V10(1) International Transaction Journal of Engineering Management & Applied Sciences & Technologies

Page 1

International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies Volume 10 Issue 1 (2019) ISSN 2228-9860 eISSN 1906-9642

http://TuEngr.com

A STUDY OF THE CONVERGENCE OF THE BEZOUT COEFFICIENTS SEARCH ALGORITHM CHALLENGES OF EGOVERNMENT IMPLEMENTATION IN THE NIGERIAN PUBLIC SERVICE METHODOLOGY OF CONSTRUCTION AND TREND SHAPING FOR ECONOMIC PROFILE OF POVERTY ANALYSIS OF CLIENT DEPENDENCE (CD) AND VENDOR INNOVATION (VI) AND THE MODERATING ROLE OF THE CORPORATE CULTURE CONCEPTUAL APPROACHES TO ECONOMIC RISK MANAGEMENT AT THE ENTERPRISES OF AGRO-INDUSTRIAL COMPLEX IN BELGOROD REGION EFFECT OF CORPORATION STRATEGY ON MARKET REACTION TO EARNING IN THE ACCEPTED CORPORATIONS OF TEHRAN STOCK EXCHANGE STATISTICAL-BASED ANALYSIS ON EFFECTS OF THE DIMENSIONS OF HUMAN CAPITAL ON MARKETING CAPABILITIES IN PRIVATE BANKS MULTI-CRITERIA STATISTICAL-BASED ANALYSIS ON THE EFFECT OF OWNERSHIP STRUCTURE AS A MODERATING FACTOR ON THE RELATIONSHIP BETWEEN FREE CASH FLOW AND APPLYING THE SUITABLE ASSETS ACCURACY ASSESSMENT OF L-BAND ATLAS GNSS SYSTEM IN THAILAND ROLLER BEARING FAULT DETECTION USING EMPIRICAL MODE DECOMPOSITION AND ARTIFICIAL NEURAL NETWORK METHODS REGIONAL ECONOMIC COMPLEX MANAGEMENT FEATURES OF RUSSIA DEVELOPING AN EVIDENCE-BASED STRATEGIC DECISIONMAKING MODEL IN INSURANCE COMPANIES ECOLOGICAL SETTLEMENTS AS ONE OF PERSPECTIVE FORMS FOR RUSSIA RURAL TERRITORY MULTIFUNCTIONAL DEVELOPMENT

MECHANICAL STRENGTH EVALUATION OF PULSED NDYAG LASER WELDING OF AUSTENITIC STAINLESS STEEL 304L Cover photos are Schematic diagram of the designed multilayer perceptron (MLP) and Confusion matrix using a test set data (neural network output), in this issue paper, entitled ROLLER BEARING FAULT DETECTION USING EMPIRICAL MODE DECOMPOSITION AND ARTIFICIAL NEURAL NETWORK METHODS, by Zarekar et al.

2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies.

International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies http://TuEngr.com

International Editorial Board

Editor-in-Chief Ahmad Sanusi Hassan, PhD Professor UniversitiSains Malaysia, MALAYSIA

Executive Editor BoonsapWitchayangkoon, PhD Associate Professor Thammasat University, THAILAND

Editorial Board:

Assoc. Prof. Dr. Mohamed Gadi (University of Nottingham, UNITED KINGDOM) Professor Dr.Hitoshi YAMADA (Yokohama National University, JAPAN) Professor Dr. Chuen-Sheng Cheng (Yuan Ze University, TAIWAN ) Emeritus Professor Dr.Mikio SATOMURA (Shizuoka University, JAPAN) Professor Dr.Chuen-Sheng Cheng (Yuan Ze University, TAIWAN) Emeritus Professor Dr.Mike Jenks (Oxford Brookes University, UNITED KINGDOM ) Professor Dr.INyomanPujawan (SepuluhNopember Institute of Technology, INDONESIA) Professor Dr.Toshio YOSHII (EHIME University, JAPAN) Professor Dr.NevenDuić (University of Zagreb, CROATIA) Professor Dr.Dewan Muhammad Nuruzzaman (University Malaysia Pahang MALAYSIA) Professor Dr.Masato SAITOH (Saitama University, JAPAN)

Scientificand Technical Committee & Editorial Review Board on Engineering, Technologies and Applied Sciences:

Associate Prof. Dr. Paulo Cesar Lima Segantine (University of São Paulo, BRASIL) Associate Prof. Dr. Kurt B. Wurm (New Mexico State University, USA ) Associate Prof. Dr. Truong Vu Bang Giang (Vietnam National University, Hanoi, VIETNAM ) Associate Prof. Dr. Fatemeh Khozaei (Islamic Azad University Kerman Branch, IRAN) Associate Prof.Dr. Zoe D. Ziaka (International Hellenic University, GREECE ) Associate Prof.Dr.Junji SHIKATA (Yokohama National University, JAPAN) Assistant Prof.Dr.Akeel Noori Abdul Hameed (University of Sharjah, UAE) Dr. David Kuria (Kimathi University College of Technology, KENYA ) Dr. Mazran bin Ismail (Universiti Sains Malaysia, MALAYSIA ) Dr. Salahaddin Yasin Baper (Salahaddin University - Hawler, IRAQ ) Dr. Foong Swee Yeok (Universiti Sains Malaysia, MALAYSIA) Dr.Azusa FUKUSHIMA (Kobe Gakuin University, JAPAN) Dr.Yasser Arab (Ittihad Private University, SYRIA)

Contacts & Offices: Professor Dr.Ahmad Sanusi Hassan (Editor-in-Chief), School of Housing, Building and Planning, UNIVERSITI SAINS MALAYSIA, 11800 Minden, Penang, MALAYSIA. Tel: +60-4-653-2835 Fax: +60-4-657 6523, Sanusi@usm.my, Editor@TuEngr.com Associate Professor Dr.Boonsap Witchayangkoon (Executive Editor), Faculty of Engineering, THAMMASAT UNIVERSITY, Klong-Luang, Pathumtani, 12120, THAILAND. Tel: +662-5643005 Ext 3101. Fax: +66-2-5643022 DrBoonsap@gmail.com Managing Office: TuEngr Group, 88/244 Moo3 Klong#2 Klong-Luang Pathumtani 12120 Thailand. Tel: +66-99-5535450. Editor@TuEngr.com Postal Paid in MALAYSIA/THAILAND.

©2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies.

:: International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies Volume 10 Issue 1 (2019) http://TuEngr.com

ISSN 2228-9860 eISSN 1906-9642

FEATURE PEER-REVIEWED ARTICLES

A STUDY OF THE CONVERGENCE OF THE BEZOUT COEFFICIENTS SEARCH ALGORITHM

1

CHALLENGES OF EGOVERNMENT IMPLEMENTATION IN THE NIGERIAN PUBLIC SERVICE

13

METHODOLOGY OF CONSTRUCTION AND TREND SHAPING FOR ECONOMIC PROFILE OF POVERTY

27

ANALYSIS OF CLIENT DEPENDENCE (CD) AND VENDOR INNOVATION (VI) AND THE MODERATING ROLE OF THE CORPORATE CULTURE

37

CONCEPTUAL APPROACHES TO ECONOMIC RISK MANAGEMENT AT THE ENTERPRISES OF AGRO-INDUSTRIAL COMPLEX IN BELGOROD REGION

47

EFFECT OF CORPORATION STRATEGY ON MARKET REACTION TO EARNING IN THE ACCEPTED CORPORATIONS OF TEHRAN STOCK EXCHANGE

61

STATISTICAL-BASED ANALYSIS ON EFFECTS OF THE DIMENSIONS OF HUMAN CAPITAL ON MARKETING CAPABILITIES IN PRIVATE BANKS

73

MULTI-CRITERIA STATISTICAL-BASED ANALYSIS ON THE EFFECT OF OWNERSHIP STRUCTURE AS A MODERATING FACTOR ON THE RELATIONSHIP BETWEEN FREE CASH FLOW AND APPLYING THE SUITABLE ASSETS

81

ACCURACY ASSESSMENT OF L-BAND ATLAS GNSS SYSTEM IN THAILAND

91

ROLLER BEARING FAULT DETECTION USING EMPIRICAL MODE DECOMPOSITION AND ARTIFICIAL NEURAL NETWORK METHODS

99

REGIONAL ECONOMIC COMPLEX MANAGEMENT FEATURES OF RUSSIA

111

DEVELOPING AN EVIDENCE-BASED STRATEGIC DECISION-MAKING MODEL IN INSURANCE COMPANIES

119

ECOLOGICAL SETTLEMENTS AS ONE OF PERSPECTIVE FORMS FOR RUSSIA RURAL TERRITORY MULTIFUNCTIONAL DEVELOPMENT

135

MECHANICAL STRENGTH EVALUATION OF PULSED ND-YAG LASER WELDING OF AUSTENITIC STAINLESS STEEL 304L

143

i

©2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies.

International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies http://TuEngr.com

A STUDY OF THE CONVERGENCE OF THE BEZOUT COEFFICIENTS SEARCH ALGORITHM Alisher R. Zhumaniezov a, b* a

Department of Computer Science, Faculty of Electrical Engineering, Kazan Federal University, Kazan 420008, RUSSIAN FEDERATION. b Department of Computer Science and Engineering, Faculty of Electrical Engineering, Czech Technical University in Prague, CZECH REPUBLIC. ARTICLEINFO

A B S T RA C T

Article history: Received 05 September 2018 Received in revised form 26 November 2018 Accepted 07 December 2018 Available online 11 December 2018

Time is very valuable in modern technology era. An important indicator of the program’s work is its computational speed. This article describes the optimization of Bezout coefficients search algorithm by introduction different optimization schemes. Among all schemes, the following are chosen: K-ary, approximating and parallel approximating optimization schemes. Bezout’s equation is a representation of the greatest common divisor d of two integers A and B as a linear combination Ax+By = d, where x, and y are integers called Bezout’s coefficients. Bezout’s coefficients are counted using the extended version of the classical Euclidian Algorithm.

Keywords: Euclidean algorithm; extended Euclidean algorithm; k-ary algorithm for computing GCD; calculation of inverse elements modulo; parallel GCD computation.

© 2019 INT TRANS J ENG MANAG SCI TECH.

1. INTRODUCTION In the age of modern technology, time is a very valuable resource. Therefore, an important indicator of the program's work is its computational speed. The process of increasing the speed goes in the following directions: 1. Increase the productivity of equipment. Achieved by using more powerful processors. The main difficulty in this approach is the great difficulty in manufacturing such processors. Another difficulty is the renewal of equipment on all machines, which entails additional costs. 2. Parallelizing the program. The distribution of common work between different threads allows you to reduce the total running time of the program. However, the Bezout coefficients search algorithm is iterative, and therefore not subject to parallelization. 3. Reduction of the asymptotic complexity of the algorithm used. This approach will be used in this work. It consists in reducing the number of elementary operations used by the algorithm.

The Bezout relation is the representation of the greatest common divisor of integers in the form *Corresponding author (A.R.Zhumaniezov). Tel: 8(927)4068857. E-mail: myzerix58@gmail.com, ©2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN 2228-9860 eISSN 1906-9642 http://TUENGR.COM/V10/001.pdf DOI: 10.14456/ITJEMAST.2019.1

1

of their linear combination with integer coefficients (Hasse, 1950). For the case of two integers đ??´ and đ??ľ and their đ??şđ??śđ??ˇ(đ??´, đ??ľ) = đ?‘‘ — is the greatest common divisor, this relation is written in the following form (Jones and Jones, 1998): đ??´đ?‘˘ + đ??ľđ?‘Ł = đ?‘‘

(1)

Moreover, the coefficients � and � are called the Bezout coefficients. Finding the Bezout coefficients can be used to solve the following problems: 1. The solution of linear Diophantine equations in the form (Sushkevich, 1954):

đ??´đ?‘Ľ + đ??ľđ?‘Ś = đ??ś

(2)

2. The solution of first-degree comparisons in the form (https://brilliant.org/wiki/bezouts-identity):

đ??´đ?‘Ľ ≥ đ??ľ(đ?‘šđ?‘œđ?‘‘ đ?‘š)

(3)

3. The search for an inverse element in a field — is a particular case of equation (3):

đ??´đ?‘Ľ ≥ 1(đ?‘šđ?‘œđ?‘‘ đ?‘š)

(4)

4. It is the basis for some cryptographic algorithms with a public key, such as RSA (Menezes et al, 1996).

Euclid's algorithm is an effective algorithm for finding the greatest common divisor of two integers (Euclid’s Elements, 1949). This algorithm is iterative and is defined by: đ??şđ??śđ??ˇ(đ??´, đ??ľ) = đ??şđ??śđ??ˇ(đ??ľ, đ??´ đ?‘šđ?‘œđ?‘‘ đ??ľ)

(5)

Extended Euclidean algorithm is a modification of the Euclidean algorithm, which allows to find BĂŠzout coefficients (Yegorov, 1923). The main idea is to represent the resulting remainder at each iteration in the form of a linear combination of the original numbers đ??´ and đ??ľ. For the "reverse" approach we use the following formula (Akritas, 1994): đ?‘˘đ?‘– = đ?‘Łđ?‘–+1 đ?‘Łđ?‘– = đ?‘˘đ?‘–+1 − đ?‘Łđ?‘–+1 ∗ đ?‘žđ?‘–

(6)

The main idea of optimizing the Bezout coefficients search algorithm will be to change the choice of a new number, which should lead to a faster convergence of the algorithm and, accordingly, to a decrease in the number of iterations. The main disadvantage of this approach is an increasing of the load per iteration, which can lead to a decrease in the speed of the complete algorithm. Therefore, we must also optimally find new values for the next iteration. At first, we estimate the convergence of the algorithms, giving them an estimate of the number of iterations. After that using the implementation in the language Python 3, we will test in practice the efficiency of the considered optimization schemes.

2. METHOD 2.1 K-ary extended Euclidean algorithm The k-ary Euclidean algorithm was first published in Sorenson (Sorenson, 1990; Sorenson, 1994). Then, Weber and Jebelean improvements were proposed (Weber, 1995; Jebelean, 1993).

2

Alisher R. Zhumaniezov

This algorithm is iterative, like the original algorithm. The main difference is to find a new pair for the next step. For this, we use the theorem proved in Weber (1995) and Jebelean (1993): Theorem 1. Let đ??´, đ??ľ > 0 are natural numbers and đ?‘˜ is a small positive number that is coprime to đ??´ and đ??ľ. Then there are integers đ?‘Ľ and đ?‘Ś, satisfying the relation |đ?‘Ľ|, |đ?‘Ś| ≤ [√đ?‘˜] + 1 such that: đ??´ ∗ đ?‘Ľ + đ??ľ ∗ đ?‘Ś ≥ 0 (đ?‘šđ?‘œđ?‘‘ đ?‘˜)

(7)

Thus, it follows directly from the theorem that the number: đ??ś=

(đ??´ ∗ đ?‘Ľ + đ??ľ ∗ đ?‘Ś)â „ đ?‘˜

(8)

Is natural. In case that đ??şđ??śđ??ˇ(đ??ś, đ?‘˜) = đ?‘‘ ≠1 it is necessary to divide the number đ??ś by đ?‘‘. Then the transition to the next iteration has the form: đ??şđ??śđ??ˇ(đ??´, đ??ľ) = đ??şđ??śđ??ˇ(đ??ľ, đ??ś)

(9)

Note that when the algorithm works, additional multipliers may appear (Ishmukhametov, 2016). To eliminate them, you must start recursively đ??şđ??śđ??ˇ(đ??´, đ??şđ??śđ??ˇ(đ??ľ, đ?‘‘)), where đ?‘‘ is the result obtained at the output of the k-ary algorithm. Now we get optimization for the extended Euclidean algorithm. It was proposed in the (Ishmukhametov, 2016). In this algorithm, too, we will use the "reverse" approach. To construct the transition formula, we present the Bezout equation: đ??´đ?‘–+1 ∗ đ?‘˘đ?‘–+1 + đ??ľđ?‘–+1 ∗ đ?‘Łđ?‘–+1 = đ?‘‘

(10)

Now we substitute in this equation the transition formulas (8) and (9) and group terms. Thus, we have explicitly obtained the transition formula for the Bezout coefficients (Ishmukhametov, 2016): đ?‘Ľđ?‘– ∗ đ?‘Łđ?‘–+1 â „đ?‘˜ đ?‘Ś ∗ đ?‘Łđ?‘–+1 đ?‘Łđ?‘– = đ?‘˘đ?‘–+1 + đ?‘– â „đ?‘˜ đ?‘˘đ?‘– =

(11)

However, in this formula there is one drawback - the non-integer division into đ?‘˜. Since it is not guaranteed that the result of dividing will always be integer, this move our calculations into the field of real numbers, which is undesirable for us. Therefore, to stay in the field of integers, we introduce auxiliary variables đ?‘˘đ?‘–∗ and đ?‘Łđ?‘–∗ (Ishmukhametov, 2016). They are defined as follows: đ?‘˘đ?‘–∗ = đ?‘˘đ?‘– ∗ đ?‘˜ đ?‘›âˆ’đ?‘– đ?‘Łđ?‘–∗ = đ?‘Łđ?‘– ∗ đ?‘˜ đ?‘›âˆ’đ?‘–

(12)

Then the recurrence relation for them will be written in the form (Ishmukhametov, 2016): ∗ đ?‘˘đ?‘–∗ = đ?‘Ľđ?‘– ∗ đ?‘Łđ?‘–+1 ∗ ∗ đ?‘Łđ?‘–∗ = đ?‘˜ ∗ đ?‘˘đ?‘–+1 + đ?‘Śđ?‘– ∗ đ?‘Łđ?‘–+1

(13)

In case there is an additional factor đ?‘&#x;đ?‘– = 2đ?‘Ąđ?‘– for đ?‘˜ = 2đ?‘Ą , then the relation (13) becomes: ∗ đ?‘˘đ?‘–∗ = đ?‘Ľđ?‘– ∗ đ?‘Łđ?‘–+1 ∗ ∗ đ?‘Łđ?‘–∗ = đ?‘˜ ∗ đ?‘&#x;đ?‘– ∗ đ?‘˘đ?‘–+1 + đ?‘Śđ?‘– ∗ đ?‘Łđ?‘–+1

(14) đ?‘›

Since we can't divide by đ?‘˜ đ?‘›âˆ’đ?‘– ∗ đ?‘&#x;, where đ?‘&#x; = âˆ?đ?‘›đ?‘–=đ?‘&#x; đ?‘&#x;đ?‘– = 2∑đ?‘–=1 đ?‘Ąđ?‘– = 2đ?‘‡ for đ?‘˜ = 2đ?‘Ą because we *Corresponding author (A.R.Zhumaniezov). Tel: 8(927)4068857. E-mail: myzerix58@gmail.com, Š2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN 2228-9860 eISSN 1906-9642 http://TUENGR.COM/V10/001.pdf DOI: 10.14456/ITJEMAST.2019.1

3

leave the field of integers, we can replace it by an integer division modulo đ??´ = đ??´1 . We obtain the intermediate coefficients đ?‘˘â€˛ and đ?‘Łâ€˛ by formula for đ?‘˜ = 2đ?‘Ą : đ?‘˘â€˛ = (đ?‘˘1∗ ∗ đ?‘˜1−đ?‘› ∗ 2−đ?‘‡ ) đ?‘šđ?‘œđ?‘‘ đ??´ đ?‘Ł ′ = (đ?‘Ł1∗ ∗ đ?‘˜1−đ?‘› ∗ 2−đ?‘‡ ) đ?‘šđ?‘œđ?‘‘ đ??´

(15)

Then the Bezout equation takes the form: đ??´1 ∗ đ?‘˘â€˛ + đ??ľ1 ∗ đ?‘Ł ′ = đ?‘‘1 ≥ đ?‘‘(đ?‘šđ?‘œđ?‘‘ đ??´)

(16)

Hence we obtain the final formula for the Bezout coefficients: đ?‘˘ = đ?‘˘â€˛ − (đ?‘‘1 đ?‘‘đ?‘–đ?‘Ł đ??´) đ?‘Ł = đ?‘Łâ€˛

(17)

2.2 Approximating extended Euclidean algorithm Optimization of the k-ary algorithm was presented by Ishmukhametov and Rubtsova (2016). The main idea is the replacement of the algorithm for finding the coefficients đ?‘Ľ and đ?‘Ś for the next iteration. For this |đ?‘Ľ| is taken from the interval (0; đ?‘˜) and đ?‘Ś is taken close to − đ??´ ∗ đ?‘Ľâ „đ??ľ. At first we introduce the following notation: đ?‘ž = đ??´â „đ??ľ đ?‘šđ?‘œđ?‘‘ đ?‘˜

(18)

đ?‘&#x; = đ??´â „đ??ľ

(19)

đ?‘&#x; − đ?‘ž = đ?‘&#x;1 + đ?‘˜ ∗ đ?‘ 1

(20)

đ?‘&#x;0 = đ?‘&#x;1â „đ?‘˜

(21)

Now we get the formula for đ??ś (Ishmukhametov and Rubtsova, 2016): đ??´âˆ—đ?‘Ľ+đ??ľâˆ—đ?‘Ś

|đ??ś| = |

đ?‘˜

đ?‘&#x;∗đ?‘Ľ+đ?‘Ś

| = đ??ľ|

đ?‘˜

We note that the original fraction đ?‘š đ?‘›

≈

� �

� �

�

| = đ??ľ|đ?‘&#x;0 đ?‘Ľ + (đ?‘ 1 ∗ đ?‘Ľ + đ?‘ )| = đ??ľ |đ?‘Ł đ?‘Ľ + đ?‘ 1 ∗ đ?‘Ľ + đ?‘ |

(22)

has an arbitrary form, so we must find an approximation

(for example an algorithm using Farey's sequence) on condition đ?‘› < đ?‘˜. Then formula (22)

takes the form: �

đ?‘š

|đ??ś| = đ??ľ | đ?‘Ľ + đ?‘ 1 ∗ đ?‘Ľ + đ?‘ | ≈ đ??ľ | đ?‘Ľ + đ?‘ 1 ∗ đ?‘Ľ + đ?‘ | đ?‘Ł đ?‘›

(23)

Then the minimum, which is equal to 0, will be achieved with đ?‘Ľ = đ?‘› and đ?‘ = −đ?‘š − đ?‘ 1 ∗ đ?‘›. Now we obtain the final formulas for the transition: đ?‘Ľ=đ?‘› đ?‘ = −đ?‘š − đ?‘ 1 ∗ đ?‘›

(24)

đ?‘Ś =đ?‘ ∗đ?‘˜âˆ’đ?‘žâˆ—đ?‘Ľ The basic steps of the algorithm are the same as for the k-ary extended algorithm. The only difference is the use of a different approach for choosing the coefficients đ?‘Ľ and đ?‘Ś. For this, an algorithm using Farey's sequence is used, as in the usual approximating algorithm.

4

Alisher R. Zhumaniezov

2.3 Parallel approximating extended Euclidean algorithm When using Farey sequence, we first obtain an approximation segment, from which we then select one of the end points. Hence the second approach follows, when we take both end points (Ishmukhametov and Rubtsova, 2017). Then the transition to (9) is transformed into: đ??şđ??śđ??ˇ(đ??´, đ??ľ) = đ??şđ??śđ??ˇ(đ??ś1 , đ??ś2 )

(25)

Then the transition to (13) is transformed into: ∗ ∗ đ?‘˘đ?‘–∗ = đ?‘Ľđ?‘–1 ∗ đ?‘˘đ?‘–+1 + đ?‘Ľđ?‘–2 ∗ đ?‘Łđ?‘–+1 ∗ ∗ đ?‘Łđ?‘–∗ = đ?‘Śđ?‘–1 ∗ đ?‘˘đ?‘–+1 + đ?‘Śđ?‘–2 ∗ đ?‘Łđ?‘–+1

(26)

And if there are additional factors đ?‘&#x;đ?‘–1 and đ?‘&#x;đ?‘–2 introduce đ?‘&#x;đ?‘– = đ??żđ??śđ?‘€(đ?‘&#x;đ?‘–1 , đ?‘&#x;đ?‘–2 ) and additions to đ?‘&#x;đ?‘– : đ?‘&#x;đ?‘–1 ′ = đ?‘&#x;đ?‘– /đ?‘&#x;đ?‘–1 đ?‘&#x;đ?‘–2 ′ = đ?‘&#x;đ?‘– /đ?‘&#x;đ?‘–2

(27)

Then instead of (14) we obtain the following transition: ∗ ∗ đ?‘˘đ?‘–∗ = đ?‘Ľđ?‘–1 ∗ đ?‘˘đ?‘–+1 ∗ đ?‘&#x;đ?‘–1 ′ + đ?‘Ľđ?‘–2 ∗ đ?‘Łđ?‘–+1 ∗ đ?‘&#x;đ?‘–2 ′

(28)

′

∗ ∗ đ?‘Łđ?‘–∗ = đ?‘Śđ?‘–1 ∗ đ?‘˘đ?‘–+1 ∗ đ?‘&#x;đ?‘–1 + đ?‘Śđ?‘–2 ∗ đ?‘Łđ?‘–+1 ∗ đ?‘&#x;đ?‘–2 ′

All other formulas keep unchanged. For parallelization, the portion of the algorithm that computes đ??ś1 and đ??ś2 . Each of them can be calculated independently.

3. RESULTS AND DISCUSSION 3.1 K-ARY EXTENDED EUCLIDEAN ALGORITHM

We construct an upper bound for đ??ś: |đ??´ |đ??´ |đ??ľ |đ?‘Ś| |đ??ś| = ∗ đ?‘Ľ + đ??ľ ∗ đ?‘Ś|â „đ?‘˜ ≤ ∗ đ?‘Ľ| + ∗ đ?‘Ś|â „đ?‘˜ = đ??´ ∗ |đ?‘Ľ|â „đ?‘˜ + đ??ľ ∗ â „đ?‘˜ ≤ 2 ∗ đ??´â „ √đ?‘˜

(29)

From this estimate it follows that at each step the greater of the numbers decreases at least √đ?‘˜â „2 times (Ishmukhametov and Rubtsova, 2016). Thus, we obtain an estimation for the number of iterations đ?‘‡(đ??´, đ??ľ) for any pair đ??´ and đ??ľ: đ?‘‡(đ??´, đ??ľ) ≤ log √đ?‘˜â „ (đ??´) + log √đ?‘˜â „ (đ??ľ) 2

(30)

2

Thus, we obtain a upper bound for the average number of iterations đ?œ?(đ??´) for any đ??´ (Ishmukhametov and Rubtsova, 2016): đ?œ?(đ??´) ≤ 2 ∗ log √đ?‘˜â „ (đ??´) = 2

2 ln(√đ?‘˜â „2)

ln(đ??´) = ln(đ?‘˜)

2

⠄2−ln(2)

4

ln(đ??´) ≈ ln(đ?‘˜) ln(đ??´)

(31)

3.2 APPROXIMATING EXTENDED EUCLIDEAN ALGORITHM The proof of the following theorem was presented by Ishmukhametov (2016): Theorem 2. There is an integer đ?‘Ľ, 1 ≤ đ?‘Ľ ≤ đ?‘˜, such that: {đ?‘&#x;0 đ?‘Ľ} ≤

3 2đ?‘˜

*Corresponding author (A.R.Zhumaniezov). Tel: 8(927)4068857. E-mail: myzerix58@gmail.com, Š2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN 2228-9860 eISSN 1906-9642 http://TUENGR.COM/V10/001.pdf DOI: 10.14456/ITJEMAST.2019.1

(32)

5

And the search for such đ?‘Ľ can be produced by an algorithm with complexity đ?‘‚(log 2 (đ?‘˜)). From the theorem it follows directly that it is possible in an acceptable time to find such a pair of coefficients đ?‘Ľ and đ?‘Ś, that: đ??´âˆ—đ?‘Ľ+đ??ľâˆ—đ?‘Ś

|đ??ś| = |

đ?‘˜

|≤

3đ??ľ

(33)

2đ?‘˜

That is, at each step there is a decrease in one number, at least in 2đ?‘˜â „3 times. Thus we obtain a estimation on the number of iterations đ?‘‡(đ??´, đ??ľ) for any đ??´ and đ??ľ from above (Ishmukhametov and Rubtsova, 2016): đ?‘‡(đ??´, đ??ľ) ≤ log 2đ?‘˜â „ (đ??´) + log 2đ?‘˜â „ (đ??ľ) 3

(34)

3

Then the average number of iterations đ?œ?(đ??´) for any đ??´ will be limited from above: đ?œ?(đ??´) ≤ 2 ∗ log 2đ?‘˜â „ (đ??´) = 3

2 ln(2đ?‘˜â „3)

2

2

ln(đ??´) == ln(đ?‘˜)−ln(1.5) ln(đ??´) ≈ ln(đ?‘˜) ln(đ??´)

(35)

3.3 PARALLEL APPROXIMATING EXTENDED EUCLIDEAN ALGORITHM All calculations for this algorithm are the same as for the approximating. So, as a result, we get the formula (35).

4. SUMMARY 4.1 4-BIT MODULE Number of iterations 200 180 160 140 120 100 80 60 40 20

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 79 82 85 88 91 94 97 100

0

Extended Euclidean algorithm

K-ary extended Euclidean algorithm

Approximating extended Euclidean algorithm

Parallel extended Euclidean algorithm

Figure 1: Comparison of the number of steps with the original algorithm (binary, 4 bit). k-ary: As can be seen from Figure 1, the number of steps became slightly less than 1.5 times less compared to the original algorithm. However, of all the algorithms considered, this is the worst result. Approximating: Figure 1, the number of iterations has decreased more than 3 times in comparison with the original algorithm. The result was close to parallel. Parallel: Figure 1, the number of iterations has decreased more than 3 times compared to the original algorithm. The result was close to approximating.

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Alisher R. Zhumaniezov

Average time of one iteration 0.03 0.025 0.02 0.015 0.01 0.005

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 79 82 85 88 91 94 97 100

0

Extended Euclidean algorithm

K-ary extended Euclidean algorithm

Approximating extended Euclidean algorithm

Parallel extended Euclidean algorithm

Figure 2: Comparison of the running time of the step with the original algorithm (binary, 4 bit). From Figure 2, k-ary: the amount of work on one iteration increased about 6 times compared to the original algorithm. This leads to a time lag in comparison with the original algorithm. It is also clear that the running time at the step is very close to the approximating algorithm. Approximating: Figure 2, the amount of work on one iteration increased approximately 10 times compared to the original algorithm. This leads to a time lag in comparison with the original algorithm. Parallel: As can be seen from Figure 2, the amount of work on one iteration increased approximately 20 times compared to the original algorithm. This leads to a time lag in comparison with the original algorithm. This also leads to a lag in comparison with the approximating algorithm.

4.2 8-BIT MODULE Average time of one iteration 0.03 0.025 0.02 0.015

0.01 0.005

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 79 82 85 88 91 94 97 100

0

Extended Euclidean algorithm

K-ary extended Euclidean algorithm

Approximating extended Euclidean algorithm

Parallel extended Euclidean algorithm

Figure 4: Comparison of the number of steps with the original algorithm (binary, 8-bit). *Corresponding author (A.R.Zhumaniezov). Tel: 8(927)4068857. E-mail: myzerix58@gmail.com, Š2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN 2228-9860 eISSN 1906-9642 http://TUENGR.COM/V10/001.pdf DOI: 10.14456/ITJEMAST.2019.1

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k-ary: As can be seen from Figure 3, the number of steps became approximately 2 times less compared to the original algorithm. However, of all the algorithms considered, this is the worst result. Approximating: Figure 3, the number of iterations has decreased by approximately 6 times in comparison with the original algorithm. The result was close to parallel. Parallel: Figure 3, the number of iterations has decreased by approximately 6 times in comparison with the original algorithm. The result was close to approximating. Average time of one iteration 0.03 0.025 0.02 0.015 0.01 0.005

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 79 82 85 88 91 94 97 100

0

Extended Euclidean algorithm

K-ary extended Euclidean algorithm

Approximating extended Euclidean algorithm

Parallel extended Euclidean algorithm

Figure 4: Comparison of the running time of the step with the original algorithm (binary, 8-bit). k-ary: As can be seen from Figure 4, the amount of work on one iteration increased by about 10 times in comparison with the original algorithm. This leads to a time lag in comparison with the original algorithm. It is also clear that the running time at the step is very close to the approximating algorithm. Figure 4, Approximating: the amount of work on one iteration increased approximately 15 times compared to the original algorithm. This leads to a time lag in comparison with the original algorithm. Figure 4, Parallel: the amount of work on one iteration increased approximately 20 times compared to the original algorithm. This leads to a time lag in comparison with the original algorithm. This also leads to a lag in comparison with the approximating algorithm. k-ary: from Figure 5, the number of steps became approximately 3 times less compared to the original algorithm. However, of all the algorithms considered, this is the worst result. Approximating: Figure 5, the number of iterations has decreased by about 7 times compared to the original algorithm. The result was close to parallel. Parallel: Figure 5, the number of iterations has decreased by about 7 times compared to the original algorithm. The result was close to approximating.

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4.3 16-BIT MODULE

Number of iterations 180 160 140 120 100 80 60 40 20

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 79 82 85 88 91 94 97 100

0

Extended Euclidean algorithm

K-ary extended Euclidean algorithm

Approximating extended Euclidean algorithm

Parallel extended Euclidean algorithm

Figure 5: Comparison of the number of steps with the original algorithm (binary, 16-bit).

Average time of one iteration 0.8

0.7 0.6 0.5 0.4 0.3 0.2 0.1

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 79 82 85 88 91 94 97 100

0

Extended Euclidean algorithm

K-ary extended Euclidean algorithm

Approximating extended Euclidean algorithm

Parallel extended Euclidean algorithm

Figure 6: Comparison of the running time of the step with the original algorithm (binary, 16-bit). k-ary: shown in Figure 6, the amount of work on one iteration has greatly increased in comparison with the original algorithm. This leads to a time lag in comparison with the original algorithm. Approximating: Figure 6, the amount of work on one iteration has an extremely strong variance. Because of this, it becomes difficult to evaluate the attitude to the original algorithm. It also becomes difficult to compare with other schemes. Parallel: see Figure 6, the amount of work on one iteration has an extremely strong variance. Because of this, it becomes difficult to evaluate the attitude to the original algorithm. It also becomes difficult to compare with other schemes. *Corresponding author (A.R.Zhumaniezov). Tel: 8(927)4068857. E-mail: myzerix58@gmail.com, Š2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN 2228-9860 eISSN 1906-9642 http://TUENGR.COM/V10/001.pdf DOI: 10.14456/ITJEMAST.2019.1

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5. CONCLUSION The theoretical and practical questions of the Bezout coefficients search are considered. Developed: a program containing the implementation of all the considered optimization schemes for the extended Euclidean algorithm. Also, in the dissertation, to evaluate the efficiency of optimization of the extended Euclidean algorithm, experiments were performed and the results are shown. In the course of this work, the following conclusions were made on the schemes considered: k-ary — showed the worst result among all the considered schemes. At small values of the module, the number of steps turned out to be greater than that of the original one, at large there was a significant gain. The amount of work on one iteration with a small module is less than that of other schemes, but more than the original algorithm. This leads to a total loss in time for the entire algorithm in comparison with the original. Approximating — showed the best result among all the considered schemes. The number of steps is several times less than the original algorithm. For large values of the module, the number of steps coincides in parallel with the number of steps. The amount of work on one iteration with a small module is less than that of a parallel module, but more than the original algorithm. However, for large values, the dispersion becomes too large, which complicates the analysis. One of the reasons may be the nonuniform convergence of the algorithm on Farey's fractions. Parallel — the number of steps is several times less than the original algorithm. For large values of the module, it coincides with the number of steps with the approximating step. The amount of work on one iteration with a small module is the largest in comparison with other algorithms. However, for large values, the dispersion becomes too large, which complicates the analysis. One of the reasons may be the nonuniform convergence of the algorithm on Farey's fractions. The further direction of the study may be the reduction of the work time spent on one iteration. Among the possible approaches: the disclosure of internal function calls, the use of a lower-level language, the use of a faster algorithm for selecting coefficients.

6. ACKNOWLEDGEMENTS The work is performed according to the Russian Government Program of Competitive Growth of Kazan Federal University.

7. REFERENCES Hasse, H. (1950). «Vorlesungen Uber Zahlentheorie», Berlin, p. 59. Jones, G. A., Jones, J. M. (1998). §1.2. Bezout's Identity. Elementary Number Theory. Berlin: SpringerVerlag, p. 302. Sushkevich, А. К. (1954). The Theory of Numbers. Elementary course., Kharkov, Kharkov University Press, 204 p. https://brilliant.org/wiki/bezouts-identity/ [accessed Oct 2016] Menezes, A., van Oorschot, P., Vanstone, S. (1996). Handbook of Applied Cryptography. CRC Press, p. 816.

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Euclid’s Elements V. 2. (1949). translated from Greek and commented by Mordukhai-Boltovsky D. D. Edited by Vygotsky М. Y. and Veselovsky I.N.., М., GITTL, p. 511. Yegorov, D. F. (1923). The Elements of Number Theory., М., Petrograd: Gosizdat, p. 202. Akritas, А. (1994). The principles of Computer Algebra with Appendix: translated from English, М., Mir, p. 544. Sorenson, J. (1990). The k-ary GCD Algorithm, Universitet of Wisconsin-Madison, Tecn.Report, pp. 1– 20. Sorenson, J. (1994). Two fast GCD Algorithms, J.Alg. 16, No. 1, pp. 110–144 Weber, K. (1995). The accelerated integer GCD algorithm, ACM Trans.Math.Software, 21, No. 1, pp. 1– 12. Jebelean, T. A. (1993). Generalization of the Binary GCD Algorithm, Proc. Of Intern.Symp.on Symb.and Algebr. Comp.(ISSAC’93), pp. 111-116. Ishmukhametov, S. Т. (2016). Calculation of Bezout Coefficients for k-ary for GCD Algorithm., КFU, Kazan, Russia, p. 6. Ishmukhametov, S. Т. (2016). Rubtsova Р.G. About Approximating k-ary GCD Algorithm , KFU, Кazan, Russia, p. 4. Ishmukhametov, S. T., Rubtsova, R. G. (2017). A parallel computation of the GCD of natural numbers//Параллельные вычислительные технологии – XI международная конференция, ПаВТ'2017, г. Казань, 3–7 апреля 2017 г.- Челябинск: Издательский центр ЮУрГУ. pp.120-129 Ishmukhametov. S. T. (2016). An Approximating k-ary GCD Algorithm, Lobachevskii Journal of Mathematics, Volume 37, Issue 6, pp. 723-729 Alisher Zhumaniezov obtained his master degree from Czech Technical University in Prague (Study Program: Open Informatics, Field of Study: Software Engineering). He is associated with Department of Computer Science, Faculty of Electrical Engineering, Kazan Federal University, Kazan, RUSSIA. His research interests encompass algorithm engineering.

*Corresponding author (A.R.Zhumaniezov). Tel: 8(927)4068857. E-mail: myzerix58@gmail.com, ©2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN 2228-9860 eISSN 1906-9642 http://TUENGR.COM/V10/001.pdf DOI: 10.14456/ITJEMAST.2019.1

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CHALLENGES OF EGOVERNMENT IMPLEMENTATION IN THE NIGERIAN PUBLIC SERVICE Oleh Ezichi Kalu a*, Ridzuan Masri a a

School of Business, International University of Malaya-Wales, Kuala Lumpur, MALAYSIA ARTICLEINFO

A B S T RA C T

Article history: Received 05 August 2018 Received in revised form 30 November 2018 Accepted 06 December 2018 Available online 11 December 2018

E-government is one of the tools aimed at reforming the public service to becoming more effective and efficient in service delivery. This is based on the assumption that the efficient application of Information and Communication Technologies (ICT) in the daily activities of government will lead to a goal-oriented service delivery. Nevertheless, there are numerous challenges that militate against the effective application of e-government in Nigerian public service. Accordingly, this article is geared towards identifying some of the challenges to egovernment implementation in Nigerian public service. No detailed statistical analysis is employed as this conceptual paper mainly based on archived information on important literature of the subject matter and inferences drawn from it. Sequel to its findings, it is then concluded that e-government is the most reliable tool in facilitating and institutionalising efficiency, effectiveness, transparency and accountability in public service.

Keywords: E-Government policy; Government efficiency; E-management; Government effectiveness; Government transparency; ICT.

© 2019 INT TRANS J ENG MANAG SCI TECH.

1. INTRODUCTION The relevance and effect of e-government on public service delivery cannot be over-stated. It is unarguable that Nigeria’s public service has benefitted immensely from e-government. E-government in Nigeria is traceable to the formulation of the Nigerian National Information Technology (NNIT) policy in the year 2000. The rationale behind the policy was to revolutionize Information Technology (IT) in Nigeria and to make Nigeria a key player in the information society and also use IT to create jobs; eradicate poverty; enhance education; creation of wealth, agriculture; governance; health; (NITP, 2000). Notwithstanding the great ideas and aims of the policy, the public service appears not to do very well in the implementation of e-government in their service delivery as a result of some challenges, which if left unchecked will make the adoption of e-government a mere dream. Among the challenges so far identified are inadequate IT infrastructure; unstable power/electricity supply; short supply of trained and qualified IT personnel, unwillingness to embrace change by most public *Corresponding author (Oleh Ezichi Kalu). E-mail: Olehkalu@gmail.com, ©2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN 2228-9860 eISSN 1906-9642 http://TUENGR.COM/V10/013.pdf DOI: 10.14456/ITJEMAST.2019.2

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servants etc (Gberevbie; Ayo; Iyoha; Duruji & Abasilim, 2015; Olaopa, 2014; Bansode & Patil, 2011; Okwueze, 2010; Abdel-Fattah & Galal-Edeen, 2008; Ayo & Ekong, 2008 and Dode, 2007). Against this background, this paper is on a mission to identify the challenges facing egovernment implementation in Nigeria’s public service and suggest possible solutions to the identified challenges. To achieve the above-stated objective, this paper is sub-divided into four sections. The first section focuses on a brief background of the emergence of e-government. The second section tackles the conceptual clarification of e-government and public service. The third section identifies the challenges to e-government implementation in Nigeria’s public service while the fourth section dwells on conclusion and recommendations.

2. CONCEPTUAL CLARIFICATIONS 2.1 Understanding E-Government The e-government concept has been largely defined, particularly, as it relates to the public sector. Honestly, researchers differ in their definitions of the concept, consequently presenting different definitions of what e-government stands for (Shilubane, 2001; Budhiraja, 2003; Ojo, 2014). According to Shilubane (2001), e-government is simply the use of information communication technologies (ICTs) to carry out public services. Put differently, the use of the internet to make sure that services are delivered in a much more convenient, customer-oriented and cost effective manner. Budhiraja (2003) defines e-government as the application of Information Technology to the process of government functioning in order to achieve a Simple, Moral, Accountable, Responsive and Transparent (SMART) Governance. Similarly, Ojo (2014, p. 79) also sees e-government as “the application of information communication technology (ICT) by the government to enhance accountability, create awareness and ensure transparency in the management of governmental business.” He further stated that egovernance is a political strategy of government through which their activities can be showcased to the public. Ayo (2014, p. 76) defined e-government as “the governing of a nation using ICT.” This means that, e-government is the application of ICT in carrying out government businesses. From the above definitions, it can be seen that e-government is the use of ICTs in the operations of government businesses. Put differently, it is the radical departure from the traditional method of executing government businesses, which is usually hierarchical, linear, and one-way to the use of internet, which facilitates easy access to information by the public at their own convenience without having to visit public offices in person. E-government is primarily aimed at improving government processes (e-administration), connecting citizens (e-citizens and e-services) and building external interactions (e-society) (Heeks, 2001). Notwithstanding the above-mentioned objectives, Godse & Garg (2009) emphasized that there are many factors to put into consideration in e-government implementation. According to them, “making and implementing decisions, proper leadership, putting in place organizational arrangements, ensuring resources and funding, establishing accountability and measuring success, telecommunications network, internal agency systems, cross-government systems, service delivery network access points, internet access and skilled staff, better delivery of government services to citizens, improved interactions with business and industry, citizen empowerment through access to

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information and more efficient government management” are the factors that must be taken into consideration for the success of e-governance implementation (Godse & Garg, 2009, p. 15). It is imperative to note that e-government “is not only the computerization of a government system, but a belief in the ability of technology to achieve high levels of improvement in various areas of government, thus transforming the nature of politics and the relations between governments and citizens” (Dada, 2006, p. 1). E-government has been seen to have four primary delivery tracks namely: Government-to-Citizen or Government-to-Customer (G2C), Government-to-Business (G2B), Government-to-Government (G2G), Government-to-Employee (G2E) (Adeyemo, 2011). These delivery tracks are also known as the models of e-government, which refer to the interaction that exist between and among government, citizens, business, employees and Non-Governmental Organisations (NGOs) respectively (Ayo, 2009 and Rabaiah & Vandijct, 2011). The e-government concept depends on the application of information technology to achieve its aims and objectives with a view to ensuring effective, efficient, transparent, accountable service delivery among others from government establishment or the public service.

2.2 DEFINITION OF PUBLIC SERVICE Public service differs from country to country, but in this case, the focus is on what it means in Nigeria. Section 318 of the 1999 constitution of the Federal Republic of Nigeria as amended states that public service is “the service of the Federation in any capacity in respect of the Government of the Federation” and includes Service as:  Clerk or other Staff of the National Assembly or of each House of the National Assembly;  Member of Staff of the Supreme Court, the Court of Appeal, the Federal High Court, the High Court of the Federal Capital Territory Abuja, the Sharia Court of Appeal of FCT, the Customary Court of Appeal of FCT or other courts established for the Federation by this Constitution and by Act of the National Assembly;  Member or Staff of any Commission or authority established for the Federation by this Constitution or by an Act of the National Assembly;  Staff of any area Council;  Staff of any Statutory Corporation established by an Act of the National Assembly;  Staff of any educational institution established or financed principally by the Government of the Federation;  Staff of any company or enterprises in which the Government of the Federation or its agency owns controlling shares or interest;  Members or officers of the armed forces of the Federation or the Nigeria Police Force or other government security agencies established by law. Agba, Ochimana and Abubakar (2013, p. 113) defined public service as “the activities of government employees and institutions aimed at formulating and implementing governmental policies and programmes for the interests of the masses (public).” However, the concepts of public service and civil service are often used interchangeably but the truth is that they are two unique concepts, though with some similarities. According to Adamolekun (2002, pp. 17–18) cited in Ibietan (2013:56), public service “usually indicates a wider scope than the civil service (and)... means the *Corresponding author (Oleh Ezichi Kalu). E-mail: Olehkalu@gmail.com, ©2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN 2228-9860 eISSN 1906-9642 http://TUENGR.COM/V10/013.pdf DOI: 10.14456/ITJEMAST.2019.2

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totality of services that are organized under public (i.e. government) authority.” It covers ministries, departments and agencies of the central government, its field administration, local government, the military, other security forces and the judiciary. This is a broader conceptualization and it is in agreement with the constitutional definition of the terms and the difference between them. Civil Service refers to “the body of permanent officials appointed to assist the political executive in formulating and implementing government policies” (Ibietan, 2013, p. 56). The similarities they have in common is that they are machineries of government charged with the responsibility of executing governmental policies, that is carrying out the daily activities that public administration demands (Adebayo, 2000). It is pertinent to opine that civil service is embedded in public service. In other words, public service is broader than civil service. Public service is associated with the totality of services that are organized under government (Ezeani, 2006).

2.3 MODELS OF THE STAGES OF E-GOVERNMENT: AN EVOLUTIONARY PERSPECTIVE A brief history of e-government indicates that, since the early 1990s, many governments around the world have adopted e-government solutions, ranging from a simple web-based presence and oneway communication to two-way communication and transactions with different stakeholders such as citizens and businesses (Al-Shehry et al., 2006; Weerakkody et al., 2006). This government transition phase moved on to a more integrated web presence and e-democracy (Moon, 2002; Layne and Lee, 2001). Many researchers have tried to understand the e-government phenomenon from an evolutionary point of view by dividing the e-government development process into many stages (e.g. Moon, 2002; Deloitte and Touche, 2001; Layne and Lee, 2001). These and several other researchers exemplify that to develop and implement a vigorous egovernment infrastructure requires a staged approach, where the development focus moves from the immature to the mature – these terms are often used to characterize the state of a given level in a continuous process (Irani et al., 2006; Anderson and Henriksen, 2006; Ebrahim and Irani, 2005). The latter offers full integration with public administration and will have required the underlying re-think and change of government and its constituents (Irani et al. 2006). Traunmuller and Lenk, (2002) accentuate that the concept of e-government represents a fertile anthology of organizational and technological issues. Incorporating the conception of maturity or immaturity does not reinforce the ontology of the egovernment concept. In addition, Andersen and Henriksen, (2006) highlight that certain qualitative and/or quantitative measures to ascertain what distinguishes different degrees of maturity are indispensable. Irani et al., (2006) states that the benefit of having a staged approach is the ability to generate momentum that can then be maintained. The reason is that it may allow the public sector (including local government organizations) to attract an increasing number of citizens to using electronic services. The e-government implementation process passes through different stages until it reaches its highest potential stage, i.e. the integration of government information and services in different departments, for different functions and at different levels of the government system, thus enabling citizens to obtain government services and information online from a single point of access (Gupta and Jana, 2003; Layne and Lee, 2001).

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Literature on e-government disciplines illustrates that many researchers (either from individual academia researchers to institutions) have developed and proposed e - government stage models, including Howard‘s Three-Stage Model (Howard, 2001); Chandler and Emanuels‘ Four-Stage Model (Chandler and Emanuels, 2002); Layne and Lee‘s Four-Stage Model (Layne and Lee, 2001), Murphy‘s Four-Stage Model (Murphy, 2005), Gartner‘s Four-Stage Model (Baum and Di Maio, 2000), UN‘s Five-Stage Model (United Nations and American Society for Public Administration,2001), Deloitte‘s Six-Stage Model (Deloitte and Touche, 2001) and Hiller and Bélanger Five-Stage Model (2001). Besides these e-government stage models, several other proponents of e-government discipline agree that these different stages in e-government provision are vital (McDonagh, 2002; Moon, 2002; Bonham et al., 2001; Baum and Di Maio, 2000). Having studied several e - government stage models, it is rather perceptible that there remains a lack of harmony regarding how many stages of maturity an e-government system goes through. As mentioned earlier, some researchers believe that only three stages are necessary, others believe that four, five or even six stages are required. In summarizing the aforementioned e-government implementation stage models, the author opines that there is no mutual conformity among the different scholars and academicians on the number of stages that e -government should pass through during its life cycle and the requirements for moving from one to another. Some models emphasize that e -government should pass through all of the preceding stages to move on to the next one. Others argue that public organisations might decide to skip certain stages or to offer different services at varying stages of maturity. In the light of these arguments, comprehending e-government evolutionary stages provide the implementer with a clear understanding of the issues that should be taken into consideration. However, these stage models represent a number of motivational reasons that influence decision-makers from the public sector to adopt e-government services.

2.4 MOTIVATIONS FOR E-GOVERNMENT IMPLEMENTATION E-government is an increasingly global phenomenon that portrays a highly beneficial endeavor and has consumed the attention of many governments (including policy makers, politicians and citizens) around the world. Several governments have been motivated to make and to continue to make substantial financial and political commitments to establishing e -government as a promising vehicle for improving the services nation-states provide to their citizens and businesses, as well as to other governments both within their borders and beyond (Gupta et al., 2008; Accenture, 2004; Sharma and Gupta, 2002). The motivational drive to implement e-government at such levels has resulted in the implementation of numerous e-government visions and strategic agenda (Accenture, 2004). Numerous motivational reasons for e-government implementation can be found theorized in the normative literature (Ebrahim and Irani, 2005; Tung and Rieck, 2005; Gupta and Jana, 2003; Jaeger, 2003; Relyea, 2002; Fairwe ather and Rogerson 2002; Moon, 2002; Layne and Lee, 2001), but it is Al-Shehry et al., (2006) who presented a classification for these motivational forces. These are: (a) Political, (b) Economic, (c) Social, *Corresponding author (Oleh Ezichi Kalu). E-mail: Olehkalu@gmail.com, ©2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN 2228-9860 eISSN 1906-9642 http://TUENGR.COM/V10/013.pdf DOI: 10.14456/ITJEMAST.2019.2

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(d) Technological and (e) Managerial reasons. These authors supply the following instances: Political Forces: E-government can increase citizen participation in political processes (i.e. electronic participation [e-participation]); building trust between citizens and their government by improving the government‘s image and perhaps facilitating democratic elements by enabling voting online. Although there are many theoretical discussions involving participation, e.g., participatory management, e-participation is usually associated with some form of political deliberation or policy decision-making process (Macintosh,2004). Participation can take place within the formal political process or outside it (Saebo et al., 2008; Macintosh, 2004). Several research studies focus on political participation in the policy-making sense, and cover participation both within and outside the formal political system. The electronic) in e - Participation has a clear association with earlier e-areas (e.g. e -business, e-commerce, e-government) and refers to the use of new ICT, with the implication that technology has the ability to transform citizen participation in the policy-making process (Saebo et al., 2008). Economic Forces: Motivations include cost reductions for both the government itself and the adopter of e-government services. According to a report for the National Electronic Commerce Coordinating Council (NECCC, 2000), government agencies can save up to 70 percent of their costs by moving their services online (UN, 2001). It has also been recognized as a new way of debating and deciding policy (Basu, 2004). Gupta et al., (2008) argues that e-government provides potential benefits including reduced cost and time for providing services to the public, enhanced communication and coordination between government organizations, reduced bureaucracy, expounding citizens’ participation and increased efficiency and effectiveness of the government agencies. Social Forces: Benefits of e-government implementation are related to end-to-end service delivery by making learning and education available for citizens and offering citizen empowerment through access to information. Moreover, services can be more readily brought to all citizens across the country, particularly those with special needs and the elderly by enabling citizens to obtain government information through a single portal at any time and from any location equipped with internet access. E-government has been compared to an "endless wire" or a new method of "threading together" citizens, businesses and governments within a nation (Jaeger, 2003). E-government, as it continues to progress in development and deployment, may re -define the relationship between government and the public (Committee on Governmental Affairs, 2001). Technological Forces: Research related to technological forces (in the context of e-government) illustrates that ICT provides new possibilities for governments to be more transparent to citizens and businesses, giving access to a greater range of information collected and generated by governments (Gupta et al.,2008; Lambrinoudakis et al., 2003). It also creates opportunities for partnership and collaboration among different government institutions (Allen et al., 2001). E-government is touted as the mechanism by which governments can reduce communication and information costs, increase speed, broaden their reach and eradicate distance (Jaeger and Thompson, 2003). Quite simply, because e-government is primarily based on ICT, it provides the necessary infrastructure for seamless

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communication and flow of information within government and its stakeholders. Moreover, studies related to this theme of research investigate the influence of ICT-design features on individuals’ acceptance and use of e-government applications. For example, several researchers have highlighted that data security, accessibility and perceived confidentiality significantly influence individuals’ adoption of e-government services (Jaeger, 2003; Lee and Rao, 2003; Warkentin et al., 2002). Managerial Forces: Research related to managerial reasons that influence e - government implementation aims at the identification and/or measurement of specific managerial strategies and behaviors that are considered to significantly affect e-government adoption and use (Titah and Barki, 2006). For example, within such reasoning, a managerial practice that has received significant research attention and is posited as having a vital effect on e -government implementation, is process reengineering. Literature highlights several empirical research studies on cases and simulations indicating that the absence of a comprehensible and well-executed process reengineering strategy significantly impedes e-government implementation and success (Kawalek and Wastall, 2005; Golden et al., 2003; Thong et al., 2000). In addition, another motivational force is the influence of management support (Ke and Wei, 2004; Homburg and Bekkers, 2002). For example, Thong et al., (2000) in their case study on the Singapore Housing and Development Board, found that the presence of management support was a significant factor that influenced e -government implementation and acceptance. Likewise, the establishment and implementation of a formal governance formation, as well as the insight of impartiality with regards to this structure, were also found to be major enabling factors of e-government adoption and usage (Thong et al., 2000). Despite the claims for these motivational reasons (or forces) for e-government implementation, mainly aiming towards improving government performance and their service delivery, a number of studies have argued that e -government has not yet fulfilled its promise. For example, Holden and Fletcher, (2001) argue that there are virtually no systematic research results justifying a rapid transition. Indeed, there is a significant body of literature that suggests bureaucracies of government will prove resistant to such change. Fountain, (2001) describes the state of government agencies embedded in institutional arrangements that frustrate attempts to exploit IT, particularly where such IT is multi-agency and aimed at a united government. Furthermore, according to the UN Global e -government Survey, (2003), the average government reaches a level of only 25.5% on the index score of the highest ranking governments, with only seven governments reaching 75% and above (UN, 2003). Moreover, in a study conducted by Accenture, (2005) on e - government initiatives in 22 countries, the average e-government‘s maturity was 48%, with only two countries reaching 60% or above. Other researchers point out that the provision of egovernment services is still far from reaching full effectiveness (Reddick, 2004; Moon, 2002) whilst a number of researchers argue that many issues, such as privacy and security, remain as barriers for e-government implementation (Wilford, 2004). Some argue that e-government is worthy of support, but many issues must be addressed with its implementation. For instance, Rogerson, (1997) specifies a number of principles for electronic services in the UK that will ensure social responsibility in egovernment implementation, i.e. the principles of choice, confidence of clean data, accessibility to allow all citizens to obtain the services, and public funds protection. Despite several aforementioned conceptions on e-government implementation, the motivational *Corresponding author (Oleh Ezichi Kalu). E-mail: Olehkalu@gmail.com, ©2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN 2228-9860 eISSN 1906-9642 http://TUENGR.COM/V10/013.pdf DOI: 10.14456/ITJEMAST.2019.2

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themes described above are largely influenced by a plethora of benefits.

3. CHALLENGES TO E-GOVERNMENT IMPLEMENTATION IN THE NIGERIAN PUBLIC SERVICE The benefits of the implementation of e-government in Nigeria cannot be over-emphasized. Scholars have highlighted that the implementation of e-government will facilitate accountability, awareness and transparency in the management of governmental business (Ojo, 2014, p. 79). Budhiraja (2003) is of the view that the implementation will lead to Simple, Moral, Accountable, Responsive and Transparent (SMART) governance. Besides, it is believed that it will also bring about an efficient, speedy and transparent process of information dissemination to the public and other agencies enhance the performance of administrative activities both internally and externally and also enhance good governance (UNESCO, 2007). Regrettably, this is not the case in Nigeria. However, the tendencies of any challenge that will be peculiar to any policy of government is not being ruled out but it is pertinent to note that there are fundamental things that have to be addressed before one can expect any benefits from the policy of e-government in Nigeria public service. This also confirms the assertion of Dode (2007, p. 382) thus: The e-government practice is bound to meet with strong opposition from the bureaucratic quarters of the policy. By this, we mean the over-bloated public service whose members will analyse this practice as a deliberate attempt by the government to throw majority of their members out of their jobs. Majority of the public servants are thus, likely to use their positions to frustrate the effective application of e-government in Nigeria. They will definitely dislike a system that will reduce to the minimum, face-to-face contact between citizens and government service providers. By logical extension however, the implementation of e-government in the Nigerian public service is fraught with many challenges. According to Abdel-Fattah and Galal-Edeen (2008), the main challenge of e-government in the Nigerian public service is lack of trained and qualified personnel to handle and operate its infrastructures. They further opined that due to the high cost associated with the procurement and training of public servants with ICT skills, government sometimes develop cold feet in the real implementation of e-governance in the public service. In the same vein, Ayo & Ekong (2008) also emphasized the lack of skilled workers to handle various ICT services and their applications in achieving the successful implementation of e-governance in the government organisations. They also observed that the absence of government regulatory policy is a critical issue that needs urgent attention if e-governance is to be a reality in public sector. To them, for e-government to be effective and successfully implemented, experts would be needed to coordinate and operate the ICT-related infrastructures as the absence of competent personnel to handle IT infrastructure, will render the procurement of such infrastructures useless (Ayo & Ekong, 2008). Another challenge is associated with the state of electricity supply in Nigeria, which is unstable and irregular. This has constituted a major obstacle to achieving the purpose of e-governance in Nigeria. Okwueze (2010) also opined that sufficient and stable power supply is crucial to the effective implementation of e-government in the country’s public sector. In juxtaposition to what is obtainable in the public sector, most government agencies rely on generators for power supply and most times the generators do not have the required capacity to power the ICT facilities. Similar to this view,

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Gberevbie; Ayo; Iyoha; Duruji & Abasilim (2015) observed that it is absolutely necessary for the government to make provision for the needed infrastructure in electricity power supply, internet connectivity, telecommunications and computer hardware, optical fiber cables, among others for the successful implementation of e-government. This implies that the successful implementation of egovernment in the Nigerian public service is no small measure dependent on solving the erratic power supply problem, among others. For Bansode & Patil (2011, p. 58) the digital divide is another obstacle to effective implementation of e-government in Nigeria’s public sector. This simply means “the gap between those with regular, effective access to digital and information technology and those lacking this access”. Keniston (2003) simply sees digital divide as the widening gap of ICT knowledge between the rich and powerful who constitute part of the information age and the poor and powerless who do not. He further observed that digital divide is not only limited to the level of ICT knowledge between the rich and the poor but also associated with linguistic. To him, this divide accounts for the separation of those who can speak English from those who cannot. Another characteristic of this digital divide is manifested in the widening digital gap between the rich and poor nations and also the digital divide between a new elite group, which he called the “digerati”, that is, those who benefit from the enormous successful information technology industry and other knowledge based sectors of the economy such as biotechnology and pharmacology. The implication of this is that, the challenge of digital divide encompasses the access to technology hardware physically and the required skills and resources needed for the judicious application of its use. However, there are factors that are known to have contributed to this digital divide. For instance, factors like physical disability, physical access, access to the contents and lack of ICT skills contribute to the digital divide (Bansode & Patil, 2011). However, Olaopa (2014, p. 5) succinctly itemized “inadequate funds allocated to the egovernance projects, difficulty associated with streamlining various silos of e-Government projects already existing or being implemented prior to the creation of the Ministry of Communication Technology, disparity between urban and rural dwellers or those with low literacy levels in accessing the internet, potential to erode the privacy of the citizenry, perceived lack of value for money when the huge cost of deploying e-governance projects is compared to the actual value to the people, false sense of transparency as the challenges to the adoption and delivery of e-governance in Nigeria. Additionally, the following are also considered as factors impeding the effective implementation of e-governance in Nigeria’s public service: Lack of ICT Infrastructure: This is another crucial challenge to the implementation of egovernance in Nigeria’s public service. As it has been explained in the definition of e-governance above, it is the application of ICTs in the operations of government business. The Nigeria’s public service is still lacking in basic ICT infrastructure. For instance, some of the offices still lack common computers let alone the common skills for its operation. What you see in their daily activities is the traditional way of doing things. That is, they are still known for doing a lot of paper work, which if e-governance were embraced fully would have reduced. In a better case, you will see the combination of both the traditional way of doing things alongside the digital approach. There are still no access to internet network in most public sector offices, no regular power supply and so on. All these pose challenge to the implementation of e-governance in Nigeria’s public service (ITU, 2006; Adeyemo, *Corresponding author (Oleh Ezichi Kalu). E-mail: Olehkalu@gmail.com, ©2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN 2228-9860 eISSN 1906-9642 http://TUENGR.COM/V10/013.pdf DOI: 10.14456/ITJEMAST.2019.2

21

2011). Attitude or Resistance to Change: This is also a challenge in the public sector. Most of them are still used to the old way of carrying out government activities. That is, they are still known to be working with many papers, carrying of files from one desk to the other or from one office to the other. Their resistance to e-governance implementation in their services is what has culminated to the poor rating of the implementation of e-governance in the public service. Some of the reasons for this, is that most of the public servants are not computer literate, not qualified, have little or no training in the installation, maintenance, designing and implementation of ICT infrastructure. Lack of harmonised e-Government Interoperability Framework: The MDAs still face mountainous challenges because they operate in silos rather than having a coordinating body that would ensure that the implementation among them is interconnected, as it is being done in developed climes. The idea of harmonisation, according is to offer a seamless e-Government operation within the entire governance process, knowing that Information Technology, IT projects cannot be executed in silos.

4. CONCLUSION AND RECOMMENDATIONS It is necessary at this point to proffer lasting solutions to the challenges facing successful egovernment implementation in Nigeria’s public service. Because of the issues highlighted as the main challenges to e-government implementation in Nigeria’s public service, the following solutions are hereby recommended: The federal government should have the political will to embrace and implement e-government in Government Ministries, Departments and Agencies and should conduct the training required to ensure that public servants adopt e-government in their daily activities. Government Ministries, Departments and Agencies, should constitute E-government implementation committees saddled with the responsibility of working out modalities for effective implementation of the concept with feedback mechanism to ascertain implementation effectiveness. The ICT Ministry should collaborate with the implementation committees at different ministries/agencies including state ministries/agencies for performance evaluation as well as feedback generation to ensure effective egovernment implementation. The government should formulate ICT policies that will make computer literacy a condition for employment and promotion of public or civil servant both at the local, state and federal levels. The National Orientation Agency should create ICT awareness among public servants. With the above achieved, the challenges will be reduced to the barest minimum. Nigeria’s public service (Ministries, Departments and Agencies) must demonstrate a high level of e-government readiness in their activities. All that is needed must be put in place by the government, particularly that which is within their capacity. The government must ensure the availability of the necessary infrastructure that will facilitate the successful implementation of e-government in Nigeria’s public service. For instance, robust broadband services, required internet network and the availability of power supply, which has been identified, as one of the major challenges to e-government implementation in the public service has to be taken care of. This means that the success of e-government implementation in the public service is tied to the availability of electricity supply. Another factor to be considered is the Human factor. This is relevant because no technology can drive itself; it is the human element that will drive the

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Alisher R. Zhumaniezov

technology. Against this background, government should carefully address the issue of human factor which often manifests in resistance to change, nonchalant attitudes and the likes which are responsible for underutilization of most of the ICT facilities put in place by government especially in offices or departments that tend to embrace e-government in their operations, thereby sabotaging the good effort of the government. In addition, it is necessary for the government to come up with a regulatory policy, in particular, on the framework through legislation of e-government and other ICT-related issues as it pertains to the operations strategies among the tiers of government. By so doing, the public service will be aware on the areas that needs to be worked on, in order to actualize effective implementation of egovernment in Nigeria’s public service. The National Information Technology Development Agency, NITDA and other stakeholders should strategise on how to harmonise the e-Government Interoperability Framework, tagged NeGIF. The idea of harmonisation, will offer a seamless e-Government operation within the entire governance process, knowing that Information Technology, IT projects cannot be executed in silos. If adopted, Nigeria can have a workable document that creates a seamless synergy across all sectors of the economy. Another idea behind the framework is to ascertain if agencies wanting to implement IT projects have the capacity to implement such projects in order to have value for money, considering that Nigeria is already lagging behind in e-Government index. Before seeking this harmonised framework, NITDA should make it mandatory for all MDAs to seek its clearance before embarking on any implementation of any IT project, considering that e-Government is very important and Nigeria is lagging behind in it. The framework is about integrating IT projects in Ministries, Departments and Agencies, knowing that IT projects cannot be executed in silos. There is need to come up with a framework. Many nations have their own framework, but in Nigeria we are yet to have one. It is better late than never. The proposed framework when adopted would make e-Governance more practical in Nigeria because too many of e-government projects are being implemented in isolation. The challenges identified, it is believed that government and stakeholders in the ICT sector will, without, further delay find lasting solutions to them. To ensure lasting solutions to the challenges, the above recommendations should be embraced. I, therefore, submit that e-government remains the best and most powerful tool to facilitate efficient and effective service delivery that will bring about efficiency, transparency, accountability and effectiveness in government transactions and operations for Nigeria’s public service.

5. REFERENCES Adamolekun, L. (2002). Public Administration in Africa. Ibadan: Spectrum Books Limited. Abdel-Fattah, M & Galal, Edeen (2008).Toward Flexible Evaluation for E-Government Websites Equality: A Multi-Perspective Evaluation Framework. Proceedings of the 8th European Conference on e-government, July 10-11, 2017. *Corresponding author (Oleh Ezichi Kalu). E-mail: Olehkalu@gmail.com, ©2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN 2228-9860 eISSN 1906-9642 http://TUENGR.COM/V10/013.pdf DOI: 10.14456/ITJEMAST.2019.2

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Accenture (2005) Leadership in Customer service: New Expectations, New Experiences. Accenture (2006) Leadership in customer service: building the trust. Adebayo, A. (2000). Principles and Practice of Public Administration in Nigeria. Ibadan: Spectrum Books Ltd. Adeyemo, A. B. (2011). E-Government Implementation In Nigeria: An Assessment of Nigeria’s EGovernment Ranking. Journal of Internet and Information System. 2 (1), pp. 11-19. Agba, M. S.; Ochimana, G. E. & Abubakar, Y. I. (2013). Public Service Ethics and the Fight against Corruption in Nigeria: A Critical Analysis. Journal of Public Administration and Management Research. 2 (1), pp. 112-118. Ayo, C. K. (2009). Information Systems and Technologies. Lagos: Mckay Educational Series. Ayo, C. K. (2014). Information and Communication Technology as a lever for innovation in leadership. In T. Abioye., C. Awonuga and A. Amuwo. Leadership and Innovation in Africa’s Development Paradigm. Ota: Covenant University Press. Ayo, C. K. & Ekong, U. (2008). E-voting implementation in Nigeria: Prospects and challenges. Proceedings of the 8th European Conference on e-government, July 10-11, 2017. Backus, M. (2003). E-Governance and Developing Countries; Introductions and Examples. Research Report, no.3. April, www.ftpiicd/org/research/reports/pdf. Bansode, S. Y. & Patil, S. K. (2011). Bridging Digital Divide in India: Some Initiatives. Asia Pacific Journal of Library and Information Science. 1 (1), pp. 58-68. Budhiraja, R (2003). Electronic Governance – A Key Issue in the 21st Century, Additional Director, Electronic Governance Division, Ministry of Information Technology, Government of India. Available: http://www.mit.gov.in /eg/article2.htm. Dada, D. (2006). The Failure of E-Government in Developing. A Literature Review. The Electronic Journal of Information Systems in Developing Countries. 22 (3). Dode, R. O. (2007). Prospects of E-Government Implementation in Nigeria, 1st International Conference on Theory and Practice of Electronic Governance, Macao, China, pp. 380-383, December 10-13. Ebrahim, Z., Irani, Z. & AlShawi, S. (2003) E-government adoption: Analysis of adoption staged models Ezeani, E. O. (2006). Fundamentals of Public Administration. Enugu: Snaap Press Ltd. Gberevbie, D.; Ayo, C.; Iyoha., Duruji M. & Abasilim, U. (2015). E-Governance: Strategy for Militating NonInclusion of Citizens in Policy Making in Nigeria. 15th European Conference on eGovernment, University of Portsmouth, United Kingdom, 18-19 May 2018. Godse,

V. & Garg, A. (2007). From e-Government to e-Governance. Retrieved from https://www.vanguardngr.com/2018/05/nigeria-designs-first-framework-e-government-coordination/ accessed on 25th June, 2018

Grant, G. & Chau, D. (2006). Developing a Generic Framework for e-Government in Felix, B. (ed.) Advanced Topics in Global Information Management. Idea Group Inc (IGI). Heeks, R. (2001). Understanding E-Governance for Development. Government Working Paper Series, Paper No 11, Manchester Institute for Development Policy and management. University of Manchester. Ibietan, J. (2013). Corruption and Pubic Accountability in the Nigerian Public Sector: Interrogating the Omission. European Journal of Business Management, vol. 5 (15), pp. 41-48. Kabir, S. L. & Benjamin, H. M. (2011). Models of E-Government: Some Missing Links for Developing Countries”, Nepalese Journal of Public Policy and Governance, vol. 28, no.1, pp. 37-48. Keniston, K. (2003). The Four Digital Divides. Delhi: Sage Publishers.

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Okwueze, F. O. (2010). E-Governance as a Tool for Public Sector Development in Nigeria. Nsukka: Society for Research and Academic Excellence, Volume 2, http://academicexcellencesociety.com/e_governance_as_a_tool_for_public_sector%C2%AD_develo pment_in_nigeria.html Ojo, J. S. (2014). E-Governance: An Imperative for Sustainable Grassroots Development in Nigeria. Journal of Public Administration and Policy Research, vol. 6 (2), pp. 77-89. Olaopa, T. (2014). Seminar on Sharing Success Stories and Challenges in E- Governance/E-Administration. http://www.cafrad.org/Workshops/Tanger21-23_04_14/olaopa.pdf Rabaiah, A. & Vandijct, E. (2011). A Strategic Framework of e-Government: Generic and best Practice�; In Les Worrall (ed) Leading Issues in e-Government Research, Academic Publishing International Ltd. pp. 1-32. Shilubane, J. (2001). E-Government: An Overview, Service Delivery Review. A Learning Journal of Public Services Managers. Worrall, L. (2011). Leading Issues in E-Government Research. London: Academic Publishing International Ltd. UNESCO (2007). Curriculum Guide on E-Governance for African Government Institutions; African Training and Research Centre in Administration for Development. http://portal.unesco.org/ci/en/files/25720/11980630809curriculum_guide.pdf/curriculum%2Bguide.p df NITP

(2000). National Information Technology http://www.researchictafrica.net/countries/nigeria/Nigerian.

Policy,

Available

at

Weerakkody, V., Dwivedi, Y. K., Brooks, L. & Williams, M. D. (2007a) E-government implementation in Zambia: contributing factors. Electronic Government, an International Journal, 4, 484-508. Weerakkody, V., Janssen, M. & Hjort-Madsen, K. (2007b) Realizing Integrated E-Government Services: A European Perspective. Journal of Cases in E- Commerce, Idea Group, 3, 14-38. Weerakkody, V., Jones, S. & Olsen, E. (2007c) E-government: A Comparison of Strategies in Local Authorities in the Uk and Norway. International Journal of Electronic Business, 5,141-159. Oleh Ezichi Kalu is associated with International University of Malaya-Wales, Kuala Lumpur, MALAYSIA. He is interested in e-government managements.

Dr.Ridzuan Masri is a faculty member of School of Business, International University of Malaya-Wales, Kuala Lumpur, MALAYSIA. He is interested in strategic managements.

*Corresponding author (Oleh Ezichi Kalu). E-mail: Olehkalu@gmail.com, Š2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN 2228-9860 eISSN 1906-9642 http://TUENGR.COM/V10/013.pdf DOI: 10.14456/ITJEMAST.2019.2

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METHODOLOGY OF CONSTRUCTION AND TREND SHAPING FOR ECONOMIC PROFILE OF POVERTY Milyausha R. Zainullina a*, Alina V. Makhiyanova b, Elmira F. Khuzieva b, Rustam M. Nagimov a a b

Kazan Federal University, Kazan, RUSSIA Kazan State Power Engineering University, Kazan, RUSSIA ARTICLEINFO

A B S T RA C T

Article history: Received 27 July 2018 Received in revised form 29 November 2018 Accepted 10 December 2018 Available online 12 December 2018

The change of the economic situation in the Republic of Tatarstan (Russian Federation region) gave rise to the differentiation in society according to population income level. The study proposes to assess the level of society stratification based on the population survey and statistical indicators. The article presents the author's methodology of population economic portrait development, the materials of applied sociological research are presented that demonstrate its approbation. They perform the comparative analysis of economic activity indexes, the assessments of family living standards, financial situation and the republic economy as a whole. Four new indexes are being developed and tested: the assessment of the financial situation, income and the ability to make purchases and savings, which form the basis of poverty economic portrait as a whole. The social survey is supported by the analysis of statistical indicators by the index of the gross regional product physical volume, the dynamics of unemployed number, the index of industrial production, the dynamics of monetary incomes per capita on average and by the average monthly nominal salary.

Keywords: Economic portrait; Economic activity indices; Social stratum; Development method.

© 2019 INT TRANS J ENG MANAG SCI TECH.

1. INTRODUCTION The economic portrait of the poor is characterized by an intermediate position between the middle class and the poor. This aspect promotes the differentiation within this layer, because the poor can be both from the middle strata, who lost their financial possibilities due to life circumstances, and the poor people who managed to improve their socioeconomic situation in a short period of time. The diversity in the economic portrait of poverty is also contributed by the reasons according to which a person found himself in this position within the social structure of society. There is a person's belonging to such social groups as invalids, pensioners, the people with a high incidence rate, the presence of a large number of dependents, etc., which determines his belonging to the poor ones. One *Corresponding author (Milyausha R. Zainullina). E-mail: milyausha-zainul@list.ru, ©2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN 2228-9860 eISSN 1906-9642 http://TUENGR.COM/V10/027.pdf DOI: 10.14456/ITJEMAST.2019.3

27

should not exclude the subjective factors that are associated with the unwillingness of a person to change something in his life. The thing is about a special culture of poverty, which is transmitted in the process of socialization. Thus, in the context of increasing polarization of different status groups, the need to analyze the phenomena taking place in the dynamics and to draw up an economic portrait of poverty is increased.

2. MATERIALS AND METHODS In order to create an author's methodology for an economic portrait of poverty compilation, it is proposed to synthesize the following two approaches. It is proposed to include the analysis of data characterizing the income and property differentiation among the poor, based on the data of a sociological survey among the representatives of this stratum (Garayeva, 2012; Tikhonova et al, 2004; Tikhonova, 2014). This makes the basis of the first indicators for their measurement. The second approach is focused on the use of population economic activity indices and the development of four new indices, which will form the basis of the population economic portrait and can be used to study other social strata of society (Yaroshenko, 2010; Tikhonova, 2014; Slobodenyuk, 2014). The calculation method is based on the calculation of the arithmetic value from the subscripts. The mean arithmetic value is the most commonly used value and has the following form: ∑đ?‘‹ đ?‘‹Ě…đ?‘Žđ?‘?,đ?‘›đ?‘?đ?‘œđ?‘?đ?‘š. = đ?‘

(1),

where X are the values for which the mean value has to be calculated; N is the total number of X values (the number of units in the studied amount). Subscripts are designed according to the following procedure: the share of negative answers is subtracted from the share of positive answers and 100 is added to this difference in order to exclude the appearance of negative values (On the indexes of population economic activity, 2016). Four indexes were developed and tested: the index of the ability assessment to make purchases and savings, the assessment of the financial situation and the level of income. The collection of empirical information was carried out through the survey using the target sample, which initially made 350 respondents. The basis for the respondent's entry into the sample was the level of his income, which should not exceed the subsistence minimum in the Republic of Tatarstan according to the selection criteria per one family member (on the subsistence minimum in the Republic of Tatarstan, 2016). In addition to our sociological survey, we analyzed the number of statistical indicators that complement the picture of the general economic state and compared the subjective assessments of respondents with the general trend in the economic sphere (Kaigorodova et al, 2014; Mustafina et al , 2017; Sayfudinova et al, 2016; Nagimova et al, 2017; Sayfudinova et al, 2016).

3. RESULTS AND DISCUSSION The consumer sentiment index is calculated on the basis of respondents' answers to five questions related to the current financial situation of families and the expectations of its change, the prospects for the development of the economy as a whole and the consumer market situation. According to the

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Milyausha R. Zainullina, Alina V. Makhiyanova, Elmira F. Khuzieva, and Rustam M. Nagimov

obtained results, the index took an average value (101.5 points). On that basis, we can state that the optimistic and pessimistic shares are the same in respect of consumer sentiments. The index of the current state of the economy took a negative value, which indicates the dominance of low estimates concerning the current state of the economy in respondent's residence place (97.7 points). In other words, there are economic circumstances of people lives that do not suit them completely. In its turn, the private index of consumer expectations took a positive value, although it did not significantly exceed the average values (104.1 points). Based on consumer expectation level increase, we can state that respondents are optimistic about the future and believe in their situation improvement (see Figure 1). As can be seen from Figure 1 and 2, comparing the population surveys in 2015 and 2016 with the economic growth in 2011-2012 and the gradual decrease of the gross regional product physical volume index in 2015 and 2016, it can be concluded that the subjective estimates in this case coincided with the objective statistical indicators.

Figure 1: Indices of population economic activity. 110 105.7

105.5

105

102.4

102.51

102.1 100.01

100 95 2011

2012

2013

2014

2015

2016

Figure 2: The dynamics of the gross regional product physical volume index (at constant prices) (Statistical collection of 2015, statistical compilation, 2016). The self-esteem index shows the degree of population willingness to take the responsibility for the basic parameters of their lives, as well as the readiness for decision make. It also includes the assessment of local authority independence and shows their independence from external circumstances. Its value was 101.6 points, which indicates the presence of two polar groups. A more detailed study of the questions made it possible to develop the following picture. One third of respondents believes that the independence of local authorities depends on the republic residents and local authorities (32.5%). Almost every fifth respondent (22.1%) says about the influence of external circumstances. Most of them note that everything depends on external circumstances and the republic residents in an equal measure (44.8%). *Corresponding author (Milyausha R. Zainullina). E-mail: milyausha-zainul@list.ru, Š2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN 2228-9860 eISSN 1906-9642 http://TUENGR.COM/V10/027.pdf DOI: 10.14456/ITJEMAST.2019.3

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However, the picture looks more pessimistic concerning the financial situation. In this case, a greater percentage was demonstrated by the variant of personal and external factor mutual influence (64.3%). At the same time, the share of those taking their own part in this matter makes half the number of those who see the cause of life as the result of external circumstances (14.3 to 21.4%, respectively). The Labor Resource Mobility Index characterizes the population assessment of the regional opportunities for the implementation of its labor potential. The index indicates the possibility of unemployment growth (reduction) in the region, as well as the possibility of internal migration of labor resources and is calculated on the basis of answers to these questions: 1) Do you think that the republic unemployment will grow, decrease or will remain approximately at the same level in the next 12 months? 2) Do you think that now is good or bad time to visit our republic and work in it? 3) Is it worth to stay to live and work in our republic or is it better go to another region of Russia? As for the respondent forecasts concerning the unemployment for the coming year, then, according to the majority, it will remain approximately at the same level (45.5%). A slightly smaller number of respondents believe that unemployment will grow (42.2%). And the smallest number of respondents suggests that its level will decrease (11.7%) (see Figure 3).

60% 40% 20% 0%

45.5%

42.2%

11.7%

will grow

will remain at will decrease the same level

Figure 3: The predictions of the unemployment rate in the Republic of Tatarstan In the opinion of every fourth person, it is the optimal time now to come to our republic in search of a better life (24%). A smaller number of respondents believe that it is the bad time now to move to and work in our republic (14.9%). The majority of respondents estimate the situation in the republic as a neutral one (61%). 100

94.8

84.6

80.7

80.8

82

77.5

2011

2012

2013

2014

2015

2016

50 0 Figure 4: The dynamics of unemployed number (according to the methodology of ILO, on the average per year), thousand people (Statistical collection of 2015, statistical compilation, 2016). Comparing the population polls on unemployment with real statistical indicators, we can conclude that the subjective estimates also coincided with the current situation. There are 3885 thousand people in the Republic of Tatarstan, and unemployment is about 1.9-2.11%. This is a small

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Milyausha R. Zainullina, Alina V. Makhiyanova, Elmira F. Khuzieva, and Rustam M. Nagimov

percentage for the market economy, since an acceptable unemployment rate is 4-5% on the average. Is it worth living and working in our republic or are other regions of Russia better for this? The majority thinks that it is better for someone to leave, and someone should stay (63%). 9.1% of respondents are sure that it is worth leaving the republic. And it is definitely worth staying in the opinion of 27.3% of respondents (see Figure 5). 63.0% 80% 60% 40% 20% 0%

27.3% 9.1%

definitely worth a someone better definitely worth it stay off and someone to leave the can stay country Figure 5: The answers to the question: ÂŤIs it worth living and working in our republic or are other regions of Russia better for this?Âť The majority of the respondents believe that the increase of social benefits (57.8%) will lead to the reduction of poor people number in the country, while 22.7% of the survey participants believe that the expansion of their types will help. This measure, like the assistance in the search for additional work, is supported by 40.9%, in the organization of one's own business - 36.4% of respondents. 16.2% of the respondents say that no measures are needed (see Figure 6). Thus, the presented measures were conditionally divided into two groups: active and passive one. The first supposed the assistance with the subsequent development of the actions by the one who needs most of all. This is the help during the organization of your own business and the search for additional work. Passive measures, in its turn, were focused on benefit type and amount increase. In the aggregate, the picture of economic activity indices is the following one. The index of labor mobility is the leading one, which indicates a positive assessment of the employment situation by respondents in their place of residence. The index of consumer expectations is the second one in the rating, being a kind of social well-being indicator and social optimism in general. the increase in social security benefits assistance in finding additional work assisting in the organization of own business the increase in social benefits any measures taken don't need

57.8% 40.9% 36.4% 22.7% 16.2% 0%

10% 20% 30% 40% 50% 60% 70%

Figure 6: The measures reducing the number of poor people. The fact that the indices of consumer sentiment and independence-self-worth have taken the average values, indicates an internal differentiation within the surveyed group. In other words, the number of respondents willing to take the responsibility for the basic parameters of their lives is approximately equal to the number of those who are not ready for such responsibility and making *Corresponding author (Milyausha R. Zainullina). E-mail: milyausha-zainul@list.ru, Š2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN 2228-9860 eISSN 1906-9642 http://TUENGR.COM/V10/027.pdf DOI: 10.14456/ITJEMAST.2019.3

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decisions as a whole. The index of the current state of the economy took a negative value and indicates a negative assessment of the respondents' life economic circumstances (see Figure 7). As can be seen by Figure 7 and 8, the index of the current state of the economy is negative and this is confirmed by the statistical values of the industrial production index. Since 2013 this rate has slowed down and could not reach the level of 2011 and 2012 even by 2016. One of the tasks of the study was the development of copyright indices, in accordance with which they planned to supplement the economic portrait of the poor people. the index of mobility of labor resources the index of consumer expectations index of autonomy-of self-worth the index of consumer sentiment the index of the current state of the economy

110 104 102 102 98 90 92 94 96 98 100 102 104 106 108 110 112

Figure 7: The rating of economic activity indices

110

106.3

106.9

105

101.7

101.3

101.5

2013

2014

2015

103.5

100 95 2011

2012

2016

Figure 8: The dynamics of industrial production index (Statistical collection of 2015, statistical compilation, 2016). In particular, the respondents were asked, on whom (or what) their financial well-being mainly depends. According to the information received, 21.4% of the respondents believe that external circumstances provoke the situation. 14.3% of the respondents believe that the financial situation is entirely the result of their personal efforts and achievements. The majority believes that the financial well-being is equally dependent on the person himself and on external circumstances (64.3%). Thus, to some extent, the proposed assumption was confirmed (see Figure 9). 100% 50%

63.4% 21.4%

14.3%

0% from external circumstances

equally from me and from external circumstances

just me

Figure 9: The answer to the question: "In your opinion, does your financial well-being mainly depend on you or on external circumstances (other people, leadership, etc.)?" We asked the respondents to specify in which case the ability to make savings depends on external circumstances, and in which on them. An equal number of respondents answered that everything depends on them personally and on external circumstances (22.1% for each option). The

32

Milyausha R. Zainullina, Alina V. Makhiyanova, Elmira F. Khuzieva, and Rustam M. Nagimov

rest consider that one should blame themselves and external circumstances (55.4%) (see Figure 10). 55.4% 22.1%

22.1%

60% 40% 20% 0%

from external equally from me circumstances and from external circumstances

just me

Figure 10: The answers to the question: "Do you think your ability to make savings depends mainly on you or on external circumstances (other people, bosses, etc.)?" Thus, the calculation of indices is based on the calculation of the arithmetic mean between positive and negative answers. Therefore, the rating of author's indexes was compiled, according to which the leading position was taken by the index of the possibility to make savings. The index of the opportunity to make purchases is slightly behind in terms of indicators. The remaining indicators took a negative value, which indicates that the respondents explain the existing financial position and the level of income that they have, rather by the influence of external circumstances than by their personal actions (see Figure 11). 92.9 92.9

income financial situation the opportunity to shop the opportunity to make savings

98.1 100.0

88.0 90.0 92.0 94.0 96.0 98.0 100.0 Figure 11: The rating of capability evaluation indexes 40000 30000

20222.6

24004.3

26161.2

2012

2013

29829.7

31391.3

32609.3

2014

2015

2016

20000 10000 0 2011

Figure 12: The dynamics of monetary monthly income in rubles per capita on the average (Statistical collection of 2015, statistical compilation, 2016). As can be seen on Figure 11, the material situation and income level are estimated by respondents as the decrease, although Figures 12 and 13 indicate an average increase of revenues and an average monthly nominal payment. This mismatch is explained either by the high rate of inflation, which devalues the income received, or by the fact that the average indicators do not characterize the general trend in income generation among poor. That is, the distribution of income in society is highly differentiated. *Corresponding author (Milyausha R. Zainullina). E-mail: milyausha-zainul@list.ru, Š2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN 2228-9860 eISSN 1906-9642 http://TUENGR.COM/V10/027.pdf DOI: 10.14456/ITJEMAST.2019.3

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40000 30000 20000 10000 0

28293.6

29147.1

20009.4

26034.5

30224.4

23233.7

2011

2012

2013

2014

2015

2016

Figure 13: The dynamics of the average monthly nominal accrued employee wages in rubles (Statistical collection of 2015, statistical compilation, 2016).

4. CONCLUSION The indices of population economic activity acted as the basis for an economic portrait development among the poor people. According to the obtained results, against the background of fairly negative assessments concerning the current state of the economy, the representatives of this layer are still optimistic about the future and believe in their financial situation improvement. In terms of consumer sentiments, they recorded the presence of two polar groups, whose representatives can be conditionally called pessimists and optimists. A similar differentiation is present in the index demonstrating the respondent's willingness to bear personal responsibility for the basic parameters of his life. At the same time, the majority assesses the conditions for the implementation of their labor potential positively and is ready for its practical implementation in general.

5. SUMMARY According to the obtained data, the survey participants can be conditionally divided into two roughly equal groups: positively and negatively assessing their ability to make savings. In terms of the ability to make purchases there was a similar situation with the only difference in the fact that the number of those responsible for the existing financial situation is somewhat less than those who accuse external circumstances. Among the measures improving the situation of the poor people, the paternalistic measures, aimed at the size and the types of social benefit increase, are the leading ones. In its turn, the measures aimed at life strategy activation are less demanded, although they are not excluded by a certain percentage of respondents. Thus, the proposed methodology, developed and tested indices can be used to monitor the current trends and changes in the economic portrait of the poor people. Also, statistical indicators were analyzed after the study that either confirmed or denied the survey results. In most cases, respondents' responses correlate with the statistical indicators. The discrepancy between the estimates is observed only in terms of income levels. This is because the averaged data do not always characterize the total amount.

6. ACKNOWLEDGEMENTS The work is performed according to the Russian Government Program of Competitive Growth of Kazan Federal University.

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Milyausha R. Zainullina, Alina V. Makhiyanova, Elmira F. Khuzieva, and Rustam M. Nagimov

7. REFERENCES Garayeva, D. F. (2012). Poverty as the factor reducing population life quality. Economics. No. 2. pp. 38 - 41. Tikhonova, N. E., Davydova, N. M., Popova, I. P. (2004). The index of living standards and the model of Russian society stratification. Sociological research. No. 9. Yaroshenko, S. (2010). "New" poverty in Russia after socialism. Journal of Social Research. No. 2. pp. 221-251. Tikhonova, N. E. (2014). Structural Preconditions and the Main Types of Russian Poverty. Social Sciences and Modernity. No. 2. pp. 5-16. Tikhonova, N. E. (2014). Phenomenon of poverty in modern Russia. Sociological research. No. 1. pp. 7–19 Slobodenyuk, E. D. (2014). Institutional factors of stagnant poverty development in modern Russia // Journal of Institutional Studies. V.6. No. 3. pp. 146-159. On

the subsistence minimum in the Republic of Tatarstan, (2016). http://www.assessor.ru/notebook/region/minimum-tatarstan/ (reference date: 30.11.2016).

see:

URL:

On the indexes of population economic activity [Electronic resource]. (2016). URL: http://wciom.ru/about.html; Levada Center [Electronic resource]. URL: http://www.levada.ru/indexi.html. Kaigorodova, G. N., Mustafina, A. A., Koth, I. A. (2014). Тhe influence of forms of insurance coverage organization on population's life quality. Mediterranean Journal of Social Sciences. Vol. 5. No. 24. pp. 118-123. Mustafina, A. A, Kaigorodova, G. N, Pyrkova, G. K. (2017). Sanatorium and resort treatment as a factor of economic development in the republic of Tatarstan. Astra Salvensis. – Supplement. No.2. pp. 267-276. Sayfudinova, N. Z., Safiullin, M. R., Safiullin, A. R., Zainullina, M. R. (2016). Modeling of economic system of the development of the Russian Federation system. Journal of Economics and Economic Education Research. Vol. 17. Issue: SpecialIssue 2. pp. 334–346. Nagimova, A., Zainullina, M., Elvira, N. (2017). Economic Conditions on the Quality of Life: Republic of Tatarstan. Tarih kultur ve sanat arastirmalari dergisi-journal of history culture and art research. Vol. 6. Issue: 5 pp. 37 – 46. Sayfudinova, N. Z., Timofeev, R. A., Makhiyanova, A. V. (2016). Methodological basis of the regional systems socioeconomic profile using survey method. Journal of Economics and Economic Education Research 17(SpecialIssue2), pp. 325-333. Republic of Tatarstan. Statistical collection of 2015. Federal Service of State Statistics. Territorial body of state statistics federal service for the Republic of Tatarstan. Kazan 2016. - 340 p. The Republic of Tatarstan statistical compilation, 2016. Federal Service of State Statistics. Territorial body of the federal service of state statistics for the Republic of Tatarstan. Kazan 2017. - 333 p. Dr.Milyausha R. Zainullina is an Associate Professor of General Management Department, Institute of Management, Economics and Finance, Kazan Federal University. Dr.Zainullina obtained a PhD in Economics. Dr.Zainullina is also Head of Department of Micro and Mezo-research Center of Advanced Economic Research Academy of Sciences of the Republic of Tatarstan. Dr. Makhiyanova Alina Vladimirovna is an Associate Professor of Institute of Management, Kazan State Power Engineering University. She received a Doctor of Sociological Sciences degree. She is interested in strategic managements.

Dr.Elmira F. Khuzieva is an Associate Professor of Institute of Management, Kazan State Power Engineering University, Kazan, Russia.

Dr.Rustam M. Nagimov is associated with Kazan Federal University.

*Corresponding author (Milyausha R. Zainullina). E-mail: milyausha-zainul@list.ru, ©2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN 2228-9860 eISSN 1906-9642 http://TUENGR.COM/V10/027.pdf DOI: 10.14456/ITJEMAST.2019.3

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ANALYSIS OF CLIENT DEPENDENCE (CD) AND VENDOR INNOVATION (VI) AND THE MODERATING ROLE OF THE CORPORATE CULTURE Hojjat JOUDAKI a, and Erfan ABSARI a* a

Department of Marketing Management, Faculty of Management, Islamic Azad University Central Tehran Branch, Tehran, IRAN. ARTICLEINFO

A B S T RA C T

Article history: Received 08 October 2018 Received in revised form 04 December 2018 Accepted 11 December 2018 Available online 12 December 2018

Present study was conducted to examine client dependency, vendor innovation (VI), and the moderating role of corporate culture. The study was quantitative in terms of nature, and applied in terms of purpose conducted in correlation design. The population was all employees, who were 95 people and clients of Varamin Telecommunications Department in a specified period with uncertain number. The employees filled out VI and corporate culture questionnaires, and the clients answered client dependence (CD) questionnaire. Given the number of population members and based on Morgan's table, 76 subjects are selected for the vendor and 384 for clients. The tool used in this study was three questionnaires: CD, VI, and corporate culture. Prior to data analysis, heuristic analysis of the data was performed. Correlation test was used to describe and measure the relationship between variables, and SPSS® and PLS (Partial Least Squares regression) software was used to test the hypotheses. The results indicated that CD affects corporate culture. Corporate culture affects VI. Client dependency does not directly affect VI, but it has an indirect effect on VI through corporate culture.

Keywords: Client dependency; Corporate culture; SPSS; PLS.; Reliability of indicators of variables

© 2019 INT TRANS J ENG MANAG SCI TECH.

1. INTRODUCTION With the drastic increase in the technological communications between organizations and the high pace of technological change, organizations have become so dependent with each other to be able survive and engage in competing with others. It is believed that in some cases collaboration between organizations could create innovations in internal development (Fisher, 2006). Vendor innovation (VI) and client dependence (CD) are new concepts attracting the attention of researchers. In this regard, contradictory results have been achieved about the impact of CD on VI. Some studies indicated that excessive CD to the organization creates power inequality and destroys flexibility (Gassmann et al., 2010; Johnsen & Lacoste, 2016). While in other contexts, CD on the organization creates trust and communication and coordination, enabling the service provider or product vendor *Corresponding author (Erfan ABSARI). E-mail: Erfanabsari@gmail.com, ©2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN 2228-9860 eISSN 1906-9642 http://TUENGR.COM/V10/037.pdf DOI: 10.14456/ITJEMAST.2019.4

37

to discover more innovative actions (Sivadas & Dwyer, 2000; Varadarajan & Cunningham, 1995).

2. RESEARCH THEORY FRAMEWORK 2.1 CD CD is of the important factors in consumer behavior and in the continuing client-company relationship. Dependence is usually categorized as a part of the economic outlook of the relationships because the consumer measures the costs and benefits of staying with a company. Thus, when a client is excessively dependent on a service provider, he is so willing to respond to some of its specific policies, programs and requests, as otherwise it might mean the loss of the service provider or parts of the value received from the service provider (Ashley et al., 2011).

2.2 VENDOR INNOVATION (VI) VI is usually defined as the adoption of the idea or behavior of a product, service, device, system, policy, or program approved of by the organization (Duncan & Holbick, 1973; Damanpour, 2000).

2.3 CORPORATE CULTURE (CC) It is a set of methods, beliefs, perceptions and inferences and thinking methods in which the members of the organization have some commonalities, and CC is the personality of the organization and the secret force that goes beyond the tangibility of the organization (Daft, 1998).

2.4 REVIEW OF LITERATURE Some studies have indicated that interdependence of the vendor and cent increases the opportunity for institutional change as it creates actors for the creation of new joint institutions (Furnari, 2016), but excessive dependence enables the client to preserve his status (Furnari, 2016). Likewise, excessive dependence on business partners will probably prevent the desire of one or both actors (vendor and client) to change due to lack of trust, opportunistic behavioral patterns, or severe dissatisfaction in the results of this asymmetric relationship (Johnsen, 2006; Lacoste, 2016; Mitrga, 2006; Zolkiewski, 2012; Rosene, 2003). The relationship between CC and company performance aspects has been studied in a seminal study (Quinn and Rohrbo, 1983). Different studies show that dominant CC affects VI capabilities (Hult, 2006; Tellis, 1998; Hurley, 2006; Cluely, 2014).

2.5 CONCEPTUAL FRAMEWORK OF THE STUDY In line with the literature review and the aim of study as described at the start of the paper, the conceptual framework of the study was configured as demonstrated in Figure 1.

Figure 1: Conceptual model

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Alisher R. Zhumaniezov

3. METHODOLOGY The study was quantitative in terms of nature and applied in terms of its purpose conducted in correlation design. Presenting the results to the education authorities for better decisions and boosting their efficiency is of the applied goals of the study. As the correlation between variables was analyzed, the study was descriptive-correlation type because correlation refers to the relationship between two or more variables that can be converted into quantity. The population was all employees, who were 95 people and clients of Varamin Telecommunications Department in a specified period with uncertain number. The employees filled out VI and corporate culture questionnaires, and the clients answered CD questionnaire. Given the number of population members and based on Morgan's table, 76 subjects were selected for the vendor and 384 for clients. The tool used in this study was three questionnaires. Prior to data analysis, heuristic analysis of the data was performed. Correlation test was used to describe and measure the relationship between variables, and SPSSÂŽ and PLS software was used to test the hypotheses.

3.1 EXAMINATION FOR THE NORMALITY OF THE DATA Skewness and kurtosis tests were used to test the normality of the variables, whose results are presented in the Table 1. As can be seen, as the range of skewness and kurtosis numbers is between 1 and -1, the variable distribution has a normal kurtosis (Plant, 2009). Table 1: Results of normal data test Variable CD VI CC

Skewness 0.287 -0.332 0.707

Kurtosis 0.459 -0.326 -0.237

3.2 KOLMOGOROV-SMIRNOV TEST In the present study, Kolmogorov-Smirnov test was used to verify the normality of the data or it having skewness or kurtosis to ensure the normal distribution. Table 2: The results of the Kolmogorov-Smirnov test Variable CD VI CC

Test statistic 1.115 0.999 0.310

Sig. 0.153 0.271 0.545

As the significance level of the test for all variables is higher than 0.05, the normality of the variables is accepted.

3.3 RESEARCH MODEL In any study, by collecting data and information in an accurate and scientific way, as well as analyzing them, the researcher strives to answer the research questions and evaluate the hypotheses derived from the theoretical basics. Thus, according to the results of the statistical analysis, the researcher opines on the hypotheses and confirms or rejects them according to the results. Through data analysis, the following structural equation model is obtained: *Corresponding author (Erfan ABSARI). E-mail: Erfanabsari@gmail.com, Š2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN 2228-9860 eISSN 1906-9642 http://TUENGR.COM/V10/037.pdf DOI: 10.14456/ITJEMAST.2019.4

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Figure 3: Conceptual model fitted in standard estimation.

Figure 4: Conceptual model fitted in the significant state of the parameters. In this model, Figure 4, path coefficients or beta coefficients (β) are determined. P values are also shown in Figure 5. Other outputs of the software, as seen in the Figure 4, are the R2 coefficients, which is represented in Figure 4: within the circle of each endogenous latent variable (i.e. the variable that is assumed to be affected by one or more other variables before). This coefficient shows a percentage of the variance of the latent variable, explained by the latent variables affecting it (Cook, 2010). Thus, for the client orientation that is endogenous and affected by other variables, R2 is set 0.142. According to the results obtained by Smart PLS software, we analyzed and interpreted the internal and external models (measurement and structural models) as well as the research hypotheses.

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A structural equation model, in solving which partial least squares (PLS) is used, should be analyzed and interpreted in two stages. First, the model of measurement and then the structural model will be analyzed and interpreted (Sanchez and Liro, 2010). The purpose of studying the measurement model is examining the weight and load analysis of the latent variables, and the purpose of studying the structural model is to study the path coefficients between the latent variables.

3.4 ANALYSIS OF THE MEASUREMENT MODEL At this stage, it is determined whether theoretical concepts are correctly measured by the observed variables or not. For this purpose, their validity and reliability are tested. In a PLS model, reliability of each indicator of the latent variable (Individual reliability of each item for constructs), internal consistency as well as construct validity and convergent validity are analyzed. Table 3: Value of factor loading of the indicators of latent variables Latent variables Indicators EN1 EN2 EN3 EN4 EN5 EN6 EN7 EN8 EN9 EN10 EN11 EN12 EN13 EN14 EN16 EN17 EN18 OL2 OL3 OL4 OL7 OL8 OL9 OL10 OL11 OL12 OL13 OL14 OL15 CS1 CS2 CS3 CS4 CS5 CS6 CS7 CS8 CS9 CS10 CS11 CS12

CD

VI

CC

P values

0.871 0.952 0.983 0.980 0.973 0.972 0.964 0.995 0.981 0.998 0.984 0.909

<0.05 <0.05 <0.05 <0.05 <0.05 <0.05 <0.005 <0.005 <0.005 <0.005 <0.005 <0.005 <0.005 <0.005 <0.005 <0.005 <0.05 <0.05 <0.05 <0.05 <0.05 <0.05 <0.05 <0.05 <0.05 <0.05 <0.05 <0.05 <0.05 <0.05 <0.05 <0.05 <0.05 <0.05 <0.05 <0.05 <0.05 <0.05 <0.05 <0.05 <0.05

0.774 0.785 0.796 0.767 0.757 0.730 0.725 0.895 0.743 0.750 0.769 0.745 0.737 0.657 0.833 0.691 0.778 0.717 0.623 0.540 0.735 0.803 0.830 0.794 0.686 0.756 0.689 0.739 0.523

*Corresponding author (Erfan ABSARI). E-mail: Erfanabsari@gmail.com, Š2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN 2228-9860 eISSN 1906-9642 http://TUENGR.COM/V10/037.pdf DOI: 10.14456/ITJEMAST.2019.4

41

3.5 RELIABILITY OF INDICATORS OF VARIABLES The reliability of each of the indicators of the latent variables in the PLS model is determined by the factor loading of each indicator. The value of each factor loading of indicators of latent variable should be greater than or equal to 0.4 (Falker & Miller, 1992). In the Table 3, the factor loading for each indicator is visible for the latent variables. As is seen in Table 3, all the values related to the latent variables specified in the colored homes are greater than 0.4. Thus, it can be said that the measurement model has sufficient reliability regarding the indicators of the latent variables. Table 3, the probability values (P values) are shown for the indicators. These values are usually introduced as the validity parameters associated with the confirmatory factor analysis as the relationships between the indicators and the latent variables are specified beforehand. As is seen, all probability values are less than 0.05 and the research tool has a proper validity In addition, the factor loadings are used to examine the convergent validity of the research tool. A measuring tool has a convergent validity, provided that the questions (indicators) related to each latent variable are already understood by the respondent, as desired by the designer. Two criteria must be met to prove that the research tool has convergent validity: first, the probability values should be less than 0.05, and second, the values of the corresponding factor loadings should be greater than or equal to 0.5. As is seen in Table 3, both criteria in question for the current research tool and therefore the research questionnaire have an proper convergent validity.

3.6 CONSTRUCTION FOR RELIABILITY (INTERNAL CONSISTENCY) Construct reliability enables the evaluation of the internal consistency of the indicators measuring a concept. In other words, construct reliability shows with what accuracy the observed variables (indicators) measure the variables. Composite reliability index is presented in the PLS model to measure this reliability. This index is calculated based on Cronbach Alpha coefficient. The value of this index should be greater than or equal to 0.6 (Nunnally,1978). Table 4 shows the value of construct reliability for each of the latent variables. Table 4: Composite reliability and Cronbach alpha of the main variables Variable Cronbach alpha Cronbach alpha

CD 0.949 0.958

VI 0.906 0.922

CC 0.952 0.933

As can be seen, Cronbach's alpha coefficient and composite reliability are shown in Table 4, and it is seen that these coefficients are all higher than 0.6. Thus, the measurement model has good construct reliability.

3.7 CONVERGENT VALIDITY The convergent validity is analyzed in PLS model by Average variance extracted (AVE). This index shows the variance that an existing construct (latent variable) derives from its indicators. For this criterion, Farnell and Locker (1981) suggest values greater than 0.5, as this ensures that at least 50% of the variance of a construct is defined by its markers. The results of the convergent validity study are presented in this paper. Table 5: Convergent validity of constructs (latent variables) Latent variable Convergent validity AVE

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Alisher R. Zhumaniezov

CD

VI

CC

0.575

0.502

0.928

As is seen in Table 5, all the values of AVE are greater than 0.5, so the measurement model has an appropriate convergent validity.

3.8 STRUCTURAL MODEL ANALYSIS The predictive power of the designed model is analyzed using the value of the variance explained (R ) for dependent variables (Leal and Roldán, 2001; Falk & Miller, 1998; China, 1998). Falk and Miller (1992) stated values greater than or equal to 0.1 for the explained variance. In the present study, given the values in Table 6, one can conclude that the structural model of the present research has enough predictive power. In other words, about 12% of variance of clients' satisfaction is explained by the variables entering the model, which is an acceptable value. Table 6: Variance explained by the dependent variable 2

Index Dependent variable VI

R2 0.123

Concerning the issues mentioned on the analysis of the model, it is seen that all the indicators studied have the necessary conditions, so the proposed model has sufficient predictive power in this research. After analyzing and measurement model, we studied the research hypotheses.

4. TESTING THE HYPOTHESES 4.1 STUDYING THE HYPOTHESES Hypotheses and test results are given in Table 7. Table 7: Path coefficient between variables Hypothesis CD  VI CD  CC CC  VI

Path coefficient 0.130 0.669 0.364

t-value 0.813 11.966 2.370

Test result Rejected Confirmed Confirmed

Table 8: Path coefficient between CD and VI through CC Indirect variable CD  VI

Through CC

Test result Confirmed

4.2 EVALUATION OF MODEL FIT INDICES Cross-validation, including CV-Communality and CV-Redundancy, has been used to evaluate the quality or credibility of the model. CV-Communality measures the quality of each block's measurement model. CV-Redundancy, also called the Aston-Gayer Q2, measures the quality of the structural model for each inbound block, considering the measurement model. The positive values of these indices show a suitable and acceptable quality of the measurement and structural model. Table 9 presents the values of each of the indices for independent and dependent variables. As is seen, the indicators are positive and larger than zero. Table 9: CV-Communality (CV Com) and CV-Redundancy (CV Red) Variable CD VI CC

CV Com 0.514 0.907 0.411

CV Red 0.514 0.184 0.206

*Corresponding author (Erfan ABSARI). E-mail: Erfanabsari@gmail.com, ©2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN 2228-9860 eISSN 1906-9642 http://TUENGR.COM/V10/037.pdf DOI: 10.14456/ITJEMAST.2019.4

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Figure 5: Fit indices of the research model

5. CONCLUSION The results of this research indicated that the vendor's dependence does not affect VI. Moreover, the vendor's dependence affects CC, and CC affects VI and CC is a moderating variable between CC and VI. Thus, as CC has played an important role and made the two variables affect each other, in fact, the vendor is influenced by the client in some cases, and culture is an important factor as a good base for the effect of these two variables. Overall, the findings showed that attention to the competitive culture for the organizations remaining innovative and creating commitment and dependence in clients will contribute to VI.

6. SUGGESTION As the vendor cannot fully control the level of dependence on the client, it is recommended that the vendor create a proper cultural structure to surmount the negative effects of the relationship between the vendor and the client. Managers as vendors should pay sufficient attention to their clients to create innovations in order to make the client more and better, so that clients can react to changes quickly. Using innovative techniques in the relationship between the organizations, the organizations should create a competitive culture to enhance CD.

7. REFERENCES Shanthi Gopalakrishnan, Haisu Zhang (2017). Client dependence and vendor innovation: The moderating role of organizational culture. Journal homepage: www.elsevier.com/locate/indmarman. Johnsen, R. E., & Lacoste, S. (2016). An exploration of the ‘dark side’ associations of conflict, power and dependence in customer –supplier relationship. Industrial Marketing Management, 59, 76–95 (November). Furnari, S. (2016). Institutional fields as linked arenas: Inter-field resource dependence, institutional work and institutional change. Human Relations, 69 (3), 551–580.

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Rosene, F. (2003). Complacency and service quality: An overlooked condition in the GAP Model. Journal of Retailing and Consumer Services, 10 (1), 51–55. Tellis, G. J., Prabhu, J. C., & Chandy, R. K. (2009). Radical innovation across nations: The preeminence of corporate culture. Journal of Marketing, 73 (1), 3–23. Mitręga, M., & Zolkiewski, J. (2012). Negative consequences of deep relationships with suppliers: An exploratory study in Poland. Industrial Marketing Management, 41 (July), 886–894. Hurley, R. F., & Hult, G. M. T. (1998). Innovation, market orientation, and organizational learning: An integration and empirical examination. Journal of Marketing, 62 (3), 42–54. Ashley, Ch. & Noble, S.M. & Donthu, N. & Lemon, K.N. (2011). why customers won’t relate: Obstacles to relationship marketing engagement. Journal of Business Research, 64, 749-756. Kock, N. (2010). Using WarpPLS in e-collaboration studies: An Overview of Five Main Analysis Steps, international journal of e-collaboration, 6(4), 1-11. Sanchez, A., Ligero, F. (2010), An institutional approach to the environmental management systems of golf courses in Andalusia, European Journal of Tourism, Hospitality and Recreation, 1 (4): 2438. Falk, R., Miller, N. (1992). A primer soft modeling. Akron: The University of Akron Press Nunnally, J. C. (1978). Psychometric theory (2nd ed.). New York: McGraw-Hill Leal, A., Roldán, J. (2001), Validación de un modelo de implantación de gestiónde calidad total y suefecto en los resultadosempresariales: un estudio causal predict tivomediante análisis PLS (Partial Least Squares). X International Conference, European Association of Management and Business Economics. Reggio Calabria, Italy, 541-555 Daft, R., Weick, K.E. (1984);" Toward a model of organizations as interpretation systems"; Academy of Management Review; 9(2),(284-295). Gassmann, O., Zeschky, M., Wolff, T., & Stahl, M. (2010). Crossing the industry- line: Breakthrough innovation through cross-Industry alliances with ‘Non- Suppliers ’. Long Range Planning, 43 (56), 639–654. Varadarajan, P. R., & Cunningham, M. H. (1995). Strategic alliances: A synthesis of conceptual foundations. Journal of the Academy of Marketing Science, 23 (4), 282–296. Sivadas, E., & Dwyer, F. R. (2000). An examination of organizational factors in flouncing new product success in internal and alliance-based processes. Journal of Marketing, 64 (1), 31–49. Hojjat JOUDAKI is associated with Department of Marketing Management, Faculty of Management, Islamic Azad University Central Tehran Branch, Tehran, IRAN.

Erfan ABSARI is associated with Department of Marketing Management, Faculty of Management, Islamic Azad University Central Tehran Branch, Tehran, IRAN.

Trademarks Disclaimer: All products names including trademarks™ or registered® trademarks mentioned in this article are the property of their respective owners, using for identification purposes only. Use of them does not imply any endorsement or affiliation.

*Corresponding author (Erfan ABSARI). E-mail: Erfanabsari@gmail.com, ©2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN 2228-9860 eISSN 1906-9642 http://TUENGR.COM/V10/037.pdf DOI: 10.14456/ITJEMAST.2019.4

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CONCEPTUAL APPROACHES TO ECONOMIC RISK MANAGEMENT AT THE ENTERPRISES OF AGROINDUSTRIAL COMPLEX IN BELGOROD REGION Yulia Y. Golubyatnikova a*, Olga G. Charykova a, Natalya A. Cherepovskaya a , Anna N. Doborovich a , Ruslan V. Lesovik b , Olga V. Leonova b , Svetlana L. Lesovaya b , Alexandr A. Mitrohin b , Irina M. Dobrydina c a

Belgorod State University;85 Pobedy st. Belgorod 308015 RUSSIA.

b

Belgorod State Technological University named after V.G. Shukhov;46 Kostykova St. Belgorod 308012, RUSSIA c Orel State University named after I.S. Turgenev ;95 Komsomolskaya St. Orel Region, Orel, 302026, RUSSIA ARTICLEINFO

A B S T RA C T

Article history: Received 05 September 2018 Received in revised form 07 December 2018 Accepted 12 December 2018 Available online 14 December 2018

The article describes the conceptual approach to economic risks management at agroindustrial complex enterprises. This research presents the definite algorithm of risk management conception at agrarian sector enterprises. It involves the analysis of special aspects and particular characteristics of economic risks at agroindustrial complex enterprises; identifying the whole range of risks, which the enterprises under research face; allocating the place for risk management in the enterprise management system; the task of setting up a risk management system; securing the principles of economic risk management; drawing up an agroindustrial enterprise risk analysis pattern; interpreting the subsystem of coordination and control over risk management processes; interpreting the subsystem of monitoring the enterprise and its business environment; interpreting the subsystem of identifying risk factors and revealing the risk; interpreting the subsystem of risk analysis and risk assessment; interpreting the subsystem of developing measures for risk management; identifying measures of economic risk management efficiency; a general conclusion and formulation of proposals. The research resulted in drawing up an algorithm flowchart with feedback loops showing risk analysis at an agroindustrial enterprise. The chart illustrates the interaction between risk management subsystems. The article also presents an economic risk register which identifies the risks agricultural enterprises may face within the enterprise, region and country. In the table, risks are grouped into three types: macrolevel, mesolevel, and microlevel. The article also describes the concept of “risk profile”, a document containing information about risk areas, risk criteria as well as guidelines on measures to prevent or minimize risks. © 2019 INT TRANS J ENG MANAG SCI TECH.

Keywords: Risk profile; Economic risk; Agrarian sector; Risk register; Risk management algorithm; Risk analysis Risk passport; Risk assessment; Types of risk; Risk minimization measures; Risk management approach.

*Corresponding author (Yulia Y. Golubyatnikova). E-mail: julia.golubjatnikova@yandex.ru, ©2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN 2228-9860 eISSN 1906-9642 http://TUENGR.COM/V10/047.pdf DOI: 10.14456/ITJEMAST.2019.5

47

1. INTRODUCTION The results of economic activity always depend on random factors. Thus, the given sphere constantly functions under risk and uncertainty. Out of all the sectors of national economy, only the agricultural sector is exposed to such a number of specific economic risks. The risk impact on the results of an activity is not to be disregarded in the development of the effective performance of enterprises. Therefore, the study of theoretical materials and practical recommendations gives us an opportunity to build the conceptual algorithm of risk management and offer it to the enterprises of the Belgorod region agroindustrial complex. Such an algorithm is under review in the given article.

2. THEORY The investigation of the economic essence of the risk category showed that in the agricultural sector external and internal conditions give reason to the specific common features attributed to risk. Both such typical features as controversy, optionality, uncertainty and the specific ones typical of an agricultural complex performance should be considered. They both play a significant role in the formation of the risk management system. The development of a methodological basis for applying risk management in the operation of enterprises, corporations and other businesses is becoming one of the high-priority agricultural economy directions in modern Russia. It is not just imbedding the practices of foreign agricultural companies into local environment but a creative search for new solutions [Fomichev, 2016]. The objective of the risk essence study is not to exclude the uncertainty in a business situation, but to learn how to vary it in order to eliminate possible negative consequences or obtain prospective positive results in the performance of an industrial structure. The study suggests that risk essence may be described as an entrepreneurial risk which is a specific result of а business activity obtained in the system of a market-oriented economy that also determines a risk as a possibility of sustaining a loss as a result of a planned act or solution while conducting business or profit-making. These are two sides of one and the same roadmap under the realization of managerial solutions or acts functioning in the same direction – the higher the profit the higher the risk [Golubjatnikova, 2017; Dogil, 2005; Herbert and Link, 1982]. Conceptually, the risk management process in business bears little or no difference from the classical management process of any enterprise. Thus, economic risks are naturally correlated to all management functions, such as: planning, organization, operations management, deployment of staff and control. To some extent, each of these functions is risk-related and requires the creation of a specific-risk-situation adjusted system of management.

3. METHODS OF INVESTIGATION In our understanding, when deciding on economic risk management in agriculture, entrepreneurs ought to follow a certain algorithm of risk-management within the framework of an Đ°groindustrial complex that implies [Golubjatnikova, 2012; Ermasova, 2013; Baldin, 2006.]: the scrutiny of peculiarities and the specifics of economic risks at agroindustrial enterprises; singling out major economic risks from the totality of risks for enterprises under research; the role of risk management

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Y.Y. Golubyatnikova, O.G. Charykova, N.A. Cherepovskaya , A.N. Doborovich, R.V. Lesovik, O.V. Leonova, S.L. Lesovaya, A.A. Mitrohin, I.M. Dobrydina

within the framework of enterprise management; problem solving while developing a riskmanagement system; the securing of economic risk-management principles; charting the riskanalysis of an agroindustrial enterprise; deciphering the subsystems of economic risk management; summarizing the results and the formulation of proposals (Picture 1). The striking feature of a risk-related situation in agriculture is the fact that the manufacturing process in this sphere is inextricably connected with the natural development processes of living organisms – plants and animals, the functioning of which, to a large extent, depends on natural hazards. These are the reasons for negative, at times, even catastrophic for agriculture consequences of extreme weather conditions (severe frost, hail, drought, flooding and etc.) due to the vagaries of the place and time of their attacks [Minakov, 2003]. The weather factor of risk in agriculture is related to other kinds of risks, which eventually may cause a major problem. In the long run, it could possibly lead to grave consequences [Organization for agricultural production, 2003]. Risk Specifics of AIC Identification of Main Types of Risks Allocation of Risk Management Place in Business Management System Problem-solving of Risk Management System Development Entrenchment of Economic Risks Management Principles Risk Analysis Charting of Agroindustrial Enterprise

Release of Risk Management Performance Indicator Results and Formulation of Proposals Picture 1: Algorithm of Risk Management Concept at Enterprises of Agroindustrial Complex. In our research we have identified the following economic risk groups for enterprises of the agrarian sector: macrolevel ( political and ecological risks ), mesolevel ( agrarian branch risk ), microlevel ( economic structure risk ), (Table 1). The economic structure risk may be divided into:

*Corresponding author (Yulia Y. Golubyatnikova). E-mail: julia.golubjatnikova@yandex.ru, Š2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN 2228-9860 eISSN 1906-9642 http://TUENGR.COM/V10/047.pdf DOI: 10.14456/ITJEMAST.2019.5

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3.1 PRODUCTION 3.1.1 PLANT GROWING a risk involving disproportion and cuts in equipping the means of production, a risk involving lack of conformity concerning the composition of cultivated crops and the conditions for their growth ( risks of disrupting crop rotation, breaching the seed-farming system, disproportionate application of fertilisers, lack of sufficient means against pests and diseases, erroneous tillage, tending of plants and land reclamation ), risks involving the appropriate usage of arable land and labour management; 3.1.2 LIVESTOCK BREEDING - risks in inadequate and inefficient equipment, herd reproduction, feeding, animal upkeep, lack of sufficient supplies for medical treatment, lack of conformity concerning the branch structure and production trend - commercial (risks involving low sales, inefficient functioning of sales network, competition, price changes on agricultural products and their depreciation while in circulation ); - financial (risks involving insolvency, loss of liquidity and financial sources, asset turnover and company profitability); - risks in company management

(loss of qualified personnel, loss of working hours)

[Eckhoudt, l., Goliier, Ch., 1995, Malashihina, N. N., Belokrylova, O. S., 2004].

Table 1: Economic Risk Register within the Framework of an Enterprise, Region and Country Risk â„–

Risk Name

Risk Description

Risk Factor

Risk Scope

Risk Code

Possible change of administrative policies, changes in priority areas of its function

Macrolevel

001-1

Macrolevel

001-2

Mesolevel

002-1

Microlevel

003-1

Microlevel

003-2

Microlevel

003-3

Microlevel

003-4

All-Russian 1.1.

Political Risk

1.2.

Ecological Risk

2.1.

Economic and Structural Risk

3.1.

Manufacturing Risk

3.2.

Financial Risk

3.3. 3.4.

50

Commercial Risk Enterprise Management Risk

Risk occurrence possibility or profit margin reduction caused in the result of state policy

Environment affecting Environmental pollution uncertainties Regional Discrepancy in the scope of open Regions incapable of business market economic processes competitiveness Corporate Impact level of climatic and natural conditions Manufacturing process Equipment capability level of changeability an enterprise Supply of materials and machinery level Probability of event occurrence connected with a loss of capital Debt position for shipped as a result of entrepreneurship product or investment activities Inefficient output distribution Level of price change for management agricultural products Personnel qualification level Shortage of qualified personnel Equipping level Index of and lack of efficiency working hours loss

Y.Y. Golubyatnikova, O.G. Charykova, N.A. Cherepovskaya , A.N. Doborovich, R.V. Lesovik, O.V. Leonova, S.L. Lesovaya, A.A. Mitrohin, I.M. Dobrydina

The submitted risk register is an approximate register for an agricultural company. Apart from the content, the register should illustrate the risk update specifying the risk area as well as the changes concerning the risk minimization measures and the comments on them. The risk may be updated by its reissuing ( giving it a new registration number) or making some alterations (the risk registration number remains unchanged) depending on the nature and amount of required change in the risk profile. The purpose of risk management is to reduce the possibility of making the wrong decision and lessen the negative consequences. On the whole, the risk management system is a process of preparing and implementing measures to succeed [Risk management: educational-methodical complex (Bachelors). 2012]. In order to succeed in risk management, it is essential to set up the guidelines for the risk management system: drawing up the methodological, regulatory and reference documentation on managing economic risks, creating a model for managing economic risks, training risk managers the methodology of risk management. The basic principles of economic risk management at company level are the assumed risk concept, the unique character of decision-making, adaptability to change, taking chances, coordination with company management, overall encompassing of economic risks [Michael D. Rogers., 2001, Merbeck, A., Stegemann U., Frommeyer J., 2004]. Economic risk management is an integral and important part of general company management. In the algorithmic chart of an agricultural company risk analysis the feed-back chain is depicted (Picture 3). The coordinating function of economic risk management completes the feed-back. The chart also clearly shows the interaction with other subsystems. This is how economic risk management works. Information on the state of affairs in the company and its environment for the current period or certain periods of time is collected in the Company Monitoring and Functioning section. This information is processed, enlarged and transferred to the Risk Identification Factors section, where a list of risk factors, endangering the operation of the agricultural company, is singled out labelling them as more important or less important [Star, M., 2006.]. Possible risks are identified through the influence of positive or negative factors. The Risk Analysis and Assessment section receives the results. This information, together with analogical previous information and regulatory and reference data, is processed by applying the economic risk assessment analysis and methodology. The results of this analytical study on assessing the risk level is compared with the previous data on processed risks, which are stored in the archive of Regulatory, Reference and Other Information, and the preset level of assumed risk. If it turns out that the currently received economic risks do not significantly differ from the previous ones and do not exceed the preset level, which has been established by the automated program or the company management, the controlling function is completed by transferring the processed risks to the archive along with a recommendation for the time of the next controlling cycle. Let us take a closer look at how it works at a processing plant - the Belgorod Experimental Plant of Fish Mixed Feed and its Risk Analysis and Assessment section. *Corresponding author (Yulia Y. Golubyatnikova). E-mail: julia.golubjatnikova@yandex.ru, Š2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN 2228-9860 eISSN 1906-9642 http://TUENGR.COM/V10/047.pdf DOI: 10.14456/ITJEMAST.2019.5

51

Risk assessment is probably the most complicated stage in company risk management. We shall measure these economic situations by applying the known economic and mathematical methods for economic risk assessment or, to be more precise, the investment risk. At present, due to the current economic situation in the country and the growing competition on the mixed feed market, Belgorod Fish Mixed Feed Plant is facing the problem of increasing the competitiveness of its product. In our opinion, it is possible to solve this problem by improving the product’s quality. Therefore, the company must purchase and install an automated volume expansion line (Table 2). Table 2: Programme of expanded mixed feed production Name of Mixed Feed Fish mixed feed for feeding fish hatchlings Mixed feed or feeding commercial fish Mixed feed for poultry Mixed feed for pigs Mixed feed for cattle Total production level

Production Level (in thou tons) 2017 2018 2019 3 6 9 5 9 12 10 7 5 30

12 10 8 45

16 14 9 60

The installation of such a line will help the company to improve the quality of mixed feed by increasing its nutritional and metabolic properties, achieving a significant decrease in granule friability, prolonging their shelf life, as well as eliminating the pernicious effect of undesirable microorganisms, bacteria and fungi, which cause various diseases among animals and fish. By analyzing the situation on the mixed feed market, the trends of growth and development of livestock breeding, chicken and fish farms, as well as analyzing the supply and demand for various kinds of mixed feed, we managed to draw up a program for producing and selling expanded mixed feed (Table 2). In order to be able to implement this project it will be required to purchase a volume expansion line, hire and train the personnel. It will also be necessary to buy a fork-lift truck for transporting the raw material and finished product on the expansion line. A bank loan for the project for 3 years with a 16% interest rate is likely to be required. Most of the loan shall be repaid by the end of the term, while the interest shall be paid out at the end of each year (Table 3). Table 3: Flow of loan cash and payments (RUB’000) Line Item Loan Entry Loan Repayment

2017 54634 -

2018 -

2019 54634

Closing Balance Interest on Loan Credit Disbursement Totality Total Payment

54634 16 8741 8741

54634 16 8741 8741

16 8741 63375

A cash-flow discounting model shall be designed based on the production program, financial prognosis and cash availability (Table 4).

52

Y.Y. Golubyatnikova, O.G. Charykova, N.A. Cherepovskaya , A.N. Doborovich, R.V. Lesovik, O.V. Leonova, S.L. Lesovaya, A.A. Mitrohin, I.M. Dobrydina

Table 4: Сash Flow Discounting Model (RUB’000) Line Item

2017

2018

2019

1. Net Profit

24600.1

59656.8

122698.1

2. Net Cash Flow (2.1. +2.2. + (-) 2.3. - (+) 2.4. - 2.5. + (-)2.6-2.7.- 2.8.) 2. 1. Net Profit 2.2. Depreciation 2.3. Debt Growth/ Debt Service Payment 2.4. Receivables Growth/ Payment 2. 5. Interest Payment

29757.4

59933.3

68340.6

24600.1 9017.5 8741

59656.8 9017.5 8741

122698.1 9017.5 -54634 8741

2. 6. Proceeds from Asset Sales

-

-

-

2. 7. Capital Investment 2. 8. Increment of Floating Capital Growth 3. Accrued Cash Liquidity eop 4. Present (Discounting) Value Factor

24634 30000 -29757.4 0.87

59933.3 0.77

68340.6 0.67

5. Present (Discounting) Value of Cashflow (p.2*p.4) 6. Net Present (Discounting) Value

-21425.3

31764.6

25969.4

-21425.3

10339.3

36308.7

Table 4 shows that the project is a profitable one as the NPV, despite the negative value of the 1 year of its implementation, the 2 and 3 years show signs of positive development. Now we shall assess the risks of this investment project by applying a range of methods: the sensitivity analysis of efficiency criteria; the scenario method; the breakdown of potential payments and the decision tree. We shall now take a closer look at each method.

3.2 METHODS 3.2.1 THE SENSITIVITY ANALYSIS OF EFFICIENCY CRITERIA Table 5 reveals that the NPV of the given investment project is at its most sensitive towards such an index as price. With a 10% decrease of this index the NPV becomes a negative figure, i.e. a 10% change in the price leads to a 58,1% change in the NPV index. It proves that a slight change of this index may significantly affect the implementation of the investment project. Therefore, the investor must keep an eye on this index. Table 5.Analysis of Sensitivity of Efficiency Test Volume Turnover Change Turnover,

NPV,

tonnage-wise RUB’000 40000 45000 50000 55000 60000

11565.9 38257.4 64948.9 91640.4 118331.9

Price Change Price, RUB 3840 4320 4800 5280 5760

Change of Fixed Outlay NPV,

Fixed Outlay, NPV,

RUB’000

RUB’000

RUB’000

-10512.9 27218.01 64948.9 102679.9 140410.8

78064 87822 97580 107338 117096

95630.5 80289.7 64948.9 49608.2 34267.4

Discount Rate Change Discount Rate 0.124 0.144 0.16 0.176 0.192

*Corresponding author (Yulia Y. Golubyatnikova). E-mail: julia.golubjatnikova@yandex.ru, ©2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN 2228-9860 eISSN 1906-9642 http://TUENGR.COM/V10/047.pdf DOI: 10.14456/ITJEMAST.2019.5

NPV, RUB’000 72348.2 68156.9 64948.9 61881.6 58946.5

53

3.2.2 SCENARIO METHOD The scenario method is used for risk analysis of the investment project which is being implemented at the Belgorod Experimental Plant of Fish Mixed Feed. We shall draw up three scenarios for implementing the project (pessimistic, most likely and optimistic) (Table 6). Table 6: Implementation of Investment Project Scenario Key Figures

Pessimistic Scenario

Probable Scenario

Optimistic Scenario

Sales Revenues, RUB’000

525000

9450000

11255000

Cumulative Costs, RUB’000

364 0000

4820000

6980000

Amortization, RUB’000 Discount Rate, %

9017.5 20

9017.5 16

9017.5 11

Start-up Investment, RUB’000 54634

54634

54634

Occurrence Probability NPV, RUB’000

0.7 28537.93

0.15 33460.27

0.15 -28361.8

The calculation has revealed that the average expected NPV value has turned out to be positive. The standard deviation figure does not exceed average NPV value. By applying the 3 sigma rule there is a 68% possibility that the NPV of our project will be within: 4136,65≤ NPV≤ 37346,02. It is highly likely (68%) that the investment project under consideration will have an NPV exceeding 0. The variation ratio of the project came to 80%. On the one hand, it exceeds 25% which points at the fact that the project has a high degree of variability. On the other hand, the variation ratio came to less than 1, which means that the risk of this project, on the whole, is lower than the company’s investment portfolio risk. 3.2.3 IMITATION MODELLING OF INVESTMENT PROJECT RISKS (THE MONTE-CARLO METHOD) Some imitation modelling of investment project risks shall be done using the data on the production and sales of mixed feed for pigs. The modelling shall be done in PPP EXEL, which means that two approaches shall be used: built-in functions and the random number generator (Table 7). Table 7: Most Probable Initial Index Data and their Change Scope Key Figures 1 . Production output, tn 2. Unit Price, RUB 3. Variable Costs, RUB 4. Constant Costs, RUB’000 5. Amortization, RUB’000 6. Profit Tax 7. Discount Rate 8. Start-up Investment, RUB’000

54

Datum 50000 4800 1404,4 97580 9017.5 0.3 0.16 54634

Change Scope 40000 - 60000 3840-5760 1404,4 78064-117096 9017.5 0.3 0.124-0.192 54634

Y.Y. Golubyatnikova, O.G. Charykova, N.A. Cherepovskaya , A.N. Doborovich, R.V. Lesovik, O.V. Leonova, S.L. Lesovaya, A.A. Mitrohin, I.M. Dobrydina

Using the built-in functions approach makes sense only in the case when the probabilities of the mean are the same. Therefore, we shall apply the random number generator tool. This tool is used for the automatic generation of a data set (general totality) of the given volume, the elements of which are characterized by a certain probability distribution. A normal distribution type was chosen for research with 150 experiments. The initial terms for imitation modelling in ППП EXEL are given in Table 8. The initial data for imitation modelling are located in the left part of the table. In order to preset a normal distribution of the general totality of the data in the above-mentioned table, such indices, as average values and their standard deviation were calculated. Table 8: Experiment Initial Conditions Constant costs Quantity Price Discount Rate Probability

Minimum 78064 40000 3.84 0.124 0.15

Experiments =

150

Probable 97580 50000 4.8 0.16 0.7

Maximum 117096 60000 5.76 0.192 0.15

Average 97580 50000 4.8 0.16 0.7 Line Number =

Deviation 2394093 2873 301.5 0.02

163

In accordance with the imitation analysis data, the NPV upon implementing the project will amount to 32615,68 RUB’000 with a standard deviation of 21627,4 RUB’000 and a variation ratio of 66,3%. Therefore, we can assume that the degree of risk of the investment project on offer is not high. The chance of receiving a negative NPV value during the implementation of the project is estimated at only 6,6%. The total number of negative NPV values stands at 8 out of 150. At the same time, the probability that the NPV figure will turn out to be more than Р(М(Е)+d, equals 15,5%, while the probability of the NPV value being placed in the space [Р(М(Е)- d; М(NPV)], equals 34,1%. 3.2.4 THE DECISION TREE METHOD FOR RISKS ANALYSIS The decision tree method for risks analysis is applied to of the investment project, which is being implemented at the Belgorod Experimental Plant of Fish Mixed Feed. The Chief Engineer must decide whether to install a new volume expansion line or not. If the new line operates smoothly, the company will make a profit of 122 mln roubles. If it breaks down, the company might lose 60 mln roubles. The Chief Engineer’s opinion is that there is a 60% possibility that the new expansion line will fail. It is possible to design an experimental installation and decide whether to assemble the production line or not. The experiment will cost 8 mln roubles. The Chief Engineer thinks there is a 50% chance that the experimental installation will work.

*Corresponding author (Yulia Y. Golubyatnikova). E-mail: julia.golubjatnikova@yandex.ru, ©2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN 2228-9860 eISSN 1906-9642 http://TUENGR.COM/V10/047.pdf DOI: 10.14456/ITJEMAST.2019.5

55

Picture 2: Chart of the Decision Tree method used for investment project risk analysis at the Belgorod Experimental Plant of Fish Mixed Feed. The given investment project economic risk assessment of this chosen company suggests a selection of risk assessment methods to be used individually at a company. The composition and order of assessment risk procedures may vary depending on the purpose, state of affairs at the company and the timing for conducting the analytical work. The measures for risk management comprise the order for every single type of economic risk, which suggests its own specific way for minimizing them. The algorithm for risk management is based on preparing a strategic solution and is represented by the following actions: the solution is directed from the Strategic Planning subsystem via the Coordination Processes of Risk Management section to the Risk Analysis and Assessment section. That said, extensive information is used in this section for analyzing the solution – risk profile registers, previous and current company monitoring results and its operating environment ( Picture 3). Drawing on the information received from the Risk Identification sector, which identifies the internal and external risk factors possibly caused by the strategic solution, the Risk Analysis and Assessment section analyses and assesses the probability of their manifestation, rates their significance for the given period of time and economic situation [ Makarevich, L.M., 2006 ] and draws up a risk profile complete with a certain mathematical model or expert system. At this point, the models and indexes, the values of which have been defined in the Risk Analysis and Assessment section, help to select the measures for minimizing or managing the risks in the Measures for Risk Management section, which makes a list of measures and methods for preventing an undesirable turn of events or making up for their negative consequences [Ryhtikova, N.A., 2012; Abchuk, V.A., 2006].

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Y.Y. Golubyatnikova, O.G. Charykova, N.A. Cherepovskaya , A.N. Doborovich, R.V. Lesovik, O.V. Leonova, S.L. Lesovaya, A.A. Mitrohin, I.M. Dobrydina

Picture 3: Algorithmic Chart of an Agrarian Enterprise Risk-analysis The result of selecting the measures for risk minimization is arranged as a risk profile, containing complete data on spheres of risk, criteria of risks as well as recommendations for preventing or minimizing risks, in other words, the complete attendant information revealed during the whole period of analysis. The risk profile is placed in a catalog and handed over to the company management. While the risk profile is being compiled, it is important to be able to foresee the discovery of a risk when going through the accounting reports: the balance sheet, the profit and loss account. Therefore, each risk profile should be given a code of its own in an app (Table 1) [Balabanov, I.T., 1996.; Vasin, S., 2010. ;Vishnyakov N. N., 2008. ;Altman, Edward, 1968.]. The completed risk profiles are handed to the company management and stored in the archive, as well, and, by all means, are taken into account during future analytical procedures, revision of adopted decisions and other cases of risk reassessment. Outdated risk profiles are not shredded as they contain information for comparing and assessing the dynamics of risk level change. Understanding the result seems to be the most challenging thing in managing risk assessment. Resources and time are easily assessed and measured, but the result is the most difficult [Musshoff, O., Hirschauer, N., 2010]. There are final results, where management is mediate, and the immediate result, typical for any kind of human activity, is mentioned. The immediate management result may be characterized by a set of criteria and efficiency indexes (number of implemented risks, undeclared risks, leading to an unexpected revision of the business scenario and the opposite [Hufnagel, J., 2004]. *Corresponding author (Yulia Y. Golubyatnikova). E-mail: julia.golubjatnikova@yandex.ru, Š2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN 2228-9860 eISSN 1906-9642 http://TUENGR.COM/V10/047.pdf DOI: 10.14456/ITJEMAST.2019.5

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While assessing the efficiency of economic risk management it is necessary to apply the whole range of general and particular indexes [Charykova, O.G., Golubjatnikova, Yu. Yu., 2011]. The final section in the algorithm of the risk management concept for agribusinesses is summarizing and drawing up proposals.

4. RESULTS At present, the majority of Russian companies traditionally regard risk management as a specialized activity, which stands apart from the regular company management functions. For instance, risk management is considered to be the same as managing various types of economic risks (financial, production, management, etc.) [Kudryavtsev, A .A., 2010, 168-173 P.]. The new approach to risk management, which has just started to take shape in recent years among Russian agricultural businesses, is aimed at the integration of the functional subsystems of the business to be able to manage risks at all levels. Under integrated risk management, the company analyses every type of risk systematically to achieve maximum efficiency at each stage and, eventually, the business as a whole [Kudryavtsev, A .A., 2010]. In other words, for our research, we need to introduce an integrated risk management system ( study the existing economic risk management practices, draw up the appropriate regulatory and reference documentation for economic risk management, design the organizational models for economic risk management, allocate responsibilities in managing the risks among all participants. The structurized concept of risk management for agricultural companies, presented in the article, which is based on the practices of a functioning company, makes it possible to plan further activities, calculate the expenses as well as formulate a need for methodological guidance papers, which will provide for a new and relatively specific, but essential, part of the business.

5. CONCLUSION The presented concept of risk management studies risks comprehensively. That said, risk management must not focus on one type of risk alone, but look at all possible risks. The most significant advantage of this approach is in its systemic way of studying a company’s economic risks. It offers a chance, first of all, to actually see the economic risks, which the company has to deal with. Secondly, the aggregate of economic risks makes it possible to make the right decisions in strategic, financial and personnel management.

6. REFERENCES Abchuk, V.A., 2006. Risks in business, management and marketing., Spb.: mikhajlova Publishing House. 480 p. (In Russian) Altman, Edward, 1968. Financial Ratios, Discriminant Analysis and the Prediction of Corporate Bankruptcy. Journal of Finance., September: 589-609 Balabanov, I.T., 1996. Risk management., Đœ: the finance and statistics. 188 p. (In Russian)

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Baldin, K.V., 2006. Risk management: a training manual. Moscow: Eksmo. 368 p. (In Russian) Charykova, O.G., Golubjatnikova, Yu. Yu., 2011. Structural model of risk management in agribusiness., Sat. researcher., Voronezh: Scientific Research Institute of Economics and Organization of the Agro-Industrial Complex of the Central Black Earth Region of the Russian Federation. 177 p. (In Russian) Dogil, L. F., 2005. Economic Risk Management Tutorial. Minsk: Book House, Misanta. 224 р. Ermasova, N. B., 2013. Risk management organization: educational-practical guide. М.: publishing trading Corporation «Dashkov and Co». 380 p. (In Russian) Eckhoudt, l., Goliier, Ch., 1995. Risk: Evaluation, Management and Sharing. Prentice Hall. 187-188 р. Fomichev, A. N., 2016. Risk-Management: tutorial for Bachelors. 4-ed. М: publishing trading Corporation «Dashkov and co». 372 p. (In Russian) Golubjatnikova Yu. Yu., 2012. Main stages of business risk management. Agrarian Russia, 3: 24-26 (In Russian) Golubjatnikova, Yu. Yu., 2017 Economic risks in business. Voronezh: OOO "izdatel'stvo rhythm", 256 p. (In Russian) Herbert, R. F., Link, A. N., 1982. The Entrepreneuer. Mainstream Views and Radical Critiques., N.Y.: Proeger Publishers, 17 р. Hufnagel, J., 2004. Рrecision farming analysis, planning, implementation in practice - loose-leafcollection, KTBL-Schrift 419. Darmstadt, Germany: Kuratorium für Technik und Bauwesen in der Landwirtschaft 335 p. Kudryavtsev, A .A., 2010. Integrirovannj risk management: Tutorial. Moscow: CJSC "Ekonomika Publishing House. 655 p. (In Russian) Minakov, I. A., 2003. Economics of agricultural enterprises., М.:KolosC. 528 p. (In Russian) Malashihina, N. N., Belokrylova, O. S., 2004. Risk management: a training manual/Rostov-n/a: "Phoenix", 320 p. (In Russian) Michael D. Rogers., 2001. Scientific and technological uncertainty, the precautionary principle, scenarios and risk management., Journal of Risk Research, 4 (1): 1-15 Merbeck, A., Stegemann U., Frommeyer J., 2004. Intelligentes Risikomanagment Das Unvorhersehbare meistern, Frankfurt / Wien: Redline Wirtschaft bei ueberreuter. 311 р. Makarevich, L.M., 2006. Entrepreneurial risks management., М: publishing house «business and service». 350 p. (In Russian) Organization for agricultural production, 2003. Under. Ed. F.K. Shakirova, М.:KolosC, 504 р. Musshoff, O., Hirschauer, N., 2010. Modernes Agromanagement., Munchen: Verlag Franz Vahlen GmbH. 471 p. (In Russian) Risk management: educational-methodical complex (Bachelors). 2012. Baranenko S.P. 281 p. (In Russian) Ryhtikova, N.A., 2012. Analysis and risk management organization: Stud. Manual., 2 Ed., М.: Forum. 240 p. (In Russian) Star, M., 2006. Integriertes Risikomanagement im landwirtschaftlichen Betrieb., Humblot. 244 p.

Berlin,Duncker &

Vasin, S., 2010. Risk management in the enterprise: a tutorial. M.: KNORUS. 304 p. (In Russian) *Corresponding author (Yulia Y. Golubyatnikova). E-mail: julia.golubjatnikova@yandex.ru, ©2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN 2228-9860 eISSN 1906-9642 http://TUENGR.COM/V10/047.pdf DOI: 10.14456/ITJEMAST.2019.5

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Vishnyakov N. N., 2008. Risk theory textbook for top students. Stud. Institutions. 2-nd ed., Corr. М: Publishing Centre «Academy». 368 p. (In Russian)

Dr.Yulia Y. Golubyatnikova is associated with Belgorod State University, Belgorod, RUSSIA.

Dr.Olga G. Charykova is associated with Belgorod State University, Belgorod, RUSSIA.

Dr.Natalya A. Cherepovskaya is associated with Belgorod State University, Belgorod, RUSSIA.

Dr.Anna N. Doborovich is associated with Belgorod State University, Belgorod, RUSSIA.

Dr.Ruslan V. Lesovik is associated with Belgorod State Technological University named after V.G. Shukhov, Belgorod, RUSSIA.

Dr.Olga V. Leonova is associated with Belgorod State Technological University named after V.G. Shukhov, Belgorod, RUSSIA.

Dr.Svetlana L. Lesovaya is associated with Belgorod State Technological University named after V.G. Shukhov, Belgorod, RUSSIA.

Dr.Alexandr A. Mitrohin is associated with Belgorod State Technological University named after V.G. Shukhov, Belgorod, RUSSIA.

Dr.Irina M. Dobrydina is associated with Orel State University named after I.S. Turgenev, Orel region, Orel, RUSSIA.

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Y.Y. Golubyatnikova, O.G. Charykova, N.A. Cherepovskaya , A.N. Doborovich, R.V. Lesovik, O.V. Leonova, S.L. Lesovaya, A.A. Mitrohin, I.M. Dobrydina

©2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. 2015 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies.

International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies

©2018 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. http://TuEngr.com 2015 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. ©2018 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies.

EFFECT OF CORPORATION STRATEGY ON MARKET REACTION EARNING IN THE&ACCEPTED 2015 International Transaction Journal ofTO Engineering, Management, Applied Sciences & Technologies. CORPORATIONS OF TEHRAN STOCK EXCHANGE ©2018 International Transaction ofaEngineering, Management, &a*Applied Sciences & Technologies. NahidJournal Hosseini and Babak Jamshidinavid a

Department of Accounting, Kermanshah Branch, Islamic Azad University, Kermanshah, IRAN 2015 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. ARTICLEINFO

A B S T RA C T

Article history: Received 27 December 2017 Received in revised form 29 March 2018 Accepted 10 October 2018 Available online 12 December2018

Leadership strategic characteristics are margin expenditure of low sale with high sale mass, economic expense to criterion ration and main investments in factories and physical properties. While differentiation strategy is followed by high sale margin which is gained by goods quality and realized branding through investment in unobvious properties such as; investment in research part, development and advertisements, the Keywords: strategic characteristics have twofold effects on investor reaction to Corporation strategy; published information about corporations. This research investigates the Market reaction to profit; effect of corporation strategy on market reaction to profit in the accepted Strategy of product corporations of Tehran Stock Exchange (TSE). Research statistic differentiation; Strategy of expenditure leadership. population includes 856 accepted corporations in TSE from 2012 to 2016, while 142 corporations have been chosen by systematic deletion as the research statistic sample. The research is “application oriented” in term of its aim, its data are “quantitative”, the research performance time is “sectional”, its performance logic is “deductive”, and it performance method is “descriptive, measuring and casualty”. Paneling data method is used to analyze the research data based-on the research data kind. The findings indicate that corporation strategy has a positive meaningful effect on market reaction to earning, strategy of cost leadership has a positive meaningful effect on market reaction to profit, and differentiation strategy of product has a positive meaningful effect on market reaction to profit. These findings show that corporations that follow strategy of expenditure leadership their profit publications will be explained more generally and more changes will own in average believes of stock price. In the otherwise, profit announcements of corporations that follow strategy of differentiation will be explained by inhomogeneous and lower changes will own in average believes of stock price. The research helps knowledge level gradation about sectional changes of market reaction to profit announcement. Moreover, in this research price reaction convergence and transaction mass reaction to profit announcement have been indicated in the form of anticipation situation. © 2019INT TRANS J ENG MANAG SCI TECH. *Corresponding author (Babak Jamshidinavid). E-mail: jamshidinavid@iauksh.ac.ir, ©2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN2228-9860 eISSN1906-9642 http://TUENGR.COM/V10/061.pdf DOI: 10.14456/ITJEMAST.2019.6

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1. INTRODUCTION Most of today organizations in the world are moving toward being bigger and increasing their business activity environment because one of the reason for this activity is answering to multi needs of customers. Managers try to be faithful to their organizations by considering the multi needs of customers. Most organization have done strategy because of the mentioned reason and other professional reasons such as; making come true of essential facilities and distribution system of final product in organization, (Macher, 2007). It is believed that competition can cause decrease of stagnant and depression in market and corporations in spite of competitive situations can continue their activities by high efficiency, so competition can be a motivation for the mentioned innovation and introduction that can cause economic development and mobility of society, (Nikel, 1996). Many definitions have been exhibited for competitiveness but one complete definition of competitiveness is, “organization ability in being in business, conserving organization capitals, returning assets and guaranteeing of jobs in future that their results are market share increase, profitability, growth of added value and staying in competition stage for long time�, (Acimva, 2000). Capital owners, creditors, government and other users of corporations` financial reports need credit, relative and qualified financial information to make decision about buying, selling, conserving stock, giving loan, evaluating managers` performances and other economic decisions. Totally, while investors invest in an economic unit, at first, they should have enough information (such as; financial information) about that unit, then they should trust the information. Creditors can`t give the investors their financial sources without being aware of financial status and performance of a unit. So, it is expected that exhibited of information divulgence quality by corporations can be effective for decisions and evaluations of users, (Acimva, 2000). Accounting aim is providing financial information for users to help improvement of decision process. While the aims of accounting done researches and studies are evaluating information usefulness for investors and other users, (Noroosh, 2009). Financial statements are very important sources that investors need in their relative decisions of investment. There is a statistical meaningful relationship between accounting information and price or stock return. Information accounting can describe the reasons of changes of prices based on the capital market information with a suitable method that based on it the prices reflect all the existent information, (Ghalibaf, 2000). Value determination of a corporation and recognition of effective factors on it in the capital markets are the challenging topics for financial investors and analyst. They are always looking for recognition of effective factors on corporation value because they want to determine the corporation real value through controlling of the mentioned factors. Based on the mentioned factors the importance of corporation value determination and the effective factors on it will be clarified, (Valipoor, 2009:93). So, future value estimation of corporation has been one of the investors` obsessions and they have used different financial instruments such as; sale income, impure profit, operational profit, profit before tax and pure profit which are profit statement members and corporation losses. So, information content study of the variables are undeniable necessities in the anticipation of corporation values. So, based on the mentioned factors the research aim in that what is the effect of corporation strategy on market reaction to profit in the accepted corporations in Tehran Stock Exchange?

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2. RESEARCH BACKGROUND Ghaemi &Taghizadeh (2015), in their research investigated the effect of information risk and transaction expenditures on reaction of stock market to profit news. 2050 seoson-corporation from 2004 to 2012 had been analyzed. Zhang et al. (2013) models had been used to test the research hypotheses which included affirmative factor analysis to determine information risk variables and linear regression analysis of multi variables to test research variables. The research hypothesis tests indicated that higher information risk can cause the first reactions of more investors to announcement of seasonal profits but they would not effect on the next reactions and transaction expenditures would not have any effects on the reaction of stock market. Khodamipoor et al. (2014), in their research investigated the effect of last duration profit anticipation error on market reaction to the management of profit anticipation and different kinds of profit management. In the research financial statements of 86 accepted corporation of Tehran Stock Exchange from 2005 to 2011 have been analyzed. To access the research aims, corporations had been grouped based on previous year anticipation and present year and news content of the present year anticipation. Then the research hypotheses had been tested by considering data mixture structure and suitable statistical tests. The research conclusions indicated that market reaction to profit anticipation with good (bad) news content, while the anticipation of last duration is more pessimistic (optimistic), was more positive (negative) than the status of last duration anticipation which was more pessimistic (optimistic). The research conclusions represented that pessimistic anticipation in the last duration could be known as the factor for profit increase management in the present duration. Kafashpoor et al. (2014), in their research investigated the effect of differentiation competitiveness strategies and leadership expenditure on performance by considering the roles of pioneer marketing intermediate and reactional marketing, (case study: big production corporations and average of industrial parts in Mashhad City). This research method was descriptive-measuring and applicational oriented. Questionnaire was used to gather data and its validity and its stability were affirmed by use of content validity, structure and Cronbach Alfa. This research statistic population included all the average production corporations and big industrial parts of Mashhad City. The sampling design was probable and simple accidental. AMOS Software was used to analyze data of 104 questionnaire. The research findings indicated that differentiation strategy and expenditure leadership had direct meaningful relationship with performance, the mentioned strategies indirectly had positive meaningful with performance by reactional marketing and pioneer marketing and pioneer marketing and reactional marketing had direct meaningful relationship with performance. Tahmasebi et al. (2014), in their research investigated optimized management strategy of expenditure leadership by exhibition of management model in pervasive keeping and repairing of introduction and suggestions. In this research one management system had been introduced and suggested for pervasive keeping and repairing. This system had been described in three different parts such as; management, operations and internet equipment management. Moreover, the process of internet accommodating had been introduced as an important sub collection of studied pervasive internet. This research findings indicated that the suggested system had owned considerable more differentiation funds than other common systems, for example; this system was very close to the *Corresponding author (Babak Jamshidinavid). E-mail: jamshidinavid@iauksh.ac.ir, Š2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN2228-9860 eISSN1906-9642 http://TUENGR.COM/V10/061.pdf DOI: 10.14456/ITJEMAST.2019.6

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management system of pervasive quality and all the organization employees incorporated in it. This suggested system had more benefit in term of particular emphasis on verification, accommodating improvement, continuous improvement of internet. So, management strategy in pervasive internet included not only relative hardware services but also it included other important factors such as; quality, customer satisfaction and financial value. Vazifehdoost (2012), in his research investigated the effect of Porter competitiveness implementation in answering to the need of central marketing of petrochemical company customers. This research was applicational oriented, and descriptive-measuring. The research statistic population included all the active managers in petrochemical part that included 70 individual who were working in petro et alon product production. Questionnaire and interview with a group of experts and specialists were used to access information and data. Koromogrov Simonov test was used to investigate normality of data distribution while T-Stevedent and Friedman tests were used to test the research hypotheses. This research findings indicated that each of the Porter strategies had positive effect in answering to the need of central marketing of polio etalon production customers and leadership strategy effect in expenditure had higher priority. Fadaeinezhad (2012), in a research investigated market reaction to seasonal profit announcements in Tehran Stock Exchange. In this research, 3 month profit announcements from beginning of 2004 to the end of 2010 were chosen as the main research data. This research innovation was using of three equal methods, aggregation, transaction and transaction for filling return in the days when stock had not been truncated. This research conclusions represented that profit announcements included relative information for stock market. While the real profit of three months was more than corporation anticipation (good news), meaningful positive unusual return would be observed in 5 days after profit announcement. The continuous of this unusual return during several days after profit announcement indicated that adjusted speed of prices in this small stock exchange is low. In the profit announcements that real profit was less than anticipation (bad news), unusual return would not be observed. Tehran Stock Exchange might have discovery ability of bad news better than good news. Moreover, negative relationship between information content and information indicators which had received before transparency would be correlated with results of big markets. Ahmad (2016) investigated relationship between profit quality (as a representative of asymmetry) with market reaction to news of capital increase, he concluded that profit quality had meaningful reversed relationship with market reaction. His research affirmed relationship of “negative reaction intensity to market” to the news of news stock publication with different levels of information asymmetry during announcement of this news. Cormier (2014) investigated “the effect of corporation government quality on profit management in the accepted corporations of Tehran Stock exchange”. The previous researches represented that managers might use profit management methods to encounter with profit optional anticipation. In the research, the researcher extracted profit management limitation in the Canadian Corporations and then he studied which corporations with better corporation government had less tendency to use profit management to access considered profit anticipations. Moreover, the researcher investigated and evaluated the effect of profit anticipation and corporation government on anticipation of future cash flow. The research findings represented corporations with corporation government mechanisms had

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less intent to the optional anticipation of profit. Farrell et al. (2014) investigated “stock redemption on corporation profit management in the situations encountered with limitation in financial securement through liability”. In this research, many observations had been introduced about use of stock redemption as a mechanism for stock redemption in the situation with securement limitation of financial sources, (by use of another mechanism of profit management). This research indicated that stock redemption had been one of the common mechanisms in profit increase of each share. Moreover, in the limited situations, access to financial securement sources needed more motivation to use stock redemption as profit management. Laksmana & Yang (2014) investigated “relationship between product profitability and profit management”. Changes among institutes in less ration competitive industries are more common than corporations with higher competition. So, this research investigated why corporations in less competitive industries had more intention to income management. The research results represented that more competitive corporations had more intention to profit management than less competitive corporations.

2.1 THEORETICAL BASES 2.1.1 CONCEPTUAL DEFINITIONS 2.1.1.1 STRATEGY OF EXPENDITURE (COST) LEADERSHIP The aim of expenditure leadership strategy is that the corporation will be a less expenditure producer in an industry. This strategy will be realized by business experience, investment in loans of mass production, use of economy (frugality) and proper supervision on total expenditures of operations (through programs such as; size decrease and quality management), (Ahmad, 2016). 2.1.1.2 STRATEGY OF PRODUCTION DIFFERENTIATION (DIVISION) This strategy needs goods development or unique services based on customer `s faithfulness to commercial brand. A corporation can exhibit higher quality, better operation or unique characteristics that each of them can justify the higher prices. In the strategy of production differentiation, corporationsintend to invest in the research base and development, so their creativity and innovation will increase. Moreover, in the strategy of production differentiation, corporations will be encountered by higher lack of sureness, it means that more emphasis on innovation and creativity in production can cause corporations to encounter with risking activities and risk on a production which has not been produced yet, (Ahmad, 2016). 2.1.1.3 MARKET REACTION TO EARNING (PROFIT) One of the experimental researches of financial accounting is recognition and description about different reactions of market to profit information. This research topic is called profit reaction coefficient. Profit reaction coefficient measures market sudden return to the reaction of the members of sudden profit. Profit reaction coefficient measure market non-expectable return to the reaction of the members of reported sudden profit by a corporation published stock papers. In the otherwise, profit reaction coefficient measures market sensitivity to profit announcement by coefficient of regression slope between unusual returns and sudden profits, (Moradi& et.al. 2009). *Corresponding author (Babak Jamshidinavid). E-mail: jamshidinavid@iauksh.ac.ir, ©2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN2228-9860 eISSN1906-9642 http://TUENGR.COM/V10/061.pdf DOI: 10.14456/ITJEMAST.2019.6

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2.1.1.4 CENTRAL MARKET Central marketing is acceptance of marketing as a business philosophy that is leader of organization competitive strategies. Central market discusses that production should reflect market demands and change based on the consumers. Central market is factor that improves operations of corporations as a holistic prospective that determines organization abilities in anticipation, reaction and changing to the investment of situational changes. Central market can cause corporations to concentrate on continuous collection of relative information with customers` needs, aims and abilities of competitors and use of the information in creation of better value for the customers.

2.2 OPERATIONAL DEFINITIONS 2.2.1 CORPORATION STRATEGIES Corporation strategies include strategy of leadership expenditure and strategy of production differentiation. 2.2.1.1 STRATEGY OF EXPENDITURE LEADERSHIP This strategy is gained by total sale on total properties (assets), (Ahmad, 2016). 2.2.1.2 STRATEGY OF PRODUCTION DIFFERENTIATION This strategy is gained by research and development gathered ratio on total sale, (Ahmad, 2016).

2.3 MARKET REACTION TO PROFIT The research dependent variable is market reaction to profit and cumulative daily abnormal return has been used to measure it. Daily abnormal return is calculated based on market adjusted model. In this model, it is proposed that market return represented expected stock of corporations in each time duration and share risk has been considered as market risk. So, minus of i share real return and market return in t duration indicates abnormal return. The findings of the research done by Ghaemi&Maesoomi (2015), indicated that effective duration of profit announcement event of each anticipated share on stock price is nearly 4 days (by considering announcement day). So, in the research accumulation of abnormal return of each share during one day before anticipated profit announcement day until 4 days after its announcement, (one day before announcement day, announcement day, 4 days after announcement day, totally 6 days), has been used as a measurement criterion for market reaction. Accumulated daily abnormal return is calculated based on the following equation as: 4

CARi 

 AR

i ,t

(1)

i 1

CARi: cumulative daily abnormal return for i corporation from one day before profit announcement of each anticipated share to 4 days after this event. Daily abnormal return of one share (ARi,t) is the different of stock real return with its expected return of that share in the investigating day, based on market adjusted model, that is calculated based on the following equation as:

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Nahid Hosseini and Babak Jamshidinavid

ARi,t=Ri,t - Rm,t

(2),

where ARi,t = abnormal return of i corporation in t day Ri,t= real return of i corporation in t day based on following equation: Ri ,t 

Pi ,t  Pi ,t 1 Pi ,t 1

(3)

In the above equation, Pi,tand Pi, t-1 are stock prices of i corporation in t day and t-1 day. Rm,t= market return in t day that is calculated as follow based on Mehrani, Nonahalfar, Ghaemi and Vatanparast views: Rm,t 

TEDPIX t  TEDPIX t 1 TEDPIX t 1

(4)

TEDPIXt: indicator of total price and stock cash profit in t day TEDPIXt-1: indicator of total price and stock cash profit in t-1 day, (Ahmad, 2016)

3. RESEARCH METHODOLOGY In this study the estimated method model is based on combined data. This method is combined of time serial data (2010-2014) and sectional data (142 accepted corporations in Tehran Stock Exchange). All calculated numbers for each model variables are based on million Rial. The used software program in the research is Eveiws 8. In the estimated models that will introduced next all dependent variables with a pause are in the right part of the model that have been known as descriptive variable to solve self-correlation problem (existences of relationships between sentences are error sentences) and have been situated as violation factor of regression classical hypotheses. Moreover, in this research EGLS has been used to measure models for problem solution of variance inequality, (variance inequality of error sentences). The research methodology is as follow in term of performance aim, performance method, performance way, data kind, relationships between variables and performance time:     

Research methodology in term of performance aim: the research is “application oriented” in term of the research performance aim. Research methodology in term of data kind: the research is “quantitative” in term of data kind. Research methodology in term of performance time: the research is “sectional” in term of performance time. Research methodology in term of performance logic: the research is “deductive” in term of performance logic. Research methodology in term of performance way: the research methodology is “descriptive, measuring and correlative” in term of performance way.

4. RESEARCH STATISTICAL SAMPLE AND POPULATION Accepted corporations in Tehran stock Exchange have been 856 corporations since the end of 2016.

*Corresponding author (Babak Jamshidinavid). E-mail: jamshidinavid@iauksh.ac.ir, ©2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN2228-9860 eISSN1906-9642 http://TUENGR.COM/V10/061.pdf DOI: 10.14456/ITJEMAST.2019.6

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4.1 HYPOTHESES Total six hypotheses are considered. 1- The corporations that have had outgoing during time duration. 2- Corporations that have entered stock exchange during the research time duration. 3- Corporations that have had changes in their financial years during the research time duration. 4- Corporations that have been financial investors and intimidators, (because of lack of relationship with the research topic). 5- Corporations that have had transaction pauses more than six months in the research time duration. 6- Corporations that their financial years will not end on February, (because of monotonous of financial years based on their activations) Based on the mentioned factors from 1 to 6, 142 year-corporation has been calculated for the test of the research statistical hypotheses.

4.2 SUB- HYPOTHESES Cost leadership strategy has a positive meaningful effect on market reaction to earnings. Product differentiation strategy has a positive meaningful effect on market reaction to earnings. Table1: Research variable codes and their relative regression models of each divided hypotheses Model variables Codes of the model variables Cost leadership strategy CLS Product differentiation strategy PDS Market reaction to earnings MRE Research regression models MREit  it  1CLSit   2 PDSit

4.2.1 RECEIVED CONCLUSIONS OF F-LIMER AND HUASMAN TESTS F-Limer test has been used to test paneling and pooling of the research data. If amount of P-Value of F-Limer test is more than 5 percent, data will be pooling. If amount of P-Value of F-Limer test is less than 5 percent, data will be paneling. If paneling method is used based on F-Limer Test, husman test will be chosen for paneling data (constant effect pattern or random effect pattern). Table 2: Conclusions of F-Limer Test Research models Research regression model

F Statistic 1.314

P.value 0.016

Test result H0 is rejected

Method Paneling

Based on the received conclusions of Table 2, meaningfulness level of F statistic for the research regression model is less than 5 percent that shows comparative use of paneling data method than pooling data method in 95 percent assurance level. Moreover, statistic ofHausman Test has been calculated to specify constancy or random of sectional unit differences. Table 3: Conclusions ofHausman Test Research models Research regression model

Chi-square 9.529

P.Value 0.008

Test result H0 is rejected

Method Constant effects

Received conclusions of Hausman Test indicates that constant effect method is more preferable

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than random effect method. 4.2.2 TEST CONCLUSION OF THE RESEARCH HYPOTHESES Test result of research hypotheses is given in Table 4. Table 4: Test conclusion of the research hypotheses Variables Cost leadership strategy Product differentiation strategy Constant member Determination coefficient 0.26

Symbol

Coefficients

Standard deviation

t statistic

Meaningfulness

(CLS)

0.105319

0.026629

3.955111

0.0001

(PDS)

0.125034

0.039672

3.151697

0.0017

C 0.146183 0.033858 4.317563 Adjusted determination Watson-Durbin Statistical probability coefficient Statistic of F 0.08 2.410 0.000 MREit  it  1CLSit   2 PDSit

0.0000 Probability of Jark-Bera 0.000

MREit  0.146  0.105CLSit  0.125PDSit

4.2.3 FIRST HYPOTHESIS: COST LEADERSHIP STRATEGY HAS POSITIVE MEANINGFUL EFFECT ON MARKET REACTION TO EARNING Zero Hypothesis: Cost leadership strategy doesn`t have positive meaningful effect on market reaction to earning First Hypothesis:Cost leadership strategy has positive meaningful effect on market reaction to earning The important factor that should consider in Table 4 is F Statistic of meaningfulness level because this statistic indicates total credit level of the model. In this model, F statistic of meaningfulness level is 0.000 and this amount is less than accepted meaningfulness level of 5 percent, so this model is totally meaningful. Moreover, adjusted determination coefficient is 0.08 and this amount can be 8 percent changes of dependent variable of the changes in the other variables of this model. Based on Table 4, amount of Watson-Durbin statistic is 2.410 that shows lack of self-correlation among error sentences. In the otherwise, an error member of one observation will not be effected by other observable error member. Statistical probability of Jarque-Berais 0.000 which is less than 0.05 and it represents that error sentences have not been distribute normally. Based on Table 4, if coefficient of CLS is positive and meaningful, it will indicate that cost leadership strategy has positive meaningful effect on market reaction to earning. As indicated in the Table 4, coefficient of CLS is 0.105, t statistic is 3.955and positive and meaningfulness level is 0.000 that shows cost leadership strategy has positive meaningful effect on market reaction to earning, so H0 of the research first hypothesis will be rejected. Second Hypothesis: Product differentiation strategy has positive meaningful effect on market reaction to earning. Zero Hypothesis: Product differentiation strategy doesn`t positive meaningful effect on market *Corresponding author (Babak Jamshidinavid). E-mail: jamshidinavid@iauksh.ac.ir, ©2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN2228-9860 eISSN1906-9642 http://TUENGR.COM/V10/061.pdf DOI: 10.14456/ITJEMAST.2019.6

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reaction to earning. Main Hypothesis: Product differentiation strategy has positive meaningful effect on market reaction to earning. Based on Table 4, if coefficient of PDS is positive and meaningful, it will indicate that cost leadership strategy has positive meaningful effect on market reaction to earning. As indicated in the Table 4, coefficient of PDS is 0.125, t statistic is 3.151and positive and meaningfulness level is 0.001 that shows product differentiation strategy has positive meaningful effect on market reaction to earning, so H0 of the research first hypothesis will be rejected.

4.3 Kao Integration Test Integration can be used as an estimation method for sampling long term balancing coefficients and its variables have unity root which are non-static. However, statistical condition of time serial variables can be secure by minus, this function will cause valuable information about variable levels be lost. Integration method will be possible to estimate time serial variables without fear of their falseness. Several tests have been introduced for integration test with total different prospective such as; Pedroni Test (2004) and Kao Test (1999). Kao and Pedroni Tests are based on regression remainders and they are look like integration test of Angel-Grangers in time serial data. Seven statistics of Pedroni for panel integration test are: First group: test statistics of internal dimension: panel statistic, panel statistics of Phillips-Prawn, t panel statistic of Phillips-Prawn kind, panel statistic of Dickey-Fuller adjusted kind. Second group: test statistics of among dimension: statistics of Phillips-Prawn grouping, t statistic of Phillips-Prawn grouping and grouping statistic. Kao (1999) introduced adjusted integration test of Dickey-Fuller based on integration vectors that should be homogenous in each section. Table 5: Test conclusions of Kao Integration Long-term relationship of the research variables Long-term relationship of the research dependent and independent variables (research regression model) MREit  it  1CLSit   2 PDSit

p-value 0.000

Kao integration test Test statistic -13.861

Panel-Data integration test at first was use by Pedroni in 1995. In this test, H0 in the paneling integration test analyses will be the existence of economic long-term relationship. The main idea in the integration analysis is that while most of economic time serials are non-stationary (includes random processes) but linear mixture of the variables may bestationary (without any random processes). Based on the results of Kao integration test in Table 5, existences of relationships between variables (dependent and independent) will be accepted in 95 percent assurance level. While statistic amount of the test is more than crisis amount and probability level is less than 0.05, zero hypothesesbased on lack of integration will be rejected and its contrast hypothesis (integration and existence of long-term relationship) will be accepted. These results indicate that there powerful

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long-term relationships between the research variables. Integration test is done by Kao method because of paneling data use in the study. Kao test follows Pedroni method but it clarifies section special pass cross origin and homogenous coefficients on regression in the first level.

5. CONCLUSION Following the results of the first hypothesis, if CLS coefficient is positive and significant, it shows that leadership strategies have positive and significant effect on market eaction as recognized, CLS coefficient is equals to 0/105 and shows leadership strategy of cost as market reaction on interest has effect positive and significant. As for result obtained from second hypothesis, PDS is positive and we conclude that strategy of product discrimination is positive and significant on market reaction.

6. REFERENCES Acimva, M. (2000). Identification and classification of ERP critical failure factors in Iranian industries. Information Systems, 37(3): 227-237 Ahmed, A., B.K. Billings, R.M. Morton, and M. Stanford-Harris. (2016), the role of accounting conservatism in mitigating bondholder-shareholder conflicts over dividend policy and in reducing debt costs. The Accounting Review vol.77; PP 867–890. Denis Cormier, Pascale Lapointe-Antunes and Bruce J. Mcconomy, (2014), "Forecasts in IPO Prospectuses: The Effect of Corporate Governance on Earnings Management " Journal of Business Finance & Accounting February 2014, 0306-686X. Fadaeinezhad, M.E., Kamelnia, M. (2012), “Market reaction to profit seasonal announcements in Tehran Stock Exchange”, Magazine of Financial Accounting Researches, 5th year, No. 4, Continuous No. (18), p.p.71-90 Ghalibafasl, H. (2000), Collection of Management such as; Financial Management- M.A Book, 1st Publication, Publication of PooranPazhoohesh Ghaemi, M.H., Taghizaden, M. (2015), “Investigating the effect of information risk and transaction costs on stock market reaction to profit news”, Quarterly of Accounting & Auditing Investigations Khodamipoor, A., Hosseinasab, H., Hayati, H. (2014), “Investigating the effect of profit anticipation error of last duration on market reaction to management profit anticipation and different kinds of profit management”, Accounting Knowledge Magazine, 6th year, No. 21, p.p. 83-108 Kafashpoor, A., Shabanboroon, O., Rahimi, E. (2014), “Investigating the effect of differentiation competitive strategies and cost leadership on performance by considering role of pioneer marketing an re-actional marketing, (case study: big production corporations and middle industrial sections in Mashhad town)”, Scientific Meeting of Management Science New Findings, Entrepreneurship & Education in Iran Kathleen Farrell a, EmreUnlu a, Jin Yu, (2014), "Stock Repurchases as an Earnings Management Mechanism: The Impact of Financing Constraints" Journal of Corporate Finance 25, 1–15. Laksmana, I., & Y.W. Yang, (2014), "Product Market Competition and Earnings Management to Meet Earnings Targets." Advances in Accounting, incorporating Advances in International Accounting, Vol., 30, pp 263–275

*Corresponding author (Babak Jamshidinavid). E-mail: jamshidinavid@iauksh.ac.ir, ©2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN2228-9860 eISSN1906-9642 http://TUENGR.COM/V10/061.pdf DOI: 10.14456/ITJEMAST.2019.6

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Moradi, M., Falahi, M.A., Kami, M. (2009), “Investigating relationship between profit quality and profit reaction coefficient”, Magazine of Knowledge & Development, 18th year, No. 33 Mathur, I.; Sang Kim, Y.; (2007). “The Impact of Diversification onFirmPerformance”, International Review of Financial Analysis. Nikel, A. (1996). Successful implementation of ERP projects: Evidence from two case studies. International Journal of Production Economics, 75(1-2): 83-96. Noroosh, E., Yazdani, S., (2009), “Investigating the effect of financial leverage on investment in the accepted corporation of Tehran Stock Exchange”, Magazine of Financial Accounting Researches, No. 2, p.p. 35-48 Tahmasebi& et.al. (2014), “Investigating management leadership strategy of cost optimized by exhibiting of management model in keeping and repairing organizational superlative beneficiary”, Quarterly of Quantitative Studies in Management, 2nd year, No.1, p.p. 177-200 Vazifehdoost, H. (2012), “Investigating the effect of implementation of Porter competitive strategies in answering to the need of central market of petro chemical company customers”, Magazine of Accounting & Auditing, 3 duration, No., 9, p.p. 162-173 Valipoor, H., Rostami, V., Shahbi, A.R. (2009), Related to the Levels & Performance of the Reported Profit for anticipation of the Corporation Value. Magazine of Management Accounting, No. &, p.p. 93-107 . Ms. NahidHosseini is a Ph.D student in Department of Management and Accounting, Islamic Azad University, Kermanshah Branch, Iran. She received her Master Degree in Accounting from Islamic Azad University, Science and Research Branch, Hamadan, Iran. Her research interests are ethical behavior in Accounting, concepts of Stock Exchange, Project Complexity & Risk. Dr. Babak Jamshidinavid is an Assistant Professor in Accounting Department, Islamic Azad University, Kermanshah Branch, Iran. He received his Master degree in accounting program from Islamic Azad University, Central Tehran Branch, Iran. He received his PhD degree in Accounting Program from Islamic Azad University, Science and Research Branch, Tehran, Iran. His research interests are Concepts of New audit, Investment Concepts in the Stock Exchange, Liquidity, Tax, Investment Decision, Stock Value, Monetary and Financial Policy.

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©2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. 2015 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies.

International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies

©2018 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. http://TuEngr.com 2015 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. ©2018 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies.

STATISTICAL-BASED ANALYSIS ON EFFECTS OF THE DIMENSIONS OF HUMAN CAPITAL ON MARKETING 2015 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. CAPABILITIES IN PRIVATE BANKS a ©2018 International Transaction Journal ofa* Engineering, Management, Foad Kouhzadi , Afshin MirHesami , & Applied Sciences & Technologies.

Yadollah Rashidi a , and Milad Kouhzadi a 2015 International Transaction Journaland of Engineering, Management, & AppliedBukan Sciences & Technologies. a Department of Management Accounting, Islamic Azad University, Branch, Bukan, IRAN ARTICLEINFO

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Article history: Received 12 December 2017 Received in revised form 02 April 2018 Accepted 30 October 2018 Available online 12 December 2018

In current research has already done to investigate the effect of dimensions of Human capital on Marketing Capabilities in Private Banks. Often, human capital is described as intangible assets which can be applied as capital for competitive advantage. Thus, an organization which has strong marketing, has better performance in recognition of customer’ needs and comprehension of factors which influence on customer. This organization can position its trademark as for trademarks of its rivals which can discriminate and use high profitability. The aim of research is to discuss that does human capital influence on marketing capability? The statistical population consists of managers and experts of private banks of Kurdistan province and alpha Cronbach has been used to analyze data. In order to estimate reliability, Kolmogrov-Smirnov test has been used. On discussion the effects of human capital on marketing capability, three hypothesizes were confirmed at confidence level 95% and error 5%. This research confirms that attention to human capital in internal companies increases marketing capability and it is necessary managers and researchers to consider it. © 2019INT TRANS J ENG MANAG SCI TECH.

Keywords: Staff competence; Staff insight; Staff creativity; Alpha Cronbach test; Kolmogrov-Smirnov test.

1. INTRODUCTION Marketing capabilities are combination process of tangible and intangible capitals in order to comprehend customer complicated needs and obtain different trademarks from rivals. Organizations combine their skills and personal knowledge to tangible capitals of organization to develop marketing capability. The organization spend more capitals to comprehend customer’ needs can obtain more capabilities from market, these capabilities are complicated by other organizations. Thus, marketing capabilities are important capital to increase competitive advantage for organizations. Marketing capability helps to establish and maintain strong relationship between organization with customer and members of channel and allows organization to make strong its relationship with customers and loyalty to trademark. Marketing capability helps development of technical knowledge, new *Corresponding author (Foad Kouhzadi). E-mail: foad.kouhzadi@gmail.com, ©2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN2228-9860 eISSN1906-9642 http://TUENGR.COM/V10/073.pdf DOI: 10.14456/ITJEMAST.2019.7

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technology and replace it with existing technology and knowledge. Marketing capability is developed by evolutionary process to establish organizational development and cannot be mimicked by rivals (TiS et al., 1997). Existing capabilities are strength for development and help performance because of it, marketing capability is vital to determine competitive advantage and its performance (Dey, 1997). Nath et al. (2008) stated that the aim of marketing is to restore value of product or service in the mind of customers and this aim is due to comprehend customer’ needs better and suitable to it. Thus, organization which has strong marketing capability shows better performance to recognize factors which influence on customer. This organization can position its commercial name as for its rival and it discriminates it and obtains high profits (Day, 1994). Today, majority of organization’ assets are intangible assets which are not estimated by traditional accounting methods. Intangible assets are capabilities and assets of organization which are applied as competitive advantage. Although, we are not able to estimate it but as for its role in organization, we can consider importance of investment. Peter Drucker says in his book: we are entering into knowledge economy era in which intangible assets (knowledge assets) are main economic capital and other traditional factors are on other ranks (Beigi and Fetrus, 2009). Intangible assets are competitive rivals for organization. Thus, product of an economic institute in not only tangible assets but points to knowledge and assets. Thus, in manufacturing and servicing companies, main product of company conforms to knowledge and assets especially organizational profit and depend on intellectual investment to increase innovation and competitive profit. Organization is able to make competitive profit by conforming intangible assets (Huang et al., 2011). Organizations shall consider their intangible assets as necessary strategy in order to stay in new paradigm. Thus, it is necessary to perform researches.Therefor this research has already done to investigate the effect of dimensions of Human capital on Marketing Capabilities in Private Banks of Kurdistan province

2. RESEARCH BACKGROUND Lew et al. (2013) in a research discusses role of social capital in explorative capability in market and found that confidence in international investment resulted to explorative capability in firm and influence on market. This research also shows the effects of modification effects of capital in performance. ZĂŠghal & Maaloul (2009) estimated intellectual capital by added value index and its results on financial, economic performance and market value on 300 English companies. In order to estimate intellectual capital, intellectual added value model has been used. The results showed that efficiency of intellectual capital has positive and meaningful relationship with economic and financial performance but there is importance relationship between market performance and technology, also, capital (physical and financial) has negative relationship with economic performance but it has positive and significant relationship with market value and financial performance. Moon & Kym (2006) stated human capital with staff capability, satisfaction and stability. Staff capabilities are personal capability, personal skills and investment on human capital. Satisfaction points to emotional and feeling mode. Total satisfaction has positive relation which occupational satisfaction and organizational commitment which reflected difference between staff and comprehended. Stability points to maintenance of staff and arbitrary substitution and can be regarded

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as threat for organization to lose knowledge and organization shall be pioneer on it. Yadollah Farsi and Razavi (2012) discussed the effect of social and human capital to recognize and exploit opportunities by young in Kerbal district and concluded that size of social network and skills and their experience have positive and significant effect. Msousmi (2011) in his research discussed the effect of human capital on competitiveness of banks. The main aim of research is to discuss the effects of human capital factors on competitiveness of financial institutes. In this research, 158 questionnaires were distributed among branches of Keshavarzi banks in Golestan province and the results showed that human capital is effective to competitiveness (reduction of end price, services and concentration of customer) in bank. Maleki Min Bashi and Siyah Sarani Kajouri (2013) discussed the effect of intangible capital on performance of companies by mediating effect of marketing capability for Semnan companies. The results showed that human capital and information capital have effect and significant effect on marketing capability and also resulted to promotion of performance. Another result is to discuss indirect effect of information capital on performance by mediating role for marketing capabilities. Rezvani et al., (2012), considered social capital in entrepreneur firms for foodstuff industries. The results showed that dimensions of social capital in food industries companies combined with marketing and commitment of personnel to aims and values can be facilitator between them and result to administrative norms and confidence and access to perfect information and pertain to non-official channels to develop marketing activities. Research Conceptual Model HUMAN CAPITAL

MARKETING CAPABILITY

Customer Relation

Staff competence Staff insight

Management Servicing the customers Discriminate product

Staff creativity

Progressive activity Business researches Distribution network

Figure 1: conceptual model (after Chen et al. (2004); Rezai Dolatabadi and Khaef Elahi (2005))

3. RESEARCH METHODOLOGY This study in terms of purpose is applied research and in terms of type of gathering information is *Corresponding author (Foad Kouhzadi). E-mail: foad.kouhzadi@gmail.com, Š2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN2228-9860 eISSN1906-9642 http://TUENGR.COM/V10/073.pdf DOI: 10.14456/ITJEMAST.2019.7

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descriptive- correlational research. Statistical Population of this study is active private banks in Kurdistan province. Total 148 people were selected to perform research during November of 2017. Because of low population, consensus method was used. Total 148 questionnaires were distributed among banks, which returned 110 questionnaires were analyzed.

4. TEST OF RESEARCH HYPOTHESES 4.1 FIRST HYPOTHESIS H0: There is not significant relationship between staff competence and marketing capability in private banks of Kurdistan province. H1: There is significant relationship between staff competence and marketing capability in private banks of Kurdistan province. Table 1: Results of testing for the Pearson correlation coefficient between staff competence and marketing capability Staff competence Marketing capability

Pearson correlation Sig. value No. Pearson correlation Sig. value No.

Marketing capability 0.198 110 1 110

Staff capability 1 0.038 110 0.198 0.038 110

According to results obtained Pearson correlation test, coefficient of relation between marketing capability and staff is 0.198 in private banks of Kurdistan and significant level is 0.038 which is less than 0.05. Thus, H0 is rejected in confidence level 95% and H1 is confirmed. In other word, it can be claimed that from respondent’s point of view, marketing capability and staff capability have significant relationship in private banks of Kurdistan and staff capability influences on marketing capability.

4.2 Second Hypothesis H0: There is not significant relationship between staff insight and marketing capability in private banks of Kurdistan province. H1: There is significant relationship between staff insight and marketing capability in private banks of Kurdistan province. Table 2: Results of testing for the Pearson correlation coefficient between staff insight and marketing capability. Pearson correlation Staff Sig. value competence No. Pearson correlation Marketing Sig. value capability No.

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Marketing capability 0.349 110 1 110

Staff insight 1 0.000 110 0.349 0.000 110

According to results obtained from Pearson correlation test, coefficient of relation between marketing capability and staff insight is 0.349 in private banks of Kurdistan and significant level is 0.000 which is less than 0.05. Thus, H0 is rejected in confidence level 95% and H1 is confirmed. In other word, it can be claimed that from respondent’s point of view, marketing capability and staff insight have significant relationship in private banks of Kurdistan and staff insight influences on marketing capability.

4.3 Third Hypothesis H0: There is not significant relationship between staff creativity and marketing capability in private banks of Kurdistan province. H1: There is significant relationship between staff creativity and Marketing capability in private banks of Kurdistan province. Table 3: Results of testing for the Pearson correlation coefficient between staff creativity and Marketing capability. Staff competence Marketing capability

Pearson correlation Sig. value No. Pearson correlation Sig. value No.

Staff creativity 1 0.000 110 0.454 0.000 110

Marketing capability 0.454 110 1 110

According to results obtained Pearson correlation test, coefficient of relation between marketing capability and staff creativity is 0.454 in private banks of Kurdistan and significant level is 0.000 which is less than 0.05. Thus, H0 is rejected in confidence level 95% and H1 is confirmed. In other word, it can be claimed that from respondent’s point of view, marketing capability and staff creativity have significant relationship in private banks of Kurdistan and staff creativity influences on marketing capability.

5. CONCLUSION The results showed that there is significant relationship between dimensions of human capital and marketing capability so that more human capital in industrial companies, high marketing capability. In other word, human capital increases marketing capability and organizations shall market capability to continue in competitive environment and it is imperative to educate new staff and commitment between them and promote organizational learning. The results showed that there is significant relationship between dimensions of human capital and marketing capability as if severity of relationship between staff capability and marketing capability is 0.198. The relation staff insight and marketing capability is 0.349 and relation between staff creativity and marketing capability is 0.454. In other word, it can be claimed that from respondent’s point of view, marketing capability and staff creativity have significant relationship in private banks of Kurdistan and staff creativity influences on marketing capability. As for information obtained and as for correlation for human capital, there is relationship between staff creativity with marketing capability. In other word, it can *Corresponding author (Foad Kouhzadi). E-mail: foad.kouhzadi@gmail.com, ©2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN2228-9860 eISSN1906-9642 http://TUENGR.COM/V10/073.pdf DOI: 10.14456/ITJEMAST.2019.7

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be claimed that from respondent’s point of view, marketing capability and staff creativity have significant relationship in private banks of Kurdistan and staff creativity influences on marketing capability. Research activities considered it. Maleki MinBashi and Siah Sarani Kajouri (2013) discussed this and their research were confirmed and there is positive relation between human capital and marketing capability. This research confirms that attention to human capital in internal companies increases marketing capability and it is necessary managers and researchers to consider it.

6. REFERENCES Arabi Seyedmohammad, (2007), strategy of human capital, Tehran, Management and accounting faculty of Alameh Tabatabae University, Aghazadeh Hasehm and Tabibi Mohammadreza, (2007) nature of competitiveness, multidimensional look, no. 76, pp 158-139 Ambastha, A., & Momaya, K. (2002). Competitiveness of Firms: Review of Theory, Frameworks, and Models. Singapore Management Review, Vol. 26, No. 1, pp: 45- 58. Becker, G.S. (2002). The age of human capital. Education in the Twenty-First Century. Retrieved from the World Wide Cutler Philip and Armstrong Garey, (2008), marketing principles, translated by Bahman Frouzandeh, Amokhteh, 936 pages, printing 9, Abbasi Mohammadreza and Torkamani Mohammad, 2010, theoretical model for HRM, COMEMRCIAL DISCUSSION, year 8th, no. 41 Cheng, M., & Lin, J., & Hsiao, T., & Lin, T. (2010). Invested resource, competitive intellectual capital, and corporate performance. Journal of Intellectual Capital, 11 (4), pp: 433-450. Danaeefard Hassan and Panahi Balal, (2010), analyze occupational insights for governmental organization (determine organizational silence and behavior of organizational silence), management magazine, year two, no. 3, pp 1901 Griffith, D.A., & Yalcinkaya, G., & Calantone, R.J. (2010). Do Marketing Capabilities Consistently Mediate Effects of Firm Intangible Capital on Performance Across Institutional Environments?. Journal of World Business, vol. 45, pp: 217-227. Hao-Chen Huang, Mei-Chi Lai b, Tzong-Huei Lin. (2011). Aligning intangible assets to innovation in biopharmaceutical industry. Expert Systems with Applications, 38, 3827–3834. Horngren, C.T., & Datar, S.M., & Foster, G. (2006). Cost Accounting: A Managerial Emphasis. 12th Edition, New Jersey: Prentice-Hall, Inc. Hajipour Bahman, Darzian Azizi, Abdolhadi and Shamsi Goshgi, Sajjad,( 2012), determine strategy of product and marketing capability on market performance, exploration of commercial management magazine Jafarpour Mahomoud, (2012), determine and evaluate relation between intangible assets and commercial performance for commercial organizations, scientific-research Magazine, fourth year, no. 7, p 53-20 Luo, X., & Donthu, N. (2006). Marketing’s Credibility: A Longitudinal Investigation of Marketing Communication Productivity and Shareholder Value. Journal of Marketing, 70 (October), 70-91. Namazi Mohammad, and Ebrahimi Shahla, (2009), discuss the effect of intellectual capital on financial performance for companies accepted in Tehran stock exchange, accounting and auditing magazine, year one, no. 4

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Nath, P., & Nachiappan, S., & Raman Than, R. (2010). The Impact of Marketing Capability, Operations Capability and Diversification Strategy on Performance: A Resource-based View. Vol. 39, pp: 317-329 Rezvani Mehran, Khodada Hosseini, Seyedhamid and Toghraee Mohammadtaghi, 2012, conceptual writing for social capital in food industries marketing Rosta Ahmad, Davar Ebrahimi Abdolhamid, 2009, marketing management, SAMT, 488, printing 13rd Seyedjavadin Seydreza, Heidari Hamed, Shahbaz Moradi Saeed, 2009, effective factors on enabling human capital in banking service, period 1, no.2 Safi, A. (1997). Teacher appearance. Tehran: Parents and Teachers Association Publication. Watson Wyatt (2001) . Human Capital as a Lead Indicator of Shareholder Value Andrew Mayo, Human Resources or Human Capital. Yadollahi Farsi, Jahangir and Razavi Seyedmostafa, (2012), role of social capital and human capital in entrepreneurship on Kerbal district, human geographical research, no. 79, p 115-103 Zeghal, D., & Maaloul, A. (2010). Analysing value added as an indicator of intellectual capital and its consequences on company performance. Journal of intellectual capital, 11(1), PP: 39-60.

Mr. Foad Kouhzadi is a PhD student in Department of Management and Accounting, Islamic Azad University, Bukan Branch, Iran. He received his Master Degree in Business Management from Islamic Azad University, Sanandaj Branch, Iran. His research interests are tax system, Project Risk Management and Purchase intention. Mr. Afshin MirHesami is a Ph.D student. Scholar in Department of Management and Accounting, Islamic Azad University, Bukan Branch in Iran. He received his Master Degree in public Management from Islamic Azad University, Mahabad Branch, Iran. His research interests are Project Complexity & Risk, development ethical behavior in Accounting, Strategic Management and Innovation Management. Mr. Yadollah Rashidi is a Ph.D student. Scholar in Department of Management and Accounting, Islamic Azad University, Bukan Branch, Iran. He received his Master Degree in Accounting from Islamic Azad University, Abhar Branch, Iran. His research interests are Financial Sources, development ethical behavior in Accounting, Capital Structure. Mr. Milad Kouhzadi is a Ph.D student in Department of Management and Accounting, Islamic Azad University, Bukan Branch in Iran. He received his Master Degree in computer engineering from Islamic Azad University, Urmia Branch, Iran. His research interests are Tax, Working Capital, Debt to Equity Ratio of Shareowners, Finance Management.

*Corresponding author (Foad Kouhzadi). E-mail: foad.kouhzadi@gmail.com, Š2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN2228-9860 eISSN1906-9642 http://TUENGR.COM/V10/073.pdf DOI: 10.14456/ITJEMAST.2019.7

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MULTI-CRITERIA STATISTICAL-BASED ANALYSIS ON THE EFFECT OF OWNERSHIP STRUCTURE A MODERATING 2015 International Transaction Journal of Engineering, Management, & AppliedAS Sciences & Technologies. FACTOR ON THE RELATIONSHIP BETWEEN FREE CASH FLOW AND APPLYING THE SUITABLE ASSETS

©2018 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Hamidreza Torang a , Alireza Eskandari a* 2015 International Transaction JournalVaramin of Engineering, & Applied Tehran, SciencesIRAN & Technologies. a Department of Accounting, Branch, Management, Islamic Azad University, ARTICLEINFO

A B S T RA C T

Article history: Received 28 December 2017 Received in revised form 25 July 2018 Accepted 14 November 2018 Available online 13 December 2018

This research seeks to investigate the relationship between free cash flow, proper use of assets and the role of moderating the ownership structure. The sample of this study includes 94 companies listed in the list of listed companies of Tehran Stock Exchange from 1391 to 1395. In this research, Microsoft® Excel software was used for data processing and statistical analysis of EViews®8 was used for statistical analysis. The results of this research show a significant negative linear relationship between cash flow and the proper use of assets. The findings also show that institutional ownership and the existence of an audit committee can modify the relationship between free cash flow and the proper use of assets, that is, institutional ownership and the existence of an audit committee can make assets more appropriate. © 2019 INT TRANS J ENG MANAG SCI TECH.

Keywords: Corporation Ownership, Audit Committee; Statistical analysis; shareholders; ownership structure.

1. INTRODUCTION From economic point of view, given logical mode of people’ behavior, it is supposed that in first step, all are following to maximize their benefits. Managers are not exception. Managers are interested in maximize personal benefits, social welfare and fix their occupational position and offer suitable picture from their financial situation of commercial units to shareholders and beneficiaries. But, in some of cases, increment of wealth of managers is not on regard to increment of wealth of other shareholders. This case is conforming to conformity between benefits of managers and other beneficiary groups in commercial units. By consideration of conflict theory between managers and owners, managers of commercial units have necessary motivations to maximize their benefits. In regard to analysis by value for shareholders, flows of cash amount are so important in company. Managers can increase said cash flow by identify suitable growth opportunities in projects with flow value and increase wealth of shareholders. As for conflict theory between managers and owners, it is possible some of managers are allowed to supply flows of free cash flow in special *Corresponding author (Alireza Eskandari). E-mail: aeskandari1354@yahoo.com. ©2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN2228-9860 eISSN1906-9642http://TUENGR.COM/V10/081.pdf DOI: 10.14456/ITJEMAST.2019.8

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projects in short term and also, much free cash amount stimulates in non-profitable projects and reduce assets. Therefore, free cash flow result to agency problem because managers are willing to apply cash flow which have less cooperation in value of company. Thus, free cash flows are possible to result to apply assets.

2. RESEARCH PROBLEM Cash flow is regarded as one of the most important parts of capital turnover and attracted by managers and investors. Maintenance of cash amount is regardless advantages like doing commercial transactions, ability to confront probable events, flexibility to supply from internal resources and avoid from investment because of limitations in supply foreign resources and cause problems like increment of non-optimal investment because of agency problems (Biom, 2015). Shareholders of each company consists of persons and institutes that conform to interests, aims and horizons of investment goals. Some of ownership structures give possibility to shareholders to participate in ownership and intervene in management. This problem is a case which influences performance of company (Jenson et al., 1976). One of control methods and corporation government is to determine ownership structure. Added it, in order to determine type of ownership to reduce agency costs, it is so important. Therefore, one of the most important items in corporation government is to aware from ownership structure and rank it in standard scales to compile suitable strategies in locating corporation governance. Ownership structure and order of shareholders is different in different companies. Some of companies’ ownership belongs to partial shareholders and real identities. This group supervises on performance of mangers and access to information like financial statements. Thus, other section of corporation ownership is under professional shareholders that have valuable information about future perspectives and commercial strategies and long term investment by direct relationship with managers and ownership structure. As for said contents, researcher is following to respond questions: Is ownership structure as modifier factor effective on relation between free cash flow and assets application?

2.1 RESEARCH PURPOSES The first main purpose is to identify relation between free cash amount and apply suitable assets in companies. The second main purpose is to identify relation between corporation ownership, free cash amount and apply suitable assets in companies under research. Third main Purpose is to identify relationship between audit committee, free cash flow and apply suitable assets in companies under research.

2.2 RESEARCH HYPOTHESES First Main Hypothesis There is significant relationship between free cash flow and apply suitable assets in companies accepted in Tehran stock exchange. Second Main Hypothesis Institutional ownership modifies relation between free cash flow and apply suitable assets.

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Third Main Hypothesis Audit committee modifies relation between free cash flow and apply suitable assets.

3. RESEARCH BACKGROUND Literature review of related works is summarized in Table 1. Table 1: Summary of research background Year Researcher

2014

2015

2016

2018

2013

2016

2017

2018

2018

Title

Results Results showed that fee of independent audit Discuss relation between audit fee and committee have direct and significant relationship with Yatim specifications of BD and audit committee auditor independence, expert of audit committee, and in 736 Malaysian companies frequent visiting, that is many specifications, increase fee Results showed that life cycle of firm consists of Discuss free cash amount and its effect to expense, age, growth and capital. By using three Denial W., measure interest based on conditional empirical settings, free cash flows which are on growth Klena et al conservation step, act conservatively and have relation with life cycle of company Discuss relation between time skewness It is concluded that the companies are on early life Klins et al for free cash flows during life cycle of cycle and have more time skewness compared with company others They stated that according to literature, tax resource Hotchen et Discuss relation between tax structure and has significant and direct relation with tax company al ownership structure and shows that tax saving is for tax risk. It shows that use of debt to reduce agency costs derived Discuss interaction between free cash from free cash amount is not suitable solution by risks flow, debt policy and ownership structure of free cash amount. Also, by consideration of Namazi by using simultaneous transaction system, statistical results, variables for institutional ownership case study: companies in Tehran stock and governmental ownership have positive effect on exchange risk of free cash amount Effect of life cycle of company in free Heydarpour Findings show that effect of life in company has direct cash flow from companies in Tehran stock et al and significant on life cycle and its properties exchange They stated that according to literature, in companies Discuss relation between long term and that don’t manage interest as effectively, percent of Aghili and mid-term institutional ownership in institutional ownership is relation with accruals and in Jalinian interest companies where don’t manage interest, its relation is negatively conform to accruals Alineghad Discuss effect of institutional ownership and Results showed that percent of institutional ownership and ownership concentration on Sarokalani has significant on investment and also, hypothesis for investment opportunities in companies and institutional ownership is significant accepted in Tehran stock exchange Bahrayni Results showed that there is no relation between Discuss relation between tax avoidance corporation strategy and audit fee. Also, there is no Izadinia et and ownership structure in companies negative relation between tax avoidance and audit fee. al. accepted in Tehran stock exchange Results showed that corporation leadership system has interactive effect on tax avoidance and audit fee

4. RESEARCH METHODOLOGY This research is applied research in terms of purpose and it is quantitative research in terms of type of data. It is inductive rom reason point of view. It is semi-empirical from type and nature. It is time series from time of performing. *Corresponding author (Alireza Eskandari). E-mail: aeskandari1354@yahoo.com. ©2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN2228-9860 eISSN1906-9642http://TUENGR.COM/V10/081.pdf DOI: 10.14456/ITJEMAST.2019.8

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4.1 STATISTICAL POPULATION Statistical population consists of companies selected during 2012 to 2016 in stock exchange and the companies are selected in terms of following specifications: 1. Companies which have accepted since early 2012 in Tehran stock exchange and are active in tile period. 2. Companies that their financial year ends to March. 3. Companies which are not members of financial intermediary, investment, insurance and banks (as for difference in their activity) 4. Companies shall not change during 2012 to 2016 in financial year. 5. Companies have not transaction pause more than 6 months 6. Their financial statements are audited.

Finally, as for limitations, 94 companies are selected among companies accepted in Tehran stock exchange and selected as systematic method and information pertain to 94 companies collected. Thus, information is for 479 years/companies.

4.2 CONCEPTUAL MODEL This study applies the conceptual model of Len and Polson model to measure free cash currents of commercial unit. According to model, free cash current is obtained by operational interest before depreciation and sum of taxation, cost of interest and divisional profit. In this conceptual model, Modifier variables are ownership structure, auditing committee (internal audit of company) and institutional ownership, see Figure 1. Dependent variable: apply suitable assets. Controlled variables: company size, financial leverage and yield of assets.

Figure 1: Conceptual model of Research

5. HYPOTHESIS ANALYSIS 5.1 FIRST MAIN HYPOTHESIS There is significant relationship between free cash flow and apply suitable assets and role of Ownership structure as a moderating factor. 5.1.1 FIRST MINOR HYPOTHESIS There is significant relationship between free cash flow and apply suitable assets in companies

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Hamidreza Torang and Alireza Eskandari

accepted in Tehran stock exchange: đ??´đ?‘†đ?‘†đ??¸đ?‘‡ − đ?‘ˆđ?‘‡ = đ?›ź0 + đ?›ź1 đ??šđ??śđ??š + đ?›ź2 đ??źđ?‘ đ?‘† + đ?›ź3 đ?‘†đ??źđ?‘?đ??¸ + đ?›ź4 đ?‘…đ?‘‚đ??´ + đ?›ź5 đ??żđ??¸đ?‘‰ + đ?‘’đ?‘–đ?‘Ą

(1).

Detail of variables and test result is given in Table 2. Table 2: Results of data analysis to test of the first Minor hypothesis. đ??´đ?‘†đ?‘†đ??¸đ?‘‡ − đ?‘ˆđ?‘‡ Variable Coefficient Fixed coefficient 1.592916 C Free cash flow -0.035470 FCF Company size -0.154344 SIZE Yield of assets 0.055702 ROA Rate of debt 0.088034 LEV Durbin-Watson statistics Prob (F-statistic)

standard deviation 0.072228 0.009876 0.015761 0.023172 0.036067 2.006046 0.0000

T statistics 22.05396 -3.591592 -9.792622 2.403889 2.440863 F-statistic Adjusted R-squared

p-value 0.0000 0.0004 0.0000 0.0167 0.0151 18.29275 0.781494

As for results derived from regression model, it is observed that P-value pertain to F statistics which show significant total regression is 0.000 and shows that model is significant in confidence interval 95%. Modified determination coefficient R2 equals to 0.781494 and shows that 78% of changes for independent variable is determined and Durbin-Watson statistics is 2.006046 and is between 1.5 to 2.5 that shows lacking co-correlation between variables.As indicated in table 2, independent coefficient of free cash flow is -0.035470 and its probable is 0. 0004.as for T statistics and p-value, the results show coefficient is on interval error 5% and this finding shows that there is negative and significant relation between free cash flow and apply assets in companies Tehran stock exchange. From the analysis, there is significant relationship between free cash flow and apply suitable assets in companies accepted in Tehran stock exchange. Free cash flows motivate management to use and consume resources in different activities which increase company value and don’t change in company value. Managers are willing to invest for free cash flows in projects with personal benefit and don’t follow legal systems and neglect negative pure value of project. Some of investment activities have positive yield but the yield is lower than cost of capital. Opportunities behavior of managers for companies having surplus cash flow is explained by free cash flows. Company’ managers for free cash flows not only have lower performance than suitable mode but also don’t use free cash flow accurately. Cash flows motivate managers to maintain cash flow in company and don’t divide it as interest and by using free cash flows and assets, increase their control power in company and this strategy conforms to free cash flows for investment activities which are not pertain to main activities and misuses assets. Results conform to documents in theoretical framework of literature and researches of Darn and Henry (2010), and Taklio et al. (2012). 5.1.2 SECOND MINOR HYPOTHESIS Institutional ownership modifies relation between free cash flow and apply suitable assets. đ??´đ?‘†đ?‘†đ??¸đ?‘‡ − đ?‘ˆđ?‘‡ = đ?›ź0 + đ?›ź1 đ??šđ??śđ??š + đ?›ź2 đ??źđ?‘ đ?‘† + đ?›ź3 (đ??šđ??śđ??š ∙ đ??źđ?‘ đ?‘†) + đ?›ź4 đ?‘†đ??źđ?‘?đ??¸ + đ?›ź5 đ?‘…đ?‘‚đ??´ + đ?›ź6 đ??żđ??¸đ?‘‰ + đ?‘’đ?‘–đ?‘Ą *Corresponding author (Alireza Eskandari). E-mail: aeskandari1354@yahoo.com. Š2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN2228-9860 eISSN1906-9642http://TUENGR.COM/V10/081.pdf DOI: 10.14456/ITJEMAST.2019.8

(2).

85

Detail of variables and test result is given in Table 3. Table 3: Results of data analysis to test of the Second Minor hypothesis. đ??´đ?‘†đ?‘†đ??¸đ?‘‡ − đ?‘ˆđ?‘‡ Variable Coefficient Fixed coefficient 1.483419 C Free cash flow -0.047930 FCF Institutional 0.098484 INS ownership Institutional ownership *Free 0.018285 FCF¡INS cash flow Company size -0.140996 SIZE Return On Asset 0.072923 ROA Debt Ratio 0.087248 LEV Durbin-Watson statistics Prob(F-statistic)

standard deviation 0.096632 0.020892

T statistics 15.35127 -2.294184

p-value 0.0000 0.0223

0.021751

4.527827

0.0000

0.007336

2.492549

0.0226

0.018463 0.036296 0.027174 2.020844 0.000

-7.636840 2.009141 3.210662 F-statistic

0.0000 0.0452 0.0014 18.50093 0.786972

Adjusted R-squared

As for results derived from regression model, it is observed that P-value pertain to F statistics which show significant total regression is 0.000 and shows that model is significant in confidence interval 95%. Modified determination coefficient R2 equals to 0.786972 and shows that 79% of changes for independent variable is determined and Durbin-Watson statistics is 2.020844and is between 1.5 to 2.5 that shows lacking co-correlation between variables. As dedicated by table 3, FCF*INC variable coefficient is equal to 0.018285 and probable value is 0.0226. As for t statistics and p-value, the results show the coefficient is on error interval 5%. This finding shows that by entering into institutional ownership, relation between free cash flow and assets is modified and institutional ownership results to apply assets. Findings show that by entering into institutional ownership in model, relation between free cash flows and apply assets is modified. And institutional ownership results to assets. Institutional owners have more control abilities compared with managers in countries where have government and legal strategies. Also, institutional ownership reduces skewness information and agency problem. Because, institutional ownership controls management efforts to manipulate leadership strategies and do their best and make logical confidence to quality of financial reporting, protect benefits of shareholders and increase benefits derived from investment. Institutional owners help to promote production technology to obtain efficiency maximally by their expert and knowledge. Institutional owners who have higher percent of company ownership, have more stimulations to leader and control it as if by increasing percent of institutional ownership, relation between free cash flows and use of assets is significant and this results conforms to theoretical framework of Daren and Henry (2010), and Taklio et al. (2012). 5.1.3 THIRD MINOR-HYPOTHESIS Audit committee modifies relation between free cash flow and apply suitable assets. đ??´đ?‘†đ?‘†đ??¸đ?‘‡ − đ?‘ˆđ?‘‡ = đ?›ź0 + đ?›ź1 đ??šđ??śđ??š + đ?›ź2 đ??śđ??´đ?‘ˆ + đ?›ź3 (đ??šđ??śđ??š ∙ đ??śđ??´đ?‘ˆ) + đ?›ź4 đ?‘†đ??źđ?‘?đ??¸ + đ?›ź5 đ?‘…đ?‘‚đ??´ + đ?›ź6 đ??żđ??¸đ?‘‰ + đ?‘’đ?‘–đ?‘Ą

Detail of variables and test result is given in Table 4.

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(3)

Table 4: Results of data analysis to test of theThird Minor hypothesis. đ??´đ?‘†đ?‘†đ??¸đ?‘‡ − đ?‘ˆđ?‘‡ Variable Coefficient standard deviation T statistics p-value Fixed coefficient 1.576833 0.097305 16.20509 0.0000 C Free cash flow -0.030138 0.025987 -1.159720 0.2469 FCF Audit committee -0.101247 0.021892 -4.624829 0.0000 CAU Audit committee 0.005907 -3.206024 0.0092 FCF¡CAU -0.018937 *Free cash flow Company size -0.140658 0.018398 -7.645286 0.0000 SIZE Return On Asset 0.073294 0.036610 2.002022 0.0460 ROA Debt Ratio 0.087515 0.026977 3.244040 0.0013 LEV Durbin-Watson statistics 2.021477 F-statistic 18.54726 Prob(F-statistic) 0.000 Adjusted R-squared 0.787415

As for results derived from regression model, it is observed that P-value pertain to F statistics which show significant total regression is 0.000 and shows that model is significant in confidence interval 95%. Modified determination coefficient R2 equals to 0. 787415 and shows that 79% of changes for independent variable is determined and Durbin-Watson statistics is 2.021477and is between 1.5 to 2.5 that shows lacking co-correlation between variables. As indicated in table 4, FCF*CAU variable coefficient is -0.018937 and significant value is 0.0092. As for t statistics and p-value, the results show that there is significant relation between coefficients in error interval 5%. This finding shows that by entering into audit committee, relation between free cash flows and apply assets is modified and audit committee results to apply assets. According to hypothesis of free cash flows, it is predicated that companies having surplus cash flow can reduce working level to use assets. Opportunities behavior for managers in companies having surplus flow is explained by free cash flows. Managers for companies having free cash flow not only have low performance compared with suitable mode and it is possible not to use free cash flows and thus according to free cash flow, it motivates managers to invest in non-profitable projects which reduce efficiency of assets and this theorem means lacking management for cash amount. As for results and hypothesis, it is recognized that by increment of free cash flow in companies where high management ownership haveoptimal use of assets is reduced because managers use surplus to their benefits. Thus, it is necessary to use controlled mechanisms against inaccurate use of amount which are operational auditing in order to efficient use surplus resources. And it conforms to documents in theoretical framework of Daren and Henry (2010) and Taklio et al. (2012). Research result is summarized in Table 5. Table 5: Summary of Research Results. Research Hypotheses First main Hypothesis There is significant relationship between free cash flow and apply suitable assets in companies accepted in Tehran stock exchange. Second main Hypothesis Institutional ownership modifies relation between free cash flow and apply suitable assets. Third main Hypothesis Audit committee modifies relation between free cash flow and apply suitable assets

Type of Relationship

Confirmed or Rejected of Hypotheses

Negative and significant

confirmed

Positive and significant

confirmed

Negative and significant

confirmed

*Corresponding author (Alireza Eskandari). E-mail: aeskandari1354@yahoo.com. Š2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN2228-9860 eISSN1906-9642http://TUENGR.COM/V10/081.pdf DOI: 10.14456/ITJEMAST.2019.8

87

6. CONCLUSION AND REMARK In this research, we conclude that ownership structure is effective on free cash current and apply suitable assets as modifier variable. And in order to find relationship, firstly, descriptive statistics analysis has been discussed. After, by application of normal squares method and generalized minimized sums, scale of effectiveness for independent and other variables are discussed on application of assets. Also, we concluded that variable coefficient of free cash current is equal to -0.035470 with probable 0.0004 that shows free cash current coefficient is 95% confidence level. Variable coefficient for institutional ownership is 0.018285 with probable 0.0226 that shows significant effect of variable on relation between free cash current and apply assets in 95% confidence interval. Variable coefficient for auditing committee is -0.018937 with probable 0.0092 that shows significant effect of variable on free cash current and apply assets in confidence interval 95%. The present results showed that variables for ownership structure play important role in company performance. Since necessity of corporation mechanism is emphasized in Tehran stock exchange system, thus, it is necessary companies and governments to use suitable ownership structure which result to performance. By applying financial statements during study financial sheets of companies, it is suggested that supervisory role is considered by ownership and assets.

7. REFERENCES Aghili M. and Jalinian, A. (2017). The cash flow-investment relationship: International evidence of limited access to external finance. Journal of Multinational Financial Management, 6(1), 89–104. Alineghad B., Sarokalani, M., and Bahrayni D. (2018). Government ownership and the Performance of government-linked companies: The case of Singapore. Journal of Multinational Financial Management, 16, 64–88. Botshekan Mohammad and MahsaRahbariKhrazi,)2009(, corporation governance, Observation of rights of shareholders in companies accepted in Tehran stock exchange, Basirt Magazine, no. 42. Pp 133-153 Biom, C. R., & Steiner, T. L. (2015). Managerial ownership and agency conflicts: A non linear simultaneous equation analysis of managerial ownership, risk taking, debt policy, and dividend policy. Financial Review, 34, 119–136. Denial W., Klena, H.,(2015). " Mechanisms to reduce agency costs using data for the period 2000 to 2008 for companies listed on the Australian Securities Exchange effective recognize”. Journal of Business Research, 20, 152- 169. Francies, I. (2011)."Earnings quality and the pricing effects of earnings patterns", working paper duke university, p.53 Financial Accounting Standards Board (FASB) ,(980 )"Objectives of Financial Reporting by Non-Profit Enterprises", Statement of Financial Accounting Concepts NO .4, Stamford, CT: FASB. Heydarpour, H. and Mahmoudi ,K. (2016). "One-time cash flow announcements and free cash flow theory: Share repurchases and special dividends". Journal of Finance 47, 1963-1975. Hotchen , S., Zingales, L.,(2018). Blockholders and corporate governance, Unpublished PhD Dissertation, Michigan State University.

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Izadiniaand Vecente. (2018). Foreign ownership and plant productivity in the Thai automobile industry in 1996 and 1998: A conditional quartile analysis. Journal of Asian Economics, 15, 321–353. Klins, P., Mueller, E. and A. Spitz ,(2016), "Managerial Ownership and Company Performance in German Small and Medium-Sized Private Enterprises." German Economic Review. Issue 2, pp. 2-18 Jenson, K. Salva,T., (1976), "Organizational Structure and Earnings Management" Journal of Accounting Auditing Finance. Vol.22 No.2 pp. 333-338. Moradzadeh Mahdi, NazemiGholami, Reza Farzani, Hojatoolaj, )2009(, discuss relation between share structure and interest management in companies accepted in Tehran stock exchange, accounting and auditing magazine, No.55, pp 85 to 98 Mohammadian Mohammad, )2009(, discuss effect of free cash flow and institutional shareholders on interest management, accounting researches, no. 2, pp 50-71 Namazi Mohammad, ShokrollahiAhmad , (2013), discuss interaction between free cash flow and debt policy and ownership structure by using simultaneous transactions, case study: companies accepted in Tehran stock exchange, accounting and auditing magazine, no. 3, pp 210-169 Nourish Iraj and Ali EbrahimiKord,(2005), discuss and compile relation between order of shareholders with information and utility for performance accounting, accounting and auditing discussions, no. 42, pp 28 to 31 Rahman SereshtHossein and Nader Mazlomi, (2005), Discuss relation between management performance for institutional investors with share of ownership in companies accepted in Tehran stock exchange, Management studies, no. 47, pp 86 to 110 RezaeeFarzin, (2012), discuss interaction relationship between free cash risk with corporation structure and debt policy, financial accounting empirical magazine, no.3, pp 98 to 115 Setayesh Mohammad hossein and Mohsen Salehinia, (2015), effect of ownership structure and structure of capital on free cash flow, accounting and auditing discussions, no. 25, pp 15 to 32 TalatAfza,. (2010). " Ownership Structure and Cash Flows As Determinants of Corporate Dividend Policy in Pakistan ". International Business Research3. Wu, Desheng(Dash); (2004). “Analyzing the financial distress of Chinese public Companies using probabilistic neural networks and multivariate discriminate analysis”. Socio- Economic planning Sciences, 42, pp: 206-220.

Mr. HamidrezaTorang received his Master Degree in Accounting from Islamic Azad University, Varamin Branch, Tehran, Iran. His research interests are Tax Concepts, Financial Management, ethical behavior in Accounting, concepts of Stock Exchange, Project Complexity & Risk. Dr. Alireza Eskandari is an Assistant Professor in Accounting Department in Islamic Azad University, Varamin Branch,Tehran, Iran. He received his Master degree in Business Administration Finance and Investment from National University of Malaysia. He received his PhD degree in Accounting from University of Technology Malaysia, (UTM), Kuala Lumpur, Malaysia. His research interests are accounting, corporate finance, audit quality, corporate governance, disclosure, cost of equity and cost of debt.

Trademarks Disclaimer: All products names including trademarks™ or registered® trademarks mentioned in this article are the property of their respective owners, using for identification purposes only. Use of them does not imply any endorsement or affiliation.

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ACCURACY ASSESSMENT OF L-BAND ATLAS GNSS SYSTEMManagement, IN THAILAND 2015 International Transaction Journal of Engineering, & Applied Sciences & Technologies. Kritsada Anantakarn a* , Boonsap Witchayangkoon a ©2018 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. a Division

of Civil Engineering and Construction Management, Uthenthawai Campus. Rajamongala University of Technology Tawan-ok, Bangkok 10330 THAILAND b Department 2015 International Transaction Journal ofThammasat Engineering, Management, & Applied Sciences & Technologies. of Civil Engineering, School of Engineering, Thammasat University, THAILAND ARTICLEINFO

A B S T RA C T

Article history: Received 26 July2018 Received in revised form 30 November2018 Accepted 18December2018 Available online 19December2018

The L-Band ATLAS GNSS service, a new land and maritime survey technique, is described and field check for accuracy in this study. The L-Band ATLAS GNSS system is a Global Based Augmentation System (GSBAS), developed by Hemisphere GNSS Technology, as a service to enhance real-time orbit and clock generation, dual redundant delivery of corrections from ground reference network via commercial communication satellites. Having significant development of mobile internet communication, GNSS receiver navigation software can utilizeL-Band ATLAS service for land survey and civil construction works. This work, GNSS dual frequency (L1/L2) single receiver is operated in L-Band ATLAS system by static and dynamic positioning measurement modes. This paper demonstrates a system test for L-Band ATLAS system in Thailand (Bangkok and Korat test sites) that monitors and assesses the accuracy of positioning measurement during March and April 2018. The accuracy assessments are based on both International GNSS Service (IGS) and local ground reference network of Department of Land (DOL) of Thailand. Real-Time L band positioning measurement outcomes are compared with Post-Processing results from IGS and DOL by using local map projection as Indian 1975 in different UTM zone 47N (Bangkok) and UTM zone 48N (Korat) in Thailand. The accuracy meets the requirement for GIS and Surveying being 4.1 centimeter in horizontal measurement and 32 cm in vertical measurement as comparing post-processing with IGS system and 17 cm in horizontal measurement in comparing with DOL Thailand system. This paper also discusses the system integration and development for improving GNSS accuracy by using currently available international and local Continuously Operating Reference Stations (CORS) services in Thailand. © 2019INT TRANS J ENG MANAG SCI TECH.

Keywords: GNSS; RTK; Post-Processing; L-Band, CORS; IGS; Differential GPS; PPP.

1. INTRODUCTION GPS helps to pinpoint positions and navigations. GPS, by measuring the traveled times from *Corresponding author (K.Anantakarn). E-mail: singut51@gmail.com. ©2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN 2228-9860 eISSN 1906-9642 http://TUENGR.COM/V10/091.pdf DOI: 10.14456/ITJEMAST.2019.9

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satellites to receivers, can give ranging distances, which in turn are used to compute receivers locations when at least four satellites are in view. Other than GPS of the US, others countries have also developed similar systems, Russia built GLONASS, EU created GALILEO, China assembled BeiDou Navigation Satellite System (BDS), and others. All these systems are made into the so-called Global Navigation Satellite System (GNSS). For low cost mapping (Anantakarn andYiengveerachon, 2016) and land survey by using GNSS, the two most common satellite positioning methods are static and dynamic (kinematic) positioning measurements (Fotiou et al., 2006). When referenced to a base station networks,static method employing post-processing technique can give results of measurement error possible less than five millimeters (Hemisphere, 2017). Even though giving highest positioning accuracy, static method takes time for raw data collection and involved complicated post-processing software operation. As static beinga reliable source,it is possible to compare accuracy of dynamic method to static method. For real time measurement of DGPS of a moving rover, radio transmission and internet communication can be used, hence the termed Real Time Kinematic (RTK). This method can possible archive the measurement accuracy of a few centimeters (Hemisphere, 2017) depending on the availability of Continuously Operating Reference Stations (CORS) and other factors. Similar to RTK, L-Band Hemisphere ATLAS applies the enhanced real-time orbit and clock generation, dual redundant delivery of corrections from ground reference network via commercial communication satellites. The L-Band Global Correction Service provides centimeter-level accuracy data to all over the world by using TerraStar correction signal broadcasted in L-Band channel on board of Inmarsat telecommunication satellite. By a single dual-frequency GNSS receiver and mobile internet communication, worldwide userscan possible get higher positioning measurement with accuracy better than 10 centimeters (Hemisphere, 2017). This study demonstrates a system test for L-Band ATLAS system in Thailand (Bangkok and Korat test sites) that monitors and assesses the accuracy of positioning measurement during March and April 2018. The accuracy assessments were based on both International GNSS Service (IGS) and local ground reference network of Department of Land (DOL) of Thailand. Real-Time L band positioning measurement outcomes were compared with post-processing results from IGS and DOL by using local datum as Indian 1975 datum for map projection in different UTM zone 47N (Bangkok) and UTM zone 48N (Korat) in Thailand.

2. STUDY AREA The study area covers two cities, Bangkok located in central Thailand and Korat in Nakhon Ratchaisima province located in North Eastern of Thailand. The Bangkok sites includes five landmarks built by Department of Thailand (DOL) that locate from longitude 100° 12' to 101° 00' East and from Latitude 13°36' to 14° 00' North. The Bangkok site is set in Indian 1975 map project zone 47N for positioning measurement. The Korat sites includes five landmarks built by DOL that spread from longitude 101°36' to 102°48' East and from Latitude 14°24' to 15° 26' North. The Korat site is located in Indian 1975 map projection zone 48N for positioning measurement. The field work for the two sites is conducted in dry season in March and April 2018 and all the landmarks has open sky for maximizing satellite views and GNSS data collection.

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3. METHODOLOGY The work will emphasize on setting up static positioning measurement for post-process and dynamic positioning measurement for RTK and L-Band ATLAS using Internet communication, see Figure 1. The static data for Post- processing is recordedwith 1-second intervals acquisitions while data for RTK and L-Band are real time processed via internet communication.

Figure 1: Workflow for this research.

3.1 POST-PROCESSING TECHNIQUE Static method has employed post-processing technique that results measurement error less than five millimeters (Hemisphere, 2017). Because it is time consuming for static raw data collection and complicated post processing software operation, this method obtains highest positioning accuracy and becomes the reliable source for dynamic measurement accuracy to compare with.

3.2 PRECISE POINT POSITIONING (PPP) Since International GNSS Service (IGS) products are used, hence the term precise point positioning (PPP) is employed to analysis of a single GNSS receiver (Wichayangkoon and Segantine, 1999) that took global correction data from IGS products (Zumberge et al., 1997). This method can be conducted in both Real-time and Post-process that bring precise satellite orbits and clock information from IGS products to correct the error GNSS signal (Wichayangkoon, 2000) for improving the accuracy of positioning measurement (Mullerschoen et al., 2001).

3.3 REAL TIME L-BAND ATLAS SERVICE HEMISPHERE GNSS TECHNOLOGY. Figure 2 explains the real time L-bandcorrection services,a modality of GNSS positioning as part of a global correction service system. The receiver uses L-band frequency (microwave wavelength) for sending its measurement data to the communication satellite INMARSAT with TerraStar channel. This satellite contacts with the processing facilities where the network data is combined with other *Corresponding author (K.Anantakarn). E-mail: singut51@gmail.com. Š2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN 2228-9860 eISSN 1906-9642 http://TUENGR.COM/V10/091.pdf DOI: 10.14456/ITJEMAST.2019.9

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auxiliary data and is processed, aiming to generate satellite precise information. That information includes the satellite orbits, the clock errors, and other quantities that are relevant for high-accuracy global positioning.

Figure 2: The correction data can be sent to end-users via L-Band satellite transmission (after Hemisphere, 2017).

3.4 CONTINUOUSLY OPERATING REFERENCE STATIONS (CORS) CORS station data can be used to enhance accuracy positioning measurement of many applicationsincluding geodesy, land survey, maritime and aviation (Evans et al, 2002). In this method, the rover unit can communicate in real-time or post-process with these station networks by using internet connection. GNSS signal is then corrected by using Networks RTK such as Virtual Reference Station (VRS) and Master-Auxiliary Concept (MAC). These software network models have different utilizations depending on the size of survey area and volume of processed data from each network (Takac and Zelzer, 2008).

3.5 THAILAND DEPARTMENT OF LAND REFERENCE STATIONS (THAI DOL CORS)

CONTINUOUSLY

OPERATING

Up to now, Thailand DOL has set up 62 CORS stations allocated entire Thailand(http://dol-rtknetwork.com). CHC Navtech Thailand Company has been in charge of maintaining and administering Server and RTK Network System, on behalf of Department of Land (DOL, 2017).

3.6 INTERNATIONAL GNSS SERVICE AND DIFFERENTIAL GLOBAL POSITIONING SYSTEM (IGS DGPS) One of the online post-processing in the Pacific and Asia region are the Australian Regional GPS Network (http://www.auslig.gov.au/geodesy/argn) using software AUSPOS Version 2.3. It is a simple operation as uploading GNSS static measurement raw data in RINEX format. Then the server collects and processes simultaneous data from IGS stations for DGPS data correction. The report of data processing including positioning coordinate and baseline ranges among the references stations is then sent backto email. This system has some disadvantages as raw data requirement for more than two hours static measurement by dual frequency only and sometime DGPS data from reference stations is not available in the region. To fill these gaps, IGS PPP method is an alternative method for post-processing to achieve precise positioning coordinates.

3.7 INTERNATIONAL GNSS SERVICE AND PRECISE POINT POSITION (IGS PPP) GNSS Analysis and Positioning Software (GAPS) Canada offers free of charge service for PPP based on IGS products.Being a data service center in the University of New Brunswick, the system

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processes our static and dynamic raw data that uploads to the server. Then atmospheric, ionosphere, satellite orbit and receiver clock from IGS reference stations are collected and processed to give very high accuracy of position coordinates. All these measurement information are included in a coordinate report that sends back to users by email after the process finish. This research field work conducts static positioning measurement and then the RINEX data is sent to ASPOS for processing as described in Figure 3. In Figure 3, the survey point D3327 measured by carrier phase with residual 2 cm and Pseudo-phase residual 5 m are also plotted.

Figure 3: GAPS PPP Online GNSS Processing Service report.

4. RESULTS AND DISCUSSION The accuracy assessment of L-Band ATLAS Real time was compared to Static positioning measurement by CORS data from DOL Thailand and IGS data Post-possessing technique. The L-Band ATLAS Real time measured in 30 minutes duration for each survey point. Static measurement conducted in 90 minutes duration for each survey point and the data was converted in to RINEX format. These data was then uploaded to IGS website for on-line Post-processing by long base-line DGPS and PPP technique. The referenced GPS data from DOL were assessed and downloaded in the format of RINEX which is compactable with GNSS software for post-processing.

4.1 DEPARTMENT OF LAND (DOL) AND POST-PROCESS One of the survey landmark for Post-process as point ID as 102454 is located in the open sky with good construction and DOL landmark information. Static measurement conducted in 90 minutes duration for each survey point and the data was converted in to RINEX format. The survey points were then employed by Post-processing technique has been conducted with the referenced positions from the Department of Land (DOL) with base lines and network adjustment as presented in Figure 4.The accuracy of Post-process from DOL as RMS North as 1.6 cm, RMS East as 1.6 cm and *Corresponding author (K.Anantakarn). E-mail: singut51@gmail.com. Š2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN 2228-9860 eISSN 1906-9642 http://TUENGR.COM/V10/091.pdf DOI: 10.14456/ITJEMAST.2019.9

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RMS Height 11.5 cm,is summarized in Table 1.

Figure 4: Post-processing results with base lines and network adjustment Table 1: Post-process accuracy Post-Process IGS-PPP IGS-DGPS DOL

North 0.005 0.023 0.016

RMS (m) East 0.004 0.052 0.016

Height 0.004 0.112 0.115

4.2 THE ACCURACY OF IGS POST-PROCESS PPP (VIA GAPS SERVICE) The accuracy of IGS Post-Process PPP ranges errors caused by signal strength, ionospheric effects, multipath etc. Carrier phase residual values as 2 cm and Pseudo-phase residual as 5 m were also plotted in Figure 5. The accuracy of post-process from IGS - PPP as RMS North as 5 mm, RMS East as 4 mm and RMS Height 4 mm is summarized in Table 1.

Figure 5:The accuracy of IGS Post-Process PPP

4.3 THE ACCURACY OF IGS - DGPS The raw data for more than two hours static measurement by dual frequency was process by AUSPOS ver. 2.3 with DGPS data from reference stations in the region. The accuracy of Post-process from IGS - DGPS as RMS North as 2.3 cm, RMS East as 5.2 cm and RMS Height 11.2 cm is summarizes in Table 1.

4.4 THE ACCURACY OF L-BAND CORRECTION ATLAS The L-Band ATLAS Real time measured in 30 minutes duration for each survey point. The accuracy of L-Band Correction ATLAS is measured at horizontal RMS 4.3 centimeter and vertical RMS 6.2 cm as displayed in Real Time at the moment of survey, see Figure 6.

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Figure 6: L-Band Correction ATLAS Real time measurement The accuracy of L-Band ATALS meets the requirement for GIS and Surveyingas illustrated in Figure 7 by Real time measured in 30 minutes duration.

Figure 7: The accuracy of L-Band Correction ATLAS The accuracy is resulted as 4.1 centimeter in RMS horizontal measurement and 32 cm in RMS vertical measurement as comparing post-processing with IGS system while 17 cm in RMS horizontal measurement and 83 cm in RMS vertical measurement in comparing with DOL Thailand system. Based on the above results, L-Band ATLAS system has been integrated and developed for improving GNSS accuracy by using currently available international and local Continuously Operating Reference Stations (CORS) services in Thailand.

5. CONCLUSION This study demonstrates a system test for L-Band ATLAS system in Thailand (Bangkok and Korat test sites) to monitor and assess the positioning measurement accuracy. The accuracy assessments arereferenced to both International GNSS Service (IGS) and local ground reference *Corresponding author (K.Anantakarn). E-mail: singut51@gmail.com. Š2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN 2228-9860 eISSN 1906-9642 http://TUENGR.COM/V10/091.pdf DOI: 10.14456/ITJEMAST.2019.9

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network of Department of Land (DOL) of Thailand. Real-Time L band positioning measurement outcomes are compared with Post-Processing results from IGS and DOL by using local map projection (Indian1975) in different UTM zones 47N (Bangkok) and 48N (Korat). The accuracy meets the requirement for GIS and Surveying being 4.1 centimeter in horizontal measurement and 32 cm in vertical measurement as comparing post-processing with IGS system and 17 cm in horizontal measurement in comparing with DOL Thailand system. This paper also discusses the system integration and development for improving GNSS accuracy by using currently available international and local Continuously Operating Reference Stations (CORS) services in Thailand.

6. ACKNOWLEDGMENT We thank Mr. Kathonkait Panaeat, Mr. Sutee Phuangsombat, Miss. Saowarat Thanomyat, Mr. Banjong Nanchiangchea, Mr. Pourich Bourungbut and Mr. Choosak Udompuch who assisted the research.

7. REFERENCES Anantakarn, K., & Yiengveerachon, V. (2016). Unmanned Blimp Aerial Photography for Low-cost Mapping. International Transaction Journal of Engineering Management & Applied Sciences & Technologies, 7(1), 35-45. DOL (2017) Department of Land (Thailand): http://dol-rtknetwork.com. Accessed:August 2018 Evans AG, Swift ER, Cunningham JP, Hill RW, Blewitt G, Yunck TP, Lichten SM, Hatch RR, Malys S, Bossler J (2002). The Global Positioning System Geodesy Odyssey Navigation, 49(1), 7-34. Fotiou, A., Pikridas, C., &Chatzinikos, M. (2006). Long Distance GPS Baseline Solutions using Various Software and EPN Data. Munich, Germany: XXIII FIG Conngress-Shaping the Change. Hemisphere GNSS (2017). S321+ GNSS SMART ANTENNA, https://hemispheregnss.com /Products/Products/Position/s321-gnss-smart-antenna-1569. Accessed: August 2018 Mullerschoen, R., Bar-Server, Y. W. Bertiger, D. Stowers (2001). NASA's Global DGPS for High-Precision Users. GPS World, January, 14-20. Takac, F. and Zelzer,O. (2008). The relationship between network RTK solutions MAC, VRS, PRS, FKPand i-MAX, Proceedings of ION GNSS 2008, Savannah, GA, 348-355 Wichayangkoon, B. (2000). Elementsof GPS Precise Point Positioning. Ph.D. Thesis in Spatial Information Science and Engineering. University of Maine. Wichayangkoon, B. and Segantine, P.C. (1999). Testing JPL’s PPP service. GPS Solutions, 3(1), 73-76. Zumberge, J.F., M. B. Heflin, D.C. Jefferson, M.M. Watkins, F.H. Webb (1997), Precise Point Positioning for the Efficient and Robust Analysis of GPS Data from Large Networks, J. Geophys. Res.,Vol. 102, pp. 5005-5017. Dr.Kritsada Anantakarn is working as a Lecturer in the Department of Civil Engineering Technology, Faculty of Engineering and Architectures, Rajamongala University of Technology Tawan-ok, Uthenthawai Campus, Thailand. He earned his Bachelor of Engineering (Civil Engineering) from Faculty of Engineering Rajamangala Institute of Engineering, and a Master’s degree in of Urban and Environmental Planning from King Mongkut's Institute of Technology Ladkrabang, and his PhD from Thammasat University. He is interested in GPS/GNSS and spatial technology. Dr. Boonsap Witchayangkoon is an Associate Professor in Department of Civil Engineering, Thammasat School of Engineering, Thammasat University, Thailand. He received his B.Eng. from King Mongkut’s University of Technology Thonburi with Honors. He earned his PhD from University of Maine, USA in Spatial Information Science & Engineering. Dr. Witchayangkoon current interests involve applications of emerging technologies to engineering.

Trademarks Disclaimer:All products names including trademarks™ or registered® trademarks mentioned in this article are the property of their respective owners, using for identification purposes only. Use of them does not imply any endorsement or affiliation.

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©2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. 2015 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies.

International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies

©2018 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. http://TuEngr.com 2015 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. ©2018 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies.

ROLLER BEARING FAULT DETECTION USING EMPIRICAL MODE DECOMPOSITION AND ARTIFICIAL NEURAL 2015 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. NETWORK METHODS a ©2018 International Transaction Journal ofa,Engineering, Management, &, Applied SciencesPayganeh & Technologies. Javad Zarekar Mehrdad Nouri Khajavi a* Gholamhassan a

Department of Solid Mechanics, Faculty of mechanical Engineering, Shahid Rajaee Teacher Training

2015 International University, Transaction Tehran, IRANJournal of Engineering, Management, & Applied Sciences & Technologies. ARTICLEINFO

ABSTRACT

Article history: Received 15 June 2018 Received in revised form 20 December 2018 Accepted 05 January 2019 Available online 10 January 2019

One of the methods for detection faults in structural and mechanical systems is processing vibrational signals extracted from the real system. The Hilbert–Huang transform (HHT) is a new and strong method for analyzing nonlinear and non-stationary vibrations based on time-frequency. This approach is based on decomposing a signal into empirical modes and Hilbert spectral analysis. In the current paper, first, vibrational signals of a roller bearing are decomposed into intrinsic mode functions (IMFs) using ensemble empirical mode decomposition (EEMD) method and IMFs sensitive to impulse are determined by Kurtosis coefficient. Then Kurtosis and standard deviation factors are extracted from the mentioned IMFs and used for training and validating the multi layers perceptron neural network. The results of network trial showed faulty or normal roller bearing and its fault type. © 2019 INT TRANS J ENG MANAG SCI TECH.

Keywords: ANN; EMD; EEMD; IMFs; Hilbert–Huang transform (HHT); Kurtosis coefficient non-stationary vibrations; time-frequency.

1. INTRODUCTION The best method of maintaining rotating machinery is failure detection and their evaluation during working. Detecting a problem on time, when the faults are minor and have no effect on the machine operation is very useful if the problem incidence causes can be evaluated during work. Vibration analysis is the strongest and most common method to determine and detect mechanical systems’ and bearings’ faults when the fault begins to appear (Shiroishi et al., 1997). In addition, the existence of noises is considered a main problem in signal processing (Zhang and Randall, 2009). The reason for this issue can be known as better understanding of machine performance vibrating mechanisms and the possible relation of changes in vibrational signal with machine dynamic behavior and its faults. Moreover, vibrational signals of weak bearings are affected by stronger rotating parts such as rotors and interfere with them (Randal and Antoni, 2011). In this method, the vibrations caused by the existed faults in rotating machine parts are transferred to the body and structure and recorded by a sensor and analyzed by analyzer devices or computer software. *Corresponding author (M.N. Khajavi). Tel: +98-9122813405 E-mail: mnouri@sru.ac.ir. ©2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN2228-9860 eISSN1906-9642 http://TUENGR.COM/V10/099.pdf DOI: 10.14456/ITJEMAST.2019.10

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Time domain methods usually use statistical tools. Peak value, root mean square (RMS), Kurtosis (Ku) factor, crest factor (CF), etc., are some of the time domain indicators used frequently to detect rotating machinery faults (Randall, 2011). Frequency domain methods work based on obtaining frequency spectrum of time signal through Fourier transform. Frequency spectrum is very useful to find an overview of signal detection. However, as frequency spectrum shows vibration amplitude in the whole time interval of signal, it does not well reveal localized change in the signal.

2. THEORETICAL BACKGROUND In recent years, the Hilbert–Huang transform (HHT) method has been used as one of the suggested and acceptable methods in the field of vibrational signals processing. This method was proposed by Huang el al., for the first time in 1998. The Hilbert–Huang transform is an adaptable time-frequency method for analyzing nonlinear and non-stationary signals. It is based on the empirical mode decomposition and the Hilbert spectrum analysis. Rai and Mohanty (2007) used EMD method, fast Fourier transform (FFT), and wavelet transform in their research to identify defective bearings. Considering nonlinear and non-stationary features in vibrational signal of roller bearings, Ali et al. (2015) used the method of feature extraction from empirical mode decomposition energy entropy and mathematical analysis to choose the most important intrinsic mode functions (IMFs). De Moura et al. (2011) used artificial neural networks and principal components analysis (PCA) to detect damage severity to rolling bearings in the outer case. Using this method, they investigated four states of defect including a normal state and three different states in terms of the bearing’s outer case damage severity and could differentiate between them. Jinde Zheng (2013) analyzed vibrational signal of roller bearings through generalized empirical mode decomposition, experimental envelope demodulation, and HHT methods.

2.1 EMPIRICAL MODES DECOMPOSITION (EMD) AND ENSEMBLE EMPIRICAL MODES DECOMPOSITION (EEMD) Empirical modes decomposition method is an adaptable tool for nonlinear and non-stationary signals analysis. In this method, each signal is decomposed based on its local behavior. The results of this decomposition are intrinsic mode functions (original or manufacturer) each of which introduce as simple oscillation compared to a simple harmonic function. Data related to each signal include a variety of oscillatory modes which interfere with each other and produce complex data. Each intrinsic, linear or nonlinear mode is a simple oscillation which has extrema points (maximum and minimum) and the same zero crossing points. In the other words, oscillations around space mean are symmetric. The following algorithm is run to obtain IMFs (Rai and Mohanty, 2007): 1. The entire extrema of the original signal đ?‘Ľ(đ?‘Ą)are identified. 2. Fitting curve on maximum and minimum points, two upper envelope curve đ?‘’đ?‘šđ?‘Žđ?‘Ľ (maximum value envelope curve) and lower envelop curve đ?‘’đ?‘šđ?‘–đ?‘› (minimum value envelope curve) are obtained. 3. The value of đ?‘š(đ?‘Ą) is calculated. đ?‘š(đ?‘Ą) =

100

đ?‘’đ?‘šđ?‘Žđ?‘Ľ +đ?‘’đ?‘šđ?‘–đ?‘› 2

Javad Zarekara, Mehrdad Nouri Khajavi, Gholamhassan Payganeh

(1)

The value of â„Ž1 is calculated using the following relation and this operation continues until h1 (t) value become less than the desirable amount d1 (đ?‘‘1 (đ?‘Ą) <∈ ). â„Ž1 (đ?‘Ą) = đ?‘Ľ(đ?‘Ą) − đ?‘š1 đ?‘‘1 (đ?‘Ą) < ∈

(2)

If â„Ž1 (đ?‘Ą) meets two following conditions, the first function is considered to be the intrinsic mode function đ??źđ?‘€đ??š1 , otherwise the stages are repeated until the above condition is satisfied so that the first đ??źđ?‘€đ??š is obtained. First condition: In the entire data set, the number of extrema and the number of zero crossings of signal must differ at most by one. Second condition: The mean value of the local maximum and minimum domain at any point of the signal must be equal. 4. The residual is calculated from the following relationship: đ?‘&#x;1 (đ?‘Ą) = đ?‘Ľ(đ?‘Ą) − đ??źđ?‘€đ??š1 (đ?‘Ą)

(3)

By repeating this algorithm, signal components are calculated, and finally the initial signal can be calculated as follows: đ?‘Ľ(đ?‘Ą) = ∑đ?‘›đ?‘–=1 đ?‘?đ?‘– (đ?‘Ą) + đ?‘&#x;đ?‘› (đ?‘Ą)

(4)

Where, đ?‘&#x;đ?‘› is the residual component, n is the number of IMFs, and đ?‘?đ?‘– is the intrinsic mode function (IMF). Through decomposing signal, the high-frequency and low-frequency components are obtained whose combination reconstructs the original signal. The created IMF components have a lower frequency at each stage compared to the previous one. Obtaining IMFs is known as “sifting processâ€? or “screeningâ€?. This process continues unless the standard deviation parameter restricts it. Standard deviation is obtained via two methods: a: Through the following relation: đ?‘†đ??ˇ = ∑đ?‘‡đ?‘Ą=0

(â„Žđ?‘˜âˆ’1 (đ?‘Ą)− â„Žđ?‘˜ (đ?‘Ą))2 2 (đ?‘Ą) â„Žđ?‘˜âˆ’1

(5)

b: The standard deviation value is usually chosen to be between 0.2 to 0.3. The EMD method is capable to decompose complicated signal into a set of IMFs which are nearly orthogonal to each other. It seems that the most important weakness of EMD method is “modes mixingâ€?. In order to solve modes mixing problem the “ensemble empirical mode decompositionâ€? (EEMD) method has been proposed. This method decomposes better the IMFs components (Yaguo Lei., 2011). Each trial includes the results of signal decomposition plus a white nose of finite amplitude. The new method was extracted from statistical properties of white noise developed by Flandrin et al. (2004). It shows that EMD method applied with white noise is a self-tuning dyadic filter bank. *Corresponding author (M.N. Khajavi). Tel: +98-9122813405 E-mail: mnouri@sru.ac.ir. Š2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN2228-9860 eISSN1906-9642 http://TUENGR.COM/V10/099.pdf DOI: 10.14456/ITJEMAST.2019.10

101

Moreover, investigating the obtained results by Flanderin et al. (2004), shows that noise can help with signal analysis in EMD method (Wu et al., 2009).

2.2

Ensemble empirical mode decomposition (EEMD) algorithm

1. A value is considered for ensemble M and white noise intensity and m is set to 1 (� = 1). 2. A set of white noise with certain amplitude is added to the signal under investigation and combined with it: �� (�) = �(�) + �� (�)

(6),

where �� is the �th series of added white noise to the signal. 3. The signal �� (�) to which white noise added, is decomposed to I original mode functions using EMD method. a. If � < �, then go to stage 1 and set � = � + 1 and repeat stages. This process continues every time with different noise series. b. The ensemble mean of �� from � trials is calculated based on the following relation for each original mode function and considered as the final IMF. �� =

1 đ?‘€

∑đ?‘š đ?‘š=1 đ??śđ?‘–,đ?‘š

, đ?‘– = 1,2, ‌ , đ??ź

� = 1,2, ‌ , �

(7)

3. THE PROPOSED METHOD FOR ROLLER BEARING FAULT DETECTION Using EEMD and artificial neural network, a method for roller bearing fault detection is proposed in this section.

3.1

DATA PREPARATION

The vibrational signals of the current study were provided from the bearing data center of Case Western Reserve University. In Figure 3, test bed consists of a 3-phase 2 HP (Horse Power) induction motor (left side), a torque sensor (center), and a dynamometer (right side) connected to a self-tuning coupling (center). The load amount is adjustable by dynamometer. The trial bearing keeps motor shaft on driver side. Balls, inner race (ring), and outer race defects have been separately created on bearing SKF6205-2RS with sizes of 0.177, 0.3556, and 0.5334 mm respectively (Case Western Reserve University Bearing Data Center Website). Graph of acceleration vs time obtained by this bearing is presented in Figure 4. Each sample consists of 10240 data points.

Figure 3: (a) Experimental setup (left) and (b) Schematic diagram of the experimental setup (right) (Available from the Case Western Reserve University Bearing Data Center Website)

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Figure 4: Vibrational signals in four conditions: (a) normal Bearing, (b) defective bearing with inner race fault, (c) defective bearing with outer race fault and (d) defective bearing with rolling elements (balls) fault.

3.2 VIBRATIONAL SIGNAL DECOMPOSITION USING EEMD METHOD: After preparing and classifying samples at previous stage, the sample signal is decomposed to 15 IMFs using EEMD method. Different faults modes are seen in Figures 5, 6, 7, and 8.

Figure 5: IMFs of normal bearing

*Corresponding author (M.N. Khajavi). Tel: +98-9122813405 E-mail: mnouri@sru.ac.ir. Š2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN2228-9860 eISSN1906-9642 http://TUENGR.COM/V10/099.pdf DOI: 10.14456/ITJEMAST.2019.10

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Figure 6: IMFs of inner race fault with fault diameter of 0.1778 mm.

Figure 7: IMFs of outer race fault with fault diameter of 0.1778 mm

Figure 8: IMFs of defective bearing with ball fault and fault diameter of 0.11717 mm

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3.3 CHOOSING SENSITIVE MODE After obtaining IMFs for each sample, kurtosis coefficient was calculated for all 15 modes and then the more sensitive mode to impulse with higher kurtosis coefficient is chosen. Kurtosis coefficient is very sensitive to impulse and is more suitable to detect and choose the more sensitive to impulse mode function. Kurtosis coefficient is obtained from (Wasserman, 1989): 1

2 đ?‘Ľđ?‘˜đ?‘˘đ?‘&#x; = √đ?‘ ∑đ?‘ đ?‘–=1(đ?‘Ľđ?‘– − đ?‘ĽĚ… )

(8).

3.4 EXTRACTING TIME DOMAIN CHARACTERISTICS: At this stage, first, data were divided into 40 categories each of which consists of 256 data points. Then from each category, two characteristics of kurtosis and standard deviations were calculated and arrays in the form of 2Ë&#x;40 and 2Ë&#x;60 were made. Standard deviation is calculated (Wasserman, 1989):

đ?œŽ=

4 ∑đ?‘ đ?‘–=1(đ?‘Ľâˆ’đ?‘ĽĚ… )

(đ?‘ −1)đ?œŽ 4

(9),

where đ?‘Ľ is the nth measurement in the đ?‘–th IMF đ?‘Ľ; đ?‘ĽĚ… is the average of đ?‘Ľ, đ?‘ is the number of data points of IMF đ?‘Ľ, and đ?‘– is the number of IMFs.

3.5 ARTIFICIAL NEURAL NETWORK DESIGN AND FORMATION Artificial neural networks are based on biological learning process models of human brain. Artificial neural networks are widely used in data analysis, patterns identification and control (Haykin, 1999). Multilayer perceptron (MLP) is the most common neural network. In condition monitoring, this kind of network is used in more than 90 % of cases. Multilayer perceptron neural network is composed of an input layer with source nodes, one or multiple hidden layers with computational nodes or neurons and an output layer. The number of nodes in the input and output layer depends on the input and output values. For less hidden layers and neurons, the performance may be inadequate. On the other hand, with a lot of hidden nodes the risk of over fitting in training data and weak generalization to new data exists. There are a variety of manual and systematic methods to choose the number of hidden layers and nodes. In the current research two hidden layers with 25 and 13 neurons were used. The number of input layer nodes is two, which is equal to the number of statistical parameters (Kurtosis coefficient and standard deviation). It consists of a normal condition, three conditions related to inner race fault, three conditions related to outer race fault and three conditions related to rolling elements (balls) fault. The network output layer includes four nodes indicating normal condition, inner race fault, outer race fault and rolling elements (balls) fault respectively (Figure 9). Therefore network structure is considered to be [2:25:13:4]. Of course, different structures were prepared and tested by writing script code in MATLABŽ software and finally the mentioned structure was chosen. 35% of data set was used for training, 10 % was used for validation and 55% for neural network testing. In the neural network design, the Levenberg-Marquardt (LM) algorithm and sigmoid- tangent activation function were used for hidden layer and linear activation function in the output layer. In order to determine the network efficiency the mean squared error (MSE) was used based on relation 8 (Wasserman, 1989). *Corresponding author (M.N. Khajavi). Tel: +98-9122813405 E-mail: mnouri@sru.ac.ir. Š2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN2228-9860 eISSN1906-9642 http://TUENGR.COM/V10/099.pdf DOI: 10.14456/ITJEMAST.2019.10

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1

đ?‘€đ?‘†đ??¸ = ∑đ?‘›đ?‘–=1(đ?‘Śđ?‘– − đ?‘ŚĚ…)2 đ?‘›

(10)

Figure 9: Schematic diagram of the designed MLP. The input data for each part of neural network is based on Table 1. 35% of data set was used for training, 10 % was used for validation and 55% for neural network testing.

3.6 SYSTEM PERFORMANCE ANALYSIS USING CONFUSION MATRIX In general, in the classification systems, the confusion matrix is used for defect detection in order to determine the success rate and efficiency of these systems. For analyzing the confusion matrix, in terms of the classification and bearing fault detection, four conditions are considered, including, (a) normal bearing, (b) defective bearing with inner race fault, (c) defective bearing with outer race fault and (d) defective bearing with rolling elements (balls) fault. Each of these values is shown in the turbulence matrix.

Figure 10: Confusion matrix using a test set data (neural network output) As shown in Figure 10, confusion matrix is in fact a classified table for examining the correct and false detection modes of faults. There are four classes for output and four classes for the target. The number of data in these classes is properly classified in their own classes; and, the network test accuracy in classifying the given classes is expressed as a percentage.

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Table 1: The confusion matrix Actual class

normal Predicted Inner race fault class Outer race fault Rolling elements fault Network test

normal

inner race fault

outer race fault

rolling elements fault

Network training

30

0

1

0

96.8%

0

48

9

5

77.4%

0 0 100%

5 7 80%

43 7 71.1%

13 42 70%

70.5% 75.0% 77.6%

In neural networks, the network performance is measured based on the mean square error. In this study, the selected neural network performance was 77.6%, which was 15 in Epoch and the selected network performance was obtained with the test data set. The network performance is displayed in the Table 1. The network efficiency in Table 1 shows that with 15 repetitions, the lowest error rate occurs within the network, the difference between the output matrix and the target reaches its lowest value.

Figure 11: The least square error curve in the learning, testing, and validation of the MLP neural network. Table 2: Description of bearing data set. Bearing status

Fault size (mm)

Normal Inner race fault

Outer race fault

Rolling element or ball fault

0.177 0.3556 0.5334 0.177 0.3556 0.5334 0.177 0.3556 0.5334

Number of training and validation samples 27 18 18 18 18 18 18 18 18 18

Number of test samples 33 22 22 22 22 22 22 22 22 22

Finally, the results of this neural network are presented in Table 2. The network accuracy of the test data in the normal state is high as 96.8%. Due to the fact that the data analyzed in this study were obtained from an accelerometer sensor on the roller bearing of actuator shaft, the vibration of the inner race fault directly affects the amplitude (due to the contact of the shaft and the inner race). *Corresponding author (M.N. Khajavi). Tel: +98-9122813405 E-mail: mnouri@sru.ac.ir. Š2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN2228-9860 eISSN1906-9642 http://TUENGR.COM/V10/099.pdf DOI: 10.14456/ITJEMAST.2019.10

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Consequently, as expected, the network test accuracy for this data set is high as 77.40%; however, it is reduced to 75.00 and 70.50 for defective bearing with rolling elements (balls) faults and defective bearing with outer race fault as in Table 2.

4. CONCLUSION Using EEMD and MLP methods and based on time domain characteristics of vibrational signal, an approach to detect the roller bearing status was represented in the current paper. The vibrational signal data include 4 status (normal, defective inner race, defective outer race, and defective rolling element or ball) with diameters of 0.177, 0.3556, and 0.5334 mm were decomposed using EEMD method and IMFs were obtained. Considering the roller bearing performance method, Kurtosis coefficient was used for choosing and filtering the sensitive to impulse modes from the entire IMFs. Finally, two features including standard deviation and Kurtosis were extracted from these sensitive to impulse modes and given to the entry of neural network. The number of layers , transform functions, and the number of different neurons in the middle layer were investigated and the best result of neural network with 2:25:13:4 structure was obtained. This network has the mean accuracy of 78.3 % and not only detects the normal or defective state but also determine the fault type (defective inner race, defective outer race, defective roller element or ball). This algorithm is proposed to extract frequency domain or time frequency domain characteristics from sensitive modes. In addition, to increase network detection accuracy it is recommended to use this algorithm with neural networks such as support vector machine (SVM) or radial basis function (RBF).

5. REFERENCES Ali, J. B., Fnaiech, N., Saidi, L., Chebel-Morello, B., & Fnaiech, F. (2015). Application of empirical mode decomposition and artificial neural network for automatic bearing fault diagnosis based on vibration signals. Applied Acoustics, 89, 16-27. Shiroishi, J.Y.S.T., Li, Y., Liang, S., Kurfess, T., Danyluk, S., (1997). Bearing condition diagnostics via vibration and acoustic emission measurements. Mechanical systems and signal processing, 11(5), 693-705. Zhang, Y., & Randall, R. B. (2009). Rolling element bearing fault diagnosis based on the combination of genetic algorithms and fast kurtogram. Mechanical Systems and Signal Processing, 23(5), 1509-1517. Randall, R. B., & Antoni, J. (2011). Rolling element bearing diagnostics—A tutorial. Mechanical systems and signal processing, 25(2), 485-520. Randall, R. B. (2011). Vibration-based condition monitoring: industrial, aerospace and automotive applications. John Wiley & Sons. Huang, N. E., Shen, Z., Long, S. R., Wu, M. C., Shih, H. H., Zheng, Q., Yen, N.C., Tung, C.C., & Liu, H. H. (1998). The empirical mode decomposition and the Hilbert spectrum for nonlinear and non-stationary time series analysis. In Proceedings of the Royal Society of London A: mathematical, physical and engineering sciences (Vol. 454, No. 1971, pp. 903-995). The Royal Society. Rai, V. K., & Mohanty, A. R. (2007). Bearing fault diagnosis using FFT of intrinsic mode functions in Hilbert–Huang transform. Mechanical Systems and Signal Processing, 21(6), 2607-2615.

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Javad Zarekara, Mehrdad Nouri Khajavi, Gholamhassan Payganeh

Jaouher Ben Ali , Nader Fnaiech, Lotfi Saidi, Brigitte Chebel-Morello." Application of empirical mode decomposition and artificial neural network for automatic bearing fault diagnosis based on vibration signals".Applied Acoustics , pp. 16-27, 2015. De Moura, E. P., Souto, C. R., Silva, A. A., & Irmao, M. A. S. (2011). Evaluation of principal component analysis and neural network performance for bearing fault diagnosis from vibration signal processed by RS and DF analyses. Mechanical Systems and Signal Processing, 25(5), 1765-1772. Zheng, J., Cheng, J., & Yang, Y. (2013). Generalized empirical mode decomposition and its applications to rolling element bearing fault diagnosis. Mechanical Systems and Signal Processing, 40(1), 136-153. Lei, Y., He, Z., & Zi, Y. (2011). EEMD method and WNN for fault diagnosis of locomotive roller bearings. Expert Systems with Applications, 38(6), 7334-7341. Flandrin, P., Rilling, G., & Goncalves, P. (2004). Empirical mode decomposition as a filter bank. IEEE signal processing letters, 11(2), 112-114. Wu, Z., & Huang, N. E. (2009). Ensemble empirical mode decomposition: a noise-assisted data analysis method. Advances in adaptive data analysis, 1(01), 1-41. Case

Western Reserve University. (No date). Bearing 〈http://csegroups.case.edu/bearingdatacenter/home〉. Accessed June 2018.

Data

Center

Wasserman, P. D. (1993). Advanced methods in neural computing. John Wiley & Sons, Inc. Haykin, S. (1999). Neural networks: a comprehensive foundation", 2nd Ed. Prentice Hall, New Jersey. . Javad Zarekar is a PhD student of Mechanical Engineering, Department of Solid Mechanic, Faculty of Mechanical Engineering, Shahid Rajaee Teacher Training University, Tehran, IRAN. He is interested in Artificial Intelligence, Signal Processing and Vibration Condition Monitoring.

Dr.Mehrdad Nouri Khajavi is an Associate Professor at Shahid Rajae Teacher Training University, Tehran Iran. He has been head of automotive engineering group for 6 years. He received his PhD degree in Mechanical Engineering from Amir Kabir University. His research interests includes: Artificial Intelligence, Signal Processing, Vibration Condition Monitoring and Vehicle Dynamics. Dr.Gholamhasan Payganeh is an Associate Professor at Shahid Rajae Teacher Training University, Tehran Iran. He is Head of Mechanical engineering Faculty. He received his PhD degree in Mechanical Engineering from Istanbul Technical University. His research interests includes: Fatigue on the gears, Signal Processing, Dynamics of vibrations, Designing machine components, Dynamics and vibrations.

Trademarks Disclaimer: All products names including trademarks™ or registered® trademarks mentioned in this article are the property of their respective owners, using for identification purposes only. Use of them does not imply any endorsement or affiliation.

*Corresponding author (M.N. Khajavi). Tel: +98-9122813405 E-mail: mnouri@sru.ac.ir. ©2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN2228-9860 eISSN1906-9642 http://TUENGR.COM/V10/099.pdf DOI: 10.14456/ITJEMAST.2019.10

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REGIONAL ECONOMIC COMPLEX MANAGEMENT FEATURES OF RUSSIA Natalia V. Arzamastseva a*, Omar B. Ugurchiev b, Visit A. Khamzatov c, Anzor V. Misakov d, Valery S. Misakov e a Department

of Political Economy, FSBEI HE RSAU - Moscow Agricultural Academy named after K.A. Timiryazev, RUSSIA b Department of Management, FSBEI HE - Ingush State University, RUSSIA c Department of Accounting, Analysis and Audit Department, Chechen State University, RUSSIA d Kabardino-Balkarian Scientific Center, Russian Academy of Sciences, RUSSIA e Nature Management Laboratory, Tembotov Institute of Ecology of Mountain Territories, Russian Academy of Sciences, RUSSIA ARTICLEINFO

ABSTRACT

Article history: Received 15 July 2018 Received in revised form 09 January 2019 Accepted 15 January 2019 Available online 17 January 2019

Many problems of economic potential management in a regional industrial complex are closely associated with the establishment of the effective ways to maximize the use of all potential opportunities. The article suggests the priority directions to identify and mobilize the internal reserves of the regional industrial complex in the depressed republics of the North Caucasus Federal District. The negative state of the basic economic characteristics makes it necessary to conduct a complex of studies on a rational structure development concerning the national economy. These studies are becoming highly relevant with the actualization of globalization processes and the intensification of competition in world markets. This situation makes it necessary to optimize the sectoral composition of the Russian industrial complex. A thorough review of the basic provisions is also necessary in the framework of the implemented industrial policy at all levels. At the same time, it should also be noted that there is half a dozen of RF regions against the background of globalization, which play a significant role in the country economy. All this suggests the need for deep economic research on the development of a regional industrial policy, based on the analysis of regional industrial complex competitiveness level. © 2019 INT TRANS J ENG MANAG SCI TECH.

Keywords: Globalization; Regional industrial policy; Territorial industrial complexes; Competitive industrial development; Industrial restructuring.

1. INTRODUCTION Within the conditions of increasing competition, the competitive industrial development, built on precise strategic positioning of regional industrial complexes and the proper balancing of sectoral economic growth rates, becomes necessary for the sustainable and balanced development of Russian Federation (RF) regions. *Corresponding author (N.V.Arzamastseva). E-mail: Nvarzamastseva@gmail.com. ©2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN2228-9860 eISSN1906-9642 http://TUENGR.COM/V10/111.pdf DOI: 10.14456/ITJEMAST.2019.11

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There is no doubt that such an approach will ensure national security. We have to admit that there is no improvement of investment climate in the depressed republics of the North Caucasus Federal District, which neutralizes the possibility of competitive advantage development for both regional industrial complexes and the regional economic system as a whole. The transition to market relations, another economic crisis, and the refusal from the planned economy destroyed regional economic complexes. The subject of the research is the methods and the tools for regional industrial policy development, the determination of regional industrial complex competitive factors. The purpose of the work is to analyze the features of the regional industrial complex management, to identify the internal reserves for the restoration and the development of the complex under study. They determined the possible sources of investment support for structural and innovative changes in the regional industrial complex; they substantiated the expediency of hybrid model use in the depressed republics concerning the distribution of economic potential in the areas; they proposed the methods of the regional industrial complex strategic positioning, they identified priority areas for the industrial development in the depressed republics of the North Caucasus Federal District.

2. RESEARCH METHODOLOGY The methodological basis of research is the general scientific methods of cognition, including various methods of abstraction. They also used systematic, functional analysis and observations.

3. STUDY RESULTS The efficiency of the modern economy of Russia depends, first of all, on the competitiveness of the regional industrial complex - a set of diversified enterprises. Practice shows convincingly the following - the higher the level of organizations within the territorial industrial complex, the more significant the qualitative and quantitative end indicators. The concept of "complex" forces us to consider the totality of enterprises as one whole. Under industry affiliation, we understand the totality of production, which is characterized by the commonality of products, technologies and the needs to be satisfied [3,7]. In addition to the sectoral aspect, the concept of “industrial complex” includes also a regional (territorial) aspect. At the same time, there are also other concepts reflecting the regional aspect of enterprise analysis, in particular, “territorial production complex”, “cluster” and others. However, it should be noted that these concepts are not synonymous with the concept of "regional industrial complex". The last concept, in our opinion, is much broader than, for example, the “cluster”, because it includes all enterprises and organizations of industrial production, regardless of the established economic and productiontechnological links between them. The transition to new (market) economic relations demanded new scientific approaches

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to the analysis and the use of industry economic potential. During the period of rejection from the centralized planning and distribution, the critical collapse of regional industrial complex economic potential and its qualitative characteristics took place. All this undoubtedly actualized the problem of economic potential management efficiency improvement concerning the territorial industrial complex, as well as the search for internal reserves to its increase [2, 8, 9]. Such a problem statement requires the finding of the most rational ways to maximize the potential of production, financial, labor and other resources. All this is acutely felt during the comparative analysis of national income, the growth rates of economy, the production of labor in industry and other factors. During the early years of market reforms, the material and technical base of industry deteriorated dramatically in the republics of the North Caucasus Federal District, and an unacceptable bias occurred in the structure of regional industrial complexes and enterprises [10, 11]. Naturally, in these conditions it was impossible to talk about any dynamism of economic growth. In such conditions, new factors began to play a key role in economic potential management of the regional industrial complex. In the conditions of competition increase, the tasks of economic growth development by the economic potential accumulation of territorial industrial complexes through the mobilization of domestic resource potential are coming to the fore [4]. It is no coincidence that they propose to consider economic potential as a summary indicator characterizing the volume of accumulated and reproduction resources by the industrial complex of the region. Moreover, the economic potential must also be explored as a social category, because its increase is intended for the fullest satisfaction of material and spiritual needs of the territory and the national security of the country. Hence, it can be argued that the degree of society satisfaction depends on the effectiveness of the regional industrial complex potential capability use. The economic (world) crisis, as well as the sanctions of Western countries and the United States, complicated the processes of economic potential of regional industrial complex formation and the utilization unequivocally, especially in the depressed republics of the North-Caucasian Federal District. The decline of industrial production was observed in almost all republics, the capacity of industrial product consumer segments produced in the region decreased significantly, which negatively affected the structure and the main elements of the economic potential. The infrastructure of the regional industrial complex of the North Caucasus Federal District republics turned out to be completely unsuitable for the next global economic crisis. Thus, the promising industries and new technologies are almost absent. The processes of main factor update in the departments of the regional industrial complex are extremely uneven across the sectors and by time lag. Thus, the actual age structure of the basic production assets of industrial enterprises in the republics of the North-West Federal district *Corresponding author (N.V.Arzamastseva). E-mail: Nvarzamastseva@gmail.com. Š2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN2228-9860 eISSN1906-9642 http://TUENGR.COM/V10/111.pdf DOI: 10.14456/ITJEMAST.2019.11

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is a special factor that greatly hinders the further development of infrastructure and the building up of the considered complex economic potential. In general, wear is more than 65% in mechanical engineering and electric power industry [11]. In such conditions it is impossible to talk about high-tech industries, the development of a highly competitive profile of the regional economic system industrial sector. At the same time, the structural-dynamic study of the studied complex infrastructure showed that the region still has the potential to increase the effectiveness of economic potential strategic management in the republics of the North Caucasus Federal District. This is chemical industry and non-ferrous metallurgy. Of course, this requires the activation of state structure, business and society interaction. This situation requires the development of a new tool for the formation and the use of industrial enterprise economic potential on the territory. It seems to us that, depending on the task, the economic potential of the regional industrial complex can be studied not only as the main source of regional revenue growth, as the result of productive force development in the region, and as the indicator of the maximum productive capacities of the regional industrial sectors, but also as a kind of social stability absorber in the region. Thus, the economic potential of the regional industrial complex goes beyond the economy itself, for it is directly linked to social events taking place in society (the creation of new jobs, social, political, financial and other opportunities). The relationship between the abovementioned constituent elements of the regional industrial complex economic potential is expressed by the maturity of social and economic relations between people developed during social production and the level of economic mechanism perfection causing these relations [1]. The size of the industrial complex economic potential in the region, its qualitative growth is created in the course of social production development. Moreover, the capabilities of the components and the mechanism of their interdependence predetermine the magnitude of the economic potential, its structure, and dynamics. The main competitive advantages of North Caucasus Federal District republics are the transboundary geographical location, a significantly developed transport network, the presence of unique natural deposits (tungsten, molybdenum, zinc, oil, gas, mineral water), high urbanization, high level of population economic activity, education and skilled labor, the ethical feasibility and multiculturalism of the region. In the course of regional industrial capital restructuring, it is necessary to identify the priority areas of activity that can change the economic situation in the region. For this, it is necessary to develop the basic components of the complex under study and the processes of their structural regulation, to improve the technological structure of material production, and to improve the organizational and the management structure of the regional industrial complex [6]. An equally difficult problem is the need to find the sources of investment support for

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the structural and innovative changes in the industrial complex of the region. As such, we consider the following ones: 1. Own funds of industrial enterprises and organizations included in the regional industrial complex; 2. The attraction of bank loans and borrowed funds of others and enterprises (not included in the complex under study); 3. We consider the population funds as a perspective source [1,3,6]. It should also be noted that the increase of the regional industrial complex position of the North Caucasus Federal District republics in the market of extra-budgetary investment resources also depends largely on the measures taken by the regional authorities in order to improve the investment climate of the territories. The current position of the investment climate in the depressed republics of the North Caucasus Federal District is characterized by stable dynamics of investments in fixed assets, the lack of significant foreign investment in the regional economy, rather low values of investment attractiveness ratings due to the well-known geopolitical situation in the region. We believe that in these conditions it is advisable to recommend a hybrid model of economic potential distribution in the depressed republics within the areas of regional industrial complex development in the conditions of a protracted economic crisis, based on the conducting model of economic policy cluster, because it allows you to use, first of all, the most promising sectors of the regional industrial complex that can give a multiplier effect in related industries. Moreover, the hybrid model allows you to increase the investments in innovative enterprises of the region. The analysis of the special literature devoted to the impact problems on the reproduction of industrial complex economic potential main aspects of the region indicates the following: 1. The balanced reproduction of effective potential main aspects is the basis for the sustainable development of the territorial industrial complex. 2. Reproduction processes are the controlled processes aimed at regional industrial complex activity increase. 3. At the same time, the key task of economic potential management is to ensure the expanded reproduction of all resources (production, social, institutional, financial, etc.), which is necessary for a competitive regional economic system development. Of course, during the crisis the economic potential management is complicated extremely. This requires the competent implementation of the systematic approach main provisions. The use of the systematic approach during the formation of a strategic management system by the economic potential of the industrial complex of the region will undoubtedly provide the opportunity to observe the principle position in which the development vector acts as the sum of two directed potentials: 1. “The vector reflecting the immanent processes of vital activity structure reproduction in the region; *Corresponding author (N.V.Arzamastseva). E-mail: Nvarzamastseva@gmail.com. Š2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN2228-9860 eISSN1906-9642 http://TUENGR.COM/V10/111.pdf DOI: 10.14456/ITJEMAST.2019.11

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2. The control vector expressing the external impact on the reproductive contour of the region� [5]. In a crisis situation, when almost all types of resources are limited, a new (forced) strategic goal of a regional industrial complex management and the restoration of industrial production comes to the forefront, and it is necessary to intensify the production processes of innovative products. At the same time, it is imperative to consider the alternative ways of the regional industrial complex economic potential use. Under these conditions, it is necessary to single out the influence of external objective factors for the development of science and technology. Today, high-tech markets are represented by the products of the fifth and even sixth technological order, the core of which is the electronics industry, fiber optic and computing technology, nanoelectronics, genetic engineering, etc. It is obvious that the regions need serious state support, otherwise Russian markets and regions will be occupied by foreign products. A radical industrial restructuring is required, which will allow to develop a network of high-tech enterprises in the region, to train personnel for new specialties, and ultimately accelerate the integration of depressed republics into the existing system of international division of labor.

4. CONCLUSION This work presents regional economic complex management features of Russia under many problems of economic potential management, associated with the establishment of the effective ways to maximize the use of all potential opportunities. The study suggests the priority directions to identify and mobilize the internal reserves of the regional industrial complex in the depressed republics of the North Caucasus Federal District. The negative state of the basic economic characteristics makes it necessary to conduct a complex of studies on a rational structure development concerning the national economy. These studies are becoming highly relevant with the actualization of globalization processes and the intensification of competition in world markets. Under this situation, it is necessary to optimize the sectoral composition of the Russian industrial complex. A thorough review of the basic provisions is also necessary in the framework of the implemented industrial policy at all levels. In addition, there is half a dozen of RF regions against the background of globalization, which play a significant role in the Russia economy. All this suggests the need for deep economic research on the development of a regional industrial policy, based on the analysis of regional industrial complex competitiveness level.

5. REFERENCES [1] Abramov V.N. The economic potential of the region // Federative relations and regional socioeconomic policy. - 2003. â„–1. pp. 114-117. [2] Belousov R.A. The growth of economic potential. M.: Economy. 1971. p. 181 [3] Great Economic Dictionary / M.: Glavpromizdat. 1987. p. 832

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[4] Gurtov V. The rise of the regional economy - the basis of the economic policy FOR the revival of Russia // Public Service. 2006. №5. pp. 25-36. [5] Korabliy Yu. The system modeling of regional management organization: methodological aspect // The problems of management theory and practice. 1996. №3. p.88. [6] Matrosova E. Structural transformations in industry - the condition for economic growth // The Economist. 2000. №5. pp. 31-39 [7] Nogmova L.А., Misakov V.S. The development of economic potential in the context of a balanced regional development // The news of the Kabardino-Balkarian Scientific Center of the Russian Academy of Sciences. 2016. № 3 (71). pp. 143-148. [8] Ushakov A. and others. The development of forecasts for the socio-economic development of regions using a comprehensive simulation model // Russian Economic Journal. 2002. №2. pp. 72-86. [9] Shevlokov V.Z., Misakov V.S. The problems of the balanced development provision in mountain territories of the South of Russia // From the collection: Sustainable development of territories: theory and practice materials of the VIII All-Russian Scientific and Practical Conference. 2016. pp. 134-140. [10] Misakov V.S., Misakov A.V. Some features of system of crisis management as factor of need of justification of system development of economic entities of agrarian and industrial complex. ISJ Theoretical & Applied Science. 2015, 11(31), 130-134. Soi: http://s-o-i.org/1.1/TAS-11-31-20 Doi: http://dx.doi.org/10.15863/TAS.2015.11.31.20 [11] Misakov V.S., Kuyantsev, A.I., Dikinov, A.H., Kazancheva, H.K. and Misakov, A.V. National Agriculture Modernization on the Basis of Import Substitution. International Business Management, 2016. 10: 1946-1951. DOI:10.3923/ibm.2016.1946.1951. URL:http://medwelljournals.com/abstract/?doi=ibm.2016.1946.1951 . Dr.Natalia V. Arzamastseva is an Associate Professor in Department of Political Economy, at FSBEI HE RSAU - Moscow Agricultural Academy named after K.A. Timiryazev, Russia. Natalia V. Arzamastseva got a Ph.D. in Economics.

Professor Dr. Omar B. Ugurchiev is Professor and Head of Department of Management at FSBEI HE Ingush State University, Russia. Professor Dr. Omar B. Ugurchiev holds the Doctor of Economics degree.

Dr.Visit A. Khamzatov is an Associate Professor of Accounting, Analysis and Audit Department at the Chechen State University, Russia. Dr.Visit A. Khamzatov received a Ph.D. in Economics.

Dr.Anzor V. Misakov is a researcher of the Kabardino-Balkarian Scientific Center of the Russian Academy of Sciences, Russia. Dr.Anzor V. Misakov obtained a Ph.D. in Economics.

Professor Dr.Valery S. Misakov is Professor of the Nature Management Laboratory at the Tembotov Institute of Ecology of Mountain Territories of Russian Academy of Sciences, Russia. Professor Dr.Valery S. Misakov got a Doctor of Economics degree.

*Corresponding author (N.V.Arzamastseva). E-mail: Nvarzamastseva@gmail.com. ©2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN2228-9860 eISSN1906-9642 http://TUENGR.COM/V10/111.pdf DOI: 10.14456/ITJEMAST.2019.11

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DEVELOPING AN EVIDENCE-BASED STRATEGIC DECISION-MAKING MODEL IN INSURANCE COMPANIES Vahid khashei a*, Elham Sadat Sabour Abvani a a Faculty

of Management and Accounting, Allame Tabataba'i University, IRAN

ARTICLEINFO

ABSTRACT

Article history: Received 01 August 2018 Received in revised form 24 December 2018 Accepted 13 January 2019 Available online 17 January 2019

Management researchers have long been concerned about the fact that management research has not been widely successful in affecting the management practices. Hambrick (1994) argues that the management research mainly aims at decision making and management practices; however, the translation of academic knowledge to measures adopted by managers has practically failed. The present study sought to develop an evidence-based decision-making model in insurance companies. The present study was fundamental and applied in terms of its objective and mixed exploratory research with regard to its nature. In the qualitative part of this study, twenty directors of insurance companies and policymaking experts were selected through purposeful and snowball sampling. Moreover, one hundred seventy directors of active insurance companies participated in the quantitative part to test the model. Structural equation approach and data-based theory was used to analyze the data. Finally, an evidence-based strategic decision-making model was developed according to Strauss and Corbin's paradigm model. Further, the relationships among the research variables were examined using the partial least squares method and the validity of the relationships was confirmed. © 2019 INT TRANS J ENG MANAG SCI TECH.

Keywords: Strategic gap; Confidence-seeking discourse; Mixed exploratory approach; Least squre; Strauss and Corbin's paradigm model.

1. INTRODUCTION Nowadays, managers need to be expert decision makers (Franklin, 2013). Given the great impact of management decisions on the organization, the managers must be competent in this regard (Rousseau, 2006). As Henry Mintsberg notes, "No job for our community is more critical than a manager’s." The manager is the one who determines whether our social institutions serve us properly or they are wasting our talents and resources (Barends et al., 2017). According to Wick’s (1995) definition of seven sensation indicators, that managers are more likely to make logical decisions than decisions that are accurate and appropriate. And this essentially incorporates arguments that are not necessarily appropriate; however, they match with reality at the moment (Teapouri et al., 2017). Various categories of decision *Corresponding author (Vahid khashei). E-mail: vahid.khashei@gmail.com. ©2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN2228-9860 eISSN1906-9642 http://TUENGR.COM/V10/119.pdf DOI: 10.14456/ITJEMAST.2019.12

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making have been introduced based on the amount of available information, the complexity of decisions, decision making levels, decision horizons, and so on, one of which is strategic decisions. Such decisions are typically uncommon and non-structured with a high degree of uncertainty and risk, to which a large amount of organizational resources are allocated. These decisions, made by senior directors at the top of the organizational pyramid, have a significant impact on the organization’s health and survival as well as long-term implications (Oryana, 2014). In the insurance industry, strategic decisions are of great importance due to the vital role of this industry in the economy. In spite of the remarkable role of insurance in improving the economy and the welfare of the community, the industry with eighty years of age in Iran has an extremely low penetration rate. The insurance penetration rate indicates the ratio of production premiums to gross domestic product (GDP). This rate was equal to 1.25% in 2004 and, with a growth rate of 0.76%, increased by 2.2% in 2016. The average global penetration rate of insurance is 6%; hence, this index in Iran is far from the global index. The low ratio of this index can be attributed to the function of the insurance industry, which is caused by weaknesses in management and decision-making system as well as in the development and implementation of strategies appropriate to the insurance industry and insurance market in Iran. Iran's insurance industry has undergone major changes over the last ten years. One of such dramatic changes is the quantitative increase of insurance companies as well as the increasing participation of the private sector in this field, in accordance with Article 44 of the IRI Constitution and with the implementation of the tariff liberalization policy. Although this policy aims to develop the insurance industry and seek to adjust the insurance premiums with the insurance risk so as to enhance competition and promote the quality of insurance services, it faced major challenges due to its expeditious implementation and the lack of necessary infrastructure in insurance companies. Under such a condition due to the short time of privatization in the insurance industry and the lack of proper competition in the industry before the tariff liberalization policy, no possibility existed for the newly established non-state firms acquiring market share. The arrival of newly established insurance companies with no financial capacity and the inclusion of noninsurers in the board of directors, these companies decided to adopt the leadership strategy these companies in order to increase their market share and to eliminate the liquidity problems and to reduce the price of their products to boost their portfolio. On the other hand, liquidity problems in recent years have led the managers of some insurance companies make false decisions, focus on third-party losses, and consequently aggravate their liquidity problems. Through pursuing the past mistakes and making attempts for their compensation, these companies have been offering non-technical rates and lowering premium and dumping rates in the market. This not only has put the insurance market in chaos and eliminated the trust of insurers to old companies but also has raised a huge challenge for the companies at the damage time. Furthermore, some of the companies have created chaos in the market through investing the premium funds in sectors with low liquidity and high risk, from which the government and people have suffered. Unfortunately, the insurance industry in Iran faces problems due to

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the weakness of the decision-making system, the lack of specific decision-making models, non-use of scientific and reliable indices in the strategic decision-making process. Insurers, on the other hand, often find themselves in a situation where they need their occupational questions to be answered. They require evidence to make relevant informed decisions. Evidence-based decision making introduces a standardized approach that encompasses the gathering of evidence used to guide a decision and the thinking method at the decisionmaking time and relies on the analysis of internal and external evidence. This process eliminates the need for decision-making based on intuition and past experiences by persuading managers to compile and analyze data before making a decision (Briner et al., 2009). Given the challenges posed to the insurance industry and the ineffectiveness of the strategic decisions adopted so far by senior directors of insurance companies along with their negative consequences for the economy and community, the main question of the present study is as follows: " What is an evidence-based strategic decision-making model in the insurance industry? " The secondary questions of the research are: What is an evidencebased strategic decision making in the insurance industry? What is the central issue of the evidence-based strategic decision-making model in the insurance industry? In what causal conditions are the evidence-based strategic decision-making formed? What strategy is prompted by the central issue? What are the underlying conditions affecting strategy? What are the causative factors involved in the occurrence of the strategy and its outcomes?

2. CRITICAL REVIEW OF RESEARCH BACKGROUND The evidence-based practice dates back to the French Revolution era, and even centuries earlier, to ancient Chinese medicine; however, this concept and terminology was first introduced in 1992 by Gordon Henry Guyatt, a Canadian physician, and his colleagues in the field of epidemiology and bioethics at McMaster University. For the first time in an article entitled "Evidence-based medicine: A new approach to professional medical education", they presented a clear definition for this concept (Rins & Bartonek, 2017). The evidence-based approach, though, was not stopped behind the medical profession, and gradually came from the medical field to other fields of science. Initially, some disciplined associated with medicine (e.g., nursing and healthcare) embraced this approach, and then it was considered in the other disciplines, including management, psychology, educational sciences, librarianship, education, and police. Evidence-based management approach is now being employed by leading organizations such as Google, Tesco, Capital One, and Harrah’s Entertainment (Mar, 2010). The main reason making the use of this approach necessary in management is decision-making. Rins and Bartonek have reviewed recent developments in evidence-based management, and systematically reviewed the efforts made to bridge the gap between research and practice, controversial findings in the studies, and the emergence of evidence-based medicine (Rins & Bartonek, 2017). In this systematic review of thematic literature, four categories of articles were identified: Articles supporting an evidence-based approach, articles addressing the perspectives of this approach, review articles on teaching this approach, and critical articles. A number of these studies are discussed below. *Corresponding author (Vahid khashei). E-mail: vahid.khashei@gmail.com. Š2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN2228-9860 eISSN1906-9642 http://TUENGR.COM/V10/119.pdf DOI: 10.14456/ITJEMAST.2019.12

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Rousseau (2018) explored the evidence-based decision-making approach to improve the quality of organizational decisions. He explains how scientific evidence can change organizational decisions and specifies how organizations can successfully make decisions by eliminating biases and adopting appropriate decision-making processes (Rousseau, 2018). Barendz et al. (2017) detected the barriers that make managers avoid using the research findings in their decisions and practices. In this study, the identified factors were shortage of time to read texts, an attitude indicating that managers have a limited understanding of scientific research, and the belief that scientific articles are unreadable. McBride (2015) concluded that the type of decision played a major role in the data collection and analysis process. The managers used the evidence-based decision-making approaches to assess professional corporations and domestic business scales as tools for data collection. The data was then analyzed through implementing the Six Sigma process and comparing the annual business results. This study was purely qualitative and used phenomenological method. The findings of Kohn (2013) revealed that evidence play a critical role in strategic decision-making. In fact, the strategic decisions are supported by processes that require the use of evidence. The aforementioned studies exclusively examined the use of evidencebased decision-making approach as a tool to compensate for decision-making biases and barriers to evidence-based performance and to identify different types of evidence in decisions. The qualitative methods were exclusively used in these studies and no specific model has been proposed for evidence-based decision-making. The best evidence should be assessed based on factors such as methodological appropriateness, contextualization, transparency, repetition and consensus. None of the above-mentioned studies have achieved a specific evidence-based strategic decision-making model in the insurance industry. The evident gap in the relevant thematic literature is the lack of a proper research and evidencebased model and an agreed evidence-based theory and framework. In addition, although the evidence-based decision-making process and the effects of managerial authority, organizational policies, and organizational context are well-known, they have not yet been theorized (Rousseau, 2007). The gap observed in the evidencebased strategic decision-making literature highlights the need to provide a specific model in this field.

3. THEROTICAL FOUNDATIONS OF THE RESEARCH 3.1 STRATEGIC DECISION MAKING A variety of decision making categories have been suggested according to the amount of existing information, the complexity of decisions, decision making levels, decision horizons, and so on, one of which is strategic decisions. These decisions are typically uncommon and non-structured with a high degree of uncertainty and risk, to which a large amount of organizational resources are allocated. Contrary to the common decisions, strategic decisions are made over a longer period of time based on details (Oriana, 2014). Strategic management decisions are typically made in a more complex environment, their conversion is difficult and costly, and their results are largely conditional to the behavior of other individuals and organizations. Additionally, strategic decisions essentially change

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the relationship between an organization and its customers and competitors. One of the features of strategic management decisions distinguishing it from other types of decisions is the "specific context or set" in which the decisions are made. Managers make strategic decisions within the context of their organizations, and these decisions affect many actors. Also, the actors’ responses naturally affect the final outcome of the decision. These actors encompass customers, competitors, and a more general community, including society, legislators, and investors (i.e., the whole world). Thus the sustainability of strategic management decisions largely depends on the manager’s knowledge of the current situation and possible reactions of the organizations, competitors, customers, and the general community (Bolding, 1994). The strategic decisions are the point from which the other organizational decisions and activities are originated. Hence these decisions determine the directions to an organization and brings motivation. Strategic decisions also play a key role in making diverse organizational activities and the allocation of resources coherent (Lafman et al., 1996). Albania (2007) believes that the strategic decision-making process refers to a set of activities through which strategic issues are identified, interpreted, dealt with, and solved. Strategic decisions are made by senior directors at the top of the organizational hierarchy. These decisions direct tens or even hundreds of smaller decisions at lower organizational levels. If the decision is not effective at the top of the organization, the following decisions at lower levels will not work properly as well. Similarly, if the strategic choice of the senior director is to succeed, it will well affect the other decisions made in other sections of the organization (Harrison, 1996).

3.2 EVIDENCE-BASED DECISION MAKING The theory of evidence-based decision-making was developed in the 1990s in accordance with evidence-based medical theory (Briner et al., 2009). In a study conducted by Rousseau (2018), evidence-based decision-making theory was defined as an evidencebased informed practice process. This measure contributes to the application of scientific knowledge in the decision-making process (Francis et al., 2013). Evidence-based decision making effectively involves decision-making measures, which requires a systematic review of organizational research (Grima et al., 2011). The systematic review of texts is a coordinated measure to systematically identify and critically analyze all existing studies, acceptably interpret the research data, and sometimes to quantitatively analyze them by using a standard and systematic method to respond to a question (the subject of decision). The reviewed research is collected based on the common literature on decision-making methods. One of the points in this process is to include the ideas and methodologies whose effectiveness have been scientifically proved (Grima et al., 2011). Evidence-based decision-making strongly focuses on data search, analysis, and collection (Fafer & Satten, 2007). Evidence-based decision-making results in credible learning among employees and continuous improvement within the organization. In addition, evidence-based decision making provides high-quality management decisions that are better implemented and improve organizational goals (Rousseau, 2006). The traditional *Corresponding author (Vahid khashei). E-mail: vahid.khashei@gmail.com. Š2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN2228-9860 eISSN1906-9642 http://TUENGR.COM/V10/119.pdf DOI: 10.14456/ITJEMAST.2019.12

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approach to decision-making either extensively relies on personal experiences or blindly follows the recommendations contained in business texts or comments made by counselors, which are often derived from traditional beliefs or weak evidence (Rousseau, 2006). When there is little reliable information available for decision-making, managers whose thoughts are oriented towards evidence-based management seek to act based on logic and Evidence but not on the basis of guesses and hope (Fafer & Satten, 2006). Different definitions are provided for evidence-based decision making. According to Maxim et al. (2015), evidence-based decision-making can be used as one of the effective tools to rationally justify the selection of a particular approach or program. Evidence-based decision making is not new; however, it is a framework combining strategic planning with the analysis of economic and social costs in a transparent model. A good decision requires to informed by evidence, research and information, to the greatest extent possible. This approach is called evidencebased decision making (Maxim et al., 2015), involving the use of current information to make decisions that are empirically supported (Keating, 2016). Evidence-based decisionmaking refers to management practices, in which ethics, professional expertise, data analysis, and the principles derived from the formal investigations are included (Gamble & Jellie, 2014). The ISO Committee, which formulates quality management standards, proposes "evidence-based decision-making" as the sixth principle of quality management, and highlights the fact that effective decisions are made based on the analysis and evaluation of actual data and information. The evidence-based decision-making mainly aims to achieve effective decisions based on data and information analysis (Blanc, 2017). According to Eszter et al. (2014), the application of the evidence-based decision-making principle would bring about the following benefits: 1) Understanding how decisions are made (informed decisions); 2) Increasing the ability to demonstrate the effectiveness of past decisions by looking at recorded actual data; and 3) Improving the ability to review opinions, and challenge and change them as well as the decisions (Eszter et al., 2014).

3.3 BENEFITS OF USING AN EVIDENCE-BASED APPROACH IN DECISION MAKING AND ITS CRITIQUES Evidence-based decision making leads to greater organizational goals, credible learning, and continuous improvement (Rousseau, 2006) so that the organizational managers need to combine this approach with their management and leadership style. Combining evidencebased decision-making with organizational practices leads to better organizational results, reduces the use of inefficient management, and enhances managerial expertise since this process involves a systematic research process (Rousseau & McCarthy, 2007). Improving the exploitation of evidence-based decision-making involves identifying and publishing the stages that should be considered for its beneficial use. This approach provides managers with a framework for understanding why the evidence-based decision-making practices are the best option for today's organizations (Kuhn, 2007). Evidence-based decision-making highlights the importance of data search, analysis, and collection (Fafer & Satten, 2007). Saket et al. listed the reasons for using this approach as follows (Saket et al., 2000): Decision errors and the resulting financial and time costs (which forms a large part of the managers’

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errors due to their lack of knowledge regarding the best management practices), managers’ knowledge (since the managers' academic disciplines are irrelevant to their job or they no longer have up-to-date knowledge after graduation), unanswered questions when dealing with organizational problems, managers’ inability to critically analyze information and to distinguish authentic and non-authentic information, long time to receive information for managers, and the use of different methods to deal with a specific problem (heterogeneous managerial decisions about a particular topic). Through using a conscious, systematic and transparent research system in evidence-based management, these errors can be greatly reduced. In practice, however, adopting evidence-based approaches in management and modeling the medical field have been criticized. Some of these critiques have suggested that medical evidence is based on precise methodology and randomized controlled experiments, while such experiments (Experiment-based research method based on control and treatment) is not possible in management (Axelson, 1998). Moreover, evidence-based management ignores this fact that the decision-making process in the organization is rarely fully logical and is often influenced by the policies and interests of the various stakeholders (Hudkinson, 2011). Another criticism is that, unlike evidence-based medicine, the effectiveness of evidence-based management is not dependent on the evidence (Ray et al., 2009). Briner et al. (2009) have specified a number of common misconceptions about evidence-based management, and concluded that the knowledge of "evidence-based management" is a product of the executives’ practices but not the academics’ in the field of management.

4. RESEARCH METHODOLOGY This research was fundamental in terms of its objective and mixed exploratory in terms of its nature and methodology since it adopts a combination of both quantitative and qualitative approaches simultaneously (Fard et al., 2004). In the first section of this study, the grounded theory was used to identify effective benchmarks in the evidence-based decision-making field, and the partial least-squares approach was used to test the model. In order to collect data, interviews were held in the first phase and a questionnaire was used in the second phase. Interviews began with questions about the "causal conditions affecting evidence-based decision making" (open interview), and the next questions were based on the interviewee’s response. All interviews were recorded and reviewed several times in order for key points to be extracted. The questionnaire also encompassed 60 items extracted from the final model. The statistical population of this study consisted of two parts. In the first part for interviews, the senior directors of insurance companies participated, who were first selected by using the theoretical sampling method based on the benchmarks specified by researcher to detect experts (e.g., history of employment in insurance industry, history of working as the CEO or board members in insurance companies, extent of mastery in the scientific foundations of strategic management and decision making, and so on). Accordingly, eight experts were identified and then snowball sampling method was used to increase the number of interviewees in this study. It continued as long as the researcher achieved the data saturation *Corresponding author (Vahid khashei). E-mail: vahid.khashei@gmail.com. ©2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN2228-9860 eISSN1906-9642 http://TUENGR.COM/V10/119.pdf DOI: 10.14456/ITJEMAST.2019.12

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as such 20 in-depth interviews were conducted. Hence the in-depth interview method was used to collect the data, and no new information was obtained after the 15th interview; however, 20 interviews were held to ensure the validity and reliability of the findings. From the 15th interview, the data was completely repetitive and approached a satisfactory theoretical saturation. In the quantitative part, the statistical population encompassed the executive directors of insurance companies. First, the total population of the study was estimated to be 304 persons. Two-step sampling was used to determine the sample size in this study. Using the Cochran’s formula, the sample size was calculated to be 170, then the contribution rate of each insurance company was determined using a random stratified approach proportional to the population size: Arman Insurance Co. (n=6), Asmari Insurance Co. (n=5), Asia Insurance Co. (n=11), Iranian Reinsurance Co. (n=4), Alborz Insurance Co. (n=9), Omid Insurance Co. (n=3), Iran Insurance Co. (n=13), Iran Moein Insurance Co. (n=3); Parsian Insurance Co. (n=9); Pasargad Insurance Co. (n=9); Tejarat-e-No Insurance Co. (n=4); Middle East Insurance Co. (n=4); Taavon Insurance Co. (n=5); Tose’e Insurance Co. (n=5); Hafez Insurance Co. (n=4); Dana Insurance Co.; (n=7), Dey Insurance Co. (n=7), Razi Insurance Co. (n=6); Saman Insurance Co. (n=6); Sina Insurance Co. (n=6); Karafarin Insurance Co. (n=8); Kowsar Insurance Co. (n=5); Ma Insurance Co. (n=6); Moalem Insurance Co. (n=7), Melat Insurance Co. (n=4), Mihan Insurance Co. (n=4), and Novin Insurance Co. (n=4). Finally, the target members were selected using simple random sampling approach.

5. RESEARCH FINDINGS 5.1 QUALITATIVE SECTION The analysis process of qualitative data consisted of four steps: 1) data; 2) familiarity; 3) coding; and 4) acquisition of meanings and concepts. To explore the views, the experts’ comments regarding the shared components of evidence-based strategic decision-making were detected as key concepts, managers and experts’ propositions in the open coding phase. Then in the axial coding phase, the commonly expressed concepts were placed under a same heading (as shown in the following tables). When an in-depth interview was conducted with 20 experts, managers and industry experts, data saturation was reached and the interview process was stopped. Finally, the data from the interviews, based on the indicators presented in the theoretical foundations and the grounded theory, were grouped as separate factors. The interviewees’ verbal statements were also analyzed based on an open coding approach and classified into 26 main components regarding the statistical relationships between categories and propositions. Then, as a result of the content matching of the themes, the identified components were depicted as a structured grounded theory.

5.2 FORMATION OF THE MAIN CLASSES After determining the categories, the main classes of the theory were formed, as presented in Table 1.

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Table 1. Micro and macro categories Category Code C1

Environmental uncertainty

C2

Managers’ Personal Attributes

C3

Confidence-seeking discourse

C4

Strategic gap

C5

Organizational Culture

C7 C8 C9 C10

C11

C12 C13 C14 C15

Category Code B1 B2 B3 B4 B5 B6 B7 B8

General categories

B10 B11

Internal uncertainty External uncertainty Managers’ Personality traits Managers’ Knowledge and skills Strategic thinking Need for stable decisions Clear decision-making path Evaluating the environment out of organization Gap between the existing and the desired situation Values and beliefs in strategic decision making Interactive space in the organization

B12

Attention to ethics in decision making

B13 B14 B15 B16 B17 B18 B19

Identification of strategic issues Internal evidence-based planning External evidence-based planning Critical evaluation Positive gap Negative gap Need for stakeholders’ strategic viewpoints Identification of stakeholders’ preferences and values Stakeholder’s involvement Purposeful allocation of resources Appropriate flow of information and knowledge Scientism Coalition Strategic orientation

B9

Ethical limitation in decisionmaking Attention to strategic issues Evidence-based strategic decisionmaking Gap analysis

Stakeholder’s involvement

B20

Organizational resources and facilities Scientism Coalition Strategic orientation

B21 B22 B23 B24 B25 B26

Causal conditions environmental uncertainties (internal and external uncertainty) Strategic gap (environment assessment out of organization; gap between existing and desirable situation)

Main phenomenon Confidence-seeking discourse (requires stable decisions, transparent decision making path) Gap analysis (positive gap, strategic negative gap) Identification of Strategic Issues (Identification of Strategic Issues)

Wisdom Categories

Governing ground Organizational culture (values and beliefs in strategic decision making, interactive space in the organization) Organizational resources and facilities (targeted allocation of resources, appropriate flow of information and knowledge)

Strategies Evidence-Based Decision Making (Internal and External Evidence Planning, Critical Evaluation)

Intervener’s conditions managers’ personality attributes (managers’ knowledge and skills, personality traits, and strategic thinking) Ethical constraints (attention to ethics in decision making)

Consequences Scientism, coalition and strategic orientation, Stakeholder’s involvement (Need for stakeholders’ strategic viewpoints, Identification of stakeholders’ preferences and values, and stakeholders’ involvement

Figure 1. Axial coding based on the model *Corresponding author (Vahid khashei). E-mail: vahid.khashei@gmail.com. ©2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN2228-9860 eISSN1906-9642 http://TUENGR.COM/V10/119.pdf DOI: 10.14456/ITJEMAST.2019.12

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Environmental uncertainty Strategic gap Civilization Leadership

Confidenceseeking Discourse Gap analysis

Organizational Culture Organizational resources and facilities

Evidence-based decision-making

Scientism, coalition and strategic orientation Stakeholder’s involvement

OrganizationalPersonal Features Ethical constraints

Figure 2. Evidence-Based Decision-Making Model. When a category was identified, the researcher could explain it based on its specific features and dimensions. By defining the specifics of each category, it can then be identified. The function of the attributes in the grounded theory is to provide more detailed information about each category.

5.3 AXIAL CODING The axial coding was the second phase of analysis in the data-based theorization, which aimed to establish a relationship between the generated classes (in the open coding phase). This is performed based on the paradigm model and helps the theorist to easily process the theory. The basis of the connections in axial coding lies in the expansion of each class (Figure 1).

5.4 THEORIZATION PHASE As stated above, the grounded theory mainly aims not merely to describe the phenomenon but to generate the theories. For the analysis of theory to be transformed, classes must be linked systematically. Selective coding (based on the results of the two previous steps) is the main phase of theorization as such it systematically links the axial class to other classes, presents those relationships within a framework, and modifies the classes that need further improvement. At this stage, the researcher, based on his own understanding of the studied texts, either presents the framework of the paradigm model as a narrative or disorganizes the paradigm model and graphically depicts the final theory (Figure 2)

5.5 VALIDITY AND RELIABILITY OF QUALITATIVE DATA Reliability refers to the consistency of the research findings. The reliability of an interview is discussed in stages such as interviewing, copying, and analysis. The reliability of the interviewee shows how the questions are directed. In terms of copying reliability, one should also be concerned about the intertextual reliability of the transcripts while the texts are typed by two different typists. During the classification of interviews, attention to the percentages reported by the two coders is a method used for determining the analytical

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reliability (Bowen & Bowen, 2008). (A) Calculation of inter-coder reliability: To calculate the inter-coder reliability, a number of interviews are selected as samples, and each one is re-encoded within a short time interval. The codes assigned at the two time intervals are then compared for each of the interviews. The test-retest method is used to evaluate the researcher’s coding stability. In each of the interviews, codes that are similar at the two intervals are marked as "Agreement" and non-similar codes are marked as "Disagreement". The intra-coder reliability at two time intervals is thus calculated as (Kual, 1996)”, Intercoder reliability% =

2×number of agreements total number of codes

x 100%

(1).

The results of the coding phase are given in Table 2: Table 2. Calculation of inter-coder reliability No. 1 2

Interview P2 P6 Total

Total number of codes 86 79 165

number of agreements 34 31 65

number of disagreements 26 22 48

inter-coder reliability 79% 78% 78%

According to Table 2, the total number of codes recorded by the researcher and his coworker is 165; the total number of agreements between codes is 65; and the total number of disagreements at these two time intervals is 48. Based on the abovementioned equation, the inter-coder reliability in this study was estimated to be 78%. Given the fact that this value is greater than 60%, the coding reliability is confirmed (Khastar, 2009).

5.6 VALIDITY OF INTERVIEWS Three criteria of creditability, transferability, and trustworthiness were considered for evaluation (Khastar, 2009). To achieve each of these criteria, the following measures were adopted: 1. Creditability: The researcher enhanced the creditability to an acceptable extent through spending enough time, verifying the research process by eight experts, using two codecs to coders for multiple interview samples to ensure the inter-coder reliability, and posing objective and measurable questions such as writing a domain memo and a reminder in Excel forms. 2. Transferability: To ensure the transferability of the research findings, three experts in the field of the organization, who did not participate in the research, were consulted on the study findings. 3. At all stages of the process, in order to establish trustworthiness, the details of the research and the notes were recorded.

5.7 MODEL TESTING In order to test the research model, a structural equation model with partial least squares approach was used. Before interpreting the model, the model appropriateness should be confirmed in the three aspects (measurement model, the structural model and general model) to rely on its results. In other words, the model validity and reliability must be proved. For *Corresponding author (Vahid khashei). E-mail: vahid.khashei@gmail.com. ©2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN2228-9860 eISSN1906-9642 http://TUENGR.COM/V10/119.pdf DOI: 10.14456/ITJEMAST.2019.12

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this purpose, the Cronbach's alpha, composite reliability, and convergent validity were used in the measurement model, as presented in Table 3. Table 3. Validity and reliability of the measurement model Convergent Validity 0.657 0.678 0.716 0.713 0.696 0.619 0.767 0.697 0.674 0.756 0.831 0.69 0.621 0.685

Criterion Environmental uncertainties Strategic gap Confidence-seeking Discourse Gap analysis Manager’s attributes Ethical constraints Attention to strategic issues Stakeholder’s involvement Evidence-Based Decision Making Organizational Culture Organizational resources & facilities Scientism Coalition Strategic orientation

Composite reliability 0.919 0.926 0.909 0.908 0.918 0.822 0.908 0.901 0.925 0.939 0.936 0.897 0.867 0.866

Cronbach's alpha 0.895 0.906 0.869 0.867 0.886 0.658 0.851 0.849 0.902 0.919 0.9 0.845 0.795 0.769

After confirming the appropriateness of the measurement model, we should examine the structural suitability of the model. To this end, cv.red and cv.com indices used (Table 4): Table 4. Fit of the structural model Structures Coalition Confidence-seeking discourse Environmental uncertainties Ethical constraints Evidence-based decision making Gap analysis Attention to strategic issues Organizational Culture Organizational resources & facilities Managers’ personality attributes Scientism Stakeholder’s involvement Strategic gap Strategic orientation

The coefficient of determination (đ?‘šđ?&#x;? ) 0.223 0.123

0.396 0.238 0.153

0.211 0.226 0.217

CV.Red

CV.Com

0.128 0.084 0.657 0.616 0.244 0.166 0.106 0.756 0.831 0.696 0.078 0.137 0.678 0.067

0.641 0.715 0.657 0.616 0.592 0.708 0.616 0.756 0.831 0.696 0.704 0.492 0.678 0.358

Finally, the general fit of the model is mentioned. In the least-squares models, the GOF index, which should be greater than 0.3, was used. This index is calculated according to Equation 2 for the present model as follows and represents the appropriateness of the general model: GOF =√đ??śđ?‘œđ?‘šđ?‘šđ?‘˘đ?‘›đ?‘Žđ?‘™đ?‘–đ?‘Ąđ?‘–đ?‘’đ?‘ Ă— đ?‘… 2 = 0.342

(2)

After confirming the fit of the model at three levels, the structural equation model developed by SmartPLS software is presented and explored the research hypotheses, Figure 3.

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Figure 3: Structural equation model.

5.8 STANDARD AND SIGNIFICANT COEFFICIENTS Regarding the outputs in the form of standard and significant coefficients, it could be concluded that all research relationships were approved. Given that the t-value is greater than 1.96, the above hypotheses are thus approved. On the other hand, to show the intensity of the effect after confirming the hypotheses, one can indicate the path coefficient presented in the standard state chart. In fact, this section confirms the model provided by the grounded theory.

6. DISCUSSION Decision-making practices in organizations can help people to become more effective in dealing with complexity and uncertainty. To sum up the present research findings on the evidence-based decision making concept, we can state that evidence-based decision making process involves a systematic diagnosis, careful and accurate evaluation, and subsequently the dissemination of using the research findings to influence managerial decisions, whose continuity is shaped by changes in management standards causing positive impacts on decision making. In order to apply this approach to management practices, evidence-based education must begin to evolve, making changes to the curriculum and modifying its *Corresponding author (Vahid khashei). E-mail: vahid.khashei@gmail.com. Š2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN2228-9860 eISSN1906-9642 http://TUENGR.COM/V10/119.pdf DOI: 10.14456/ITJEMAST.2019.12

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structure based on evidence-based decision-making. As Harrison (1996), Oiriana (2014), and Mintzberg (1976) noted, in order to begin strategic decision-making in an organization, the pathology must first be performed based on the existing and desired situations of the organization, taking into account the external and internal environment. This would result in the identification of strategic issues in the organization and stimulate the need for transparent and stable decision-making. In response to this behavioral needs demonstrated by the organization based on the model derived from the grounded theory in this study, a strategic decision-making is evidence-based if it is made in accordance with strategic planning based on internal and external evidence and critical assessment. In order to get to the point of using evidence-based solutions, the managers should first become aware of the process converting scientific evidence into practice (Rousseau, 2006). According to Stacey (2011), the dissemination of evidence-based knowledge does not automatically lead to its implementation so that a large number of researchers seek to develop an implementation knowledge. In this regard, a scientific study reveals what additional strategies are needed to create a better understanding of the best practice. They proved that organizational structure and culture play a significant role in making the best practice happen and that further research on the provision of evidence-based organizational incentives is necessary to make necessary changes in managers’ behaviors (Stacey, 2011). According to Barends et al. (2017), the barriers that lead the managers not to involve research findings in their decisions and practices are their lack of time to read texts, the view that managers have limited understanding of scientific research, and the belief that scientific articles are unreadable (unintelligible). Moreover, Howard and Liang (2011) identified eight barriers to using informed decision-making processes, including lack of time, irrelevancy of management research, lack of adequate financial resources to support better practices, unavailability of thematic management research, lack of managers’ support from management research in decision making, managers’ inability to identify up-to-date and relevant research, organizational policies, and managers’ incompetence in finding, interpreting, and applying research findings which are relevant to the decisions. McCormick (2010) discusses the consideration of ethical factors in managerial decision-making, and states that ethical considerations should be the key to evidence-based decision-making process. The findings of Baba and Hakem Zadeh (2013) showed that there are different ethical considerations at the individual, organizational and institutional levels, which may affect the final selection. According to Hudkinson (2012), a thoughtful and intelligent way is needed to select which decision components to focus more or less. Evidence and information about functional context and problem are critically evaluated. According to Briner and Rousseau (2014), evidence is not always perfect in reality and can lead to misleading. That is why all evidence must be critically evaluated regardless of whether it has been obtained from the decision maker’s professional experience or derived from scientific research. In other words, the accuracy of the evidence and their relevance to the subject of the decision should be carefully and regularly evaluated in a critical manner. Briner and Walsh, 2014) believe that evidence-based decision making involves making decisions based on information or data collected from inter-organizational sources or

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external scientific research and that critical assessment of the data is to assess them before they are used in decision making. Evidence-based decision-making seeks to make decisionmaking models in the organization always be on the basis of provability and the participation of all groups to bring the best outcomes.

7. CONCLUSION This study develops an evidence-based decision-making model in insurance companies, fundamental and applied in terms of its objective and mixed exploratory research with regard to its nature. In the qualitative part, twenty directors of insurance companies and policymaking experts were selected through purposeful and snowball sampling. Moreover, one hundred seventy directors of active insurance companies participated in the quantitative part to test the model. Structural equation approach and data-based theory was used to analyze the data. An evidence-based strategic decision-making model was developed according to Strauss and Corbin's paradigm model. The relationships among the research variables were examined using the partial least squares method and the validity of the relationships has been confirmed.

8. REFERENCES Blanc, C. L. (2017). Analysing the provenance tracking of business process management in the quality domain. MPhil, University of the West of England. Available from: http://eprints.uwe.ac.uk/29290 Accessed 2018. Briner, R., Denyer, D., & Rousseau, M. (2009). Evidence-based management: Concept cleanup time. Academy of Management Journal, 23(4), 19-32. doi:10.5465/amp.2009.45590138. Briner, R., & Walshee, N. (2014). From passively received wisdom to actively constructed knowledge: Teaching systematic review skills as a foundation of evidence-based management. Academy of Management Learning & Education, 13(3), 415-432. doi:10.5465/amle.2013.0222. Eszter Tóth, Z. and Tamás, J. (2014) Quality Management Teaching Material. Budapest University of Technology and Economics. Barends, E., Villanueva, J., Rousseau, D. M., Briner, R. B., Jepsen, D. M., Houghton, E., & Ten Have, S. (2017). Managerial attitudes and perceived barriers regarding evidence-based practice: An international survey. PloS one, 12(10), e0184594. Drucker, P.F, The New Society of Organizations. Harvard Business Review, 70:5 .p.95-140, 1992. Fard, D., Alvani S., M., & Azar, A. (2004). Qualitative research methodology in management: A comprehensive approach, Safar Pub., Tehran, p. 45. Francis-Smythe, J., Robinson, L., & Ross, C. (2013). The role of evidence in general managers' decisionmaking. Journal of General Management, 38(4), 3-21. Franklin, C. L., II. (2013). Developing expertise in management decision-making. Academy of Management Journal, 22(6), 21-37. Gamble, E., & Jelly, R. (2014). The case for competition; Learning about interpretation, Academy of Management Learning & Education, 13(3). 433-445. Grima, P., Marco, L., & Tort-Martorell, X. (2011). Management by facts: The common ground between total quality management and evidence-based management. Total Quality Management & Business Excellence, 22(6), 599-618. doi:10.1080/14783363.2011.568262. *Corresponding author (Vahid khashei). E-mail: vahid.khashei@gmail.com. ©2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN2228-9860 eISSN1906-9642 http://TUENGR.COM/V10/119.pdf DOI: 10.14456/ITJEMAST.2019.12

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Hambrick, D. C. (1994). 1993 presidential address: What if the academy actually mattered? Academy of Management Review,19(1), 11– 16 Harrison, E.F. (1996), ``A process perspective on strategic decision making'', Management Decision, Vol. 34 No. 1, pp. 46-53. Howard, P., & Liang, Z. (2011). Evidence-informed managerial decision making: What evidence counts? (Part Two). Asia Pacific Journal of Health Management, 6(2), 12-21. doi: 10.1258/135581905430852.1. Keating, Byron, (2016),vidence-Based Management Is The Future Of Business Education,Australian national university Kohn, M. K. (2013). Evidence Based Strategic Decision Making in Ontario Public Hospitals (Doctoral dissertation). Institute of Health Policy, Management and Evaluation. Faculty of Medicine. University of Toronto. Maxim, Paul S., Len Garis, Darryl Plecas and Mona Davies, (2015) The Right Decision: Evidence-based Decision Making for Police Service Professionals, Revised May, 2015, Canadian Association of Chiefs of Police Research Foundation.pp1-108 McBride, LaToya B (2015). The Role of Evidence-Based Decision MakingiIn Organizations: A Phenomenological Study. A Dissertation for the Degree of Doctor of Business Administration. Capella University. McCormick, D. W. (2010). Ethics & the 15 minute evidence-based manager: A review of a response to a critique published as 'evidence-based management: Concept cleanup time?' by Rob B Briner, David Denyer, and Denise M Rousseau (Academy of Management Perspectives, Nov 2009). Organization Management Journal, 7(4), 303-306. doi:10.1057/omj.2010.40 Rousseau, D.M. and McCarthy, S. (2007). Educating managers from an evidence-based perspective”, Academy of Management Learning and Education Archive. 6(1), 84-101. Rousseau, D.M. (2006). Is there such a thing as evidence-based management? Academy of Management Review, 31(2), 256-69. Rousseau, D.M (2018). Making evidence-based organizational decisions in an uncertain world, Organizational Dynamics. Stacey, R.D. (2011). Strategic management and organizational dynamics: the challenge of complexity ", 6th Ed., p179-181, Ashford Colour Press. Trank, C. (2014). Reading” evidence-based management; The possibilities of interpretation. Academy of Management Learning & Education, 13(3). 381-395. doi:10.5465/amle.2013.0444. Dr. Vahid Khashei is an Associate Professor in Faculty of Management and Accounting, Allame Tabataba'i University, IRAN. His works are focused on Strategic Planning.

Elham Sadat Sabour Abvani is a PhD student, Faculty of Management and Accounting, Allameh Tabataba’i University, Tehran, Iran.

Trademarks Disclaimer: All products names including trademarks™ or registered® trademarks mentioned in this article are the property of their respective owners, using for identification purposes only. Use of them does not imply any endorsement or affiliation.

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Vahid khashei, Elham Sadat Sabour Abvani

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ECOLOGICAL SETTLEMENTS AS ONE OF PERSPECTIVE FORMS FOR RUSSIA RURAL TERRITORY MULTIFUNCTIONAL DEVELOPMENT Liza A. Tsurova a*, Magomed M. Musaev b, Arsen P. Kushkhov c, Anzor V. Misakov d, Valery S. Misakov e a

Department of Finance and Credit, FSBI of HE, Ingush State University, RUSSIA Department of Economics, Chechen State University, RUSSIA c Department of Accounting, Analysis and Audit Department, FSBI of HE, Kabardino-Balkarian State University named after H.M. Berbekov, RUSSIA d Kabardino-Balkarian Scientific Center, Russian Academy of Sciences, RUSSIA e Nature Management Laboratory, Tembotov Institute of Ecology of Mountain Territories, Russian Academy of Sciences, RUSSIA b

ARTICLEINFO

ABSTRACT

Article history: Received 01 August 2018 Received in revised form 24 December 2018 Accepted 13 January 2019 Available online 21 January 2019

Modern socio-ecological-economic processes of the rural territory functioning in the depressed republics of the North Caucasus make it necessary to rethink the rural community problems and develop new approaches, mechanisms and directions for their recovery and sustainable development. The rural settlements of the mountainous areas in the republics of the North Caucasus Federal District could not fit into market relations and lose their socio-economic purpose catastrophically in the sphere of agrarian relation organization and implementation, which threatens with unpredictable consequences not only for the socioeconomic, but also for the political sphere. In these conditions, the strategic task for the future is to conduct structural and functional transformations of rural areas, to develop new qualities and characteristics, which allow to adapt to changing external socioeconomic conditions [11, 13]. © 2019 INT TRANS J ENG MANAG SCI TECH.

Keywords: economic crisis; mountain regions; depressed republics; rural territories; multifunctional development; ecological settlements; sustainable development.

1. INTRODUCTION The rural territories, which were the part of the agro-social sphere, have been going through difficult stages of their development for the last quarter of a century. The transition to market relations changed the type (quality) and the character (dynamics) of rural settlement development radically, which made a large and destructive impact on their essential characters. All this suggests that it is methodologically incorrect to consider rural territories in *Corresponding author (Liza A. Tsurova). E-mail: m.mana.qeshm@gmail.com. ©2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN2228-9860 eISSN1906-9642 http://TUENGR.COM/V10/135.pdf DOI: 10.14456/ITJEMAST.2019.13

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isolation from the general background of the socio-economic and political processes taking place in the country. Many problems of multifunctional rural development are still beyond social and economic research. For example, the problems of imperfect organizational and methodological support of procedures for the evaluation and the implementation of functions by rural settlements, the analysis of the organizational and economic components of multifunctional development mechanisms for rural areas, focused on the implementation of new functions while maintaining traditional ones, are very relevant. These and a number of other problems and issues of theoretical, methodical and practical nature predetermined the purpose and the objectives of the study.

2. RESEARCH METHODOLOGY The object of the research is the rural settlements of mountainous areas in the depressed republics of the North Caucasus. In-depth studies of ecological settlement creation problems as one of the promising forms of rural mountainous area multifunctional development in the North Caucasus Federal District were carried out on the empirical and factual basis of the Kabardino-Balkarian Republic mountain regions. During the study they used abstract-logical, morphological and semantic analysis, the structural and the functional approach, the expert assessments and other methods of economic research.

3. RESEARCH RESULTS Modern rural settlements of the North Caucasus republic mountainous territories are well-established phenomenon, on the one hand, and unexplored one, on the other. All sorts and even revolutionary changes in the social structure of the state, the models and the mechanisms of socio-economic and political development took place in the country for decades and even centuries, but mountain settlements have always been isolated and characterized by the presence of dominants that are stable and unchanging by nature - the way of life and economy management, as well as the traditional way of farming as economic activity type. The presence of a large variety of conceptual approaches to the study of rural areas is caused by the cross-subjectivity of their functioning areas. At the same time, there is not much research on rural settlements in mountainous areas, although this is very relevant from all sides and aspects. First of all, the rural settlements of mountainous areas need to be considered not only in the context of territorial organization and settlement systems, but also in the context of geopolitical changes taking place. Secondly, although the rural settlements of the mountainous territories are in a deplorable state today, they nevertheless need to be considered as a structural element of the regional socio-ecological-economic system. And this is natural, because, in accordance with the provisions of the general management theory, even small rural localities are an object of

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management with complex characteristics, properties and functions. Of course, the modern rural settlements of mountainous areas cannot be considered exclusively from the standpoint of any particular approach, since the processes and phenomena carried out in them are extremely complex by nature and character, and therefore require an explanation with regard to the synthesis of interdisciplinary knowledge. The rural settlements as the systemic formations of complex nature with mixed genesis are continuously in the field of influence of many external and internal multidirectional factors [2, 12, 14]. Researchers identify many groups of factors for the development of rural settlements, including:     

social factors (infrastructure, social causes and consequences of economic and political crises, war, etc.); institutional factors; environmental factors; innovation and investment factors; economic factors, etc. [5]

The set of factors for rural settlement development in mountainous areas within the system of their involvement in the form of structural components of territorial development potential can be structured into four groups:    

natural factors; economic factors; production and system factors; social factors [7].

There is also a more pragmatic approach, in which all factors of rural development are located in two blocks:  

the block of factors for territorial prerequisites; the block of factors and citizen interests.

The majority of rural settlements (and especially mountainous areas) is constantly in the search of a balance between homeostasis and adaptation within the conditions of increasing competition. Preserving the homeostasis (the constancy) of the situation, hence the inability of any innovations, the rural settlements of mountainous areas are archaized even deeper, and the socio-economic gradients intensify in comparison with the lowland settlements. In the course of communication with the residents and the leaders of municipalities in the mountainous regions of the Kabardino-Balkarian Republic, namely, Cherek, Chegem and Elbrus regions, we were convinced that these settlements are not ready still to adapt, to “build in” a postindustrial economy, to reformat their morphological characteristics and features. At that, it should be noted especially that over the past quarter of the century, the rural *Corresponding author (Liza A. Tsurova). E-mail: m.mana.qeshm@gmail.com. ©2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN2228-9860 eISSN1906-9642 http://TUENGR.COM/V10/135.pdf DOI: 10.14456/ITJEMAST.2019.13

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settlements of mountainous areas have lost their originality and territorial recognition noticeably, many clans and families do not follow the way of centuries-old traditions of farming [9, 10, 15]. This is the essence of an optimal balance finding between homeostasis and adaptation in the multifunctional development of mountainous area rural continuum. Speaking about the multifunctional development of rural areas, it is necessary to consider it both as the phenomenon and as the process. In the first case, the thing is about the fact that the phenomenon of rural territory multifunctional development is identical to the socio-economic phenomenon of modern Russia, which consists in the presence of special types of territories with quasi-agricultural and agricultural landmarks of the economy and the nature of social and other serving spheres ensuring the development of personality and society. The process of rural area multifunctional development should be considered as a gradual logical linear-evolutionary movement towards the complication of the functions implemented by rural settlements, the abandoning from unclaimed and the emergence of their new combinations [5,16]. In accordance with the rating of RF regions concerning the quality of life compiled by the RIA Rating agency, the Kabardino-Balkarian Republic occupies 83-85 place among 85 Russian regions over the past few years (since 2000). In the course of the analysis, we studied the set of socio-economic indicators of population life quality in the Kabardino-Balkarian regions, including such as the proportion of the population below the subsistence minimum, unemployment, natural population growth, the provision with hot water, sewage and investment attractiveness. In the course of the analysis, we have (as an absolutely losing scenario) discarded previously the comparisons of mountain territory rural settlements with urban settlements, leaving (besides the first ones) the rural settlements of lowland territories. Even in comparison with the unfavorable rural settlements of the flatlands, the settlements of the mountainous territories almost lose by all socio-economic indicators, except for one - the crime rate per 1000 people. There is a significant imbalance for all analyzed comparative indicators. All paramedic-obstetric points are closed in the mountainous territories, small schools are eliminated, there are not enough social and cultural services, housing is not built in any village by the authorities or commercial structures ... The construction in the mountainous terrain is very expensive and unaffordable for the mountaineers. In the highlands, the backyard area is very scarce in terms of crop yields. In the structure of regional resources, the savings of the highlanders do not exceed 3%, which is difficult to comment. In the structure of expenditures on the final consumption of villagers in mountainous areas - 35% is for the payment of services, 35% is for non-food products; 30% is for food. It is noteworthy that food costs make up to 40% in the lowland

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areas. Such a gap is simply explained by the fact that the mountaineers do not have so much income to spend so much on food - they live at the expense of personal subsidiary farming. Unemployment is the most depressing indicator - it is 5 times higher than official one in mountainous areas and reaches 80% in some villages. And this is natural, unfortunately there is not a single agricultural or processing enterprise left in the highland villages. For this reason, agriculture is no longer a system-forming one, and hence, rural settlements remain the legacy of the Soviet planning and administrative economy, when they were placed according to the production basis, ignoring all other aspects [4,6]. In the course of the analysis, we were able to create a social portrait of a typical rural settlement of the republic mountainous areas: small (endangered) population; the absence of minimum necessary infrastructure, the old age of the population, the lack of hot water, sewer networks, incomes below the subsistence minimum, the catastrophic parameters of unemployment. At the same time, it should be noted that (unregulated) branches remain endemic industries in rural settlements of mountainous areas — agriculture (animal husbandry), hunting, and forestry. In the past three decades, they developed various targeted long-term programs for the sustainable development of agriculture and rural areas. In the course of their implementation, many different problems were identified, especially applied ones. All these problems, shortcomings and omissions are associated with a certain isolation from the true picture of the situation in rural areas, which have significant asymmetry in terms of socio-economic development. This asymmetry finally reduces the effectiveness of carried out activities, and also increases the risk of falling budget and social efficiency significantly [2, 8, 17]. Three main groups operate in the zone of rural area active interaction:   

the rural population itself; small business sector operating in rural areas; - municipal organizations [1,3].

The socio-ecological-economic landscape, rural society, as well as the subjects themselves produce the formed functions of rural areas, and the maintaining of a certain stability for the minimum level of villager life quality socio-economic standards is the primary task of municipal authorities. At the same time, with any resulting imbalance, the rural environment experiences an extremely unstable situation and is not able to function fully. During the last 5-6 years, the production growth of agricultural products has been observed in the republics - this is mainly due to a successful combination of factors and circumstances, including the activation of import substitution state policy, increased state support for the agricultural sector, especially concerning the renewal of BPA, the provision of "long" loans to individual strategic suppliers and agricultural producers. *Corresponding author (Liza A. Tsurova). E-mail: m.mana.qeshm@gmail.com. ©2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN2228-9860 eISSN1906-9642 http://TUENGR.COM/V10/135.pdf DOI: 10.14456/ITJEMAST.2019.13

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However, it should be noted that the increase of agricultural production cannot be unambiguously considered as the main indicator of the rural settlement multifunctional development. The Kabardino-Balkarian Republic is a fairly favorable territory (relative to most Russian regions) for the competitive development of agriculture, the organization of new environmentally friendly products of various specializations. The agro-industrial products of the CBR are highly demanded in many regions of the country (meat, poultry, dairy products, apples, etc.), the republic supplies 20% of RF canned products. In the context of Sustainable Rural Development strategy implementation regarding the organization and the development of new highly efficient species and resettlement schemes, it is necessary to develop the priority regional forms for the organization of future rural settlements. One of such organization forms for these settlements can be ecovillages, which, first of all, are focused on ecologically-friendly non-traditional ways of the area internal reserve use. The main activities of mountain area residents can be handicraft and ecological clean agricultural production, agrotourism, eco-tourism, hunting tourism, all kinds of creative and event industries, coupled with the involvement of historical, cultural, spiritual and recreational potential [7,12]. It is noteworthy that the basis of the created ecosettlement can be made up of both rural and urban populations, united by the idea of a man harmonization with nature, treating a man as part of noosphere, creating new (local) rules, norms, traditions and foundations ... It seems to us that the quality of life in eco-settlements will be viewed through the prism of nature, resources and health safety. Such alternative forms of settlements can reduce the disunity of rural settlements, form a new spatial-economic network, reduce social tensions, etc. There are many informal eco-settlements in the Krasnodar Territory nowadays. As a rule, they are located in new remote uninhabited territories. The algorithm of eco-settlement development in the regions may be the following ones:    

the development of the initiative group; the selection and the registration of land for an ecovillage; the procedures for the development and coordination of projects in the relevant authorities; the registration of a new settlement - an ecovillage [7].

The options for buying the houses of abandoned settlements are possible. All this can be regarded as the turn towards social issues. According to our estimates, about 8 mountain villages are on the verge of liquidation due to the lack of a socio-economic base of settlements, unacceptable unemployment, the aging of population, and the complete degradation of social infrastructure. The fact of an ecovillage creation in the Krasnodar Territory is noteworthy - often the migrants are able-bodied people, among whom there are many well-to-do people who want to feel the competitive advantages of the rural lifestyle in their “own” way of its implementation.

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The fundamental rule of eco-settlement organization and their settlement is voluntariness, that is, personal wishes, initiative, which, undoubtedly, will allow to use a diverse set of functions of traditional rural settlements in order to provide a set of planned effects (to increase the quality of life, demography, the formation of investment attractiveness) [5]. Unfortunately, there is no possibility yet to predict the number of possible ecosettlements in the CBR due to the lack of information base and target indicators, which would create a simulation model for the development of alternative settlements. There are no eco-settlements in the republic. Although, it is possible to make ecosettlement development forecast and population number based on linear trends. It is necessary to organize the monitoring of rural area multifunctionality for this. It should be noted that there are all the necessary prerequisites in the system of local self-government for this - there are special methods for information base development, such as monitoring, analysis and diagnostics, the forecasting of socio-ecological and economic development, municipal statistics is also being developed. But at the same time, it is necessary to state the absence of a monitoring system concerning the multifunctionality of rural development, which does not allow to implement a set of rural development purposeful functions.

4. CONCLUSION The rural settlements of the mountainous areas in the depressed republics of the North Caucasus should be the object of constant significant state support. Today there is a significant shortage of measures concerning different directions and the impact of state support and increased stimulation of rural settlement socio-ecological-economic development. In the course of the study, we were able to substantiate the objective need of an organizational and economic mechanism development for the multifunctional development of rural settlements in mountainous areas. In our opinion, one of the effective tools for the socio-ecological-economic function imbalance reduction in the rural settlements of mountainous areas is the creation of new forms of human settlements — ecosettlements.

5. REFERENCES [1] Agibalov A.V. The improvement of rural development management // Voronezh. VSAU. 2017. - 171 p. [2] Artamonov A.D. The development policy of RF rural areas: the settlements of the twentieth century. Tambov. - 2005. - 168 p. [3] Belkina Ye.N. The analysis of social aspects concerning the development of ru ral territories in the Krasnodar Territory // Bulletin of the Academy of Knowledge. 2018. №26. pp.50 -56. [4] Buzdalov I.N. Methodological aspects of sustainable rural development // Economics of rural and processing enterprises. 2017. №6. pp. 2-4. [5] Gomanova S.O. Eco-settlements of Russia: institutional aspect // Power. 2017. vol. 25 №1. pp. 67-71. *Corresponding author (Liza A. Tsurova). E-mail: m.mana.qeshm@gmail.com. ©2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN2228-9860 eISSN1906-9642 http://TUENGR.COM/V10/135.pdf DOI: 10.14456/ITJEMAST.2019.13

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[6] Yemelyanov S.V. Multi-criteria decision-making methods / M.: Knowledge. 1985. - 32 p. [7] Inshakov O.V. Space institutionalization in the concept of spatial economics // Spatial economy. 2007. №1. pp. 5-21. [8] Kisileva N.N. The regional models of rural development in the North Caucasus Federal District // The modern problems of science and education. 2012. №6. pp. 430-43. [9] Misakov V.S., But V.V., Adzhieva A.Yu. Innovative infrastructure as the resource for balanced development achievement in the region // Economy and Entrepreneurship. 2017. 6 (83). pp. 200-203. [10] Misakov V.S. The problems of socio-ecological-economic security provision in the mountainous territories of the South of Russia // Proceedings of the Kabardino-Balkarian Scientific Center of the Russian Academy of Sciences. 2016. № 1 (69). pp. 113-120. [11] Misakov V.S., Adzhieva A.Yu., Ilaeva Z.M. The priorities of socio-economic development, allocated in accordance with the cluster zoning of rural areas // Economy and Entrepreneurship. 2017. No. 8-3 (85). pp. 232-238. [12] Nogmova L.A., Misakov V.S. The development of economic potential in the context of a balanced regional development // News of the Kabardino-Balkarian Scientific Center of the Russian Academy of Sciences. 2016. № 3 (71). pp. 143-148. [13] Shevlokov V.Z., Misakov V.S. The problems of balanced development provision in the mountain territories of the South of Russia // From the collection: Sustainable development of territories: theory and practice. The materials of the VIIIth All-Russian Scientific and Practical Conference. 2016. pp. 134-140. [14] Becker G.S. Human Capital: A Theoretical and Empirical Analysis, 1964. Universiti of Chicago Pres: 3-rd edition: 390p. [15] Camareto L., Crus F. 2016. Rural sustainability, inter-generational support and mobility. European Urban and Regional Studies, 23, pp. 734-749 [16] Hebinck P., Ploeg V.D. Shnaider S. Rural development and the construction of new markets. Rural development and the construction of New Mapkets, 3. pp. 1-212. [17] Pavelinc Olario C. 2013. Developing a Global Security Policy, Advances in agriculture and Botanics Published. Dr. Liza A. Tsurova is an Associate Professor in Department of Finance and Credit" at FSBI of HE "Ingush State University, Russia. Dr. Liza A. Tsurova eaned a Ph.D. in Economics.

Dr. Magomed M. Musaev is an Associate Professor in Department of Economics, Chechen State University, Russia. Dr. Magomed M. Musaev eaned a Ph.D. in Economics.

Dr. Arsen P. Kushkhov is an Associate Professor of Accounting, Analysis and Audit Department, FSBI of HE, Kabardino-Balkarian State University named after H.M. Berbekov, Russia. Dr. Arsen P. Kushkhov received a Ph.D. in Economics. Dr.Anzor V. Misakov is a researcher of the Kabardino-Balkarian Scientific Center of the Russian Academy of Sciences, Russia. Dr.Anzor V. Misakov obtained a Ph.D. in Economics.

Professor Dr.Valery S. Misakov is Professor of the Nature Management Laboratory at the Tembotov Institute of Ecology of Mountain Territories of Russian Academy of Sciences, Russia. Professor Dr.Valery S. Misakov got a Doctor of Economics degree.

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MECHANICAL STRENGTH EVALUATION OF PULSED ND-YAG LASER WELDING OF AUSTENITIC STAINLESS STEEL 304L F. Vakili Tahami a, E. Safari b, H. Halimi Khosroshahi a* a Faculty b Faculty

of Mechanical Engineering, University of Tabriz, Tabriz, IRAN of Physics, University of Tabriz, Tabriz, IRAN

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ABSTRACT

Article history: Received 01 August 2018 Received in revised form 24 December 2018 Accepted 13 January 2019 Available online 21 January 2019

This work focused on the welding of austenitic stainless steel 304L using the laser beam welding technique, in the room and high temperatures. Two pieces of the AISI 304L sheet with thickness of one millimeter are arranged on a special fixture and welded under the protection of high purity argon gas. For laser welding, a pulsed NdYAG laser beam with the beam frequency of 20 Hz, the welding speed of 84.5 millimeters per second, the pulse width of 6.5 milliseconds, and the average beam power of 220 watts are used. After welding, the samples of the tensile test cut using an electrical discharge machine, for tensile tests. The uniaxial tensile tests carried out at room and high temperature. Tensile tests have shown that it is possible to perform the laser joining of this alloy, and suitable joints can be obtained with this technique so that the average strength of joints is equal to 73.5% of the base alloy strength in the room temperature, and 64.7% of the base alloy strength at high temperature. © 2019 INT TRANS J ENG MANAG SCI TECH.

Keywords: Nd-YAG laser beam; Laser Welding; Mechanical Properties; High Temp Tensile; Creep test.

1. INTRODUCTION Austenitic stainless steels are used in many industries, such as chemical processing, petroleum, gas and petrochemical industries, at different temperature ranges (Davis, 1994). These alloys are one of the most widely used engineering alloy groups. One of the most important properties of austenitic stainless steels is their welding ability. Arc welding, TIG welding, and laser welding are among the most common welding methods for joining of this alloys (Soltani & Tayebi, 2018; Yan et al., 2010). Different methods of fusion welding use different energy sources with a variety of power densities, due to high power density in laser welding as well as electron beam welding, the weld seams created by these energy sources have the properties and strength that are suitable for welding similar and even dissimilar alloys (Olson,1993). Laser welding uses a high-energy laser beam and can create deep and narrow weld seams (Katayama, 2013). These features have led to many studies in the use of laser beams for welding of various materials (Ma et al., 2016; Zhang et al., 2018). Also, due to the local nature and the ability to apply laser radiation accurately, various methods of hybrid welding *Corresponding author (H.Halimi Khosroshahi). E-mail: halimi@tabrizu.ac.ir. ©2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN2228-9860 eISSN1906-9642 http://TUENGR.COM/V10/143.pdf DOI: 10.14456/ITJEMAST.2019.14

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have been developed using the laser beam (Mahrle & Beyer, 2006; Zhang et al., 2015). Giridharan and Murugan (2009) examined various parameters affecting the 304L austenitic stainless steel welding and obtained optimum seam welding conditions. Yan et al. (2010) investigated the different austenitic stainless steel 304 welding methods and concluded that laser welding is one of the best welding methods for this alloy. Kuryntsev and Gilmutdinov (2015) investigated the effect of using a defocused laser beam on AISI 321 stainless steel laser welding. They concluded that the use of defocusing leads to an increase in the volume of the weld pool and reduces the need for precise preparation of the edges of the weld. Kumar et al. (2017) examined the effect of laser beam position in AISI 304 alloy welding using Nd-YAG pulsed laser beam. They concluded that the best results would be achieved in the case where the laser beam is about perpendicular to the surface of the specimen. Mohammed et al. (2017) studied the microstructure and microhardness of SAF 2205 duplex stainless steel laser joints. Shah et al. (2018) examined the weld pool during laser welding of AISI 304 alloy and developed a numerical model for simulating the weld seam profile. Bhatt, and Goyal (2018) investigated metallurgical properties of the austenitic stainless steel 316 and brass. Studies on laser welding show that many studies have been done to investigate the microstructure and the possibility of laser joining of stainless steels. However, the strength of the resulting laser joints (especially at high temperatures) has not been completely studied. Stainless steels are used in a vast temperature range, so the strength of the joints must be examined in different temperatures. In this study, the strength of the laser joining of AISI 304L alloy has been investigated in the room and high temperature (Saravanan et al., 2017).

2. EXPERIMENTAL PROCEDURE The alloy used in this study is the 304L austenitic stainless steel alloy with the combination of the elements listed in Table 1. As shown in this table, the most important alloying elements of this stainless steel are Chrome with 17.84% and nickel with 56.6%. Chromium has been added to increase the resistance of the alloy to oxidation and the nickel element due to the austenitic matrix stability at ambient temperature, increasing the strength at high temperatures and increasing weldability, formability and toughness (Davis, 1994). Table 1. Compositions of 304L stainless steel (wt. %). Element Weight percent

Fe

Cr

Ni

C

Mn

Si

S

P

69.73

17.84

9.56

0.025

1.285

0.351

0.018

0.021

Parts of a sheet with the thickness of one millimeter are arranged side by side using a sheet fixture and are welded using an Nd-YAG pulsed laser beam. Two pieces of the 304L sheet are placed side by side in the butt welding configuration, which is shown in Figure 1. The location of the laser beam is centered, and the center of the laser beam is in the two-piece contact line (Bernadskiy, 2014). The welding procedure is performed using an Nd-YAG pulsed laser beam with the maximum output power of 400 watts. Also, during welding, argon gas with a flow rate of 10 liters per minute was used as a protective gas for welding. Welding parameters used for joining, are given in Table 2. At 220 watts of welding power and 6.5-millisecond pulse widths, each pulse has a maximum

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F. Vakili Tahami, E. Safari, H. Halimi Khosroshahi

power of about 1692 watts, which results in high penetration depth. Also, since the laser beam diameter is 750 micrometers at the surface of the sheet and the welding speed is 5.84 millimeters per second, the overlapping percent of the pulses is equal to approximately 80.5%.

Figure 1. Butt welding configuration Table 2.Laser Welding Parameters Parameter Value

Welding power Pulse width Welding speed Beam frequency Beam diamater on sheet surface 220 W

6.5 ms

5.84 mm/s

20 Hz

750 micro meters

After welding, an electric discharge machine (EDM) was used to cut the proper tensile samples. The welded parts after the cutting are shown in Figure 2. The number of eight samples is cut off from the welding parts, see Figure 2.

Figure 2: Welded parts. After the cutting process, the tensile samples were tested using a Zwick Z100 tensile machine under a uniaxial tensile test at room temperature and also using a Santam SCT-30 machine at high temperature (600°Celsius). An image of one of the tensile samples is shown in Figure 3 before performing the tensile test.

*Corresponding author (H.Halimi Khosroshahi). E-mail: halimi@tabrizu.ac.ir. Š2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN2228-9860 eISSN1906-9642 http://TUENGR.COM/V10/143.pdf DOI: 10.14456/ITJEMAST.2019.14

145

Figure 3: Tensile test sample

3. RESULTS AND DISCUSSION Three tensile tests were performed on the samples at room temperature. The results of the tensile test on these specimens as well as the base alloy (AISI 304L) are presented in Table 3. The strength of sample No.1 is 73.5% of the base alloy strength, and sample No.2 is 72.5% of the base alloy strength, as well as the sample No.3, is 74.03% of the base alloy strength at room temperature and under the same conditions. The average joint strength is equal to 462.8 MPa or 73.3% of the strength of the base alloy 304L, which is a very good value. Table 3. Tensile strength of base alloy and laser welded joints at room temperature Sample No. AISI 304L 1 2 3

Ultimate Strength (MPa)

The strength of the joint to the base alloy (%)

Breaking Point

631.2

-

-

463.8 457.3 467.3

73.5 72.5 74.0

Joint Joint Joint

Two high-temperature tensile tests (600 °C) were performed on the welded specimens and their results, along with the results of the 304L base alloy test, are presented in Table 4. The strength of sample No.4 at 600 °C is 64.7% of the base alloy strength and for sample No.5, is 62.6% of the strength of the base alloy. The average joint strength at high temperature is 230.63 MPa or 63.65% of the base strength. Table 4. Tensile strength of base alloy and laser welded joints at high temperature (600°C) Sample No. AISI 304L 4 5

Ultimate Strength (MPa)

The strength of the joint to the base alloy (%)

Breaking Point

362.3

-

-

234.39 226.87

64.7 62.6

Joint Joint

It can be readily seen that tensile strengths of base alloy and laser welded joints at room temperature are higher than those at high temperature (600°C). Laser welded joints techniques can be used. However, all samples the breaking points are at joint, cautions should be applied for the uses of any particular applications. Three elevated-temperature (600 °C) creep tests at 240MPa constant stress, were performed on the welded specimens and base alloy samples. The creep tests results are presented in Table 5. In Table 5, at 240 MPa constant stress and 600 °C test temperature, the creep test rupture time of base alloy is 68.3 hours and rupture time for sample 6 at is 46.4% of the base alloy rupture time and for

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F. Vakili Tahami, E. Safari, H. Halimi Khosroshahi

samples 7 and 8, is 42.2%, and 38.4%, respectively. Table 5. Tensile strength of base alloy and laser welded joints at high temperature Sample No. AISI 304L 6 7 8

Creep Rupture Time (Hours)

Breaking Point

68.3

-

31.7 28.8 26.2

Joint Joint Joint

4. CONCLUSION In this research, the welding of austenitic stainless steel 304L was studied using the laser beam welding technique. Two pieces of the AISI 304L sheet with a thickness of one millimeter are arranged on a special fixture and welded under the protection of high purity argon gas. The 304L austenitic stainless steel laser welding was performed using Nd-YAG pulsed laser beam welding machine, and the samples obtained from the welding were subjected to tensile tests at room temperature as well as high temperature. The results of the tensile tests show that suitable joint for the 304L alloy can be obtained using this method. The average joint strength at the room temperature is 73.3% of the base alloy strength. Also, the average joint strength at the high temperature (600 °C) is 64% of the base alloy strength.

5. REFERENCES Davis, J. R. (Ed.). (1994). Stainless steels. ASM international. Soltani, H. M., &Tayebi, M. (2018). Comparative study of AISI 304L to AISI 316L stainless steels joints by TIG and Nd: YAG laser welding. Journal of Alloys and Compounds, 767, 112-121. Olson, D. L. (Ed.). (1993). ASM handbook: welding, brazing, and soldering (Vol. 6). Asm Intl. Katayama, S. (2013). Introduction: fundamentals of laser welding. In Handbook of laser welding technologies (pp. 3-16). Ma, J., Atabaki, M. M., Liu, W., Pillai, R., Kumar, B., Vasudevan, U., & Kovacevic, R. (2016). Laserbased welding of 17-4 PH martensitic stainless steel in a tubular butt joint configuration with a built-in backing bar. Optics & Laser Technology, 82, 38-52. Saravanan, S., Raghukandan, K., & Sivagurumanikandan, N. (2017). Pulsed Nd: YAG laser welding and subsequent post-weld heat treatment on super duplex stainless steel. Journal of Manufacturing Processes, 25, 284-289. Zhang, M., Tang, K., Zhang, J., Mao, C., Hu, Y., & Chen, G. (2018). Effects of processing parameters on underfill defects in deep penetration laser welding of thick plates. The International Journal of Advanced Manufacturing Technology, 96(1-4), 491-501. Mahrle, A., & Beyer, E. (2006). Hybrid laser beam welding—Classification, characteristics, and applications. Journal of laser applications, 18(3), 169-180. Bernadskiy, V. N. (2014). Hybrid welding technologies and welded joints. Welding International, 28(8), 654-659.

*Corresponding author (H.Halimi Khosroshahi). E-mail: halimi@tabrizu.ac.ir. ©2019 International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies. Volume 10 No.1 ISSN2228-9860 eISSN1906-9642 http://TUENGR.COM/V10/143.pdf DOI: 10.14456/ITJEMAST.2019.14

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Zhang, K., Lei, Z., Chen, Y., Liu, M., & Liu, Y. (2015). Microstructure characteristics and mechanical properties of laser-TIG hybrid welded dissimilar joints of Ti–22Al–27Nb and TA15. Optics & Laser Technology, 73, 139-145. Giridharan, P. K., &Murugan, N. (2009). Optimization of pulsed GTA welding process parameters for the welding of AISI 304L stainless steel sheets. The International Journal of Advanced Manufacturing Technology, 40(5-6), 478-489. Yan, J., Gao, M., & Zeng, X. (2010). Study on microstructure and mechanical properties of 304 stainless steel joints by TIG, laser and laser-TIG hybrid welding. Optics and Lasers in Engineering, 48(4), 512-517. Kuryntsev, S. V., &Gilmutdinov, A. K. (2015). Welding of stainless steel using defocused laser beam. Journal of Constructional Steel Research, 114, 305-313. Kumar, N., Mukherjee, M., &Bandyopadhyay, A. (2017). Study on laser welding of austenitic stainless steel by varying incident angle of pulsed laser beam. Optics & Laser Technology, 94, 296-309. Mohammed, G. R., Ishak, M., Aqida, S. N., &Abdulhadi, H. A. (2017). The effect of fiber laser parameters on microhardness and microstructure of duplex stainless steel. In MATEC Web of Conferences (Vol. 90, p. 01024). EDP Sciences. Shah, A., Kumar, A., & Ramkumar, J. (2018). Analysis of transient thermo-fluidic behavior of melt pool during spot laser welding of 304 stainless-steel. Journal of Materials Processing Technology, 256, 109-120.

Bhatt, D., & Goyal, A. (2018, December). Effect of parameters of Nd YAG laser welding on AISI 316 Stainless steel and Brass. In IOP Conference Series: Materials Science and Engineering (Vol. 455, No. 1, p. 012118). IOP Publishing. Dr. F. Vakili Tahami has received his Ph.D. in Mechanical Engineering from UMIST (Manchester University- England). He is now an Associate Professor in the University of Tabriz, Department of Mechanical Engineering. His research is related to welding, mechanical design, and FEM. Dr. E. Safari has received his Ph.D. in the laser physics from Joseph Fourier University. He is now an Associate Professor in the University of Tabriz, Department of Physics. His research is related to laser and laser welding. Hamed Halimi Khosroshahi is a Ph.D. student in the University of Tabriz. His research interests include FEM, welding, and material design.

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F. Vakili Tahami, E. Safari, H. Halimi Khosroshahi

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