassany, H., & Faisal, F. (2018). Factors influencing the Internet banking adoption decision in North Cyprus: an evidence from the partial least square approach of the structural equation modeling. Financial Innovation, 4, 29. https://doi.org/10.1186/s40854-018-0111-3 Aboobucker, I., & Bao, Y. (2018). What obstruct customer acceptance of Internet banking? Security and privacy, risk, trust and website usability and the role of moderators. The Journal of High Technology Management Research, 29(1), 109-123. https://doi.org/10.48550/arXiv.1903.12551 Alkailani, M. (2016). Factors Affecting the Adoption of Internet banking in Jordan. Journal of Marketing Development and Competitiveness, 10 (1), 39-52. Retrieved January 23, 2022, from https://articlegateway.com/ index.php/JMDC/article/view/1855/1757 Bashir, I., Madhavaiah, C. (2015). Consumer attitude and behavioural intention towards Internet banking adoption in India. Journal of Indian Business Research 7(1), 67-102. https://doi.org/10.1108/JIBR-02-2014-0013 Hamakhan, Y.T. (2020). The effect of individual factors on user behaviour and the moderating role of trust: an empirical investigation of consumers’ acceptance of electronic banking in the Kurdistan Region of Iraq.

Financial Innovation, 6, 43. https://doi.org/10.1186/s40854-020-00206-0 Hassan, M. U., Iqbal, A., & Iqbal, Z. (2018). Factors affecting the adoption of Internet banking in Pakistan: An integration of technology acceptance model and theory of planned behavior. International Journal of Business Information Systems, 28(3), 342-370.

Kesharwani, A., & Bisht, S. S. (2012). The impact of trust and perceived risk on Internet banking adoption in India: An extension of technology acceptance model. International Journal of Bank Marketing. 30(4), 303-322. https://doi.org/10.1108/02652321211236923 Keskar, M. Y., & Pandey, N. (2018). Internet banking: a review (2002–2016). Journal of Internet Commerce, 17(3), 310-323. https://doi.org/10.1080/15332861.2018.1451969 Kingshott, R., Sharma P, Chung H., (2018). The impact of relational versus technological resources on e-loyalty: a comparative study between local, national, and foreign branded banks. Industrial Marketing Management, 72, 48–58. https://doi.org/10.1016/j.indmarman.2018.02.011 Ndubisi, N. O. (2007). Customers’ perceptions and intention to adopt Internet banking: the moderation effect of computer self-efficacy. AI & Society, 21(3), 315-327. https://doi.org/10.1007/s00146-006-0062-5 Namahoot, K. S., & Laohavichien, T. (2018). Assessing the intentions to use Internet banking: The role of perceived risk and trust as mediating factors. International Journal of Bank Marketing. 36(2), 256-276. https://doi. org/10.1108/IJBM-11-2016-0159 Mutahar, A. M., Daud, N. M., Ramayah, T., Isaac, O., & Aldholay, A. H. (2018). The effect of awareness and perceived risk on the technology acceptance model (TAM): mobile banking in Yemen. International Journal of Services and Standards, 12(2), 180-204. DOI: 10.1504/IJSS.2018.091840 Patel, K. J., & Patel, H. J. (2018). Adoption of Internet banking services in Gujarat: An extension of TAM with perceived security and social influence. International Journal of Bank Marketing. 36(1), 147-169. https:// doi.org/10.1108/IJBM-08-2016-0104 Rahi, S., Othman Mansour, M. M., Alghizzawi, M., & Alnaser, F.M. (2019). Integration of UTAUT model in Internet banking adoption context: The mediating role of performance expectancy and effort expectancy, Journal of Research in Interactive Marketing, 13(3), 411-435. https://doi.org/10.1108/JRIM-02-2018-0032 Rahi, S., Ghani, M., Alnaser, F., & Ngah, A. (2018). Investigating the role of unified theory of acceptance and use of technology (UTAUT) in Internet banking adoption context. Management Science Letters, 8(3), 173-186.

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Raza, S. A., Umer, A., Qureshi, M. A., & Dahri, A. S. (2020). Internet banking service quality, e-customer satisfaction and loyalty: the modified e-SERVQUAL model. The TQM Journal. 32(6), 1443-1466. https://doi. org/10.1108/TQM-02-2020-0019 Ramayah, T., & Rouibah. (2009). User Acceptance of Internet banking In Malaysia: Test of Three Competing Models. International Journal of E-Adoption 1(1), 1-19. DOI: 10.4018/jea.2009010101 Saibaba, S. &. Naryana Murthy, T., (2013). Factors influencing the behavioral intention to adopt Internet banking: An empirical study in India. Researchers World: Journal of Arts, Science and Commerce, 4(4), 77-91.

Retrieved January 13, 2022, from https://ssrn. com/abstract=2515665 Saibaba, S. (2014). Factors Influencing Customers' Intentions to Use Internet banking: Model Development and Test. International Journal of Innovative Technology & Adaptive Management (IJITAM), 1(5), 2347-3622.

Retrieved January 13, 2022, from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2515670 Shah, A. (2011). Factors Influencing Online Banking Customer Satisfaction and Their Importance in Improving Overall Retention Levels: An Indian Banking Perspective. Information & Knowledge Management, 1(1), 45-54. Retrieved January 15, 2022, from https://core.ac.uk/download/pdf/234671157. pdf Shankar, A. and Jebarajakirthy, C. (2019). The influence of e-banking service quality on customer loyalty: A moderated mediation approach, International Journal of Bank Marketing, 37(5), 1119-1142. https://doi. org/10.1108/IJBM-03-2018-0063 Sharma, R., Singh, G., & Sharma, S. (2020). Modelling Internet banking adoption in Fiji: A developing country perspective. International Journal of Information Management, 53, 102116. https://doi.org/10.1016/j. ijinfomgt.2020.102116 Singhal, D., & Padhmanabhan, V. (2008). A Study on Customer Perception Towards Internet banking: Identifying Major Contributing Factors. Journal of Nepalese Business Studies, 5(1), 101-111. https://doi.org/10.3126/ jnbs.v5i1.2088 Tan, M., & Teo, T. S. (2000). Factors Influencing the Adoption of Internet banking. Journal of the Association for Information Systems: 1, 1-44. DOI: 10.17705/1jais.00005 Xue, M., Hitt, L. M., & Chen, P. Y., (2011). Determinants and outcomes of Internet banking adoption. Management science, 57(2), 291-307. https://doi.org/10.1287/mnsc.1100.1187 Zolait, A. H. S. (2010). An examination of the factors influencing Yemeni Bank users’ behavioural intention to use Internet banking services. Journal of Financial Services Marketing, 15(1), 76-94. https://doi.org/10.1057/ fsm.2010.1

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RAZUMEVANJE BIHEVIORALNE NAMERE O USVAJANJU INTERNET BANKARSTVA: INDIJSKA PERSPEKTIVA Rezime: Internet bankarstvo bankama pruža nemerljive prednosti povodom sredstava rezervnog fonda, boljeg povezivanja sa klijentima, kao i pojedinačnih doprinosa konkurencije. Ovim istraživanjem se očekuje priznavanje postojanja komponenti koje iskonski utiču na nameru klijenata banaka da usvoje Internet bankarstvo u Indiji. Kroz istraživanje je predložen celovit model pod nazivom „Usvajanje Internet bankarstva u Indiji“, koji je bio deo u potpunosti zasnovan na „Objedinjenoj teoriji prihvatanja i korišćenja tehnologije“ (UTAUT) kao i tri dodatna faktora koji su prepoznati kao osetljivi na okruženje. Samostalno sprovedena anketa od 100 uzoraka o uticaju bihevioralne namere na usvajanje Internet bankarstva je sprovedena putem korišćenja anketa dostupnih na Internetu. Korišćen je statistički test Chi-Square, izvršena je korelacija i regresija u SPSS softveru za dublju analizu. Prema TAM modelu, uočeno poverenje, uočen rizik kao i opažanje lakoće korišćenja su faktori uzeti u obzir zarad procenjavanja bihevioralne namere za usvajanje Internet bankarstva u svakodnevnom životu.

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Ključne reči: Internet bankarstvo, bihevioralni faktori, usvajanje, Indija.

EJAE 2022, 19(1): 121 - 136 ISSN 2406-2588 UDK: 330.34:502.131.1(4-15) 502.1:33(4-15) DOI: 10.5937/EJAE19-33686 Original paper/Originalni naučni rad

GOVERNMENTAL INVESTMENT IN THE ENVIRONMENTAL ECONOMY IN THE WESTERN BALKAN Jelena Šogorov Vučković*, Dušan Piksiades, Ivan Trifunović Faculty of European Legal and Political Studies Novi Sad, Novi Sad, Serbia

Abstract: “A Green economy” has been one of the key agendas that governments all over the world have set as a goal to achieve. The last few decades have been critical for the recognition of this major problem, and they played a critical part in reversing the effects brought on to our planet with the acts of people and other natural factors. Governments have devised multiple plans to enforce regulations that would protect the environment we live in, and most of these plans have been spearheaded by the United Nations (UN) and the European Union (EU). They have developed several plans that have a task to minimalize, or escalate, the effects of global warming until 2050. Covered by these plans are almost all of the World’s countries, and a majority of these actions are connected with the economy and sustainable development. The Western Balkan region has recently started implementing Eco laws and trying to make the environment more energy efficient. The WB countries have also undergone serious economic improvement in the environmental field. This paper analyses the progress of the Western Balkan countries, its onset and implementation, as well as plans for future economic investment. The countries that will be analyzed are Albania, Bosnia & Herzegovina, Montenegro, North Macedonia, and Serbia. The analyses in the paper include the presentation of legal regulations and the economic perspectives of the plans that need to be implemented in these countries, as well as their investment potential concerning the green economy. Since all of these countries tend to become members of the EU in the future, these results would be compared with the average measures performed by the EU countries. The paper hypothesizes that Western Balkan countries have lower average rates than EU countries, and would have to focus not only on making a more stable legal perspective concerning Eco laws, but also a more environmentally stable economy.

*E-mail: jelenasogorov@fepps.edu.rs

Article info: Received: August 26, 2021 Correction: November 11, 2021 Accepted: March 17, 2022

Keywords: Western Balkans, Environmental economy, Government.

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VUČKOVIĆ. Š. J., PIKSIADES. D., TRIFUNOVIĆ. I.  GOVERNMENTAL INVESTMENT INTO THE ENVIRONMENTAL ECONOMY IN THE WESTERN BALKAN

INTRODUCTION Climate change is one of the biggest issues that has been at the height of our concern for decades.

Gas emissions and global warming are particularly concerning and do present very big threats that need to be solved as fast as possible. These threats can only be escalated in a united governmental front that needed to include most of the world countries. That is why the UN organizes annual COP conferences, which have the task of making an agenda and pursuing it within the shortest possible period. Also, the UN started organizing ICPP conferences whose purpose is to form a consistent plan of protecting the environment against climate change, as well as to create special regulations that are in line with the UN’s plan (Арежина; Дардури, 2018). During the Paris Accords, essential points for the coordinated action plan to limit global warming and reduce it to pre-industrial levels, or as low as possible, were agreed upon and this task is to be completed before 2050. (Ji & Zhang, 2020). The EU has also devised multiple plans and taken serious action when it comes to climate change. The plan is known as the "Three-Twenty plan", which has a task to lower all kinds of environmental threats by 80%. Investments in various environmental projects, as well as raising social awareness, are key ways to achieve the goals that have been set over the years, and it is one of the defining factors which will impact future developments (Piksiades, 2020).

Ecology represents a very broad scientific field that spans both ways of the "science spectrum", involving both natural and social sciences. In the social sphere, ecology has become one of the key components of politics, law, and the economy. All of these social sciences have recognized problems beholding our planet and tried to resolve them. Green, or environmental, economy is an area of the economy whose goal is to improve general living economic parameters while protecting the environment and minimalizing the risk of environmental problems (Terdiman, 2012). In the recent period, ecology has become one of the most important topics, especially during the COVID-19 pandemic, making clean energies a priority and main focus (Claire, 2020). The economy is at the center of climate change and it cannot be separated from it. It is essential for climate change to be reversed and escalated to the farthest extent possible. The economy represents one of the main pillars of the EU, and it is the reason why multi-governmental cooperation has reached its highest point. Sustainable development has also been adopting eco- standards, mainly because of the protection of our environment and creating a better standard of living for European citizens (Lilić, Drenovak-Ivanović, 2014). The concept of a Green Economy was framed and presented in Rio, 1992, at the COP conference held by the UN. After that, it became a base for future green deals and potentially one of the most important milestones that countries need to meet to preserve their environment. The main focus of a Green Economy is sustainable development. Sustainability is a key factor that plays an important role in environmental and governmental areas, raising awareness of a healthier environment and usage of renewable resources (Gašić, 2013). This, however, cannot go unregulated. Environmental performances and actions have to have a clear legal frame that could be reached through reforms and policymaking, which has not been the interest of many countries until recently (Rapsikevicius, et al., 2021). The EU, being a political and economic actor, encourages countries that will potentially join the Union to have stable and developed economic regulations and markets. It represents a driving force that urges countries to further their development, as well as to make it faster so that the economic integration would happen as fast as possible (Głodowska and Pera, 2019). One of those key aspects is sustainable development. Under sustainable development, we would consider a mix of care for the living world on our planet, as well as maintaining the capacity of natural resources, and using them for social and ecological challenges.

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For the environmental economy to function, the Government of the country needs to have imposed sufficient laws. These laws must be effective, efficient, administratively easily enforceable, and politically acceptable (Šogorov Vučković, 2020). Policymaking in the field of environmental protection has been more frequent in the last few years. However, the ones that are researching and implementing these laws have been working on them for decades, designing implementation plans that would be most effective (Dressel et al., 2021). In this case, government influence and investment are crucial. Direct and indirect government investments are also necessary for competitive development and improvement, bringing new advancements into human resources and technologies alike (Thongsri and Chang, 2019).

METHODOLOGY Empirical research, carried out in numerous studies, shows that sustainable development is in direct correlation with the development of the country and its sustainability scores, which include developments in the economy, policymaking, medical care, and other social aspects (Demidova et al., 2021).

The methodology that will be used consists of combined scientific methods that include analytical, deductive, inductive, and generalization methods. Method of generalization will be used to explain what the Western Balkans are, therefore it will be used in the pure theoretical sense. This method will be used minimally. Mostly the paper will consist of analytical methods. It will examine how the governments of the Western Balkans act on the opportunity of making their respected countries have better and greater green economic standards. For the basis of every analysis, a report will be used that shows the annual progress of the aforementioned country. If the report of a country is not available, the analysis will be carried out solely on available reports, that is the EU annual report and the UN report. The green economy is a very big field and does involve a lot of fields to be covered and analyzed.

For the sake of this paper, we have decided to give each country overview in six key fields: Renewable Energy Sources, “Green” (or Eco) infrastructure, Sustainable transport, Water Management, Waste Management, Land Management. All of the statistics will be shown in tables, one for each country, and contrasted with the results achieved by the EU. That will give a perspective of how close, or far, Western Balkan countries are to reaching the development needed to fulfil requirements to join the EU, and what their development has been like lately. Governmental subsidies play a vital role when it comes to development.

Western Balkans The Balkan region is a fairly large landscape spanning Southern Europe. This region has been a valuable historically-political and economic region for centuries. Politically speaking, the Balkans have been at a crossroads of the Orient and Western Europe, a unique mix of conservatively-traditionalistic and Pro-European societies (Todorova, 2006). During the 20th century, the Balkans were under democratic, then mostly under Socialist rule. After the fall of the Berlin Wall, the countries again had democratically elected leaders and started their transition and the process of joining the EU. Economically, the Balkan region has been an important crossroad for trade since Roman times. Therefore, Balkans have always been one of the key economic regions that supply Europe with multiple goods from the East as well and vice versa.

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The term Western Balkans, political in its nature, has been given to the countries that are located in the Balkans but still are not a part of the EU. Those countries are Albania, Bosnia & Herzegovina, Montenegro, North Macedonia, and Serbia. The Western Balkans represent a turbulent political, economic, and geographical region. Geographically speaking, the biggest part of the Western Balkan region was part of Yugoslavia (SFRY), thus sharing the economic and political area of one sovereign country. That was all made more difficult after the devolvement of Yugoslavia.

In a political sense, the countries of the Western Balkans have many unresolved issues among themselves, some even stemming from the Socialist period. Most of these problems have escalated, or have been created, during the 1990s. Many of those issues have not been resolved yet. After the fall of Socialist governments, countries in the Western Balkans entered a period of transition. Democratization of these, once authoritarian, systems lead to the desire of joining the EU, which was at the time open for enlargement. Some problems were resolved, and some have remained. One of the biggest problems of expanding the EU into the territories of the Western Balkans is the poor economic, social and political outlook; people are “voting with their feet” by joining the regional mass migration drive towards the EU countries (Bonomi, 2018). These are the main reasons why policymakers in the EU are quite cautious when deciding on the enlargement into the Western Balkans, even though the situation in the Western Balkans has improved very much over the last decade, especially in economic terms. However, there are still a few key issues that countries in the Western Balkans have to resolve, environmental issues and the enforcement of environmental policy being the most difficult ones. In the EU negotiation chapters, no. 27 is reserved for Environmental policies and climate change issues. It is designed to encourage countries that will be joining the EU to make their environment cleaner and more energy-efficient and to enforce sustainable development. Upon joining the EU, countries of the Western Balkans will need to implement all of the necessary procedures and ensure the fulfilment of all the agreements of communities of the Union (Čavoški, 2007). Environmental regulations represent one of the most important aspects when it comes to implementing green innovations, and they are needed to protect our environment. That can be achieved by imposing limitations on environmental goods since they are public property (Feng, Z.; Chen, W.; Rosen, 2018).

Economically, Western Balkans are connected and intertwined with various trade routes and economic cooperation. All of the countries do participate in the Berlin Process that started in 2014.

The Berlin Process has a task to maintain the sustainability of the Western Balkans, support the ongoing reforms, and enhance the cooperation among the regional countries (Marjanović & Rudan, 2018).

Multiple conferences were organized over the years, and there were significant developments in that field1. Even though the Berlin process was supposed to last until 2018, it continued in the years after as well. The ideal outcome of this process would be for the countries to work together and devote themselves to resolving regional issues (Марјановић, Рудан, 2019). In one way or another, the Berlin Process was quite successful from the perspective of economic relations among the countries. It has directly influenced the formation of a Regional Economic Area (REA), known better as the “Mini-Shengen”.

This area had a task to ensure the implementation of the "Four Freedoms" of the EU (the movement of goods, people, labor, and investment/services), especially because the Western Balkan market has almost 20 million people and could be good for new foreign direct investment, which would result in economic prosperity (Đukanović & Đorđević, 2020). One of the key issues in this agenda is solving the problem of implementing environmental policies and building a system that is more focused on sustainable development.

1

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More than 50 billion Euros have been donated to the cause of sustainable development and energy efficiency in the Western Balkans

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The EU proposed 5 Green agendas that need to be fulfilled by the Western Balkan countries: de-carbonizing, clean energy production with sustainable development, recycling, biodiversity, and decreasing air/water/soil pollution (Commission Staff Working Document, 2020). Western Balkan region has big problems when it comes to domestic investments, high rate of unemployment, foreign debt, trade dependency, and low-income production (Рапаић, 2021). A great example that the Western Balkans have is Hungary, whose institutional approach, intelligence distribution, and government involvement led to the development of the country's eco politics (Varjú, 2020).

Albania Albania is the only country in the Western Balkans that was not part of the former Yugoslavia, but it was a part of the Socialist block and was regarded as one of the poorest in Europe back in that period.

The transition meant that Albania would switch to a more open economic system and would become part of the free market. When we look at the environmental politics in Albania, it is still somewhat in its infancy, just like in most of the Western Balkan countries. The country has a lot of various natural resources, which need to be protected and responsibly distributed (Mullaj et al., 2017). The EU annual report for 2020 states that Albania made limited progress when it comes to environmental protection; legislations have been adopted in accord with European standards2, yet still some areas need to be addressed and laws implemented according to European standards3 (Commission Staff Working Document, Albania, 2020). The biggest problem Albania faces is a lack of government funding for various projects. There are no government funds that are specialized for financing environmental projects (UNECE, 2018).

With regard to renewable energy sources, Albania has made significant progress in the last few years. The Environmental Law that came into power in 2017, states and guarantees transmission and distribution of electricity from renewable energy sources (RES) and priority access to the transmission and distribution grids (UNECE, 2018). Most of the country's RES, exactly 95%, come from hydropower.

Renewable energy represents one of the most important areas of investment regarding the green economy, and great efforts need to be put in to implement it (Ji and Zhang, 2019). That puts Albania in front of many European countries that use RES. The government has got around 100 million Euros of donations over the last few years, which can be put into funds to increase RES numbers. Since there are no Environmental funds, environmental infrastructure relies heavily on foreign funds and donations.

In a two-year period (2016-2018) Albania invested a total of 74,350,9024 billion Lek (UNECE, 2018).

Only a small portion came from government investments. When it comes to sustainable transport, Albania has made a significant move with regard to this very important part of the green economy.

The country has devised and started implementing the Plan for Sustainable Transport (2016-2020), which includes road infrastructure and transport improvements, both public, and transit (UNECE, 2018). So far the country has started building new railways and motorways, as well as using eco-friendly transport in multiple municipalities. Water Management represents one of the most important green economic fields, and it is also one of the most used in Albania. The waste-water treatment still needs to proceed with the completion and adoption of the remaining river basin management plans, including the transboundary consultations (Commission Staff Working Document, Albania, 2020). Waste Management represents a great problem in Albania.

2 3

Legislations of water management, environmental crime, and civil protection Waste management, water, and air quality, and climate change

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In the past, Albania even used to import waste from other countries, but that trend has ended. The recommendation from the EU is to promote recycling and reuse of waste, as well as to prevent waste generation remain limited (Commission Staff Working Document, Albania, 2020). Land Management is similarly not such a strong asset of Albanian policy. According to the reports, 22.31 % of the land in Albania is arable, which is lower than the EU average (UNECE, 2018). When it comes to waste management, especially the waste produced by gas, just like developed countries, Albania needs to look after that. It has to find safe storage to deal with remaining CO2, and thus preserve its environment (Roduner and Rohwer, 2021).

Table 1. Waste management Country

Recycling municipal waste (%)

Albania

13%

Bosnia and Herzegovina

(no results)

Montenegro

5%

North Macedonia

(no result)

Serbia

5-8%

EU (average)

47.5%

Source: Eurostat

Bosnia and Herzegovina Bosnia and Herzegovina was once a part of Yugoslavia. In recent decades, especially after the civil war that took part on the countries’ territory, the economic and political situation has become difficult.

Being as it is, Bosnia and Herzegovina is the only country in the Western Balkans that has not received a candidate status from the EU. The country is also lagging in environmental practices in comparison with the EU member states (United Nations, 2020). According to the EU Commission report, Bosnia and Herzegovina is still in its early stage of preparation in the area of environmental and climate change, and they have a very limited advancement in the area (Commission Staff Working Document, Bosnia and Herzegovina, 2020). As long as the economy of Bosnia and Herzegovina is concerned, it is not in any danger of inflation, since the inflation numbers are quite low, but there are, however, other issues.

The country has high current account deficits and elevated unemployment levels that create serious problems for the country (UNECE, Bosnia and Herzegovina, 2018). A very big problem in Bosnia and Herzegovina is the aspect of law and government organization. Since it is a decentralized country, there is no environmental protection law in effect. That leaves the policy framework without strong legislative control (Blau & Janssen, 2020), which, unfortunately, might have an impact on political positions in the country. From society's point of view, pro-environmental behaviors are more likely to have positive feedback from the community (Clayton et al., 2021). When it comes to international cooperation, Bosnia and Herzegovina needs to extend its approach. That way the policies can be implemented more efficiently and it would be possible to form intergovernmental organizations that would implement various projects (Persson and Runhaar, 2018).

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Regarding renewable energy sources, Bosnia achieved a very good result in the previous year. A total of 36% in gross final consumption was calculated (Commission Staff Working Document, Bosnia and Herzegovina, 2020). As long as green infrastructure is concerned, Bosnia and Herzegovina has a big problem. The report by SCP outlines that companies are not implementing environmental procedures that are in line with the EU (Blau & Janssen, 2020), while the EU Commission report states that energy infrastructure is undeveloped or non-existent (Commission Staff Working Document, Bosnia and Herzegovina, 2020). Also, there is a big problem with regulations related to the environmental infrastructure. Bosnia and Herzegovina never imposed any law in that field. Sustainable transport is one of the key fields in which Bosnia and Herzegovina are lagging behind the EU. It still has very high CO2 emissions, and there is a lack of funds and people when solving this big problem. Also, the quality of roads, as well as the network of roads is still insufficient to cover all of the needs the country has.

Regarding water management, the situation in Bosnia and Herzegovina is better. The country has a lot of water resources, but they are not used appropriately and can be considered neglected from the perspective of environmental policy. The recommendation of the EU is to devise a consistent and harmonized countrywide strategy and investment plans on water management that would include implementing legislation and monitoring (Commission Staff Working Document, Bosnia and Herzegovina, 2020). Water management would be a direct result of the project in the field of water management and would determine the levels of pollution precisely (Karczmarczyk, 2021). Waste Management is a major problem in Bosnia and Herzegovina. The country does not have any plans and it is not in the process of developing one. The biggest problems are landfills that are not managed and are constantly getting bigger. Land Management is one of the factors that can be used for good advantage in Bosnia and Herzegovina. With more than 43% of agricultural land, Bosnia and Herzegovina has the potential to reinforce good regulations and manage their land following the EU regulations.

Table 2. Environmental Infrastructure Country

Motorways/railways (km/lines per 1000 km)

Albania

No data/12.2

Bosnia and Herzegovina

198/20

Montenegro

No data/18.4

North Macedonia

287/27.4

Serbia

963/48.1

EU (Total)

Approx. 75.000/ approx. 210.000

Source: EU Commission report

Montenegro Montenegro is also one of the Ex-Yugoslav states that did not have any environmental regulation until recently. The country had been a part of the State Union Serbia and Montenegro until 2006 when it declared independence. Currently, the country has a candidate status for joining the EU. Based on the latest report of the EU, it has been suggested that Montenegro should considerably increase goals when it comes to environmental regulations (Commission Staff Working Document, Montenegro, 2020). Montenegro has made a significant improvement regarding the environmental policies and implementation of green economy, and they were determined to adapt their policies in accordance with EU standards (Eironet, 2019).

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Generally, Montenegro has been on the right track in regard to renewable energy sources, performing better than any other country in the Western Balkans. However, even this has represented a downward trend in Montenegro in the last year, which is the lowest figure since 2008 (Commission Staff Working Document, Montenegro, 2020). Also, the government has yet to adopt a plan for renewable energy and enforce it in the best way possible. The environmental infrastructure is fairly good, but a majority of projects need to be realized. They have also imposed multiple regulations in this field. Some projects are already underway and their goal is to transform Montenegro into an exporter of electric power, as well a key transit route (Commission Staff Working Document, Montenegro, 2020). Making new renewable energy structures has had a large impact on urbanization in the country. It can be said that these urbanizing projects have had a positive impact on social, ecological, and economic systems (Blanco et al., 2021). As for sustainable transport, one of the most important is the Adriatic-Ionian expressway, which is needed both to fasten transport of goods and to make the country a transit for economic goods.

The government has invested much in building the expressway so that the country can be connected with the rest of Europe faster, and in a more efficient way. Water Management is one of the strongest assets of environmental economics and policy implementations in the country. All the requirements were met and the work on infrastructure has already begun. On the Adriatic sea, all of the hydropower components have been arranged, as well as the software. Waste Management is not a strong field in the eco-policy or economic policies of Montenegro. It is partially aligned with the EU's policy, and therefore the model and the modalities of its implementation remain to be clarified (Commission Staff Working Document, Montenegro, 2020). Land Management is not one of the strongest assets of Montenegro’s environmental economy. What is significant for the whole region, and Montenegro is no exception, is the negative approach when it comes to rural areas and their transformation into modernized environments (Kosanović, et al., 2019). The country has a rather low agricultural land percentage, and that represents something to be worked on in the future. When it comes to energy, the government should push for further technological innovation which will eventually make the environment cleaner, as well as reduce costs of energy production (Hua and Wang, 2019). Montenegro does not have a big problem with implementing regulations, but with assessing them. Accordingly, the country needs to have a detailed risk analysis, as well as problem-solving, based on previous testing and potentially new one (Edenhofer and Kowarsch, 2015).

Table 3. Renewable energy sources Country Albania

95%

Bosnia and Herzegovina

No data

Montenegro

64.4%

North Macedonia

26.1%

Serbia

28%

EU (average)

36%

Source: EU Commission report

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RES in use (%)

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North Macedonia North Macedonia represents one of the least developed parts of former Yugoslavia. The rugged terrain and a fairly big probability of natural disasters have predetermined the country as not being very fit for industrial prosperity. That aspect aside, North Macedonia is a very important transit country, connecting some very big ports in the South with the rest of Europe. As for the governmental segment, North Macedonia had a lot of political turmoil, but it managed to resolve them. Now, North Macedonia has a fairly stable government, as well as the Ministry of Environment that has started to impose some very important laws.

Renewable energy does not represent a strong economic aspect of North Macedonia. The country has not met the set requirements, but the Parliament has voted in some important laws on RES. The EU requests that investments in hydropower should be aligned with EU standards (Commission Staff Working Document, North Macedonia, 2020, 108). North Macedonia had a significant problem with environmentally-friendly infrastructure. The government did put in a lot of money into this segment, but it was not enough. The recommendation of the EU is that this field should be subsidized more heavily, especially the projects related to hydropower, mining, and infrastructure (Commission Staff Working Document, North Macedonia, 2020). Sustainable transport is also an undeveloped area in North Macedonia’s environmental economy sector. The government did enlarge its network of roads, but it did not use any funds from the EU. That should have been taken more seriously and with far greater observance. The country has made a significant improvement regarding the usage of hydropower and water management, but there is still much to be done. Administrative capacity and inter-institutional coordination need to be aligned with the standards of the EU, because, currently, they are not strong enough (Commission Staff Working Document, North Macedonia, 2020). Similarly, the improvements in the field of waste management still represent a problem in North Macedonia. There needs to be an increase in economic incentives to promote recycling and the prevention of waste generation (Commission Staff Working Document, North Macedonia, 2020). Land Management is one of the fields where North Macedonia did make significant progress, especially on rural land. The EU Commission ruled that the country made good progress in implementing the pre-accession assistance program for rural development (Commission Staff Working Document, North Macedonia, 2020). For the development of the country, there needs to be a strong managerial structure. That should be encouraged by the coordinating bodies, which would further encourage competitions, as well as social and environmental projects, thus leading to overall better performance (Martínez-Ferrero and Lozano, 2021). What still represents a large problem is the burning of fossil fuels in the country. This is a regional problem that contributes to the rise of carbon dioxide in the atmosphere, as a consequence of various economic activities, which need to be limited (Blagojević, et al., 2020).

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Table 4. Water Management Country

Hydropower (MW)

Albania

95

Bosnia and Herzegovina

No data

Montenegro

70

North Macedonia

62

Serbia

100

EU (average)

650

Source: EU Commission report

Serbia Serbia represents one of the leaders in the Western Balkan area when it comes to economic investment. Formerly the industrial and political center of Yugoslavia, Serbia, with its capital Belgrade, has been one of the most important and influential economic hubs in the region. The economy of the country was slowed down by sanctions that were imposed during the 1990s, but it entered the transition period in the early 2000s. That transition meant that Serbia would start its negotiations for the EU membership, which was considered to be the main reason of general stability and country consolidation (Базић, Бујвид Курек, Обрадовић, 2019). When the Republic of Serbia was formally formed in 2007, the country embarked on a path of building its economic system in which environmental protection, and investment in the green economy, was a major factor. Today Serbia is one of Europe's most investmentprone countries, giving out high subsidies to big foreign investors. The biggest investor in Serbia by far is the EU. When it comes to environmental protection and investments, the Government of Serbia is focused on this problem. After the 2020 election, in her Assembly address, the prime minister pointed out that the country would invest in a green economy. Substantial investments have been put into projects related to the distribution of electricity, as well as into the modernization of energy distribution systems (Government of Serbia, 2020). Following that, the EU also regards it as very important to encourage green economic growth, especially the one based on the relations of the economy that rely on knowledge and innovations (Jovanović, Stojković Zlatanović, 2020). The government should invest more into a green economy, which would secure more stable budget resources (Grupa autora, 2017). Serbian Government is the only government that is transparent when it comes to publishing data about current investment in the environmental economy and sustainable development. The budget for this year will be 121 million Euros4. Although the environment is one of the key areas of investment in Serbia, no significant environmental investments were made in the previous year. Serbia needs to improve its sustainable development, which will directly influence the development of new technologies and embrace further innovation (Guo, et al., 2018). Regarding various political movements, we have witnessed a resurgence of the environmental movement in the last few years. Their philosophy is purely environmental and tends to be apolitical, even though their leaders can have left-wing and right-wing political aspirations (Matkovic, 2021).

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When it comes to renewable energy sources, Serbia has made significant improvements so that the country's primary legislation is now compliant with the EU’s third energy package (Commission Staff Working Document, Serbia, 2020). However, further progress is needed in this area. Serbia has set its target for RES to be 27% by 2020, which it has already reached, but further measures should be taken in order to reach the 40% needed by 2030. As long as the environmental infrastructure is concerned, Serbia is the leading country in the region in the number of motorways and railways. Consequently, the EU has concluded that Serbia has been attracting significant foreign direct investment, well above the region’s average and gradually rising in the last few years (Commission Staff Working Document, Serbia, 2020). Although sustainable transport is one of the areas in which Serbia has been making improvements over the years, there is still room for enhancement. Representing an important transit road for all of the transport coming from Southern and Eastern Europe, Serbia must impose regulations that favor the country’s attracting more transport. What poses a rather big problem for Serbia is Water Management. Even though natural resources do allow this aspect to have much better results, Serbia has not made significant progress. Therefore, the country should be in line with EU environmental legislation, including environmental impact assessments with proper public consultations, nature protection, and water management legislation (Commission Staff Working Document, Serbia, 2020). Another serious issue Serbia has to address is waste management. The recycling rates are too low, which implies that much more investment is required. The country has adopted multiple laws and regulations in the area, but there is yet room for improvement. Land Management is yet another problem for Serbia. In terms of agricultural, the country has a lot of fertile land, which is not used to its fullest potential. There is a plan to strengthen this field of economy, and the EU has suggested that it should now be extended over a wider area without delay (Commission Staff Working Document, Serbia, 2020).

Table 5. Sustainable transport Country

Road share of inland freight transport (t/km,%)

Albania

No data

Bosnia and Herzegovina

No data

Montenegro

55.7

North Macedonia

97.2

Serbia

63.1

EU (average)

53

Source: EU Commission report

CONCLUSION Countries of the Western Balkans have all made significant progress over the last few years in terms of environmental protection and economy. However, they still do lag behind the EU countries. Some fields are especially alarming and need to be addressed on the level of the whole region: Transparency, waste management, and Government investments. With regard to transparency, it represents the major problem for all of the Western Balkan countries, especially Bosnia and Herzegovina. In all of the countries, the only fully credible report was given by the EU Commission, i.e. individual countries did not publish their reports on environmental issues and development. That trend needs to change in order 131

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to have a full picture of the environmental overview. Regarding waste management, all of the countries need to have better rates of recycling. One great solution is to have a Regional Recycling Center, which will then improve the rates of all countries. This plan has been spoken of but never put into action. The last aspect that urgently needs to be addressed is Government investment. Even though we do not have reports on how much money some countries in the Western Balkans spend on investment, based on the results of the report, we firmly believe that it needs to be increased drastically. All of the Western Balkan countries have received significant funds from the EU when it comes to environmental investment, but that money needs to be put to better use and in a larger amount. Putting a larger portion of their GDP into environmental investment will do good for the countries and bring them closer to becoming a EU member. Other aspects also require improvement, but these three are very important, and the Western Balkan countries have shown very small improvement rates. Water management should be improved by using more hydropower to produce electricity, which all of the countries in the Western Balkans are capable of. Furthermore, Land management should be improved by increasing the number of agricultural lands. This is possible to achieve with good Government subsidies. Transport and infrastructure represent areas in which the smallest improvements and effort are needed, but are still required. More direct Government investment is needed, which will increase the number of railways and motorways in the whole region. Especially when addressing the infrastructure, the net of motorways and railways has significantly increased, and their standards are in line with the ones of the EU. Using these strengths will not only bring the Western Balkans closer to the EU, but it will strengthen the economy of all the countries as well.

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Development of Methodology and Assessment of Ecological Safety of the EAEU and CIS Regions in the Context of Sustainable Development. Economies, 9(3), 100. https://doi.org/10.3390/economies9030100 Dressel, S., Sjölander-Lindqvist, A., Johansson, M., Ericsson, G., & Sandström, C. (2021). Achieving Social and Ecological Outcomes in Collaborative Environmental Governance: Good Examples from Swedish Moose Management. Sustainability, 13(4), 2329. https://doi.org/10.3390/su13042329 Edenhofer, O., & Kowarsch, M. (2015). Cartography of pathways: A new model for environmental policy assessments. Environmental Science & Policy, 51, 56-64. https://doi.org/10.1016/j.envsci.2015.03.017 Gašić, M. (2013). Zelena ekonomija. Učenje za poduzetništvo 3(1), 174-180. Retrieved January 5, 2022, from https://hrcak.srce.hr/130308 Guo, Y., Xia, X., Zhang, S., & Zhang, D. (2018). Environmental regulation, government R&D funding and green technology innovation: Evidence from China provincial data. Sustainability, 10(4), 940. https://doi. org/10.3390/su10040940 Głodowska, A., & Pera, B. (2019). On the Relationship between Economic Integration, Business Environment and Real Convergence: The Experience of the CEE Countries. Economies, 7(2), 54. https://doi.org/10.3390/ economies7020054 Feng, Z. Chen, W. & Rosen, M. A., (2018). Environmental Regulation, Green Innovation, and Industrial Green Development: An Empirical Analysis Based on the Spatial Durbin Model. Sustainability, 10(1), 223. https:// doi.org/10.3390/su10010223 Grupa autora (2017), Transformacija ekonomije na Balkanu: Promena Javne politike a ne klime, Republika Srbija i opšti pogled na zelenu ekonomiju, Brisel: Green European Foundation. Đukanović, D., & Đorđević, B., (2020). Mali Šengen”– koncept, implementacija i kontroverze. Međunarodni problem, 72, 595-618. https://doi.org/10.2298/MEDJP2003595D Jovanović, P., Stojković Zlatanović, S., (2020). Izazovi održivog razvoja u Srbiji, Beograd: Institut društvenih nauka.

Hua, L., & Wang, S. (2019). Antecedents of consumers’ intention to purchase energy-efficient appliances: An empirical study based on the technology acceptance model and theory of planned behavior. Sustainability, 11(10), 2994. https://doi.org/10.3390/su11102994

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Ji, Q., Zhang, D. (2020). How much does financial development contribute to renewable energy growth and upgrading of energy structure in China?. Energy Policy, 128, 114-124. https://doi.org/10.1016/j.enpol.2018.12.047 Jia, X., & Duić, N. (2021). Advanced methods and technologies towards environmental sustainability. Clean Technologies and Environmental Policy, 23(3), 709-710. https://doi.org/10.1007/s10098-021-02024-z Karczmarczyk, A., Bus, A., & Baryła, A. (2021). Assessment of the efficiency, environmental and economic effects of compact type on-site wastewater treatment plants—results from random testing. Sustainability, 13(2), 982. https://doi.org/10.3390/su13020982 Kosanović, S., Folić, B., Kovačević, S., Nikolić, I., & Folić, L. (2019). A study on the sustainability of the traditional Sirinić houses in the Šar Mountain Region, the South-Western Balkans. Sustainability, 11(17), 4711. https://doi.org/10.3390/su11174711 Lilić, S., & Drenovak-Ivanović, M. (2014), Ekološko pravo. Beograd: Univerzitet u Beogradu, Pravni Fakultet.

Retrieved January 25, 2022, from http://www.slilic.com/Ekolosko%20pravo%20-%20 Lilic%20-%20 Drenovak%202013%20(II%20izdanje)%20-%20tekst%2020_%20dec% 202013. pdf Martínez-Ferrero, J., & Lozano, M. B. (2021). The Nonlinear Relation between Institutional Ownership and Environmental, Social and Governance Performance in Emerging Countries. Sustainability, 13(3), 1586. https://doi.org/10.3390/su13031586 Marjanović Rudan, A., (2019). Institucionalizacija Regionalne Političke saradnje kroz Berlinski Proces. Kultura Polisa, 16(40), 113-125. Retrieved January 25, 2022, from https://kpolisa.com/index.php/kp/article/ view/522/489 Marjanović Rudan, A., (2018). The Berlin Process in a Nutshell, Sarajevo: Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH. Matković, A. (2020). The Relation Between Political Ideology and Radical Environmentalism. Српска политичка мисао, 70(4), 171-187. https://doi.org/10.22182/spm.7042020.9 Mullaj, A., Hoda, P., Shuka, L., Miho, A., Bego, F., Qirjo, M., (2017). About green practices for Albania. Albanian Journal of Agricultural Sciences. Special edition 16, 31-50.

Ooba, M., Hayashi, K., Fujii, M., Fujita, T., Machimura, T., & Matsui, T., (2015). A long-term assessment of ecological- economic sustainability of woody biomass production in Japan. Journal of Cleaner Production, 88, 318-325. https://doi.org/10.1016/j.jclepro.2014.09.072 Persson, Å., & Runhaar, H. (2018). Conclusion: Drawing lessons for Environmental Policy Integration and prospects for future research. Environmental Science & Policy, 85, 141-145. https://doi.org/10.1016/j. envsci.2018.04.008 Piksiades, D., (2020). Progress in Fulfilling the requirements of the Paris Agreement on Climate Change in the Western Balkans. Post-Socialist transformation of the City, Novi Sad: University of Novi Sad, Faculty of Philosophy, Department of Sociology, 167- 185.

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Documents/Reports Blau, Avi, Janssen, Camille, (2020). Bosnia and Herzegovina, Country Profile. Barcelona: SCP/RAC. Government of Serbia: Program of the Government of the Republic of Serbia of the Candidate for Prime Minister Ana Brnabić, National Assembly of the Republic of Serbia. 28th October 2020.

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Commission Staff Working Document (2020). Bosnia & Herzegovina 2020 Report. Accompanying the Communication from the Commission to the European Parliament, the Council, the European Economic, and Social Committee, and the Committee of the Regions, Brussels: European Commission.

Commission Staff Working Document (2020). Montenegro 2020 Report. Accompanying the Communication from the Commission to the European Parliament, the Council, the European Economic, and Social Committee, and the Committee of the Regions, Brussels: European Commission.

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DRŽAVNE INVESTICIJE U EKONOMIJU ŽIVOTNE SREDINE NA ZAPADNOM BALKANU Rezime: „Zelena ekonomija“ jedna je od ključnih agendi koje vlade širom sveta žele da postanu. Poslednjih nekoliko decenija bilo je kritično za prepoznavanje ovog velikog problema i predstavljalo je važan deo u anuliranju efekata koji su na našoj planeti doneli ljudi, kao i drugi prirodni faktori. Vlade su osmislile više planova za sprovođenje propisa kojima bi se zaštitila životna sredina, a većinu ovih planova predvodili su Ujedinjene nacije (UN) i Evropska unija (EU). Oni su osmislili nekoliko planova koji imaju zadatak da minimiziraju ili eskaliraju efekte globalnog zalaganja do 2050. godine. Ovim planovima obuhvaćene su gotovo sve zemlje sveta, a veličina ovih akcija je povezana sa ekonomijom i održivim razvojem.

Region Zapadnog Balkana nedavno je počeo da primenjuje ekološke zakone i pokušava da životnu sredinu učini energetskim efikasnošću.

Zemlje ZB su takođe postale značajna ekonomska poboljšanja u oblasti životne sredine. Ovaj rad će analizirati napredak zemlje Zapadnog Balkana i način na koji su započeli, implementiraju i šta se planira učiniti za buduća ekonomska ulaganja. Zemlje koje će se analizirati su Albanija, Bosna i Hercegovina, Crna Gora, Severna Makedonija i Srbija. Analize u radu obuhvataju prikazivanje zakonskih propisa i ekonomsku perspektivu planova koje je potrebno sprovesti u ovim zemljama, kao i njihov investicioni potencijal kada je u pitanju zelena ekonomija. Budući da sve zemlje ZB teže da postanu članak EU u budućnosti, ovi rezultati bi se uporedili sa prosečnim rezultatima koje sprovodi zemlje EU. Hipoteza rada je da zemlje Zapadnog Balkana imaju niže prosečne stope od zemlje EU, te da bi se morale fokusirati na stvaranje stabilne pravne perspektive kada su u pitanju ekološki zakoni, kao i na ekološku stabilnost.

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Ključne reči: Zapadni Balkan, Ekološka ekonomija, Vlada.

CIP - Каталогизација у публикацији Народна библиотека Србије, Београд 33

The EUROPEAN Journal of Applied Economics / editor-in-chief Žaklina Spalević.

- Vol. 12, No. 1 (2015)- . - Belgrade : Singidunum University, 2015- (Belgrade : Caligraph). - 28 cm Polugodišnje. - Je nastavak: Singidunum Journal of Applied Sciences = ISSN 2217-8090.

Drugo izdanje na drugom medijumu: The European Journal of Applied Economics (Online) = ISSN 2406-3215 ISSN 2406-2588 = The European Journal of Applied Economics COBISS.SR-ID 214758924

Vol. 19 Nº 1

journal.singidunum.ac.rs

Vol. 19 Nº 1 APRIL 2022 journal.singidunum.ac.rs

The Impact of COVID-19 Pandemic on Work Organization pp. 1-15

Internal Audit in COVID-19 Environment: Key Aspects and Perspectives of Remote Auditing pp. 30-41

GDPR and Challenges of Personal Data Protection pp. 55-65

Employees Motivation and Managerial Coaching During the Pandemic COVID-19 at the Research Institute pp. 16-29

Smart Economic Development Within European Countries pp. 42-54

Exploring the Influence of Instagram on Travel Destination Choice pp. 66-80

Global Distribution Systems Versus New Distribution Capability and Internet of Things pp. 81-97

Economic Justification of Applying Information Technologies to the Creation of Smart Citi pp. 98-109

Governmental Investment Into the Environmental Economy in the Western Balkan pp. 121-136

2022

Understanding the Behavioural Intention to Adopt Internet Banking: An Indian Perspective pp. 110-120