Page 1

MARCH 2024
journal of the International Institute in Geneva


Claude Cellich, International Institute in Geneva, Switzerland

Associate Editors:

• Daria Dyakonova, International Institute in Geneva, Switzerland

• Carole Sutton, University of Plymouth ,UK

Editorial Review Board Members:

• Mladen Andrlic, Ambassador of Croatia in Hungary, Croatia

• Kip Becker, Boston University, USA

• Shab Hundal, JAMK University of Applied Sciences, Finland

• Liu Hong, University of Otago, New Zealand

• Juneyoung Lee, World Trade Organization, Switzerland

• Octavio Peralta, UN Global Compact Network, Philippines

• Ravi Sarathy, Northeastern University, USA

• Ravi Shanker, Indian Institute of Foreign Trade, India

• Ludmila Sterbova, University of Economics, Czech Republic

• Nikos Tsourakis, University of Geneva, Switzerland

• Stephen Weiss, York University, Canada



Volume 1, Number 1




Effective Management of Volunteers

Katharina Rehfeld

Culture and International Trade Law: from Conflict to Coordination

Juneyoung Lee

What Factors Influence the Level of Engagement of Individuals in a Banking Relationship in Jordan?

Nawal Tarazi

Setting Educational Objectives for the Book: Machine Learning Techniques for Text

Nikos Tsourakis

A New Data Protection Law in Switzerland. Still the Weakest Privacy Law in Western Europe?

Michael Baltaian

Navigating the Sustainable Energy Transitions Diamond. Strengthening Coherence between the Technological, Economic, Human, Resource, and Governance Dimensions of Sustainable Energy Transitions From a Systems Perspective

Joachim Monkelbaan and Terrence Surles


Split the Pie: A Radical New Way to Negotiate

Claude Cellich



Papers for publication in future issues of the IIG JOURNAL OF INTERNATIONAL BUSINESS AND DIPLOMACY are welcomed. All articles will be peer-reviewed. The following topics should be addressed in future issues of the Journal:

• Cross cultural marketing communications

• Cross cultural business negotiations

• Exporting / Importing

• E-business and digital marketing

• Foreign joint ventures and strategic alliances

• Investment and financial risk management

• Capital markets and corporate finance

• Entrepreneurship and enterprise development strategies

• Global marketing management and strategies

• International trade promotion

• International project management

• Ethics and Sustainability

• International Relations, Security and Diplomacy

• Business analytics and AI

• International Management and Digital innovation

• Risk Management and Strengthening Supply Chains

Contributors should send their manuscripts via e-mail to Editor (

Manuscripts should not exceed 20 double spaced pages.

JOURNAL OF INTERNATIONAL BUSINESS AND DIPLOMACY is published by the International Institute in Geneva, Switzerland.

Copyrights © 2024. All rights reserved.



To promote research in international business, international relations and diplomacy, and artificial intelligence the International Institute in Geneva has established an in-house publication entitled the Journal of International of Business and Diplomacy. This journal replaces the Institution’s IUG Business Review. The composition of the Editorial Review Board consists of academics and professionals active in their field of expertise. All the articles in the journal have been peer reviewed. The editor and his team are grateful to the faculty and administrative staff for producing the first volume of the journal.

The first article by Katharina Rehfeld explores effective management within non-profit organizations, focusing on the role of motivation and organizational culture. Volunteers driven by intrinsic motivation are vital to NPOs. And managing them requires understanding their motivations while maintaining a balance between guidance and autonomy. The study shows that values and organizational culture play a significant role in motivation.

The second paper by Juneyoung Lee is based on her recent book Culture and International Trade Law: From Conflict to Coordination It addresses the interaction between trade liberalization, cultural protection, and cultural diversity at domestic, regional, and international levels. Based on anthropological elements, the paper conceptualizes culture being utilized in the trade domain. The author proposes a spectrum of cultural products and discusses the nuances and difficulty in defining what classifies as a cultural product in the context of international trade law. Further, it provides a background to UNESCO and culture, assesses economic and other reasons to restrict or enhance trade in culture, analyzes actual culture-related trade policies in selected countries and examines multicultural and preferential trade rules when they intersect with culture. The overall position is that there needs to be a shift from viewing trade and culture “in conflict” to assessing trade and culture “in coordination.”

The third article by Nawal Tarazi studies in an innovative way the factors that influence the level of engagement of individuals in a banking relationship in Jordan. The research employs a nonprobability sample of 542 individuals to obtain a comprehensive understanding of the individual and social factors that influence the level of engagement of individuals in a banking relationship. Her findings affirm key independent factors including economic knowledge, age, income, financial literacy, economy, financial technology, and trust affect the level of engagement of individuals in a banking relationship in Jordan highlighting the gender differences. The author argues that the results can serve as practical guidelines for bank managers, regulators, and policymakers.

The fourth article is timely in view of the latest development in artificial intelligence. Based on his book Machine Learning Techniques for Text: Apply modern techniques with Python for text processing, dimensionality reduction, classification and evaluation, Nikos Tsourakis refers to how the dominant trend in technology is moving towards crafting machines capable of learning from data to perform intelligent tasks. Preparing for this paradigm shift is crucial for individuals and organizations to remain competitive and innovative in the rapidly evolving digital landscape. The book Machine Learning Techniques for Text aims to equip learners with the relevant skills, focusing on text data and human language. The book covers topics like analyzing texts, embarking on machine learning, and effectively utilizing cutting-edge deep learning frameworks for different tasks. Incorporating Anderson and Krathwohl's Taxonomy enables the set of clear learning objectives, preparing students for real-world challenges and permitting measurable learning outcomes. In the article the author provides a summary of the book along with an indicative list of relevant educational goals, learning outcomes, and assessment tasks.


The fifth article by Michael Baltaian examines the practical implications of the new law passed on September 1, 2023 for companies doing business in Switzerland. More specifically, the article looks not only at the key components of the new law and how they compare with equivalent law in Europe but also what they mean in practice for companies considering international ones already subject to GDPR and local businesses only operating in Switzerland.

The last article by Joachim Monkelbaan and Terrence Surles highlights why the world needs to shift towards sustainable energy sources and more efficient use of energy. This requires a comprehensive understanding of a set of key determinants. This article sets out these determinants, including economic aspects, technological aspects, resource considerations, and human facets of sustainable energy transitions. The governance that considers proper policies, polity (institutions), and politics needs to enable these four sometimes synergistic but often conflicting dimensions. The article lays out these dimensions and their intersections and presents them in the form of the ‘Sustainable Energy Transitions (SET) Diamond’.

On behalf of the Editorial Review Board, I take this opportunity to thank everyone for their contribution to this first volume with their knowledge, expertise and above all for their precious time. I look forward to future issues of the Journal with articles addressing the need to improve sustainability of businesses operating in a disruptive environment due to geopolitical conflicts, digital transformation and increasing global competition.

The Editor


Effective Management of Volunteers

The role of motivation and organizational culture


This article explores effective management of volunteers within non-profit organizations (NPOs), focusing on the role of motivation and organizational culture. Volunteers are vital to NPOs, driven by intrinsic motivation, and managing them requires understanding their motivations while maintaining a delicate balance between guidance and autonomy. Studies show that values and organizational culture play a significant role, while the organizational values must be aligned with the personal values of the volunteers. The article illustrates crucial aspects by providing information on voluntary work in Switzerland.

Keywords: sustainable leadership, non-profit organization, commitment, organizational culture

NPOs play a pivotal role in both the economy and the well-being of society. They heavily rely on volunteers who contribute their time and effort voluntarily, driven by a strong intrinsic motivation rather than financial gain. Managing and leading volunteers, however, presents a unique challenge due to the delicate balance between guidance and preserving their autonomy. To harness the full potential of volunteers and ensure their sustained support, it is crucial for those in leadership positions to understand their motivations to guide and manage them effectively and sustainably.

Against this background, the article highlights the peculiarities of managing volunteers by exploring the role of the values and culture of the organization to ensure its existence. Statistics and information about volunteers in Switzerland are provided as an example to illustrate its relevance further.

In Switzerland, the extent of volunteer work is considerable: in 2020, around 1.2 million people carried out unpaid work within organizations, clubs, or public institutions and 2.3 million took on informal unpaid activities such as neighbourhood help, childcare, services, or care and caring for relatives and acquaintances who do not live in the same household. Volunteers invest an average of 4.1 hours per week in this commitment (Federal Statistical Office Switzerland, 2021).

Researchers have highlighted sustainable leadership as a critical success factor for NPOs (Froelich/McKee/Rathge, 2011, p. 3). Sustainable leadership, particularly concerning volunteers, focuses on maintaining their performance and long-term commitment without offering monetary compensation (Kanning 2013, p. 25). Given the extensive literature on the impact of pay structures on employee performance and commitment, managing unpaid volunteers in NPOs necessitates alternative management approaches (Redmann 2018, p. 72).

1 Katharina-Maria Rehfeld is Professor in Human Resource Management at IU International University of Applied Science and Adjunct Professor, International Institute in Geneva

Volunteer work is not free of expectations; it operates on the principle of reciprocity. Volunteers donate their time with the expectation that their motives or needs associated with philanthropy will be indirectly satisfied by the organization (von Schnurbein 2008).

Effective leadership in NPOs requires an understanding of volunteers' motives to align their behavior with the organization's goals. Sustainable leadership entails adopting a "motivationally compatible leadership behavior" (Krönes 2016, p. 10), tailored to individual volunteers' needs and motives.

Motives for Volunteering

The discussion on egoism and altruism has significantly influenced research on voluntary engagement for a long time (Cialdini et al., 1987; Schie et al., 2015). Reasons for voluntary engagement have been categorized into egoistic (self-centered) and altruistic (concerned with the well-being of others) reasons. In 1998, Clary and colleagues (Clary et al., 1998) introduced a functional approach that emphasizes the versatility of engagement, overcoming the previous debate on egoistic and altruistic motivations for involvement. They applied the question of the functional approach, which examines the functions and significance of attitudes for individuals, to the realm of voluntary engagement. They inquire into the psychological functions underlying volunteer work, suggesting that engagement can simultaneously serve different purposes for different individuals. Clary et al. (1998, p. 1,518) identify six generally relevant motives for voluntary engagement serving different functions or purposes (Houle et al. 2005, p. 338):

1. Value Motive: This motive is all about having a strong sense of wanting to do good for others and make a positive impact on the world. People with a value motive volunteer because they believe in helping those in need and making their communities or the world a better place. It's driven by a deep sense of humanitarianism and altruism, where the satisfaction comes from knowing they've made a difference in someone else's life.

2. Knowledge Motive: Those with a knowledge motive are motivated by the opportunity to learn and grow. They see volunteering as a chance to gain new insights, acquire new skills, and expand their horizons. These volunteers are often focused on personal development and self-improvement. They find fulfilment in acquiring knowledge and developing expertise in various areas through their volunteer experiences.

3. Career Motive: Some volunteers are driven by the desire to advance their careers or secure gainful employment in the future. They see volunteering as a means to build their resume, gain valuable work experience, and develop skills that can enhance their job prospects. This motive is especially common among young people and those looking to transition into a new career field.

4. Social Motive: People with a social motive are primarily interested in building connections and expanding their social networks. They view volunteering as an opportunity to meet like-minded individuals, make friends, and connect with others who share their interests and values. The social aspect of volunteering is what motivates them the most.

5. Protection Motive: The protection motive involves using volunteer work as a way to cope with personal issues or challenges. It can be a means of distraction or escape from problems in their own lives. Volunteering allows them to focus their energy and attention on helping others, which can provide a sense of relief from personal difficulties.


6. Self-Esteem Motive: Volunteers with a self-esteem motive are driven by the positive feelings and self-confidence that come from helping others. They find a sense of selfworth and accomplishment in their voluntary actions. Being recognized and appreciated by others for their contributions further boosts their self-esteem. It's about feeling good about themselves and their ability to make a difference.

After examining numerous studies through this framework, Chacón et al. (2017) discovered that the predominant driver for volunteering is the values dimension, while career and enhancement motivations are less common. The inclination towards career and understanding motivations tends to decrease with the average age of volunteers, and it appears that men are more inclined towards considering the social dimension compared to women.

In Switzerland, most volunteers get involved because they enjoy the activity. For many people, social aspects are also important: thanks to their commitment, volunteers come together with other people and can work together to move something. Other motives that are mentioned often are expanding own knowledge and experiences, giving something back to other people, developing personally and growing personal network. External pressures and obligations rarely play a role. In informal volunteer work, the most important motive is often to help: Three quarters (76%) is committed to helping others. There is no major difference in the motives of women and men (Federal Statistical Office Switzerland 2021).

The managing director of the Ilgenau village for disabled people in Ramsen, Switzerland, highlights the significance of these motives in volunteerism. Many volunteers are driven by a desire to give back, stemming from personal experiences or gratitude for their current circumstances. Younger volunteers, in particular, value networking opportunities, training, and skill development, often becoming experts in their fields through focused further training.

Effective leadership of volunteers relies on aligning their personal motivations with the fulfillment provided by volunteer activities (Stukas et al., 2009, p. 80). Despite the continued dependence of nonprofit and public organizations on volunteer support, determining the factors that drive individuals to volunteer and sustain their commitment over time remains a complex challenge. The Volunteer Functions Inventory (VFI) serves as a practical tool that has demonstrated its efficacy in engaging volunteers. Utilizing resources like the VFI questionnaire enables the evaluation of volunteers' motivations, allowing for the customization of their roles to enhance both performance and commitment. Research not only supports the effectiveness of this approach but also validates its utility in designing training manuals for volunteer organizations and improving recruitment and retention practices. Organizations are encouraged to foster and capitalize on these motivations through shared reflection, as proposed by Clary and Snyder (2002).

Organizational Values and Culture

Besides understanding volunteers' individual motivations, an organization's culture and its values play a significant role. Organizational culture has gained importance in recent years in how it influences external perceptions and cooperation within NPOs. It can determine whether volunteers are interested in working with the organization and whether they commit for the long term. A strong, trust-based organizational culture that aligns with and nurtures volunteers'


intrinsic motivation becomes a crucial factor in the success or failure of NPOs. Duke (2012) conducted a study that showed a positive relationship between organizational culture and nongovernmental organizations (NGO) performance. A suitable organizational culture can have a positive impact on an organization's effectiveness and its ability to achieve its desired outcomes. Similarly, organizational culture can help prevent negative actions and scandals (Vijfeijken, 2019).

However, there has been limited research on shaping organizational culture in NPOs and how values guide and influence the behaviors of leaders, helpers, and members. Previous studies on organizational culture have largely focused on for-profit organizations. This is partly because NPOs often assume that their organizational culture is naturally shaped by their mission, vision, goals, and their distinction from the business sector. Nevertheless, it is becoming increasingly clear that the interests and values of NPOs, in pursuit of their missions, may not always align with a social and value-oriented organizational culture (Vijfeijken, 2019). This misalignment could diverge from the values held by volunteers.

Martin and Siehl (1983) describe organizational culture as "the cement that holds an organization together through shared patterns of meaning consisting of core values, forms, and strategies to reinforce content." Edgar Schein (1985) also highlights the role of employee values in organizational culture. Schein suggests that employees' values strongly influence organizational culture, meaning that an organization's culture reflects the fundamental values of its team, which, in turn, influence how people behave within the organization (Türk 1976, p. 68). This shared value base serves an identification function (Arnett et al. 2003). NPOs attract volunteers and members who identify with the organization's mission and share its values. To retain volunteers over the long term, it's crucial to assess early in the recruitment process whether a person's individual values align with the organizational culture's values (Weinert 2004, p. 171). Only when these values are in line with a person will they feel comfortable and remain committed to the organization.

Freiermuth (2022/2023, p. 8) points out that the self-perception of formally engaged volunteers has evolved in recent years: they have become more self-assured, viewing themselves as contributors who bring their personal talents and want to have a say, expecting communication on an equal footing. Nowadays, individuals who dedicate themselves to a club or institution not only aim to contribute to a good cause but also approach an organizing entity with specific needs. To retain volunteers, organizations must be aware of and consider these needs, as the options are vast, and volunteers can choose whom they work with.

In the competition for the resource of volunteers, favorable conditions are crucial. The foundation for this is professional volunteer management, aiming to optimize volunteer activities for all involved. It involves aligning the desires and needs of volunteers with the requirements institutions place on them. Volunteer management also ensures that collaboration with volunteers is part of the organizational culture and embedded in the overall strategy. It is crucial that volunteers are familiar with and can identify with the goals and values of the organization.

The integration of volunteers succeeds only when accepted and supported by paid staff. Paid employees should be involved early on, and any reservations and fears should be taken seriously. Otherwise, friction points may arise within an organization, complicating the collaboration between paid and volunteer personnel.

Focusing too much on motivating volunteers can create a conflict-avoidant atmosphere in the long run. For instance, if volunteers who are less motivated are overly protected due to a


misinterpretation of employee orientation, it can place additional burdens on paid employees and demotivate them (Simsa 2019, p. 272). This situation can lead to pronounced swings between extremes: too much autonomy followed by centralized control, which can negatively affect volunteers' intrinsic motivation (Simsa 2019, p. 374). Dealing with this leadership dilemma of "either-or," it is advisable to adopt a consistent "both-and" approach. These dilemmas and contradictions specific to NPOs require leaders to have a high tolerance for ambiguity. Leaders must balance divergent interests and expectations of different employee groups while also serving as symbolic role models within the organization. As a result, effective leadership is increasingly recognized as a critical success factor for NGOs in sustainability discussions. It is emphasized that volunteer work is not meant to replace paid work but rather complement and support it. Therefore, the roles, tasks, competencies, and obligations of volunteers and paid staff must be clearly defined and delineated.

The Swiss Red Cross (SRC) Aargau is one of the 24 cantonal branches of the national Red Cross society. As an autonomous association within the SRC group, they are financially and organizationally independent. About 1,000 volunteers are engaged in relief and social integration. According to Silvana Lindt, the specialist in volunteer management at the SRC Aargau, the paid staff experiences collaboration with volunteers as a crucial enrichment in their daily work. "Our employees appreciate the volunteers a lot, and the volunteers reciprocate that appreciation. It's a very positive collaboration for all parties involved. We motivate each other" says Lindt (Freiermuth 2022/2023, p. 8).

Conclusion and Outlook

In conclusion, this paper has delved into the critical aspects of retaining volunteers by comprehending their motivations, emphasizing the significance of organizational culture and values. Despite the third sector's substantial role in society and its contribution to essential tasks, it remains an area that lacks extensive research, particularly in terms of employee management. Recognizing its social and macroeconomic importance, there exists a pressing need to bridge this research gap through empirical studies, thereby ensuring the sustainability of leadership. This empirical approach is crucial for cultivating evidence-based strategies aimed at maintaining the long-term commitment of volunteers.

Furthermore, it is essential to underline that volunteer work is a voluntary endeavor, contrary to mandated involvement. It can never be demanded but should be requested and fostered. While forms of obligatory engagement have their place in various sectors of society, they do not fall under the purview of volunteer work.

Sustainable collaboration with volunteers should be ingrained in the organizational culture, with decisions regarding volunteer engagement made at the leadership level. Adequate resources must be allocated, and the legitimate fears and reservations of paid staff should be acknowledged and addressed. Without the understanding and acceptance of the paid staff, the successful organization of volunteer efforts becomes challenging.

In summary, volunteer work and paid employment are not in competition; rather, they serve different purposes. Services of immediate and vital importance to individuals and the environment should be carried out through paid work, while volunteer work significantly contributes to enhancing the quality of life, fostering human interaction, and championing environmental protection. Balancing these aspects is fundamental for effective leadership in volunteer management.



Arnett, D.B., German, S.D. and Hunt, S.D. (2003). 'The identity salience Model of relationship Marketing success: The case of nonprofit marketing,' Journal of Marketing, 67(2), pp. 89–105. Retrieved from:

Chacón, F., Gutiérrez, G. and Sauto, V. (2017). ‘Volunteer Functions Inventory: A systematic review. Psicothema,’ 29 (3), pp. 306–316.

Cialdini, R.B. et al. (1987). ‘Empathy-based helping: Is it selflessly or selfishly motivated?,’ Journal of Personality and Social Psychology, 52(4), pp. 749–758.

Clary, E. G., and Snyder, M. (2002). ‘Community involvement: Opportunities and challenges in socializing adults to participate in society,’ Journal of Social Issues, 58, pp. 581–591.

Clary, E. G. et al. (1998). ‘Understanding and assessing the motivations of volunteers: A functional approach,’ Journal of Personality and Social Psychology, 74(6), pp. 1516–1530.

Duke II, J. (2012). ‘Organizational Culture as a Determinant of Non-Governmental Organization Performance: Primer Evidence from Nigeria,’ International Business and Management, 4, pp. 66-75.

Federal Statistical Office Switzerland (2021). Freiwilliges Engagement in der Schweiz 2020. Retrieved from:

Freiermuth, K. (2022/2023). ‘Mit Freiwilligen zusammenarbeiten,’ Der HR-Profi Newsletter 01 Dezember 2022/Januar 2023, Weka Business Media, pp. 8-9.

Froelich, K.A., McKee, G.J. and Rathge, R.W. (2011). ‘Succession planning in nonprofit organizations,’ Nonprofit Management and Leadership, 22(1), pp. 3–20. Retrieved from:

Houle, B. J., Sagarin, B. J., and Kaplan, M. F. (2005). ‘A functional approach to volunteerism: Do volunteer motives predict task preference?’ Basic and Applied Social Psychology, 27(4), pp. 337– 344.

Kanning, H (2013). ‘Nachhaltige Entwicklung – Die gesellschaftliche Herausforderung für das 21. Jahrhundert,’ in: Baumast, A. and Paper, J. (eds) `Betriebliches Nachhaltigkeitsmanagement,` Stuttgart, pp. 21-43.

Krönes, G. (2016). ‘Motivation nutzen – Nachhaltiges Personalmanagement Ehrenamtlicher,’ Weingartener Arbeitspapiere zur Allgemeinen Betriebswirtschaftslehre, zum Personalmanagement und Nonprofit-Management, Nr. 12.

Lamprecht, M., Fischer, A. and Stamm, H. (2020). ‘Freiwilligenmonitor Schweiz 2020,’ Retrieved from:

Martin, J., and Siehl, C. (1983). ‘Organizational culture and counterculture: An uneasy symbiosis,’ Organizational Dynamics, 12(2), pp. 52–64.

Van Schie, S., Güntert, S.T., Oostlander, J. and Wehner, T., 2015. “How the organizational context impacts volunteers: A differentiated perspective on self-determined motivation.” VOLUNTAS: International Journal of Voluntary and Nonprofit Organizations, 26, pp.1570-1590.


Redmann, B. (2018). ‘Erfolgreich führen im Ehrenamt: Ein Praxisleitfaden für freiwillig engagierte Menschen,’ Springer Gabler.

Schein, E. H. (1985). ‘Organizational culture and leadership: A dynamic view,’ Jossey-Bass, San Francisco, CA.

Schnurbein, G. v. (2008). ‘Nonprofit Governance in Verbänden: Theorie und Umsetzung am Beispiel von Schweizer Wirtschaftsverbänden,’ Haupt Verlag.

Simsa, R. (2019). ‘Leadership in Organisationen sozialer Bewegungen: Kollektive Refexion und Regeln als Basis für Selbststeuerung. Gruppe. Interaktion. Organisation,’ in: Zeitschrift für Angewandte Organisationspsychologie, 50, pp. 291–297.

Stukas, A. A. et al. (2009). ‘The matching of motivations to affordances in the volunteer environment: An index for assessing the impact of multiple matches on volunteer outcomes’ Nonproft and Voluntary Sector Quarterly, 38, pp. 5–28.

Türk, K. (1976). ‘Grundlagen einer Pathologie der Organisation: 60 Einsichten,’ Enke Sozialwissenschaften.

Vijfeijken, T.B.-V. (2019). ‘“Culture is what you see when compliance is not in the room”: Organizational culture as an explanatory factor in analyzing recent INGO scandals,’ Nonprofit Policy Forum, 10(4).

Wehner, T. et al. (2015). ‘Frei-gemeinnützige Tätigkeit: Freiwilligenarbeit als Forschungs- und Gestaltungsfeld der Arbeits- und Organisationspsychologie,’ in: Wehner, T. and Güntert, S. (eds) ‘Psychologie der Freiwilligenarbeit,’ Springer, Berlin, Heidelberg, p. 3-22.

Weinert, A. B. (2004). ‘Organisations- und Personalpsychologie,’ Beltz Verlag


Culture and International Trade Law: from Conflict to Coordination 1

Juneyoung Lee 2


This work addresses the interaction between trade liberalization, cultural protection, and cultural diversity at domestic, regional, and international levels. Based on anthropological elements, the work conceptualizes culture being utilized in the trade domain. It proposes a spectrum of cultural products and discusses the nuances and difficulty in defining what classifies as a cultural product in the context of international trade law. Further, the work: (i) provides a background to UNESCO and culture; (ii) assesses economic and other reasons to restrict or enhance trade in culture; (iii) analyzes actual culture-related trade policies in a cross-section of countries; and (iv) examines multilateral and preferential trade rules when they intersect with culture. The overall position is that there needs to be a shift from viewing trade and culture "in conflict" to assessing the two subjects "in coordination".

Keywords: trade, culture, trade policies, cultural policies, cultural identity, cultural diversity, protectionism, conflict, and coordination

1. The Research Question and This Publication's Approach

How can policies on trade and culture be coordinated in such a way that both are enabled to flourish? This question is at the heart of this publication.

It is not only a philosophical but also a practical, legal, and policy-oriented question that decisionmakers face in trade negotiations and trade disputes. The latest bilateral trade negotiations between the European Union and the United States explicitly underscore the challenges of untangling the issue of trade and culture. Even before officially launching these Transatlantic Trade and Investment Partnership (TTIP) negotiations, some European countries claimed the cultural and audiovisual services should be excluded from the negotiating mandate.

Furthermore, the China-Audiovisuals case shows that the World Trade Organization (WTO) cannot avoid considering its role in the trade and culture debate much longer. The basis for such considerations can be found outside the WTO, and mainly in the developments around the 2005 UNESCO Convention on Protection and Promotion of the Diversity of Cultural Expressions. One can, however, question the influence the 2005 Convention has had on legal and political considerations of trade and culture.

Governments have been struggling with striking a balance between the protection of culture and the liberalization of trade based on differing domestic policy priorities for decades. Before placing this discussion in the context of the General Agreement on Tariffs and Trade (GATT) / WTO and UNESCO in the 1930s, the League of Nations adopted the 1933 Convention for Facilitating the International Circulation of Films of an Educational Character. The contracting parties of the Convention believed that “the international circulation of educational films is

1 The article is based on a recent book: Juneyoung Lee (2023). Culture and International Trade Law: From Conflict to Coordination, Leiden and Boston, Brill.

2 Juneyoung Lee is a Legal Affairs Officer at the World Trade Organization and Adjunct Professor at the International Institute in Geneva


desirable for the mutual understanding of people, and it will consequently encourage moral disarmament.” Aiming at achieving this belief, the Convention exempted educational films from import duties, but this was discontinued with the outbreak of World War II. Afterwards, the 1933 Convention was replaced by the UNESCO Agreement for Facilitating the International Circulation of Visual and Auditory Materials of an Educational, Scientific and Cultural Character, also known as the ‘Beirut Agreement’. Although the latter was designed to “facilitate the free flow of ideas by word and image that would promote the mutual understanding of peoples to encourage the aims of the UNESCO”, it was regarded “in effect as a tariff and trade instrument ” Therefore, the discussion on the interaction between trade and culture began before the creation of the GATT.

In the context of trade, the drafting fathers of the GATT 1947 had undergone a series of difficult discussions on the issue of trade and culture, in particular relating to cinematographic films. The outcome of this debate is the still existing Article IV of the GATT 1947 that allows the GATT Contracting Parties, in the case of cinematographic films, not to fully follow one of the basic principles of the multilateral trading system, namely, the national treatment and general elimination of quantitative duties, in favor of national films.

In addition, this issue was the very reason for the delays during the Uruguay Round because the United States and France had difficulties agreeing on the treatment of audiovisual services under the multilateral trading system. During the Uruguay Round, the audiovisual sector had been debated as an “all-or-nothing” issue: while some considered audiovisual services as entertainment products that were in no way different from any other commercial product, others defended audiovisual products were cultural products and vectors of the fundamental values and ideas of a society. The result of these hard negotiations led to the selection methodology in the General Agreement on Trade in Services (GATS), in which members can choose service sectors that they wish to liberalize. In other words, if a member does not wish to liberalize audiovisual services, the member simply does not list the sector in its services schedule. Although more than two decades have passed since this debate on cultural exception, the very same issue re-emerged in the TTIP negotiations.

The Canada-Periodical case fueled the necessity for a non-WTO architect to deal with cultural products issues. In this regard, when Canada and France realized the difficulties for the cultural issue to be resolved in their favor under the multilateral trading system, namely in the WTO, they came to a cooperative endeavor to achieve their goal culture is different from other sectors which led them to turn to UNESCO, not the WTO. The victorious outcome for them was the UNESCO Convention on Protection and Promotion of the Diversity of Cultural Expressions, concluded in 2005. This 2005 UNESCO Convention, which came into force in March 2007, has now been ratified by 150 parties. The preamble of the Convention clearly identifies the sensitivities around trade and culture with an underlying preference for culture.

For example, the UNESCO Convention states that Contracting Parties are convinced that cultural activities, goods, and services have both an economic and a cultural nature, because they convey identities, values and meanings, and must therefore not be treated as having solely commercial value. They further note that while the processes of globalization, which have been facilitated by the rapid development of information and communication technologies, afford unprecedented conditions for enhanced interaction between cultures, they also represent a challenge for cultural diversity, particularly considering risks of imbalances between rich and poor countries.

The debate thus far has focused on the assumption that trade and culture have a confrontational relationship, with supporters on either side. Whereas some WTO Members (e.g. the United


States) prefer to treat all products similarly, other WTO Members (e.g. Canada and France) are determined to make a clear distinction between cultural and other products when it comes to trade. This book aims to go beyond this contest and explores possibilities to strike a balance between both extremes.

Thus, varying domestic trade policy approaches towards culture are reflected at the multilateral level. The 2005 UNESCO Convention may have contributed to the controversy and has driven a wedge between countries instead of becoming a unifying instrument.

Beyond the domestic and multilateral levels, and particularly because of the stalled negotiations in the Doha Development Round, preferential trade agreements (PTAs) are rapidly growing in importance and in numbers. PTAs increasingly include innovative models for (de)regulating the trade in cultural products.

There may, however, remain considerable potential to discuss the issue of trade and culture at WTO level. The WTO itself may also engage in institutional co-operation with specialized institutions such as UNESCO under the framework of Goal 17 (partnership) of the Sustainable Development Goals (SDGs).

There is much more at stake than discussion of culture in the context of trade, this encompasses the appreciation of what culture entails in a rapidly globalizing and integrating economy. Both trade and investment are the lifeblood of such an economy and culture can, in this context, easily be marginalized. At the same time, the exchange between people and companies from different parts of the world can lead to the exchange and mutual enrichment of cultures. These issues are extremely context-sensitive and can best be considered on a case-by-case basis which respects pluralism. Traditional legalistic approaches with binding dispute settlement leave little room for nuance. In that sense, the opportunities offered by more ‘informal’ types of lawmaking should be explored.

Although there is no widely agreed upon definition of ‘cultural products’, some common features of ‘culture-ness’ can be identified: culture is dynamic, social, and contextual. However, further aid for the identification of the cultural components of cultural products in the context of trade is needed. A practical tool, such as a Spectrum for Cultural Products can be designed to categorize specific cultural goods and services based on the UNESCO Framework for Cultural Statistics.

2. The Significance of the Coordinated Framework Proposed in This Publication

The narrative of literature on trade and culture thus far consists in the opposing views about trade and culture: either culture should ‘get out of the way’ and let trade rule, or trade should be kept at bay to shield culture from the vagaries of economic globalization. This is the antagonistic story usually brought forward in research on trade and culture. 2 To overcome this divisive reporting, my book is an attempt at harmonizing public policy concerns in the field of trade and culture. In conceptual terms, this publication touches upon the dialectic relationship between the arguments that trade liberalization hampers the protection of culture up to the point that it can wipe out culture (thesis) and the view that trade can enhance the diffusion of culture and promote cultural diversity (antithesis). The main goal of this paper is to explore these opposite paradigms and to merge them through a dialectic process into a compromise or other state of agreement via conflict and tension (synthesis).

2 Van Den Bossche P. (2007) Free Trade and Culture: A Study of Relevant WTO Rules and Constraints on National Cultural Policy Measures, Amsterdam, Boekmanstudies; Voon T (2007) Cultural Products and the World Trade Organization, Cambridge, Cambridge University Press.


My book also goes beyond most legal scholarship on the issue of trade and culture in the sense that it considers the full range of cultural products based on the ‘cultural spectrum’, which means that it leaves the usual narrow view behind that only audiovisual products are relevant to trade. Furthermore, literature thus far has escaped from pondering the ‘culture-ness’ of cultural products in the context of trade. My contribution sets the stage for a working definition of culture and cultural products which is supported by anthropological and moral conceptualizations of culture. This approach is unique in the sense that literature thus far has rushed into the legal substance of trade and culture without thoroughly investigating a subject which clearly has sociological aspects.

The legal and procedural approach which I adopt is important amidst a clear lack of conciliatory efforts from both institutions and most governments. However, legal, and procedural considerations are no panacea for the political and economic challenges posed by special interests, protectionist popular sentiments, and the prioritization of other unresolved trade issues.

The existing antagonistic approach to trade and culture does not recognize the WTO as an organization which is already equipped with tools to harmonize trade and culture. Not only from the legal perspective detailed overview of the WTO legal provisions which could have an influence on cultural products, and an explicit identification of culture-related/specific provisions. This publication further shows non-legal instruments which can positively aid the discussion on the relationship between trade and culture. From the WTO negotiations perspectives, this publication further analyses the cultural areas of trade negotiations not only through the example of audiovisual services, which are usually interchangeably used for any cultural issue under the WTO without thorough justification, but also other subjects, such as geographical indications and traditional knowledge and folklore. My exploration does not stop at the multilateral level but goes beyond that by examining the potentials of preferential arrangements as a testing ground for finding a healthy equilibrium between trade and culture.

Critically, the book balances the ways forward in future discussions on trade and culture by showing the opportunities which ‘informal international lawmaking’ can offer. Based on its sociological conceptualization of the ‘culture-ness’ of cultural products, the book emphasizes the dynamism of culture which brings to question the suitability of the rigid nature in traditional legalistic approaches towards trade and culture.

Lastly, from an institutional point of view, the coordination between WTO and UNESCO has surprisingly been ignored for a long time. In this regard, this book requires institutional coordination.

3. Key Elements of the Book

This study has sought to answer the following question: How can policies on trade and culture be coordinated in such a way that both are enabled to flourish? To answer that question, a working definition of culture was needed to set the tone for the entire study. This publication thus started by providing three dimensions of ‘culture-ness’ as key cultural characteristics that can be a filter for cultural products in the context of trade, notably that:

i. Culture is social,

ii. Culture is dynamic (evolutionary and constantly changing), and iii. Culture is contextual.


Further, the Spectrum for Cultural Products was based on these three common features and aided the identification of ‘cultural products’ in the context of trade. Additionally, cultural products were differentiated on scales based on the 'strength' of their culture-ness.

Chapter 2 focuses on the standard-setting instruments of UNESCO to compare the widely known 2005 UNESCO Convention on the Protection and Promotion of the Diversity of Cultural Expressions with other UNESCO standard-setting instruments. The Chapter demonstrates that in contrast to a successful example of the UNESCO World Heritage Convention, the 2005 UNESCO Convention does not yet reach the desired level of protecting cultural diversity. Consequently, the Chapter reflects upon whether the 2005 UNESCO Convention should have taken the incremental approach which had been identified as one of the reasons why other UNESCO standard-setting instruments, such as the World Heritage Convention, are widely supported by the international community. Given that the life of the 2005 UNESCO Convention is still evolving since its entry into force in 2007, the Chapter suggests that the 2005 UNESCO Convention continuously undertake the incremental approach in its implementation. In this context, the Chapter suggests the 2005 UNESCO Convention be renewed to better safeguard the collective spirit of the international community in protecting cultural diversity.

Chapter 3 explores the landscape of domestic cultural policies of key WTO Members that can impact their trading partners. The Chapter points to certain weaknesses in the different economic rationales that argue cultural products are economically different from other products. Clearly, there is no single tendency or trend that one can identify among the diversified approaches by these key WTO Members in terms of protecting their cultural products. Such difficulty in detecting a trend was more challenging for tariff measures than for non-tariff measures. The reason for this could be the lack of a common definition of cultural products which further results in the lack of an established scope for cultural goods. Chapter 3 also identifies certain similarities in key WTO Members' non-tariff measures, particularly in the audiovisual sector.

As Chapter 3 shows, a major challenge is to clearly draw the line between disguised trade protectionism and bona fide cultural concerns. Although this challenge may arise at the national level, the deficiency of international level co-operation on agreed standards in this regard further accelerates the domestic challenges. The fact that there is currently no international or regional institution that is explicitly mandated to tackle the dilemma between trade protectionism and legitimate cultural concerns calls for co-operation at international level.

Chapter 4 and Chapter 5 aim at responding to this call. While Chapter 4 focuses on enhancing the prospective for the WTO to serve as a forum for discussion on trade and culture, Chapter 5 addresses a new era of preferential trade agreements (PTAs) which is quietly being paved as a complementary tool for the linkage between trade and culture.

Chapter 4 demonstrates the existence of implanted tools in the WTO for the co-operation between culture and international trade law from the legal, negotiation, administrative, and WTO accession perspectives. This Chapter emphasizes the importance of a tightly connected pivot across these four functions of the WTO for addressing WTO Members' cultural concerns. Additionally, the point which Chapter 4 tries to make is that, in contrast with the general perception, the WTO could well offer a credible venue for discussing the relationship between trade and culture. In this regard, I identified and emphasized the non-dispute settlement functions of the institution as the appropriate tools for the coordination between culture and international trade law, beyond the already well-recognized dispute settlement function of the WTO. This argument is based on the inherent nature of culture which is identified in Chapter 1 of the study.


Similarly to Chapter 4, Chapter 5 considers fora that could play a role in the general treatment of cultural products, namely PTAs. This Chapter examined the PTAs of the leading countries which have been active in the discussion on trade and culture, either at the UNESCO or WTO level, in particular. Thus, Chapter 5 distinguishes major PTA models useful in treating cultural products in PTAs.

Surprisingly, the 2005 UNESCO Convention's impact on PTAs was marginal, except for the EU model, which utilized the 2005 UNESCO Convention in the Protocol on Cultural Co-operation annexed to its preferential trade agreements. This may also suggest the necessity for better collaboration between these two communities: trade and culture. China and New Zealand were identified as culturally conscious and as pursuing innovative cultural policies in the context of PTAs.

Chapter 5 also explains that bilateral investment laws have in a way been more developed in embracing a segment of culture (cultural heritage) than international trade law thanks to the limited scope of culture that international investment law thus far needed to deal with. In my Spectrum of Cultural Products, cultural heritage is one of the six key segments, which is identified as the least controversial.

Chapter 6 presents specific suggestions for ways forward on how to better coordinate the treatment of cultural products in the context of international trade law. Finding a culture-friendly way in the trade context is emphasized broadly in two ways: the first according to a dispute settlement approach, and the second according to a non-dispute settlement approach. Within the dispute settlement approach, I first identify classical trade dispute settlement, particularly in the WTO dispute settlement system but still not conservative in the sense that the classical dispute settlement aims at an evolutionary interpretation approach; and second, informal international lawmaking based on the nature of culture itself is identified as innovative and complementary. Within the non-dispute settlement approach, monitoring, negotiations, and institutional coordination are argued to have a positive effect at multilateral level.

Due to its dynamic nature, culture may not fully match with any rigid form of legality, which is why my preferred way of considering the issue of trade and culture, as presented in Chapter 6, is in non-dispute settlement-oriented, i.e. monitoring/surveillance, negotiations, or institutional cooperation which are not geared towards conflict. However, my ways forward also include the dispute settlement-oriented approach, such as evolutionary treaty interpretation, and informal international law making.

Additionally, for the scenario in which a new agreement could be designed specifically for the issue of trade and culture in the realm of the WTO, a Plurilateral Agreement, or like-minded Members' Initiatives on Cultural Products, is suggested as an appropriate form. Chapter 6 further suggests the APEC (covering the Asia-Pacific region) and the Council of Europe (covering the European region) as appropriate regional forums for developing a working agenda on the relationship between trade and culture.

The aim of this book is to analyze the phenomenon of the inter-relationship between trade and culture. The publication underlines the extensively divisive opinions which revolve around the relationship between trade and culture, and their impact on each other. Nonetheless, when elaborating the possible new approaches in an attempt to contribute to the debate on this issue, what I pursued was the design of those approaches in a constructive way and not in a conflicting way so that policies on trade and culture can be coordinated.


I fully recognize the complexity of the issues I address and hope that this book will facilitate deeper conversation about the ways in which culture and trade move from conflict and shape meaningful coordination and dialogue, which are intrinsic to culture itself and the very purpose of its existence.


Lee, Juneyoung (2023) Culture and International Trade Law: From Conflict to Coordination, Leiden and Boston, Brill.

Van Den Bossche P.(2007) Free Trade and Culture: A Study of Relevant WTO Rules and Constraints on National Cultural Policy Measures, Amsterdam, Boekmanstudies

Voon T. (2007) Cultural Products and the World Trade Organization, Cambridge, Cambridge University Press


What factors influence the level of engagement of individuals in a banking relationship in Jordan?


The Central Bank of Jordan (CBJ) presented a study report (NFIS 2018-2019) in collaboration with Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH highlighting that 67% of people in Jordan above the age of 15 do not have access to the formal financial system in terms of bank account ownership. Only 33% of adults in Jordan, among whom only 27% of women, are considered financially included. This percentage is considered low even when compared to other countries with the same income level

The research study employed a non-probability sample of 542 individuals to obtain a comprehensive understanding of the individual and social factors that influence the level of engagement of individuals in a banking relationship. The Theory of Planned Behavior (TPB) is the base theory underpinning this research. The Partial Least Squares Structural Equation Modelling method (PLS SEM) was employed for quantitative analysis. The findings affirm key independent factors including economic knowledge, age, income, financial literacy, economy, financial technology, and trust affect the level of engagement of individuals in a banking relationship in Jordan highlighting the gender differences. Engagement leads to more sustainability and development, thus improving financial inclusion in the country. The results can serve as practical guidelines for bank managers, regulators, and policymakers.

Keywords: Engagement, banking relationship, financial behavior, theory of planned behavior (TPB).


A banking relationship as described by Petersen, & Rajan, (1994) is a close relationship and continued interaction over time, involving multiple products. Sashi’s (2012) definition of customer engagement focuses on satisfying customers by providing greater value when compared to competitors, this satisfaction builds trust and commitment in long-term relationships, thus leading to a higher level of engagement in the long term. Tezel (2015) and Özmete (2015) define financial behavior as a behavioral economic decision. The skills, abilities, attitudes, and patterns of this behavior are essential for making the right financial decisions both on a personal and social scale (Atkinson and Messy, 2012). The most important component of financial skills is financial literacy as highlighted by Csiszárik Kocsir et al. (2017) and confirmed by Xu & Zia (2012) who state that financial skills are not inborn skills, they are acquired, which supports the importance of financial literacy.

The financial sector is considered the backbone of any economy. Development, growth, and achievements of the financial sector are reflected in other sectors of the economy. Several studies including Levine (2005), Bencivenga and Smith (1991), King and Levine (1993), Odedokun (1998), Xu (2000), and Shamim (2007) empirically found a correlation between financial development and economic growth.

1 Nawal Tarazi is Head of Department and Adjunct Professor at the International Institute in Geneva.

According to the Association of Banks in Jordan 2021 Annual Report, there are twenty-three banks operating in Jordan as of year-end 2021. Thirteen are commercial Jordanian banks, six foreign banks and four are Islamic banks. As of year-end 2021, the total assets of banks operating in Jordan reached JD 61.06 billion (USD 86.12 billion) and direct credit facilities granted by banks reached JD 30.03 billion (USD 42.36 billion). According to the Central Bank of Jordan (2022), Financial Inclusion is the state wherein individuals and businesses have convenient access to and use affordable and suitable financial products and services, payments, savings, credit, transactions, and insurance that meet their needs, help to improve their lives, and are delivered in a responsible and sustainable way. Jordan’s policymakers are aware of the importance of the inclusion strategy and are committed to following and realizing the economy’s objective of sustainability and growth.

The Financial Inclusion Diagnostic Study in Jordan for the year 2017 (Central Bank of Jordan, 2018) stated that the level of formal financial inclusion in Jordan is quite low for some types of financial products and among certain segments of the population. The World Bank Global Findex’s Database reported that only 25% of Jordanians above 15 years of age had a bank account in 2014, with a much lower rate for women (15.5%) than for men (33.3%). This percentage increased to 42.5% account owners in 2017 (26.6% women vs. 56.3% men) and 47% in 2021 (34% women compared to 58.6% men) (The World Bank, 2021; Development Research Group, 2022).

A study conducted by the Central Bank of Jordan (CBJ) in cooperation with Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH (NFIS 2018-2019) prompted the Jordanian authorities to act and try to understand the reasons for low financial inclusion in Jordan. Their objective was to find ways to boost the availability and the quality of financial services. It stemmed from their belief that low financial inclusion as reflected in the low level of engagement in financial behavior represented in the form of bank account ownership has severe consequences on the economy in general and more specifically on the banking sector. The intention of behavioral change was asserted by actions taken by the highest authorities and national-level policymakers including the Central Bank that strongly believed in the seriousness of the issue.

Earlier studies on the financial behavior of individuals and their level of engagement in a banking relationship were limited in scope and depth. Existing literature on the topic focuses mostly on aspects related to relationship behavior and customer satisfaction once the banking relationship has been established. Fewer studies consider studying the antecedent factors that affect the behavior of individuals establishing a banking relationship and enhancing their engagement. There is thus a gap in the current body of knowledge which this research endeavors to address.

The primary aim of this research is to determine the main antecedents, individual and social factors, that impact the level of engagement of individuals in a banking relationship in Jordan. The Theory of Planned Behavior (TPB) (Ajzen, 2019) is the base theory that acknowledges the role of social reality and provides a basis for understanding causal relationships. The factors explored within the research are age, income, education, economy, economic knowledge, financial literacy, financial technology, and trust, in addition to gender. The objective of identifying and understanding the role of these factors can help to shed light on the reasons behind the relatively low level of engagement of individuals with the banking system in Jordan. The research also seeks to suggest means and tools of intervention to encourage greater financial engagement.


Moreover, the research pays specific attention to the influence of ‘Gender’ on the above factors. It also places a particular emphasis on investigating the influence of financial literacy in enhancing the level of individuals’ behavioral engagement in a banking relationship.

The objectives of the research are:

1. To determine the individual and social factors that enhance the level of engagement of individuals in a banking relationship.

2. To examine the influence of financial literacy in enhancing the level of behavioral engagement of individuals in a banking relationship.

3. To investigate the influence of ‘Gender’ and if the above dynamics vary by gender.

Examining interventions from independent variables to core variables (control beliefs) that would lead to changes in the financial behavior is a fairly new perspective that has been adopted in earlier studies but only on a very limited scale. This research addressed this gap by incorporating research literature on behavioral change that lead individuals to alter their financial behavior through improved engagement in a banking relationship, thus impacting the sector and eventually the economy.

Literature Review

The TPB was initially presented in Ajzen and Fishbein’s 1972 expectancy value model of attitude which was then expanded and presented by Ajzen (1991). This theory highlights the significance of beliefs in shaping human behavior. According to the TPB, the three types of beliefs are behavioral beliefs, normative beliefs, and control beliefs. The strength of these beliefs is associated with the perceptions of behavioral control or what the TPB presents as perceived behavioral control (PBC), given that attitudes, subjective norms, and perceived behavioral control represent the three conceptual independent determinants of intention, whereas the actual behavioral control is directly related to perceived behavioral control. The TPB indicated that the engagement in a behavior is influenced both by intentions and PBC which should be assessed fairly towards a specific behavior to realistically reflect the actual control over that behavior.

According to the TPB, individuals’ behavioral intention is expected to lead to the final behavior. Intention can be defined as follows: how ready an individual is to perform a certain behavior based on attitude, subjective norms, and perceived behavioral control (Ajzen, 2002). Some studies such as Sahoo and Pillai (2017) and Kosiba et al. (2018) presented evidence on limited drivers and outcomes of customer engagement in some banking services. This research contributes to the understanding of the individual and social factors and will determine their effectiveness on individuals’ financial behavior in terms of level of engagement in a banking relationship.

Several studies argued the important role played by financial literacy and its influence on financial behavior. Supporting the study’s objectives, Andarsari and Ningtyas (2019) reported a positive and significant influence of financial literacy on financial behavior. The same study reported that women are expected to lead the future of the world’s economy by 2028 and are expected to take 75% of the world’s discretionary expenditure. The engagement concept is adopted in this research as an important component of customer relationship management and is directly related to consumer behavior in terms of active and engaged purchase of a service or product.

Based on the findings from the preceding literature review (Ji and Wang, (2014), Mittal et al. (2005), McDonald & Rundle (2008) supported by Freeman’s (1984), Tezel (2015), Mthembu


(2014), Geva (2001), Demirgüç-Kunt (2018), as well as LaMorte, (2022)), and within the parameters of this research, the engagement in a banking relationship is determined by the ownership of an account at a bank, and the level of engagement is defined as the intensity of an individuals’ usage of banking services. Thus, supporting the concept of banking relationship that starts with an account opened in the name of a customer regardless of its type. The engagement is the customer’s financial behavior which is driven by the expectation of financial assistance and practicality of financial services, the aim of which is to ease financial pressure, provide support, and facilitate financial operations.

The antecedents’ effect supported the use of the TPB to explain the final behavior. Several other studies used the TPB to study banking behavior such as Aziz and Afaq (2018), Yadav et al. (2015), Chai and Dibb (2014) , Çoşkun and Dalziel (2020), Deenanath et al. (2019), Tucker et al. (2019), Bapat’s (2019), Loibl et al. (2021), Ibrahim and Arshad (2017), Ambad and Damit (2016), Flores and Vieira (2014), as well as Bashir and Madhavaiah’s (2014).

According to the TPB, human behavior is influenced by three types of beliefs: behavioral, normative, and control beliefs. A ‘Belief’ according to Schwitzgebel, (2019) is a “state of mind” wherein one person places trust or confidence in others. These beliefs produce the core, attitude, subjective norms, and perceived behavioral control that drive individuals’ financial behavior in the form of level of engagement in banking relationships. Attitude towards the behavior is the degree to which an individual has a favorable or unfavorable evaluation of the behavior concerned.

“Subjective norms” refer to the perceived social pressure to perform or not perform a behavior. It is assumed that subjective norms are determined by a set of normative beliefs concerning the expectations of important references or close individuals such as family, friends, co-workers, supervisors, or doctors. Normative beliefs, together with an individual’s motivations, determine the subjective norms. The construct of “perceived behavioral control” refers to people’s perception of the ease or difficulty of performing the behavior of interest; the perception of behavioral control is an impact of intentions and actions (Ajzen 1988 & 1991).

The TPB does not specify where these beliefs originated from but presents several possible background factors that include individual and social factors which have proven to impact the individual’s beliefs and attitudes (Ajzen 1985). The background factors may influence the beliefs people hold, some of these factors are of a personal nature such as personality and broad life values; demographic variables such as education, age, gender, and income; and exposure to media and other sources of information.

This research will follow a path to test some background factors, taking into consideration that some factors such as age, income, gender, culture, and economy cannot be changed or influenced but will assist in confirming the strength or weakness of a relationship. Other factors, however, such as knowledge, education, financial literacy, and FinTech can be transformed, thus determining the relationship between factors before designing effective intervention methods which lead to the necessary behavioral change. The research will pave the way to clarify the kind of intervention needed to improve efficiency. In addition to the above independent individual and social factors, the research adds other related factors that are believed to have an impact on financial behavior: ‘Trust’ and ‘Economic Knowledge’. These will be justified in the upcoming analysis.

Research Methodology

As this research is theory driven, a deductive approach to theory development was followed subject to rigorous testing. This research used the lens of the TPB (Ajzen, 2019) to understand the changes in human social behavior to be able to predict it. The TPB assumes a social reality


and provides a basis of explanation indicating causal relationships. Several hypotheses were developed and then the data collected were analyzed using a quantitative approach.

Model of the TPB (Ajzen, 2019)

The research adopted the positivism and post-positivism philosophical assumptions on social sciences which usually lead to the development of models that can predict human behavior. The methodology was the “Deductive Explanatory Methodology”, which is the most common process in social sciences that tends to justify what is happening by using hypotheses to explain relationships among variables. Results determine relationships between factors thus enabling the design of effective interventions that would lead to the needed behavioral change.

The strategy for data collection consisted in a survey administered as a questionnaire and used as the instrument. The questionnaire that included twenty-nine questions, was prepared in both English and Arabic and was inspired by previous high ranked related studies in literature. The questionnaire was structured, standardized, tested, and administered to allow respondents to select the most appropriate option to reflect factors being studied. The research study investigated a non-probability sample of five hundred and forty-two (542) individuals who successfully completed all questions, to obtain a broad view of the individual and social factors that influence the level of engagement of individuals in a banking relationship in Jordan. The target population included Jordanians living in the eight largest cities of Jordan. Data was collected mostly electronically and in certain cases manually, depending on the location and electronic reach of some members within the target population.

The purpose of this research is to understand and observe the effect of the independent variables on the mediating/core variables then relate and propose new ideas and interventions that affect the dependent variable which is the financial behavior towards the level of engagement in a banking relationship.

The conceptual model of the TPB used for this research is highlighted in the figure below underscoring the independent factors that were selected from the TPB (age, education, income, economy, knowledge) in addition to the three factors that were added (trust, financial literacy and Fintech). Three mediating / core factors (attitude, subjective norms, and perceived behavioral control) in relation to the dependent factors being the financial behavior which reflect the level of engagement in a banking relationship. Gender was presented as a moderating variable defined by Allen, M. (2017) as variables that can strengthen, diminish, deny, or transform the relationship between independent and dependent variables. Sometimes moderating variables can change the direction of the relationship or help explain the links between the independent and dependent variables. Several hypotheses were presented and investigated to explore relationships and significance using the PLS SEM.



The study employed a Partial Least Squares Structural Equation Modelling method, referred to as PLS SEM path modelling which is a popular method for estimating complex path models with latent variables and their relationships. The main goal of SEM is “statistical methodology that takes a confirmatory i.e. hypothesis-testing approach to the analysis of a structural theory bearing on some phenomenon” (Byrne, 2013, p. 3). When applying SEM, it is important to highlight the difference between the measurement model (outer model) and the structural model (inner model), which present the relationship between latent constructs known as factors and their indicators at the outer model, whereas relationships among latent constructs with each other are presented at the inner model (Henseler et al., 2009; Jarvis et al., 2003).

The PLS SEM analysis approach explains the relationships among multiple variables using a series of multiple regression equations, whereby causal relationships between constructs are represented by multiple regressions. This method is used for investigating cause effect interactions between constructs and variables and is suitable for both theory building and testing. The PLS-SEM technique is widely used in business research and offers the researcher a considerable flexibility in terms of model specifications and data. It is considered to be an adequate technique for both theory building and testing (Hult et al., 2009 and Hair et al., 2011). The principal step of SEM is the establishment of a path model which is a diagram that displays hypotheses and variable relationships to be estimated (Bollen 2002). A path model displays “constructs” also referred to as “latent variables”, which represent conceptual variables that the researcher has defined in the theoretical model. It is important to determine the nature of the latent variables or constructs i.e. reflective vs. formative. Constructs appear in circles linked via single-headed arrows that represent predictive relationships to the “indicators” that are also names or “manifest variables or items” that appears in rectangles and represent the raw data collected, whether through direct measurement or observation.

In this research, as highlighted in the figure below developed by the PLS SEM, the constructs that appeared as latent variables were the independent variables: Age (AGE), Income (INC), Education (EDU), Economy (ECO), Economic Knowledge (EK), Financial literacy (FL), Financial Technology (FinTech), and Trust (TRUST). Each construct was linked to indicators that measured these constructs, represented by answers from the survey questions measuring that construct. The remaining constructs appearing as latent variables in the middle section of the model included Attitude (ATTD), Social Norms (SN), Perceived Behavioral Control (PBC),


and then Financial Behavior (FB), a dependent latent variable which appears to the right of the model.

The results of conducting the PLS SEM tests to assess the structural model and investigate the proposed hypotheses are summarized in the table below indicating relationship strength, direction, and impact.

Hypotheses/Relationships Original Sample (O): Path (sign +) Coefficients (Significance)* P Values < 0.05 **R2 Supported (Yes/No) Description ATTD -> FB 0.120 0.024 0.326 Positive, significant & substantial. AGE -> ATTD 0.129 0.001 0.326 Positive, significant & substantial. AGE -> PBC -0.004 0.915 0.492 Nonsignificant AGE -> SN -0.024 0.583 0.528 Nonsignificant. EK -> ATTD 0.300 0.000 0.326 Positive, significant & substantial. EK -> PBC 0.090 0.039 0.492 Positive, significant & substantial.

significant & substantial.

*P Values < 0.05 considered significant **R2 values of 0.26, 0.13 and 0.02 can be considered substantial, moderate, and weak.

Findings & Discussion

Five hundred forty-two (542) individuals successfully completed the full questionnaire, and their responses were analyzed. The gender participation was 58% women versus 42% men. Of total participants, 58% were between the age of 40-59 years, 65% were private business employees, business owners or self-employed and 85% of the participants hold both a graduate and post graduate degrees. Most participants live in the capital Amman which is the main business and financial hub and 55% of all participants had been exposed directly or indirectly to economics and finance studies or courses. 31.37% of participants earn JD 1001-JD 2500 (USD 1400-3500) monthly, which is considered high income. 38.5% stated that they use the services extremely often (almost daily), and 36.7% use the banking services very often (weekly).

31 EK -> SN 0.131 0.014 0.217 Positive, significant & moderate. ECO -> ATTD 0.057 0.143 0.326 Nonsignificant ECO -> PBC 0.018 0.629 0.492 Nonsignificant ECO -> SN 0.120 0.007 0.217 Positive, significant & moderate. EDU -> ATTD -0.060 0.177 0.326 Nonsignificant EDU -> PBC -0.011 0.740 0.492 Nonsignificant EDU-> SN 0.031 0.543 0.217 Nonsignificant FL -> ATTD 0.042 0.357 0.326 Nonsignificant FL -> PBC 0.153 0.000 0.492 Positive, significant & substantial. FL -> SN 0.030 0.531 0.217 Nonsignificant FinTech -> ATTD 0.194 0.001 0.326 Positive, significant & substantial. FinTech -> PBC 0.270 0.000 0.492 Positive, significant & substantial. FinTech -> SN 0.217 0.000 0.217 Positive, significant & moderate. INC -> ATTD -0.078 0.075 0.326 Nonsignificant INC -> PBC 0.017 0.693 0.492 Nonsignificant INC -> SN -0.112 0.033 0.217 Negative, significant & moderate. PBC -> FB 0.592 0.000 0.528 Positive, significant & substantial. SN -> FB 0.133 0.000 0.528 Positive,
TRUST-> ATTD 0.184 0.003 0.326 Positive,
TRUST -> PBC 0.363 0.000 0.492 Positive, significant & substantial. TRUST -> SN 0.163 0.009 0.217 Positive, significant
significant & substantial.
& moderate

The findings confirmed that as per the main theory applied in this research; the TPB revealed and confirmed that ATTD, PBC, and SN play positive, significant, and substantial roles in the financial behavior of individuals as indicated by the level of engagement in a banking relationship in Jordan.

The dominant core factor to influence the level of engagement in a banking relationship is PBC, which was proved and influenced by individuals’ independent factors EK, TRUST, FL, and FinTech. The findings indicated that most respondents lacked confidence in their ability to choose financial investment products and mostly chose to invest in real estate; revealing a need to provide more information about products and emphasize the need for increased involvement by the financial service providers.

Furthermore, this research has verified the important role of financial education or financial literacy (FL) in increasing the level of engagements. A strong financial base would lead to a higher level of engagement, which would improve banking relationships and performance, thus ensuring the survival, sustainability, and a better financial inclusion plan thereafter. As for the control factor being gender, the results showed some differences between the two groups (Men vs. Women ). A significant difference in relationship was found between women’s SN and PBC in terms of financial behavior. No significant evidence was found of a link between women’s attitude and financial behavior, but there was significant evidence in the men’s results.

Analyzing the findings and the results using PLS-SEM to determine the factors that affect the financial behavior of individuals indicated by the level of engagement in a banking relationship in Jordan demonstrated the following: First, the TPB revealed and confirmed that ATTD, PBC, and SN play positive, significant, and substantial roles in the financial behavior of individuals. Observing the effect of the three core factors on the dependent variable (FB), the results illustrate that PBC has the strongest impact on FB, PBC (β=0.592, p<0.05), followed by SN (β=0.133, p<0.05), and the least effect was attributed to ATTD (β=0.12, p<0.05).

Second, the effect of the independent variables on the mediating variables were determined as follows. TRUST has the strongest positive impact on PBC (β=0.363, p<0.05), followed by EK on ATTD (β=0.30, p<0.05), then FinTech on PBC (β=0.27, p<0.05), FinTech on SN (β=0.217, p<0.05), FinTech on ATTD (β=0.194, p<0.05). Trust on ATTD (β=0.184, p<0.05) and TRUST on SN (β=0.163, p<0.05). The importance of financial literacy was related to the perceived behavioral control reflecting an impact of FL on PBC, (β=0.153, p<0.05). The only independent variables with negative significance and a moderate effect on the mediating variables was INC on SN (β=-0.112, p<0.05).

As for the control factor being Gender, the results showed some differences between the two groups (Men vs. Women). A significant difference in relationship was found between women’s SN and PBC in terms of financial behavior. No significant evidence was found between women’s attitude and financial behavior whereas there was significant evidence in the men’s results. The significant perception differences were between (ATTD FB) and (INCSN) which were considered important and meaningful for Men but not for Women. EK is strongest independent factor for Women and affects their three core factors (ATTD, PBC, and SN) whereby EK only affects Men’s ATTD toward the FB. ECO and INC, findings reflected significant effect for Men only on their SN or social surrounding beliefs. TRUST was more significant to Men as it affects both their ATTD and PBC. Women’s TRUST significance was related to their PBC. FinTech and FL were equally important to both Men and Women.


The validity of these findings and the need for greater deliberation is underlined by the fact that other publications (The Report: Jordan 2018: Country Profile, 2022), largely highlighted similar considerations, thus emphasizing the need for further improvements regarding accessing the unbanked population and keeping up with the global developing Fintech industry. Unless these issues are addressed, the engagement levels in banking relationships would not improve. The research findings strongly suggest that the banking sector in Jordan, guided by the CBJ will have to place more emphasis on educating and developing individuals to improve the level of engagement in their banking relationships and provide other services to improve the implementation of the financial inclusion plan. Thus, the strategic plans of banks to perform effectively and sustain performance should encourage the use of the available educational and training platforms and be committed to engaging more with government and non-government bodies to strengthen the drivers for banking relationship initiation and higher engagement.

These research findings are a reminder to banks that their marketing campaigns that offer new services at the far end of the relationship are not enough to improve the level of engagement. It is also a call to policymakers to investigate and offer explorative activities to enlighten individuals with up to date financial and economic knowledge that would boost their confidence and lead to stronger drivers to engage more in their banking relationships. Such activities start at school and continue through attractive online or in-person training programs.


To improve the level of engagement in a banking relationship in Jordan, there is a need to boost the individuals’ PBC and equip them with stronger means of control to perform and use the different banking services, thus improving the level of engagement in their banking relationship which is the intended financial behavior. This can be done through strengthening financial literacy at an early age which will improve interest in understanding the financial system as well as encourage improved knowledge of economics. Such antecedents would enhance trust in the financial system and improve engagement levels and use of further financial services.

This research provided findings that may be used to introduce new information that would lead to changes in individuals’ beliefs. These changes are expected to be more effective if related to their economic knowledge (EK), financial literacy (FL), financial technology (FinTech) or (TRUST). The significant relationships between these independent variables and the strongest core variable PBC are expected to affect the financial behavior of individuals.

The following details highlight the effect of the independent variables on the mediating variables as concluded from the research analysis:

• AGE was found to play positive, significant, and substantial role on the individual’s ATTD, with no significant effect on the individual’s PBC or SN beliefs;

• EDU has no effect on the ATTD, PBC nor does it affect an individual’s SN beliefs;

• INC has no effect on the ATTD nor on PBC but showed a moderate negative effect on the individuals SN beliefs. ECO on individual’s ATTD and SN was insignificant. However ECO showed a moderate positive effect on the individuals PBC beliefs;

• FL has no effect on the individual’s ATTD nor on SN beliefs, but FL showed significant positive and substantial effect on the individual’s PBC;

• FinTech has significant, positive, and substantially affect on ATTD, SN & PBC;

• EK significantly, positively, and substantially affect an individual’s ATTD and PBC and moderately affects the individuals SN;


• TRUST has positive substantial effect on individuals’ ATTD and PBC, and a positive moderate effect was demonstrated on an individuals’ SN;

• A significant difference in relationship was found between female SN and PBC in terms of financial behavior.

The following points outline how the findings of this research contribute to the literature on the financial behavior of individuals. First, this research provided empirical support and an enhanced picture of the determinants or the antecedents and the driving forces of individuals’ financial behavior. Second, this research demonstrated that TPB predicts engagement in financial behavior and suggested the ideal way to produce a change in behavior is by introducing new information that would lead to the change in shaping an individual’s beliefs. Since behaviors often revert to what they were prior to the intervention, it must be ensured that individuals’ new beliefs accurately reflect reality, only then is it fair to expect that the effect of the intervention will persist over time. Often intervention is ineffective unless the individuals have the potential to carry out their newly formed intentions over a long period which will ensure the translation of intentions into behavior. This research recommends interventions at an early age through FL programs at school in addition to continuous follow up to develop and improve knowledge through training and awareness campaigns.

From a practical perspective, this research has several important implications for both banks and policymakers. Investigating the independent factors influencing the level of engagement of individuals in a banking relationship could indicate the relevant type of resources to invest in at each stage of the behavioral process. It was revealed that banks should be aware and continuously work on updating the individuals in terms of economic and financial knowledge (EK and FL), which is particularly important at the initiation stage. Then, providing them with FinTech services that would boost their TRUST in themselves and in the banking system will lead to a higher level of engagement in banking relationships.


The following recommendations are suggested to further enhance the current developments and perhaps suggest new initiatives and interventions for banks, regulators, government, and nongovernment entities to consider.

First: Financial Literacy (FL) should be a priority in the Jordanian educational system. Principles of business, economics, and finance to be introduced at an early stage in school curricula. Receiving financial education at an early age would prepare a generation to manage its small finances, thus enhancing individual’s ATTD, PBC, and readiness to manage larger finances and more complex situations in their practical life after school.

Second: More financial training and awareness campaigns should be launched online and on ground at all levels. For example, banks are expected to spread financial awareness about their services through handy publications that are easy to read and to understand, explaining how to use a service and what the benefit is to the customer and to the bank. This would ensure that customers are well informed about services, trust their banks more and are ready to use such services with confidence, which will enhance their level of engagement in their banking relationship.

Third: Similarly to point Two, financial training and awareness campaigns need to be launched online and on ground with a special focus on women in bank account engagement. Banks should provide these campaigns along with handy publications to promote services which cater to women’s needs and encourage them to maintain their own banking relationships and


accounts. Such campaigns would enhance their EK and TRUST, thus improving their engagement in their banking relationships. The awareness campaigns, whether through publications, direct calls, or face-to-face meetings with banking experts, would be considered interventions that would improve women’s EK along with TRUST which would affect their PBC leading to higher levels of engagement in their banking relationships. Bank customer service roles need to expand further to include day-to-day awareness and educational promotions to customers on ground, on the phone, and online. Customer service needs to act as the well of knowledge that keeps customers aware and up-to-date with latest developments.

Fourth: Banks should invest more in training and research departments in an effort to provide new up-to-date services to existing customers, attract new young customers and enlarge the female customer base. The research findings asserted that FinTech can have a positive, significant, and substantial effect on the three core factors ATTD, SN and PBC that determine the financial behavior of individuals, FB. Thus, banks should continuously provide and upgrade their FinTech services to improve the level of engagement in banking relationships at all levels. This can be done through more investment in their training and research departments or through supporting FinTech companies.

Fifth: Regulators should encourage youth, including school students, to open accounts and issue them debit or prepaid cards with parent supervision. Maintaining a bank account and managing one’s own expenses at an early age would improve individuals’ PBC, build trust, and enhance money planning and investment awareness, thus encouraging entrepreneurship and responsibility. This recommendation would play a crucial role in the implementation of the financial inclusion plan in the long run.

Sixth: Regulators and banks should use media (social media, TV, and radio) to promote services including awareness campaigns to promote savings and investments. Social media is considered a strong tool to spread awareness and encourage peer action. These campaigns may also be delivered through sponsoring of social cultural events to spread financial awareness.

Limitations and Future Research Suggestions

Although this research has presented important implications for the Jordanian market, it is necessary to acknowledge its limitations.

First: The sample size of five hundred and forty-two (542) participants proved to be sufficient to conduct a robust statistical analysis. However, it was not fully representative of the Jordanian population, primarily concentrating on individuals from the capital Amman and its surroundings. The data collection process took four months, from July to October 2021, an extraordinary period when the world was opening up again after the COVID19 pandemic, implying limitations in terms of reach and communication.

Second: This research could not measure the impact of the latest developments in the education system on individuals, to assess the effect of FL programs that had already started on individuals’ financial knowledge and behavior. A longitudinal study would bring enhanced insights into the indirect effects of the FL programs and could hence be a more accurate way to evaluate the effectiveness of such programs.

Third: The relationships examined represent a snapshot in time. Although it is likely that the conditions under which the data were collected will remain essentially the same, there are no guarantees that this will be the case. Future longitudinal studies might assess further engagement dimensions and outcomes in the long term.


Fourth: The comprehensive approach adopted in this study attempted to include the most important resource factors influencing individual financial behavior. However, some other individual factors such as personality, mood, values and other social factors such as religion, culture, law, and media could be important predictors of financial behavior, yet may have been neglected by the literature, and were covered by this research. Future research could explore these potentially influential factors.

Fifth: The available research literature in the “engagement in banking relationships” is very limited, despite its importance. It has been highlighted as an essential behavior to retain and recapture the growth in the banking sector, requiring more research to capitalize on customer engagement behavior for the benefit and growth of the banking sector

Finally, this research presented praxis by analyzing and studying the phenomena of engagement in banking relationships in Jordan through the lens of the TPB and succeeded in bridging the gap between this theory and the current practice within the banking sector in Jordan. This quantitative research has provided evidence and answered the “what” regarding the financial behavior of individuals in Jordan and the impact of individual and social factors. Further qualitative research is recommended to answer the “why” and cover what individuals have in mind and why they behave the way they do. It is suggested to conduct more studies in other related economies within the MENA region. More studies and investigating more factors would provide further critical implications for both theory and practice in the educational and banking sectors.


Agnes Csiszarik-Kocsir and János Varga, (2017). ‘The Relationship between the bank products and the financial knowledge according to the results of a questionnaire survey,’ Economy & Business Journal, 11, (1), 367-377

Ajzen, I. (1985). ‘From intentions to actions: A theory of planned behavior,’ Action Control, pp. 11– 39. Retrieved from:

Ajzen, I. (1988). Attitudes, personality, and behavior. Chicago: Dorsey Pres

Ajzen, I. (1991). ‘The theory of planned behavior,’ Organizational Behavior and Human Decision Processes, 50(2), pp. 179–211. Retrieved from:

Ajzen, I. (2019). Theory of Planned Behavior (TPB) with background factors. Retrieved November 16, 2022, from:

Ajzen, I. and Fishbein, M. (1972). ‘Attitudes and normative beliefs as factors influencing behavioral intentions.,’ Journal of Personality and Social Psychology, 21(1), pp. 1–9. Retrieved from:

Ajzen, I. (2002). ‘Perceived behavioral control, self-efficacy, locus of control, and the theory of planned behavior,’ Journal of Applied Social Psychology, 32(4), pp. 665–683. Retrieved from:


Atkinson, A. and Messy, F. (2012). Measuring Financial Literacy Results of the OECD / International Network on Financial Education (INFE) Pilot Study, OECD Library. OECD working papers on Finance, insurance and private pensions, no. 15, OECD Publishing.references - scientific research publishing. Retrieved October 30, 2022, from: ?ReferenceID=2275403

Allen, M. (2017). The sage encyclopedia of communication research methods, Amazon SAGE Publications, Inc. Retrieved October 23, 2022, from: CommunicationResearch-Methods/dp/1483381439

Ambad, S.N. and Damit, D.H. (2016). ‘Determinants of entrepreneurial intention among undergraduate students in Malaysia,’ Procedia Economics and Finance, 37, pp. 108–114. Retrieved from:

Andarsari, P.R. and Ningtyas, M.N. (2019). ‘The role of Financial Literacy on financial behavior,’ JABE (Journal Of Accounting And Business Education), 4(1), p. 24. Retrieved from:

Aziz, S. and Afaq, Z. (2018). ‘Adoption of Islamic banking in Pakistan an empirical investigation,’ Cogent Business & Management, 5(1), p. 1548050. Retrieved from:

Bapat, D. (2019). ‘Exploring antecedents to financial management behavior for young adults,’ Journal of Financial Counseling and Planning, 30(1), pp. 44–55. Retrieved from:

Bashir, I. and Madhavaiah, C. (2014). ‘Determinants of young consumers’ intention to use internet banking services in India,’ Vision: The Journal of Business Perspective, 18(3), pp. 153–163. Retrieved from:

Bencivenga, V. R., & Smith, B. D. (1991). Financial intermediation and endogenous growth. The Review of Economic Studies, 58(2), 195–209.

Bollen, K.A. (2002). ‘Latent variables in psychology and the Social Sciences,’ Annual Review of Psychology, 53(1), pp. 605–634. Retrieved from:

Byrne, B.M. and Byrne, B.M. (2013). ‘Structural equation modeling with EQS.’ Retrieved from:

Chai, J.C. and Dibb, S. (2014). ‘How consumer acculturation influences Interpersonal Trust,’ Journal of Marketing Management, 30(1-2), pp. 60–89. Retrieved from:

Central Bank of Jordan (2022). Spreading financial and banking literacy, Spreading Financial and Banking Literacy - The Central Bank of Jordan. Central Bank of Jordan. Retrieved October 29, 2022, from:

Çoşkun, A. and Dalziel, N. (2020). ‘Mediation effect of financial attitude on financial knowledge and financial behavior,’ International Journal of Research in Business and Social


Science (2147- 4478), 9(2), pp. 01–08. Retrieved from:

Csiszárik-Kocsir, Á., 2017. Crisis and Financing–or the PracticalFinancing Decisions of Hungarian Small and Medium-sized Enterprises. Polgári Szemle: Gazdasági És Társadalmi Folyóirat, 13(Spec.), pp.199-215.

Deenanath, V., Danes, S.M. and Jang, J. (2019). ‘Purposive and unintentional family financial socialization, subjective financial knowledge, and financial behavior of high school students,’ Journal of Financial Counseling and Planning, 30(1), pp. 83–96. Retrieved from:

Demirgüç-Kunt, A., Klapper L., Singer D., Ansar S., and Hess J. (2018). ‘Overview,’ The Global Findex Database 2017: Measuring Financial Inclusion and the Fintech Revolution, pp. 1–14. Retrieved from:

Flores, S.A. and Vieira, K.M. (2014). ‘Propensity toward indebtedness: An analysis using behavioral factors,’ Journal of Behavioral and Experimental Finance, 3, pp. 1–10. Retrieved from:

Freeman, R.E. (1984). Strategic Management: A Stakeholder Approach, Pitman, Boston, MA.

Geva, B. (2001). ‘Bank collections and payment transactions a comparative legal analysis.’ Retrieved from:

Hair, J.F., Ringle, C.M. and Sarstedt, M. (2011). ‘PLS-SEM: Indeed a silver bullet,’Journal of Marketing Theory and Practice, 19(2), pp. 139–152. Retrieved from:

Hair, J.F., Sarstedt, M., Ringle, C., and Mena, J. (2011). ‘An assessment of the use of partial least squares structural equation modeling in Marketing Research,’ Journal of the Academy of Marketing Science, 40(3), pp. 414–433. Retrieved from:

Henseler, J., Ringle, C.M. and Sinkovics, R.R. (2009). ‘The use of partial least squares path modeling in International Marketing,’ Advances in International Marketing, pp. 277– 319.

Retrieved from:

Hult, G.T., Neese, W.T. and Bashaw, R.E. (2009). ‘Worldwide faculty perceptions of marketing journals: rankings, trends, comparisons, and segmentations.’ Global Edge Business Review, 3, pp. 1– 23.

Ibrahim, Y. and Arshad, I. (2017). ‘Examining the impact of product involvement, subjective norm and perceived behavioral control on investment intentions of individual investors in Pakistan,’ Investment Management and Financial Innovations, 14(4), pp. 181–193. Retrieved from:

Jarvis, C.B., MacKenzie, S.B. and Podsakoff, P.M. (2003). “A critical review of construct indicators and measurement model misspecification in marketing and Consumer Research,” Journal of Consumer Research, 30(2), pp. 199–218. Retrieved from:


Ji, J. and Wang, Y. (2014). ‘Commercial Bank Efficiency Evaluation in consideration of the undesirable output and its link with stakeholders’ relationship: An application of China’s commercial banks,’ Mathematical Problems in Engineering, 2014, pp. 1–7. Retrieved from:

King, R.G. and Levine, R. (1993). ‘Finance and growth: Schumpeter might be right,’ The Quarterly Journal of Economics, 108(3), pp. 717–737. Retrieved from:

Kosiba, J.P., Boateng, H., Okoe, A., Hinson, R. (2018). ‘Trust and customer engagement in the banking sector in Ghana,’ The Service Industries Journal, 40(13-14), pp. 960–973. Retrieved from:

LaMorte, W. (2022). Behavioral change models, The Theory of Planned Behavior. Boston University School of Public Health. Retrieved November 6, 2022, from:

Levine, R. (2005). ‘Chapter 12 Finance and Growth: Theory and evidence,’ Handbook of Economic Growth, pp. 865–934. Retrieved from:

Loibl, C., Letkiewicz, J., McNair, S., Summers, B. and Bruine de Bruin, W., (2021). ‘On the association of debt attitudes with socioeconomic characteristics and financial behaviors,’ Journal of Consumer Affairs, 55(3), pp. 939–966. Retrieved from:

McDonald, L.M. and Rundle‐Thiele, S. (2008). Corporate Social Responsibility and bank customer satisfaction,’ International Journal of Bank Marketing, 26(3), pp. 170–182. Retrieved from:

Mittal, V., Anderson, E, Sayrak A., Tadikamalla P. (2005). ‘Dual emphasis and the long-term financial impact of customer satisfaction,’ Marketing Science, 24(4), pp. 544–555. Retrieved from:

Mthembu, M. (2014). ‘Marriage of convenience: Bank-Customer relationship in the age of the internet: a South African perspective.’ Journal of International Commercial Law and Technology, 9(1), 14-23.

National Financial Inclusion Strategy NFIS (2018 – 2020). Central Bank of Jordan Retrieved October 29, 2022, from:

Odedokun, M.O. (1998). ‘Financial intermediation and economic growth in developing countries,’ Journal of Economic Studies, 25(3), pp. 203–224. Retrieved from:

Oxford Business Group (2018). The report: Jordan 2018: Country profile. Bloomberg Terminal Research. Retrieved October 29, 2022, from:


Özmete, E. (2015). ‘Measuring the poverty of elderly people with needs analysis in Turkey,’ Handbook of Research on Behavioral Finance and Investment Strategies, pp. 127–146. Retrieved from:

Petersen, M., & Rajan, R. (1994). ‘The Benefits of Lending Relationships: Evidence from Small Business Data.’ The Journal of Finance, 49(1), 3-37. Retrieved from:

Sahoo, D. and S. Pillai, S. (2017). ‘Role of mobile banking servicescape on customer attitude and engagement,’ International Journal of Bank Marketing, 35(7), pp. 1115–1132. Retrieved from:

Sashi, C.M. (2012). ‘Customer engagement, buyer‐seller relationships, and Social Media,’ Management Decision, 50(2), pp. 253–272. Retrieved from:

Shamim, F. (2007). ‘The ICT environment, financial sector and economic growth: A cross‐country analysis,’ Journal of Economic Studies, 34(4), pp. 352–370. Retrieved from:

Schwitzgebel, E. (2019). Belief, Stanford Encyclopedia of Philosophy. Stanford University. Retrieved October 27, 2022, from:

Tezel, Z. (2015). ‘Financial Education for Children and youth,’ Handbook of Research on Behavioral Finance and Investment Strategies, pp. 69–92. doi: 10.4018/978-1-4666-74844.ch005

Tucker, M., Jubb, C. and Yap, C.J. (2019). ‘The theory of planned behaviour and student banking in Australia,’ International Journal of Bank Marketing, 38(1), pp. 113–137.

Retrieved from:

Yadav, R., Chauhan, V. and Pathak, G.S. (2015). ‘Intention to adopt internet banking in an emerging economy: A perspective of Indian youth,’ International Journal of Bank Marketing, 33(4), pp. 530– 544. Retrieved from:, Z. (2000). ‘Financial Development, investment, and economic growth,’ Economic Inquiry, 38(2), pp. 331–344. Retrieved from:

Xu, L. and Zia, B. (2012). ‘Financial literacy around the world: An overview of the evidence with practical suggestions for the way forward,’ Policy Research Working Papers [Preprint].

Retrieved from:


Setting Educational Objectives for the Book: Machine Learning Techniques for Text 1


The dominant trend in technology is moving towards crafting machines capable of learning from data to perform intelligent tasks. Preparing for this paradigm shift is crucial for individuals and organizations to remain competitive and innovative in the rapidly evolving digital landscape. The book "Machine Learning Techniques for Text" aims to equip learners with the relevant skills, focusing on text data and human language. The book covers topics like analyzing texts, embarking on machine learning, and effectively utilizing cutting-edge deep learning frameworks for different tasks. Incorporating Anderson and Krathwohl's Taxonomy enables the set of clear learning objectives, preparing students for real-world challenges and permitting measurable learning outcomes. In the current work, we provide a summary of the book along with an indicative list of relevant educational goals, learning outcomes, and assessment tasks.

Keywords: Anderson & Krathwohl's Taxonomy, Educational Goals, Machine Learning, NLP

1. Introduction

Despite recent advancements across various scientific fields, the language phenomenon is still shrouded in mystery (Binder & Smith, 2013). Astonishingly, it is Homo sapiens that have pioneered this complex system for information exchange, resulting in some of humanity's most remarkable achievements. While oral and gestural forms of language served as primary drivers over millennia, the written version played a pivotal role in disseminating knowledge globally. Today, text data is prolifically generated through activities such as social network interactions, scientific publications, and multimedia transcriptions, among others. There is an urgent need to equip professionals with the appropriate skill set to analyze this type of data effectively and make informed decisions. The "Machine Learning for Text" book (Tsourakis, 2022) assists learners in this endeavor.

In the new machine age era, delegating the effort of analyzing human language to a computer is an attractive option simply because it can process more data in a fraction of the time. However, the execution of this task is not merely quantitative. We can also teach a machine to perform it efficiently. The focus of the book is to present techniques in practical scenarios that allow a machine to extract meaningful insights from text data and act intelligently to solve a particular problem. It consists of ten chapters, each focusing on one specific case study using real-world datasets. For that reason, the book is solution-oriented, and it's accompanied by Python code in the form of Jupyter notebooks to help learners obtain first-hand experience.

Following an educational objectives framework in a textbook holds paramount importance for several reasons ( Wiggins & McTighe, 2011). Firstly, it establishes a clear and organized path for both educators and learners, providing well-defined goals and outcomes that facilitate the learning journey. This structured approach ensures that the content is systematically organized,

1 Tsourakis, N. (2022). Machine learning techniques for text: Apply modern techniques with Python for text processing, dimensionality reduction, classification, and evaluation . Packt Publishing Ltd.

2 Nikos Tsourakis is a Research Associate at the University of Geneva and Adjunct Professor at the International Institute in Geneva.


making it easier for students to grasp complex concepts progressively. Moreover, it assists educators in crafting effective teaching strategies and assessments that align precisely with the desired learning outcomes, enhancing the efficiency of the learning process. Finally, it promotes consistency and coherence in education, ensuring all instructional material is aligned with recognized standards and objectives. This paper uses Anderson & Krathwohl's taxonomy of learning objectives (Anderson & Krathwohl, 2001) as a guide, offering insights into the educational goals and cognitive complexity of each chapter. We begin in the next section with a summary of the book's content before delving into its educational objectives.

2. Book Summary

The book utilizes a case study approach that enables active engagement instead of passively absorbing information. The problem statement is set in each chapter from the beginning, ensuring learners understand the challenge. Even when the discussion momentarily deviates from the primary objective, for instance, presenting some fundamental concept, readers quickly refocus on the problem under study. A recurring pattern is that we first try to gain some intuition on the data and then implement and contrast different solutions. In the following sections, we provide a high-level summary for each chapter.

2.1 Chapter 1: Introducing Machine Learning for Text

This introductory chapter sets the stage for the book. It highlights human language's distinct characteristics alongside its challenges, notably its ambiguity. It then covers key concepts in artificial intelligence, machine learning, deep learning, natural language processing, and big data, emphasizing the book's focus on the intersection of these fields. The chapter presents the main techniques for machine learning for text, the relevant terminology, and the challenges while using text corpora. Readers also familiarize themselves with the basic concepts behind text processing. There is a discussion on the notion of what a machine can learn, along with the taxonomy of different types of learning. The chapter concludes by stating the importance of visualization and evaluation techniques.

2.2 Chapter 2: Detecting spam emails

Email, a pervasive Internet service for message exchange, faces the ongoing challenge of distinguishing and preventing unsolicited messages. Spam detectors play a crucial role in this task, striving to catch spam without impeding legitimate communication. The first problem of the book outlines a step-by-step process for crafting and assessing a typical spam detector. The discussion starts with the constraints of conventional programming for this task, followed by the fundamental text representation and preprocessing methods. Subsequently, an open-source dataset is employed to build and evaluate two classifiers using supervised learning and the Naïve Bayes and SVM algorithms. Finally, the performance of the two classifiers is contrasted using standard metrics.

2.3 Chapter 3: Classifying Topics of Newsgroup Posts

Businesses deal with various forms of unstructured text data daily, such as news posts, support tickets, and customer reviews, which, if not efficiently analyzed, can result in missed opportunities and customer dissatisfaction. Automated systems that handle large data volumes can offer a scalable solution for classifying this data. The time factor is also crucial, as a company can monitor in real time the different issues and react accordingly.

This chapter categorizes text documents into predefined topics, utilizing supervised and unsupervised machine learning techniques. It builds upon exploratory data analysis, enhancing visualizations through dimensionality reduction techniques like PCA and LDA. It also introduces


word embeddings, an advanced word representation technique with unique properties. Finally, the analysis is based on the KNN and Random Forests algorithms.

2.4 Chapter 4: Extracting Sentiments from Product Reviews

Understanding the emotional context conveyed by a series of words holds significant value in analyzing survey responses, customer feedback, and product reviews. The rise of social networks has expanded opportunities for instantaneous expression of opinions on various subjects, leading companies, academia, and government entities to seek insights from public sentiment. By gauging the sentiment behind these expressions, organizations can make informed decisions, enhance customer satisfaction, tailor marketing strategies, and detect emerging trends, ultimately improving their products, services, and overall engagement with their audience.

This chapter addresses another common challenge in natural language processing: extracting sentiment from a piece of text. It incorporates an open-source dataset featuring customer reviews from Amazon. The exploratory data analysis phase is extended, and dimensionality reduction is used for feature selection. The focus is on deep learning techniques, and to facilitate their explanation, the chapter discusses linear and logistic regression. Concepts related to minimizing loss and gradient descent constitute part of this discussion. Readers learn how to construct, train, and test a deep neural network model in Keras for sentiment analysis.

2.5 Chapter 5: Recommending Music Titles

In today's vast digital landscape, customers often face overwhelming choices. Understanding their habits and preferences is highly valuable in fulfilling their needs and enabling companies to promote new products and services. However, given the predominantly online nature of most services, direct access to customers can be challenging. Their preferences, such as favorite music genres or authors, can be extracted from their purchase history and product reviews. Automatic systems can then use this data to recommend content or products, enhancing the user experience and extending their interaction with the service.

This chapter focuses on creating recommender systems for music titles by utilizing customer reviews on Amazon. The discussion begins with exploratory data analysis and rigorous data cleaning to address potential sample biases. The content-based and collaborative-filtering recommender types are introduced, contrasting their strengths and weaknesses. Using t-SNE for dimensionality reduction and RBM, we implement a system that suggests music titles. Finally, the topic of hyperparameter tuning is revisited, using a grid search to identify the optimal combination of the hyperparameters.

2.6. Chapter 6: Teaching Machines to Translate

Language barriers can hinder the spread of information and ideas in our culturally diverse world, and it's a significant challenge in effective human communication. The concept of a universal translator, often featured in science fiction literature, movies, and TV shows like Star Trek, envisions a device capable of seamlessly translating alien languages into the user's native tongue. The ongoing efforts to train machines to function as proficient translators have yielded remarkable progress in recent years despite the inherent challenges posed by language ambiguity and flexibility.

This chapter introduces various machine translation techniques while enriching readers' knowledge of standard NLP methods. It provides an opportunity to compare top-down and bottom-up approaches in system design. Rule-based and statistical machine translation constitute an excellent way to introduce fundamental concepts on the topic. Readers become familiar with typical NLP methods such as POS tagging, parse trees, and NER. The discussion on deep


learning models becomes more challenging as the focus is now on sequence-to-sequence learning. An extended section describes the famous encoder/decoder architectures using RNN and LSTM in detail. A seq2seq model is put into action to create an English-to-French translator, and the chapter ends with the typical evaluation of machine translation systems based on the BLEU score.

2.7. Chapter 7: Summarizing Wikipedia Articles

The rise of Web 2.0 transformed individuals from passive content consumers into active content creators, leading to an immense volume of online text data. However, the abundance of content has made it increasingly challenging to discover and consume valuable information efficiently. Consequently, there is a pressing need for automated systems that can accurately summarize longer texts and filter out irrelevant content. This task becomes even more complex when considering various constraints, such as the target audience and the type of content being summarized.

This chapter explores methods for creating effective summarization systems using web-derived data and covers techniques for automatically accessing and parsing web resources like Wikipedia. In addition to traditional text summarization methods, the chapter delves into the Transformer's cutting-edge architecture that offers outstanding performance across various realworld applications. This advanced architecture builds upon the previously discussed seq2seq models and incorporates key concepts highlighted throughout the book. The chapter concludes by discussing the ROUGE score for evaluating the performance of relevant systems.

2.8 Chapter 8: Detecting Hateful and Offensive Language

The proliferation of hate speech and the dissemination of fake news are significant negative consequences of the growing influence of social networks. Often shielded by anonymity, users on these platforms may find it easier to express hateful comments or share false information, as they are not immediately accountable for their actions. In order to combat these issues, major social networks invest substantial resources in machine learning algorithms to detect and remove inappropriate language.

The focus of this chapter revolves around efficiently utilizing and customizing pre-existing thirdparty models to identify hate speech and offensive language on Twitter. An open-source dataset containing inappropriate tweets is employed to construct a BERT language model for classification. The role of the validation set to fine-tune the model's hyperparameters and the strategies for dealing with imbalanced data are also examined. The classification tasks are based on boosting algorithms and CNN.

2.9 Chapter 9: Generating Text in Chatbots

State-of-the-art artificial intelligence applications can produce humanlike content, spanning written essays, music, and artwork. These applications hold great potential in the journey towards achieving artificial general intelligence, where systems can comprehend and perform any intellectual task that humans can. The generative aspects of natural language processing emphasize conversational agents, commonly known as chatbots. These chatbots find widespread application in various domains, including customer service for large organizations, language acquisition in education, and data collection in research. They can be engaged through various communication channels, such as speech, text, or even facial expressions and gestures.

This chapter covers a wide range of NLP techniques, starting with basic regular expressions and progressing towards more advanced approaches based on deep learning. We provide insights into crafting language models from scratch or fine-tuning pre-existing ones. Readers also gain


familiarity with reinforcement learning techniques and how to develop graphical user interfaces for interacting with the chatbot. Additionally, we introduce perplexity as an evaluation metric and delve into TensorBoard, a tool that illuminates the inner workings of deep neural networks.

2.10 Chapter 10: Clustering Speech-to-Text Transcriptions

When working with real-world problems, it's frequently the case that their data come unlabeled. Take, for instance, grouping news topics, analyzing customer call transcriptions, evaluating user tweets, and more. In all these preceding cases, businesses aim to gain valuable insights by uncovering pertinent information within this data. Manually labeling each sample is often impractical due to the time and cost involved. Consequently, it becomes essential to incorporate techniques capable of handling such unlabeled datasets.

This chapter focuses on unsupervised learning to cluster similar data points into cohesive categories. Hard and soft clustering techniques are presented, offering an understanding of their inner workings and practical implementation. The hard clustering methods introduced are hierarchical clustering, k-means, and DBSCAN. There is also a relevant discussion on choosing the optimal number of clusters. Another distinctive aspect is the creation of the text corpus using speech-to-text technology and assessing performance using WER. The chapter concludes by applying soft clustering and LDA to identify the topics in a dataset.

3. The Taxonomy of Educational Objectives

Bloom's Taxonomy of Educational Objectives (Bloom, 1956) is an established framework for organizing and categorizing educational goals and learning outcomes. Since its introduction, this taxonomy has been pivotal in shaping curriculum development, instructional design, and assessment strategies in education. It provides a structured way to understand and address the diverse cognitive processes involved in learning. The taxonomy consists of six hierarchical levels, each representing a different level of cognitive complexity, from lower-order thinking skills to higher-order ones (Figure 1 - left).



Application Analysis

Comprehension Knowledge

While the original taxonomy by Bloom is renowned for its foundational role in education, a revised version of this taxonomy was published in the early 2000s (Anderson & Krathwohl, 2001). The older version primarily emphasizes the cognitive domain, focusing on knowledge acquisition and cognitive skills. On the other hand, the revised version extends the taxonomy to include the affective and psychomotor domains, encompassing emotional and physical aspects of learning. It also offers a more contemporary perspective, emphasizing the importance of metacognition in today's diverse educational landscape and recognizing that learning is a

Figure 1: Bloom's versus Anderson & Krathwohl's Taxonomy
Bloom's Taxonomy Creating Understanding Remembering Applying Analyzing Evaluating Anderson & Krathwohl's Taxonomy

dynamic process involving lower- and higher-order thinking skills. Overall, Anderson and Krathwohl's work provides a more comprehensive and adaptable framework for educators to address a broader range of learning objectives (Figure 1 - right).

The six educational objectives of Anderson and Krathwohl's taxonomy are:

1. Remembering: Recognize and recall facts, concepts, and information. Learners demonstrate their understanding by retrieving previously learned material from memory.

2. Understanding: Comprehend and interpret information. Learners can explain concepts and ideas in their own words, demonstrating a deeper understanding of the subject matter.

3. Applying: Apply knowledge and understanding in new situations or to solve problems. Learners can transfer their learning to practical scenarios and demonstrate the ability to use concepts and principles effectively.

4. Analyzing: Breakdown complex information into its components and understand the relationships between them. Learners can differentiate between different elements and assess their significance.

5. Evaluating: Make judgments and assess the value or quality of information, arguments, or solutions. Learners can critique, justify, and provide evidence for their evaluations.

6. Creating: Generate new ideas, solutions, or products based on current knowledge and skills. Learners can design, construct, and invent, demonstrating a high level of originality and innovation.

The next section provides an overview of the taxonomy used to categorize and classify the learning objectives for one of the book's chapters, along with relevant assessment tasks.

4. Learning Objectives and Assessment Tasks for Chapter 2

4.1 Anderson & Krathwohl's Taxonomy

This section presents the learning outcomes for the book's second chapter, thoughtfully crafted to align with Anderson and Krathwohl's taxonomy principles. As already explained, this educational framework provides a structured approach to learning and assessment, allowing the set of clear objectives and serving as a valuable roadmap to the chapter's content. The educational objectives and learning outcomes per cognitive level are shown in Table 1.


Define the typical steps for training a classifier.

Identify when machine learning is suitable for a given task.

Describe the basic steps of the exploratory data analysis.

List the basic methods for word representation.

Recall the basic data preprocessing steps.


Summarize the role and purpose of training and test sets.

Understand the limitations of traditional programming for solving complex problems.

Explain why specific metrics are not appropriate in the context of an ML problem.

Demonstrate how to extract pertinent features for a given problem.


Construct a basic data preprocessing pipeline.

Apply the basic techniques for text representation and preprocessing.


Implement classifiers using an open-source dataset.


Analyze the tradeoffs between training accuracy and generalization capacity of a model.

Examine the performance metrics used to evaluate spam detectors.

Contrast the strengths and weaknesses of the implemented classifiers.


Assess the effectiveness of machine learning models based on standard metrics. Critically evaluate the tradeoffs associated with different algorithms and techniques used in machine learning.


Create and design new strategies for improving spam detection beyond what is discussed in the chapter.

Develop a comprehensive understanding of the entire spam detection pipeline and potentially modify it to suit different scenarios.

Table 1: Anderson & Krathwohl's taxonomy of the learning objectives for Chapter 2. Later in the paper, we will also provide an indicative list of the other chapters. Before that, however, we present different tasks that assess these objectives.

4.2 Assessment tasks

Assessment has been signified early on as an integral part of the educational process, helping to evaluate learning outcomes, improve teaching practices, and ensure accountability and quality in education (Tyler, 1949). In this respect, we propose in Table 2 sample tasks for each cognitive level that can assist in the assessment.


Students are expected to demonstrate their ability to retrieve information, identify key terms, and remember essential details from the learning materials. This level involves tasks like creating flashcards, completing multiple-choice quizzes, listing fundamental concepts, matching terms to their definitions, and recalling specific facts without reference.


Learners are expected to explain ideas in their own words, create concept maps to visualize connections between key ideas, summarize content with a focus on cause-and-effect relationships, and compare and contrast different concepts.


Assessment tasks involve solving problems related to learned concepts, demonstrating the application of tools or techniques in Python, and offering step-by-step instructions for applying the learned principles in a different way.


Students at this level are expected to analyze case studies, identify key issues and solutions, deconstruct intricate ideas to explain relationships, compare different approaches or theories, and identify patterns, trends, or recurring themes within the content.



Learners are expected to critically assess the validity and reliability of data, construct persuasive arguments for or against specific concepts or theories, develop criteria for evaluating the effectiveness of solutions, compare and contrast ideas from various sources, and determine the significance of content within a broader context.


Students are challenged to design original projects, create presentations to synthesize key concepts, develop new models, theories, or frameworks, write essays proposing innovative solutions, and generate interactive learning materials to teach others.

Table 2: Proposed assessment tasks for Anderson & Krathwohl's taxonomy.

The next section concludes the discussion with more learning objectives for the entire book.

5. Indicative Learning Objectives for all chapters

Excluding Chapter 2, we provide in Table 3 an indicative list of learning outcomes for each chapter and taxonomy level. These can assist as a reference to other tutors who wish to use the book in their teaching activities.


ch1 Remember the basic taxonomy of machine learning algorithms.

ch3 State the purpose of exploratory data analysis.

ch4 Recall the concept of overfitting and how it can be addressed using regularization.

ch5 Memorize the concept of hyperparameter tuning in machine learning.

ch6 Name the distinction between top-down and bottom-up techniques in machine learning and natural language processing.

ch7 List the typical interchange formats for organizing data.

ch8 Define the benefits of transfer learning and fine-tuning of large language models.

ch9 Provide the definitions for autoregressive and auto-encoding models.

ch10 Tell the differences between hard and soft clustering methods.


ch1 Understand how machines learn versus traditional programming.

ch3 Make sense of word embeddings and their relevance in text representation.

ch4 Explain how optimization techniques can minimize the loss function.

ch5 Comprehend the importance of data cleaning in preparing datasets for analysis.

ch6 Describe the components and functioning of the transformer model.

ch7 Clarify the challenges associated with a single context vector in the encoder-decoder model and the role of attention mechanisms.

ch8 Outline the concept of ensemble learning and the rationale behind combining multiple machine learning models.

ch9 Interpret the relevance and appropriateness of perplexity as an evaluation metric for language models.

ch10 Illustrate the ways to visualize hierarchical relationships between objects in a dataset.


ch1 Implement the suitable machine learning method for a given problem.


ch3 Utilize dimensionality reduction methods for improved data analysis and visualization.

ch4 Apply machine learning algorithms to predict continuous values.

ch5 Perform hyperparameter tuning efficiently using grid search.

ch6 Construct standard NLP processes for tagging and information extraction.

ch7 Develop web crawling and data scraping techniques for gathering data from online resources.

ch8 Make use of strategies for dealing with imbalanced data sets.

ch9 Experiment with the concept of fine-tuning language models using reinforcement learning.

ch10 Identify the optimal number of clusters using the appropriate methods.


ch1 Scrutinize possible model errors based on their severity on the problem under study.

ch3 Examine the gender biases often found in word embeddings.

ch4 Investigate the impact of regularization on model performance and overfitting prevention.

ch5 Predict the potential consequences and implications of misinterpreting correlation as causation.

ch6 Compare the appropriateness of different grammar formalisms for parsing and generation tasks.

ch7 Inspect how entities relate to each other using knowledge graphs.

ch8 Contrast training versus validation loss to apply early stopping.

ch9 Break down the steps to avoid an exploding gradient.

ch10 Analyze clustering results using domain knowledge.


ch1 Defend the use of computer- and human-centered metrics.

ch3 Compare the performance of the created models with the baseline one.

ch4 Judge the impact of dropout on model generalization.

ch5 Determine the performance of machine learning models on generalizing to unseen data using cross-validation.

ch6 Assess the quality of sequence-to-sequence model output using the BLEU score.

ch7 Estimate how model performance is affected by adapting the learning rate.

ch8 Rate the addition of pooling layers in convolutional neural networks.

ch9 Decide where to use an intrinsic or an extrinsic evaluation approach.

ch10 Evaluate the quality of topics generated by LDA in terms of relevance and coherence.


ch1 Produce innovative visualizations to present complex information with clarity and aesthetics.

ch3 Propose new ways to create simpler models for the same classification task.

ch4 Design custom solutions for addressing overfitting challenges in machine learning.


ch5 Create efficient strategies for hyperparameter tuning in different machine-learning applications.

ch6 Develop custom machine learning applications using knowledge-driven or datadriven approaches.

ch7 Invent a customized transformer-based architecture for sequence-to-sequence learning.

ch8 Elaborate novel chained models to advance ensemble learning techniques.

ch9 Construct custom language models using fine-tuning strategies for specific text generation tasks.

ch10 Integrate LDA with other NLP techniques to create innovative solutions for topic modeling in various domains.

Table 3: Indicative Anderson & Krathwohl's taxonomy of the learning objectives for all chapters.

6. Conclusions

Building machines that learn from observations is becoming the dominant paradigm due to the ever-increasing amount of data that cannot be processed with traditional methods. These resources pose fewer challenges in access and storage, which have become relatively inexpensive. Conversely, we need techniques to extract, visualize, and analyze text data to leverage this massive amount of unstructured information.

By the book's conclusion, learners acquire a versatile skill set for text preprocessing, representation, dimensionality reduction, machine learning, language modeling, visualization, and evaluation in Python, equipping them to tackle similar problems effectively.

We juxtaposed the contents of the book with specific levels of the Anderson & Krathwohl taxonomy, showcasing the diversity of cognitive processes and learning outcomes addressed throughout the book. Finally, we provided possible assessment tasks for each level in the taxonomy to assist other tutors in their teaching efforts.


Anderson, L. W., & Krathwohl, D. R. (2001). A taxonomy for learning, teaching, and assessing: A Revision of Bloom's Taxonomy of Educational Objectives. Pearson.

Binder, P.-M & Smith, K. (2013). The Language Phenomenon: Human Communication from Milliseconds to Millennia. Springer.

Bloom, B. S. (1956). Taxonomy of educational objectives: The Classification of Educational Goals. Longmans.

Tsourakis, N. (2022). Machine learning techniques for text: Apply modern techniques with Python for text processing, dimensionality reduction, classification, and evaluation . Packt Publishing Ltd.

Tyler, R. W. (1949). Basic principles of curriculum and instruction. University of Chicago Press.

Wiggins, G. P., & McTighe, J. (2011). The understanding by design guide to creating highquality units. ASCD.


A New Data Protection Law in Switzerland. Still the Weakest Privacy Law in Western Europe?

Michael Baltaian 1


On 1st September 2023, a new data protection law came into force in Switzerland. This article examines the practical implications of this new law for companies doing business in Switzerland. In particular, the article looks not only at the key components of the new law and how they compare with the equivalent law applying to the rest of western Europe (the EU’s GDPR), but also what they mean in practice for companies, considering both international companies already subject to the GDPR and local Swiss businesses only operating in Switzerland. In addition, the article considers the broader implications of the new law for Switzerland in terms of its international competitivity and its protection of the privacy of people in Switzerland.

This article is not legal guidance.

Keywords: data privacy, personal data protection, FADP, GDPR

What has changed?

On 1st September 2023, the new Federal Act on Data Protection (FADP), 2 together with the associated Ordinance on Data Protection (DPO), 3 came into force. The ordinance supports the FADP by providing additional details on certain aspects of the law.

These replaced the previous Federal Act on Data Protection (FADP) 4 and Ordinance (DPO). 5

Why the change?

The two primary drivers for replacing the previous act were:

• Bringing the law up to date

The previous law dated from 1992, the year when the World Wide Web was just being expanded beyond CERN but still largely limited to the scientific community. 6 As such, the law significantly pre-dated many of the most important personal data processing activities found in today’s digital economy (e-commerce, smartphones, social media, cloud computing, Internet of Things, etc.).

1 Michael Baltaian is a Data Privacy Consultant and Adjunct Professor at the International Institute in Geneva.

2 New Federal Act on Data Protection (FADP) (unofficial English translation published by the Swiss Confederation):

3 New Ordinance on Data Protection (DPO) (unofficial English translation published by the Swiss Confederation):

4 Old Federal Act on Data Protection (FADP) (unofficial English translation published by the Swiss Confederation):

5 Old Ordinance to the Federal Act on Data Protection (DPO) (unofficial English translation published by the Swiss Confederation):

6 CERN, “The birth of the World Wide Web”:


Despite partial updates to the law in 2009 and 2019, 7 the Swiss Federation recognized that a comprehensive overhaul of the law was required.

• Retaining EU adequacy status

The EU maintains a list of countries it considers adequate in terms of data protection legislation and the rule of law. Countries on the list are considered by the EU to offer a level of personal data protection comparable to the protection enjoyed in the EU and, as a result, personal data can be transferred from the EU to such countries without the need for additional safeguards. EU adequacy status can be a major economic benefit for countries which do a significant amount of business with EU countries.

Switzerland was granted EU adequacy status in 2000 based on the old FADP from 1992. 8 However, this decision was taken when the EU’s own data protection laws were based on the Data Protection Directive (DPD) from 1995. 9

Since then, the EU has replaced the DPD with the General Data Protection Regulation (GDPR) 10 which raised the bar for personal data protection within the EU and, by implication, the expectations for other countries to be considered adequate. The EU indicated that it intended to revisit existing adequacy decisions and, without a significant overhaul of Switzerland’s data protection law, there was a real risk that Switzerland could lose its EU adequacy status with the resulting impact on the Swiss economy.

The Swiss Confederation believe that the new FADP enhances data protection in Switzerland sufficiently that its EU adequacy status is no longer at risk.

The legislative environment

Most countries in the world recognize that people should be protected from the misuse of personal data about them and have enacted corresponding data privacy legislation. 11 A 2022 study identified 157 countries which now have some form of data privacy legislation. 12 Legislation typical takes the form of a comprehensive (or omnibus) data privacy law – a law that applies to any form of personal data – rather than sectorial laws – laws that apply to specific types of personal data or industry sectors (e.g. health, finance).

The global legislative landscape can be broadly divided into three categories:

• The GDPR

7 Swiss Federal Council statement on the “New Federal Act on Data Protection (nFADP)”:

8 Swiss Federation information on “Adequacy of Switzerland by the EU”:

9 Old EU data protection law, the Data Protection Directive (DPD):

10 Current EU data protection law, the General Data Protection Regulation (GDPR):

11 Definitions for personal data vary but it is most commonly taken to mean any data relating to an individual who is or could be identified

12 Graham Greenleaf (2022) “Now 157 Countries: Twelve Data Privacy Laws in 2021/22”, University of New South Wales, Faculty of Law:


The General Data Protection Regulation (GDPR) is the EU’s comprehensive data privacy law. It came into force in May 2018 and applies to all EEA countries (i.e. all 27 EU countries and the three EFTA countries Norway, Iceland and Liechtenstein). Even though the UK left the EU, the GDPR effectively continues to apply to the UK through the UK GDPR, a domestic UK law with minimal changes compared to the EU GDPR. 13

In addition to applying directly to multiple countries, the GDPR is widely considered a mature and well thought through piece of legislation and, as a result, is often seen as the global “gold standard” for privacy laws. None-the-less, the GDPR has been criticised for introducing unnecessary bureaucracy for businesses to achieve compliance. 14

• “GDPR Light” laws

As national data privacy laws are typically based on a common set of principles, 15 they often resemble each other. In addition, since the GDPR was introduced, other countries increasingly look to the GDPR when introducing or updating their own data privacy laws and, as a result, data privacy laws outside of the EEA increasingly resemble “GDPR Light” laws – laws that contain many of the same concepts and requirements as the GDPR but with some of the more onerous components watered down.

• The US

The United States remains an outlier in terms of data privacy law. It is the only G7 country without a comprehensive national data privacy law. 16 Instead, it has a patchwork of sectorial federal laws (e.g. HIPAA for entities processing health data) and comprehensive state laws (e.g. CCPA and CPRA for California).

The Swiss approach

Switzerland’s new Federal Act on Data Protection (FADP) is a clear example of the “GDPR Light” approach. It borrows heavily from the GDPR but contains significant differences, seeking that “sweet spot” between being sufficiently close to the GDPR to protect people’s personal data (and maintain Switzerland’s EU adequacy status) and sufficiently different to limit the burden of compliance on businesses.

13 The UK plans to replace the UK GDPR with a new data privacy law, the Data Protection and Digital Information (No. 2) Bill, which is currently progressing through the UK parliament:

14 For example, the UK government has criticized the GDPR for “pointless paperwork for businesses” and “annoying cookie pop-ups”: . See also Chinchih Chen, Carl Benedikt Frey, and Giorgio Presidente (2022) “Privacy Regulation and Firm Performance: Estimating the GDPR Effect Globally” Oxford Martin School, University of Oxford:

15 Fair information Practice Principles:

16 The American Data Privacy and Protection Act (ADPPA), a proposed comprehensive data privacy law for the US, failed to progress through the US Congress in 2022


To whom does the FADP apply?

Like the GDPR, the FADP has an extraterritorial component, stating that it applies to activities which “have an effect in Switzerland, even if they were initiated abroad” (FADP Art. 3). In practice and applying similar rationale as for the GDPR, the FADP can be considered to apply to:

• Companies that are based in Switzerland; and

• Companies that are not based in Switzerland but offer goods or services to people in Switzerland

o Simply having a website accessible from Switzerland would generally not be sufficient to trigger applicability of the FADP

o However, the FADP would apply to companies which target people in Switzerland by for example allowing payment in CHF or shipping goods to Switzerland


To a very large extent the FADP follows the same definitions (FADP Art. 5) as the GDPR. Personal data is any data relating to “an identified or identifiable” individual and sensitive personal data (data which could cause particular harm to individuals if misused) also basically aligns to the GDPR definition, with the addition of “data relating to social assistance measures.”

The notable addition under the FADP is the definition of high-risk profiling (profiling that allows an assessment of “essential aspects of the personality”) and uses this definition as the trigger for a number of additional obligations.

The key obligations of the FADP

The key obligations for companies arising from the FADP are outlined in this section.


The FADP requires companies to apply certain privacy principles when processing personal data. They generally correspond to the principles defined in the GDPR:

GDPR principle

Lawful, fair and transparent

Purpose limitation

Data minimisation

Corresponding principle under the FADP

Lawful, good faith and transparent (FADP Art. 6 and Art. 19)

Purpose limitation (FADP Art.6)

Proportionate (FADP Art. 6)

Accuracy Accuracy (FADP Art. 6)

Storage limitation

Storage limitation (FADP Art. 6)

Security Security (FADP Art. 8)

Accountability No explicit accountability requirement


Companies should therefore follow the good privacy principles and, even though there is no explicit accountability requirement, companies should still maintain records to be able to demonstrate their compliance.

Like the GDPR, the FADP also contains a requirement to implement privacy by design and by default (FADP Art. 7). In practice this means companies need to have a process in place to ensure privacy principles and requirements are taken into account from the moment planning for a new activity starts.

Data protection officer (DPO) and registration

Unlike the GDPR, which requires companies to nominate a DPO in most cases, there is no requirement under the FADP for companies to have a DPO (FADP Art. 10). Companies should still consider whether nominating a DPO is beneficial (e.g. to manage communications with the data protection authorities and individual data subjects) and, in any case, need to ensure that accountability for compliance with data privacy requirements is clearly assigned within their organisation. If a company does appoint a DPO, that person should have sufficient knowledge and autonomy to fulfil the role.

There is no obligation to register processing activities with the authorities and, unlike the GDPR, companies outside of Switzerland do not need to designate a representative in Switzerland unless they carry out regular, large-scale, high-risk activities (FADP Art. 14).

Record of processing activities (RoPA)

The FADP introduces a requirement for companies to maintain an inventory of all their activities (RoPA) that involve the processing of personal data (unless the company has less than 250 employees and performs only low risk processing activities) (FADP Art. 12).

The information to be held in the RoPA closely resembles the corresponding requirements under the GDPR. Therefore, companies which already maintain RoPAs to satisfy GDPR requirements should be able to re-use the same format to satisfy the FADP.

Even small companies which fall below the RoPA requirement threshold are still recommended to maintain a RoPA to help them satisfy other privacy requirements (e.g. responding to data subject requests).

Legal basis and consent

Unlike the GDPR which requires an explicit justification or “legal basis” to process personal data, the processing of personal data is generally allowed under the FADP as long as the privacy principles and good security practices are respected, the individual has not explicitly objected and sensitive personal data is not shared with third parties (FADP Art. 30).

None-the-less, companies must obtain consent for processing sensitive personal data or performing high-risk profiling (FADP Art. 6). The requirements for valid consent generally align to those of the GDPR:


GDPR requirements

Corresponding FADP requirements (FADP Art. 6)

Freely given Voluntarily

Specific and granular Specific

Informed Appropriately informed

Unambiguous Explicit

Equally easy to withdraw (This point is not explicitly mentioned)

The FADP relieves companies of the need to explicitly identify a legal basis for processing. However, companies should still ensure they follow the privacy principles, including for lawful, good faith and proportionate processing. Companies should be cautious about asking for consent when not necessary but, in case they decide to ask for consent, they should ensure they follow the GDPR requirements for valid consent.

Data protection impact assessment (DPIA)

The FADP introduces a requirement to perform a data protection impact assessment (DPIA) in cases of planned high-risk processing (FADP Art. 22). The triggers for a DPIA, the required contents and the requirement to consult with the data protection authority in case the high risk cannot be sufficiently mitigated all mirror the requirements in the GDPR.

In practice, a DPIA provides companies with a convenient mechanism to demonstrate that they have shown due caution, recognised risks and identified appropriate mitigating measures to sufficiently reduce these risks. Triggering a DPIA in the planning phase is also a way for a company to demonstrate that it is applying privacy by design.

Hence, it is advisable for companies to perform a DPIA if they are planning a processing activity that could result in a higher risk to individuals, including activities which involve large-scale processing of sensitive personal data or of vulnerable individuals, high risk profiling, systematic large-scale monitoring, automated decision making or novel technologies.

DPIAs must be retained for at least 2 years (DPO Art. 14).


The FADP mirrors the GDPR in requiring organisations to inform individuals that their data is being processed at the time the data is gathered (if gathered directly from the individual) or within 30 days (if the data is obtained via a third party) (FADP Art. 19, 20 and 21).

In general, the FADP is less prescriptive than the GDPR in terms of what information needs to be provided and allows for more exceptions when information may not be provided. However, in the case of data transfers abroad, the FADP does go beyond the GDPR in requiring the company to list all countries to which that data may be transferred.


In practice, companies that are already subject to the GDPR may re-use their GDPR privacy notices to meet the requirements of the FADP, though they may need to enhance them with an explicit list of countries in case of international data transfers. Such information should be found in the company’s record of processing activities (RoPA).


Like the GDPR, the FADP contains a requirement for companies to implement appropriate technical and organisational measures for security (FADP Art. 8). However, unlike the GDPR, Swiss law spells out some specific and somewhat eclectic mandatory security measures in the ordinance (DPO Art. 3, 4 and 5).

These include application of least privilege access, logical access control, physical access control, protection of data at rest (including on portable media) and in motion, business and IT continuity plans and a requirement to keep systems up to date and patched. There are also requirements to log changes to and sharing of personal data (including who changed what and when) and to keep these logs securely for at least one year.

Procedures to identify and handle data breaches and, in case of higher risk processing, a broader policy on data security are required.

Whilst most companies will have such measures already in place as part of their general data security practices, it is worth reviewing the detailed requirements outlined in the ordinance to be sure to have procedures in place which address all of them and that these procedures are working in practice.

Data breaches

The GDPR requires notification to the relevant data protection authority of any personal data breach within 72 hours unless harm to individuals is unlikely and notification to individuals without undue delay if the risk to individuals is high.

By contrast, the FADP requires notification to the data protection authority as soon as possible only if the risk to individuals is high. Notification to individuals is necessary only if required for their protection or if instructed to do some by the authority (FADP Art. 24).

The definition of a data breach (a security incident leading to loss of confidentiality, integrity, or availability of personal data) as well as the reporting format closely match those in the GDPR.

In practice, companies need to have processes in place to detect and handle security incidents, including potential data breaches. These processes should include mechanisms to determine if notification is necessary, rapidly notify the authorities if needed and document the handling of each incident irrespective of whether notification was needed or not.

Third parties

Like the GDPR, the FADP requires companies to have a contract in place with third parties which process data on their behalf (processors) and to perform due diligence to ensure the processor’s security practices are adequate (FADP Art. 9). Processors need approval to further delegate


processing to sub-processors but that can be given generically, rather than for individual subprocessors (DPO Art. 7).

However, in contrast to the GDPR, the FADP does not stipulate in detail the elements that a thirdparty contract must contain.

It is therefore a must for companies to have signed data processing agreements in place with all of its processors. Whilst, in theory, this agreement could be significantly simpler than those required under the GDPR, it must still contain sufficient obligations to adequately protect the company and, as a result, may well still include many of the aspects mandatory under the GDPR. Companies that are already working with data processing agreement templates which meet the GDPR requirements will most likely continue to use these.

The degree of due diligence required will vary depending on the risks associated with the processing. For lower risk processing, the contractual obligations to provide good data security contained in the data processing agreement may be sufficient.

International data transfers

The FADP adopts a similar approach to the international transfer of personal data as the GDPR does, with a list of “adequate” countries to which personal data can be transferred without additional safeguards and standard contractual clauses (SCCs) to be imposed in case of transfers to other countries (FADP Art. 16).

Switzerland’s list of adequate countries (DPO Annex 1) closely follows that of the EU, though often with a slight lag (for example, Japan and South Korea are now recognised as adequate by the EU but not yet by Switzerland).

For transfers to countries which are not on Switzerland’s adequacy list, the most common mechanism is to implement SCCs between the Swiss-based data exporter and the data importer abroad. The EU SCCs 17 are lengthy and complex contractual documents, leading to concerns about “paper-based compliance” where companies focus their efforts on getting the necessary contractual clauses in place at the expense of ensuring that personal data is actually adequately protected in practice. To their credit, the Swiss authorities have recognised the EU SCCs as being valid for exports out of Switzerland, 18 thereby at least sparing international companies the burden of negotiating two sets of SCCs when exporting data outside of adequate countries.

From a practical perspective, companies must be aware of all cases where they export personal data (including providing access to personal data to organisations outside of Switzerland) and ensure that such exports are either to countries on Switzerland’s adequacy list or that they have signed SCCs in place with the data importers. Such SCCs should be the latest EU SCCs published by the EU on June 4, 2021, with suitably amended annexes (e.g. to describe the nature of the processing) and a “Swiss rider” to explain that references to the EU are to be read as including Switzerland. The identified data exports should of course match the corresponding data described in the Record of Processing Activities (RoPA) and privacy notices.

17 EU Standard Contractual Clauses:

18 Swiss data protection authority paper on standard contractual clauses: 2)


The above actions can represent a significant amount of work, though thankfully no greater than that required of comparable companies based in the EU.

Data subject rights

Like to GDPR, the FADP spells out a number of rights for individuals which companies must be capable to satisfying. These largely correspond to the main data subject rights under the GDPR.

Data subject right under the GDPR Corresponding right under the FADP

Right to be informed (transparency)

Right to access (copy of data)

Right to rectification (correction of data)

Right to erasure (right to be forgotten)

Right to object

Right to portability

Right not to be subject to automated decision-making

Right to be informed (FADP Art. 19)

Right to access (FADP Art. 25)

Right to rectification (FADP Art. 32)

Right to erasure (FADP Art. 32)

Right to object (FADP Art. 32)

Right to portability (FADP Art. 28)

No explicit right beyond right to object

The FADP defines a 30 day time deadline for access and portability requests (DPO Art. 18 and 22), in line with the GDPR’s one month limit. However, the FADP allows for a slightly broader set of exceptions when a company may refuse a request. For example, under the GDPR, a company may refuse to provide a copy of data if the request is “manifestly unfounded or excessive”; under the FADP, it may refuse if it is “manifestly unfounded, namely if it pursues a purpose contrary to data protection or is manifestly of a frivolous nature” (FADP Art. 26).

The mishandling of data subject requests can undermine an individual’s trust in an organisation and is a frequent trigger for complaints to data protection authorities. Hence, companies need to have reliable processes in place to identify and respond appropriately to data subject requests within the required time period. Typical causes for mishandling include a failure to recognise a data subject request has been made, failure to track a request through to completion and failure to provide a complete and good faith response. Companies that are already subject to the GDPR should be able to simply re-use their GDPR processes to satisfy the FADP.


The GDPR is often incorrectly blamed for the “annoying cookie pop-ups”, even though the requirements arise from a separate piece of EU legislation, the “e-privacy Directive,” 19 which requires users give their consent before non-essential cookies or other tracking technologies can be downloaded onto their devices. The impact of the GDPR was merely to specify what constitutes valid consent.

19 The EU “e-privacy Directive”:


Similarly, under Swiss law, the FADP does not make any explicit reference to cookies or other tracking technologies. The cookie requirements arise from the Telecommunications Act (TCA) 20 which requires that “users are informed about the processing and its purpose and are informed that they may refuse to allow processing” (TCA Art. 45).

In practice, companies are taking the introduction of the new FADP as an opportunity to update their approach to cookies and bring their websites into line with the behaviour typical of other European websites, including a cookie preference pop-up on first arrival at the website informing users of the purposes for which cookies are used and offering the possibility to accept or reject non-essential cookies. This is typically complemented by additional information readily available through the privacy notice or a separate cookie notice and the ability to easily change cookie preferences at any time whilst using the site.

Sanctions and enforcement

This is an area where the FADP takes a significantly different approach from the GDPR.


Maximum penalty

EUR 20 mio or 4% of global annual turnover


(FADP Art. 60-66)

CHF 250,000

Imposed against A company An individual

Imposed by Data protection authority Swiss cantonal authorities

Imposed for Infringements of the GDPR Wilful violations of the FADP

Other remedies

“Class action”-like lawsuits by not-for-profit organisations

Fines under the GDPR are intended to be “effective, proportionate and dissuasive” 21 and EU national data protection authorities (coordinated, when necessary, through the European Data Protection Board or EDPB) have so far issued over 1,800 fines totalling over EUR 4 bio since the GDPR came into force in May 2018. 22 Put simply, the GDPR provides a big stick and EU authorities have not been reluctant to use it.

By contrast, the maximum fine under the FADP of CHF 250,000 appears quite modest and hardly dissuasive for larger organisations. The manner in which such a fine could be imposed has attracted some attention: 23

• Fines imposed against individuals, rather than companies: it is anticipated that, in keeping with other data protection laws that impose fines on individuals, such fines would target key decision makers within an organisation rather than, for example, a data protection officer acting in an advisory role.

20 Swiss telecommunications act (TCA) ) (unofficial English translation published by the Swiss Confederation):

21 GDPR Art. 83(1)

22 GDPR enforcement tracker:

23 See also for additional perspectives on FADP fines “How to avoid criminal liability under the revised Swiss DPA - 18 June 2023 – VISCHER”:


• Fines imposed by cantons, rather than by the national data protection authority: the Swiss data protection authority has no power to impose fines, though it can refer cases to the cantonal authorities. In general, this may further dampen the willingness to impose fines, though inconsistency in approaches across cantons cannot be excluded.

• Fines limited to wilful violations: whilst “there are no criminal penalties for negligent breaches of data protection obligations,” 24 wilful violations include transferring data to a processor without a contract, transferring data abroad without the necessary safeguards and failing to apply minimum security requirements.

How fines will be applied in practice will emerge over time, but all indications are that this new but limited power under the FADP will be used sparingly. Whilst the Swiss data protection regime is not entirely toothless (the Swiss data protection authority has the right to perform investigations and “may order that data processing activities be modified, suspended or discontinued, or that personal data be deleted”), 25 the sanctions and appetite for enforcement are likely to lag far behind those of the EU.

Impact of the new law

• EU adequacy status maintained?

A key objective of the new FADP was to ensure Switzerland maintained its status as an “adequate” country for personal data exports in the eyes of the EU.

Considering that the FADP includes all the key components found in the GDPR (even if the requirements are often watered down compared to the GDPR) and that, once granted, the EU has never withdrawn adequacy status from any country, there is nothing to indicate that Switzerland’s adequacy status is any longer at risk. 26

This will allow the continued free transfer of personal data between the EU and Switzerland, a major benefit for Swiss-based companies and the Swiss economy as a whole.

• Compliance burden minimised?

Whilst bringing Swiss data privacy law closer to the GDPR, Switzerland was also keen to keep the law business-friendly, limit the compliance burden and avoid the unnecessary bureaucracy that the GDPR is sometimes accused of.

This has led to the removal or softening of many requirements, including:

- No need to appoint a DPO

- No need for a legal basis to process personal data

- Greater freedom in drafting privacy notices and data processing agreements

- Higher threshold for reporting data breaches

- Broader exceptions for refusing data subject requests

24 Swiss data protection authority statement on criminal law:

25 The role of the Swiss data protection authority:

26 Note that since this article was first drafted, the EU has confirmed that it continues to recognize Switzerland’s adequacy status: Report on the first review of the functioning of the adequacy decisions adopted pursuant to Article 25(6) of Directive 95/46/EC | European Commission (


For companies which operate internationally and already need to comply with the GDPR, the overhead of developing and implementing new Swiss-specific processes, procedures and templates is likely to exceed the benefits offered by Switzerland’s lighter requirements. Hence, it is to be expected that international companies will chose to consistently apply their GDPR processes to EEA countries and Switzerland.

There are some very limited areas where the FADP requirements exceed those of the GDPR, e.g. in the more detailed specification of security requirements. These are however sufficiently minor that the risk of a company diligently following GDPR processes being sanctioned for missing a Swiss-specific requirement is low.

Therefore, for companies which operate internationally and already need to comply with the GDPR, the burden of compliance is likely to be the same as for an EEA country.

For local Swiss businesses only operating in Switzerland, the new FADP introduces many new obligations compared to the previous law. The lighter requirements of the FADP may provide some relief from this increased burden of compliance but this is likely to be limited in practice. For example, even though a company does not need to appoint a DPO, it must still ensure accountability for compliance with data privacy requirements is clearly assigned within their organisation. Similarly, even if requirements for reporting data breaches or responding to data subject requests are lighter, companies must still have processes in place identify and manage such events.

Therefore, for local Swiss businesses only operating in Switzerland, the burden of compliance is likely to be significantly higher than under the old FADP, though marginally lower than that for a comparable company operating in an EEA country.

• Individuals’ data better protected?

The trade-off for a more demanding data privacy law should come, not only with the retention of EU adequacy status, but also with better protection of “the personality and fundamental rights” of individuals (FADP Art. 1).

Whilst the new FADP does impose additional requirements on companies, individuals are unlikely to see much of a change other than slightly more extensive privacy notices. The FADP does not require companies to identify a legal basis for processing an individual’s data and we have not seen the flurry of consent requests that accompanied the introduction of the GDPR (when many companies realised they were holding data on individuals without any legal basis for doing so).

One challenge to better protection of individuals’ data is simply lack of awareness. The GDPR received extensive media coverage when it came into force, the Internet is full of explainers regarding people’s rights under the GDPR and a steady stream of significant fines has helped to keep the GDPR in the public spotlight. By contrast, the new FADP was introduced with typical Swiss discretion and information directed at the general public regarding their rights under Switzerland’s lighter regime is very limited. 27 The nuanced deviations of the FADP from the GDPR have served to further “muddy the waters”. As a result, individuals’ understanding of what they can and should expect in terms of protection of their personal data generally remains limited.

27 See for example the website of the Swiss data protection authority:


The biggest difference between the FADP and the GDPR in terms of protection of individuals’ data is however the enforcement regime. The Swiss data protection authority has limited resources 28 and is unable to directly impose even the limited fines foreseen under the FADP. This may undermine the protection of personal data through a) companies that cynically breach the law, believing that resulting profits will outweigh any eventual fine or other sanction, b) companies that decide to ignore or remain wilfully ignorant of the law, assuming that either this will never come to light or, if identified, will simply result in a request to “fix things” without other consequences and c) a reluctance of individuals to raise complaints to the authority, due to lower expectations that any significant actions will be taken.


The new FADP is a necessary (and maybe overdue) update to Switzerland’s data protection landscape, a welcome step closer to the EU’s GDPR and sufficient to assure that Switzerland will remain on the EU’s “adequate country” list and can continue to enjoy the economic benefits that go with that.

Switzerland’s “GDPR Light” approach of watering down certain requirements compared to the GDPR is, in practice, unlikely to significantly reduce the compliance burden on companies. Companies already subject to the GDPR will typically apply their existing GDPR practices to meet the Swiss requirements. However, local Swiss companies not subject to the GDPR now face similar challenges to those faced by comparable EEA companies when the GDPR was introduced.

The “GDPR Light” approach both weakens some requirements for protecting individuals’ data and reduces individuals’ clarity regarding their rights compared to their counterparts in countries subject to the GDPR. This, combined with a significantly weaker enforcement regime than the GDPR, means that Switzerland, as the only country not subject to the GDPR, still has arguably the weakest data privacy law in western Europe. 29

Having only come into force on 1st September 2023, the revised FADP is still very new and, as was seen with the introduction of the GDPR, it may take several years for both companies and regulators to get comfortable with the new law and how it is to be applied. Actual enforcement activities (or lack of them) over the next 3-5 years are likely to frame some companies’ attitudes to the FADP. This, together with evolving public concerns (or apathy) regarding data privacy, may determine how company privacy practices for Switzerland evolve and provide an interesting avenue for future research.

28 The Swiss data protection authority has 33 employees according to its annual report of 2022/2023:

29 In this context, western Europe is taken to mean all countries in the EU, EFTA and the UK. It does not consider the European microstates such as Andorra, Monaco, or San Marino


Navigating the Sustainable Energy Transitions Diamond.

Strengthening coherence between the Technological, Economic, Human, Resource, and Governance Dimensions of Sustainable Energy Transitions From a Systems Perspective

Joachim Monkelbaan 1 and Terrence Surles 2


The article argues that the world needs to shift towards sustainable energy sources and more efficient use of energy. This requires a comprehensive understanding of a set of key determinants. This article sets out these determinants, including economic aspects, technological aspects, resource considerations, and human facets of sustainable energy transitions. Governance that considers proper policies, polity (institutions), and politics needs to enable these four sometimes synergistic but often conflicting dimensions. The article lays out these dimensions and their intersections and presents them in the form of the ‘Sustainable Energy Transitions (SET) Diamond.’

Keywords: energy transition, climate change, low carbon, renewable energy, governance, technology, sustainability, investment, resources, electricity grid.


The world is at a critical juncture of sustainable energy transitions 3 that will almost certainly take decades. The imperative to shift towards sustainable energy sources and more efficient use of energy has gained significant traction, especially in view of the challenges of climate change, the dwindling of affordable fossil fuel resources (partly because of geopolitical rather than resource availability factors), and related health concerns. This push for clean energy was confirmed at COP28 where the world undertook to transition away from fossil fuels and 118 countries committed to tripling renewable energy capacity and doubling the annual rate of energy efficiency improvements by 2030, 4 in line with the recommendations from the International Energy Agency (IEA) and G20 commitments. 5 However, such transitions are not merely about technological advancements or policy changes, they also hinge on a comprehensive understanding of a set of key determinants that are discussed in this paper.

These key determinants are:

A/ Economic aspects (including trade, financing, lost –stranded– assets, and investment);

B/ Technological progress, innovation, and challenges, which are key to implementing successful and impactful sustainable energy transitions;

C/ Resource considerations (including critical minerals, land, water, fossil fuels, and circular economy); plus

D/ Human facets (including behavioral change, values, skills, cultural issues, and education).

1 Joachim Monkelbaan is Climate Trade Lead at the World Economic Forum.

2 Terry Surles is currently on the staff of the Hawaii Natural Energy Institute where he is the program lead for technology integration and policy analysis.

3 We intentionally use the plural “transitions” in this article as there are numerous transitions to make in a global energy transition and in every transition, there are multiple pathways




All of these dimensions represent both challenges and opportunities. Moreover, we suggest that governance which considers proper policies, polity (institutions), and politics, should enable these four sometimes synergistic but often conflicting dimensions. Their interlinkages must be considered from a systems perspective in order to develop enabling processes that will allow for an integrated approach to significantly reduce greenhouse gas (GHG) emissions. This article lays out these different dimensions and presents them in the form of the ‘Sustainable Energy Transitions (SET) Diamond’ (Figure 1 below) that can serve as a heuristic tool for implementing the global sustainable energy transition.

1. Dimensions of the sustainable energy diamond

A. Economic Aspects

There is a host of economic and financial considerations that play a role in energy transitions. Transitions to sustainable energy sources necessitate an international framework that encourages both trade and investment in renewable technologies and resources like critical minerals. Countries rich in renewable resources might export excess energy or technology, fostering global cooperation and balanced energy distribution. Agreements that incentivize the trade of renewable energy (technology) could significantly accelerate the transitions (Monkelbaan et al., 2022). One specific option to foster trade and investment in clean energy would be through inclusive climate clubs (Monkelbaan, 2021).

The costs of energy transitions will be very large. These costs will either need to be borne by taxpayers in the form of government subsidies, private sector shareholders, or end-use ratepayers. Promises made by governments that emphasize eventual savings, however, often fall on deaf

Figure 1. The Sustainable Energy Transitions (SET) Diamond. Source: the authors.

ears. This can lead to a backlash by populist politicians stressing the status quo of continued fossil energy use. Thus, governments, to the extent possible, must make reasonable pronouncements on the benefits, timing, and costs of energy transition.

Mobilizing financial resources towards sustainable energy projects is paramount as the SET will require USD 4,5 trillion/year by 2030 to meet the 1.5-degree target (IEA, 2023). For reference: globally, investments in clean energy currently amount to USD 1,7 trillion. One place to start would be to divert the hundreds of billions that governments pay in fossil fuel subsidies towards clean energy investments (Monkelbaan and Steenblik, 2021). Governments and the private sector must collaborate to channel investments into renewable energy infrastructure and in particular in R&D. Innovative financing mechanisms, such as green bonds and impact investments, can attract capital towards sustainable initiatives. Additionally, pricing carbon, divesting from fossil fuels, and redirecting investments towards renewable energy projects are essential steps for a sustainable future.

One specific challenge with renewables and energy efficiency is that these technologies lead to lower costs over time, but they require significant upfront investments. In countries with functional capital markets, developers and consumers can take up loans to cover these investments. However, a further restructuring of capital markets is needed to enable the scale-up of renewables, particularly in developing countries which can leapfrog fossil fuel-based infrastructure and cut (future) carbon emissions at lower costs (per ton of CO2). We see the divergence of the enormous amount of free capital to relatively low-cost-high-impact energy transitions in emerging markets as one of the major challenges in this space. As an analogy: some African countries, such as Botswana, have skipped landlines and transitioned directly to mobile phone networks, thus avoiding enormous investments in ‘old’ infrastructures.

Other considerations are stranded assets in fossil fuel-based infrastructure to the tune of 11–14 trillion USD (Mercure et al., 2021) and the significant impact of reducing fossil fuel use on the valuation of oil, coal, and gas companies. These companies are often state-owned enterprises, which further complicates their governance. Maybe the most staggering challenge in terms of the economics of energy transitions and climate change is how we can double the size of the global economy by 2050 (PwC, 2017) while bringing GHG emissions to(wards) zero.

B. Technological aspects

In many ways, technology development has eased the approach to decreasing carbon emissions. In general, costs of renewable resources and supporting technologies have consistently decreased. Thus, power purchase pricing agreements have, until recently, continued to decrease for wind and solar (and solar + storage) making these resources competitive with natural gas (Figure 2).


In addition, costs of customer-based solar and storage have also diminished which has led to significant growth of behind-the-meter generation and storage in the United States, Hawaii and California for example.

The development of advanced technologies has allowed for the insertion of high percentages of variable renewable energy technologies into the electricity grid. These include the development of grid-forming inverters that are more effective in the ability to provide better inherent mitigation of grid stability risks, particularly in low inertia or microgrid applications. These advanced inverter controls are currently being provided by leading manufacturers, but the technology is new and definitions, grid codes, and requirements are still being developed internationally. While it is anticipated that grid forming capability will advance, it poses uncertainty for future renewable energy growth.

As many grids now have significant behind-the-meter solar and solar + storage generation for residential, commercial, and industrial buildings, there will be an increased need to develop new communications and information technologies. These will allow system operators to better understand what the current status of grid operations is. The current technologies limit the ability of system operators to do so in an effective and efficient manner.

Finally, as grids approach 100% variable renewable energy, there will be a need for firm capacity. This is due to potential weather events significantly hindering output from wind and solar resources. Long-term extreme weather incidences will not allow variable renewables to properly recharge energy storage systems. An example of long-term unusual weather in Hawaii is shown in Figure 3. In 2006, Oahu experienced an unusual amount of rain and clouds over an extended period of time. Figure 3 shows that, had there been a significant amount of solar energy at the time, it would not have been able to operate effectively. The current lithium ion systems are not yet fit to store long-term. While research and development is ongoing, current long-term storage technologies do not exist.

Figure 2. Levelized Wind and Solart Power Purchase Agreement Prices as Compared to Natural Gas Prices Land-Based Wind Market Report: 2022 Edition

There is thus a need for firm capacity. There has been a push for biomass combustors and biofuels. However, there are issues related to resource availability, life cycle emissions, and competition for land and water resources. Other technologies, such as nuclear energy and carbon capture and storage coupled to combined cycle natural gas-fired facilities are available or under development, but subject to public perception and opposition issues. These technologies will be necessary for addressing grid stability, firm power needs, and resource adequacy issues. When the significant transformation of the grid is considered, everyone (utilities, regulators, legislators, and consumers) must be prepared for and adapt to innovation, transformation, and disruption of the grid as we presently know it. Even in terms of modeling these systems, ‘the goalposts are moving.’(C. Imhoff, personal communication) That is, traditional methods of modeling and analyzing key attributes of grid operation, such as stability, affordability, and resource adequacy, may no longer be sufficient is properly characterizing grid operations and needs. New methods for evaluating changes to the grid must be developed. When considering transformation and disruption, governmental entities must remain flexible in responding to changing and sometimes unanticipated needs and requirements.

While a transformed grid is a key example of a critical technology as it forms the backbone of the energy system, we need upgraded technologies and radical innovation that makes clean energy more efficient, affordable, and scalable. Examples of technologies that promise to reduce emissions are nuclear fusion, carbon capture, use, storage (CCUS), and hydrogen. Investment in innovation, including through basic research, will be one of the most productive ways to make energy transitions feasible and affordable in the longer run.

Technology in an energy transition goes beyond ‘hard’ technology and can also cover naturebased solutions. There are also many ways to conserve energy and become climate resilient by using traditional or ecological principles in the design and construction of buildings (providing shade, maximizing warmth from the sun), especially in terms of construction and urban planning.

C. Resource/materials aspects

There is a growing awareness that a global shift in critical resource needs, development, and ownership is to come. Historically, in the energy sector, this focus was on oil and gas producing economies. The new paradigm, however, will focus on critical materials and resources for the production of renewable energy systems and energy storage technologies. New renewable and storage technologies will require large amounts of copper, lithium, iron, nickel, manganese, cobalt, and rare earth elements (see Figure 4 below). This figure illustrates that a few relatively

Figure 3. I D. Stenclik, personal communication

common resources will experience significant growth in the near future due to the needs of renewable energy systems.

Other relatively rare resources that will be required are found in substantial amounts only in a handful of countries. Good examples are cobalt which is mainly available in the Congo, and rare earths which are currently mainly produced in China.

Even in cases of relatively abundant resources, these are more difficult to find. Take copper, for example in 1900, 50 tons of rock yielded one ton of copper; today, the same yield requires 800 tons of rock. The IEA (2021) predicts that key resources such as copper, nickel, and graphite will grow from current requirements which amount to about seven million metric tons per year to over twenty million metric tons by 2030.

Rare earth elements offer an example of the growing need where none existed previously. For wind generators, neodymium and dysprosium are required. More efficient lighting would require lanthanum, yttrium, terbium, and europium. Rare earth elements offer a good example of how the globe’s changing appetite for specific elements has evolved. To give a few examples in addition to energy technology needs, these elements have found new uses in consumer electronics, industrial lasers, optical glasses and ceramics, catalysts, fiber optics in the health care sector.

Initiatives developed by the US Department of Energy (DOE) include the creation of critical material hubs to focus on how to develop better technologies as well as understand where critical resources are available. As part of these initiatives, DOE is examining the possibility of extracting rare earths and other critical resources from coal slag, and using extraction techniques on the remaining coal mines in the United States. In the bigger picture, the International Resource Panel (2017) estimated that a sustainable level of material (biomass, fossil fuels and non-metallic minerals) would be about 50 billion tonnes per year. We are currently at about 100 billion tonnes of materials use per year, and this number is set to double by 2050. (ibid.)

Water, of course, plays a special role both in climate change and in energy systems. The impacts of climate change on the water cycle can be greater than those from temperature rise in itself: from rainfall patterns to shrinking ice sheets, rising sea levels, floods and droughts. Climate change is exacerbating both water scarcity and water-related hazards. Water is sometimes

Figure 4. Minerals needed for low-carbon energy. Source: Kavya Beheraj, Axios (2023). Note: does not include steel or aluminium.

included in the structure of the energy/water nexus. Energy systems are highly dependent on water from hydropower generation to the cooling requirements of nuclear and thermal power plants. Renewables such as wind and solar PV require very little water, while other resources and technologies, such as biofuels, concentrating solar power (CSP, and hydrogen are relatively water-intensive). Water usage is a significant energy consumer, requiring energy for conveyance, treatment, wastewater treatment, and recycling or disposal.

There is another issue related to the massive development of new technologies to replace fossil fuel systems: the vast amount of waste from technologies such as solar panels and lithium ion batteries and how to dispose of or recycle them? For example, the total amount of solar panel waste, which currently stands at 1.35 Million Metric Tonnes (MMT), could reach 12.3 MMT in 2040. This makes recycling of solar panels increasingly urgent. Here, circular economy principles have an important role to play in making the production, use, and disposal of clean energy technologies in themselves more sustainable by lowering their lifecycle emissions.

The minerals in EV batteries are worth up to 2,000 euros per car. Those materials could be in short supply within a few years, but can be recycled infinity times and not lose their power. While there is little battery recycling capacity today, 40 per cent of battery materials used in new EVs could come from recycled stocks by 2040. 6

Resource considerations for sustainable energy transitions do not stop at shortages of materials, but should also include (over)supply of fossil fuels. For countries with ample resources of relatively cheap fossil fuels (such as coal) and large numbers of workers and investments in that sector, decreasing the use of fossil fuels is challenging.

There are strong linkages between trade and circular economy as Figure 5 below demonstrates. The chevron arrows in the middle represent steps in the linear (‘take-make-discard’) economy. Solid lines then represent domestic flows and dotted lines represent international trade flows in support of CE.



D. Human Decision-Making and Behavioural Aspects

So far, the emphasis in work on SETs has been on proximate drivers such as technological progress, critical resources, and financing. Preferences, motivations, values, beliefs, and behaviors at individual and group levels have largely been overlooked, even if these factors are crucial for SETs. Human behavior, aspirations, and preferences can be significant drivers in reducing emissions. ‘Governance emanates both from organizations and institutions and through individuals. Well-functioning institutions require input from capable individuals’ (Monkelbaan, 2019: 154). Furthermore, values such as trust are critical for human cooperation and progress (Fukuyama, 1995).

Psychological barriers to climate governance include loss aversion, optimism and status quo biases, ideological worldviews that preclude climate action, discredence towards experts and authorities, and rebound effects (especially related to energy conservation) (Monkelbaan, 2019: 155). It will thus be critical to build a wider culture of sustainability on mindsets geared towards the willingness to transition to better energy systems in the long run.

At the same time, numerous studies, most recently work on EcoBlock, 7 demonstrate there is an overall lack of personal interest to embrace energy efficient technologies and a conservation ethic. This generally takes the form of disinterest to pay higher initial costs for energy efficient

7 Behavior-Based Energy Efficiency: A Case Study of the Oakland EcoBlock, Jared Langevin1, Handi Chandra Putra1, Jingjing Zhang1, Therese Peffer2, September 2023

1 Building Technology and Urban Systems Division, Lawrence Berkeley National Laboratory, Berkeley, CA.

2 California Institute for Energy and Environment, University of California, Berkeley, Berkeley, CA.

Figure 5. Value chain with CE activities and trade flows (solid lines are domestic flows and dotted lines are international flows). Source: Monkelbaan, 2021a

systems even though life cycle costs are significantly lower. Encouraging behavioral change among individuals and communities is crucial for SETs. Thus, fostering a culture of energy conservation, promoting responsible consumption patterns, and embracing energy-efficient technologies will be necessary. Public awareness campaigns and incentives will also be needed to promote energy-saving practices and taxpayer acceptance of subsidies for renewable resources and technologies. Newer technologies will have to be accepted in information and communications systems. These will allow for system operators to manage behind-the-meter generation and energy use. Public support for innovative, disruptive, and transformational technologies for smart grids can also encourage behavioral shifts towards sustainability.

Additionally, while there may be an overall political will to increase renewable energy production, there can be significant opposition at a local level. Three examples are useful. Many approved utility-scale renewable energy projects end up being canceled. This is partially due to NIMBY-ism. That is, communities want electricity from renewable resources as long as these resources are not close to them. As an example, four of the five approved utility-scale renewable energy projects on Maui were cancelled due, in part, to public opposition (Dobbyn 2023). Here we can see that citizen participation, public protest for climate action, and democracy could potentially be strong drivers for energy transitions, but can also delay and cancel specific clean energy projects.

A second serious impediment is the need to increase transmission to move electricity from renewable resource generation to load centers. In the United States, this change needs to be permitted across multiple jurisdictions, leading to significant delays or cancellations. Development of transmission has actually decreased in the United States over the past five years. Lastly, renewable energy resources will require the development or expansion of new mines as technologies such as batteries need significant inputs of critical minerals which has typically led to public opposition to their development.

Developing a workforce equipped with the necessary skills is vital as the transition to renewable energy and the circular economy can also potentially generate over 100 million jobs by 2030, helping to reduce poverty and inequality (ILO, 2019). Educational institutions should integrate sustainable energy concepts into their curricula to cultivate a generation that values and understands the importance of renewable resources. Moreover, fostering an ethos and culture that values sustainability and environmental stewardship is essential to sustain the momentum of the transition.

2. Enabling Sustainable Energy Transitions through Governance

Governance plays a pivotal role in steering the dimensions of sustainable energy transition at various levels including policy, polity (institutions), and politics (Monkelbaan, 2019). Effective governance mechanisms can facilitate the integration of economic, technology, resource, and human dimensions, ensuring smooth and successful transitions. In general, governance covers the policy, polity (institutions) and political dimensions.

A. Policy Level

Governments must develop robust regulatory frameworks that incentivize sustainable energy investments while phasing out subsidies and other support for fossil fuels. Policies that encourage renewable energy adoption, such as feed-in tariffs and renewable portfolio standards, but also clarity around permitting (see Section 2 above) market certainty and attracting investments (Monkelbaan et al., 2021b).


Establishing clear, long-term energy transition plans helps align policies, investments, and technological advancements. Governments should set ambitious yet achievable renewable energy targets, providing a roadmap for stakeholders. Governments should also take into account the needs and concerns of diverse stakeholders.

B. Polity Level

Engaging stakeholders from diverse sectors such as industry, academia, civil society, and local communities in institutions fosters collaborative decision-making and implementation. Rather than breaking down institutional silos, as is often suggested, we need to incentivize those silos to engage and collaborate (Niestroy and Meuleman, 2016). Formulating energy policies through participatory processes can foster inclusivity and social acceptance.

In many countries, this interaction is part of a dynamic between national and local governments. While national goals can be announced, their implementation will generally be carried out at the local level. This includes the development of regulations, the approval of permits, and community meetings to gain acceptance of particular projects. A specific example is discussed in Box 1 below.



1. The example of the United States (US) for addressing national/local dynamics in energy transitions

It may be useful to use the United States as an example of how one might address the national/local dynamic in order to move energy transitions forward. The national goal can be somewhat imperfectly summarized as ‘electrify everything,’ i.e. transportation, buildings, and industry. Changes to the nation’s grid come at a time when other factors must be considered in addition to decarbonization, such as affordability, reliability, resiliency, and energy and environmental justice. Decisions that reconcile competing issues may depart from historic norms from the time when regulators and system operators needed to focus primarily on affordability and reliability.

As a result, the US is beginning a once-in-a -century transformation of the grid. While the federal government can develop policies and, in many instances, provide funding, the considerable burden of implementing change will fall on US states. State regulators, planners, and legislators will be critical partners for meeting national goals.

State agencies approve new generation facilities as well as new or upgraded transmission lines. Many of these decisions are made on an incremental, rather than transformative or disruptive basis. State regulators need to balance costs to consumers when adding new variable renewable energy resources and retiring fossil-fired units. Assurance is needed that grid stability, reliability, resiliency, and other grid services are maintained. Affordable electricity must be maintained for all customers, while rules must be developed to lessen financial impacts on low-income residences that are already burdened by energy bills.

State regulators are often understaffed and are sometimes overwhelmed when balancing competing issues. When considering approval of permits, intervenors focusing on a single issue may lead to time consuming discusssions and complicate decision-making. For example, attempts to change net energy metering (NEM) rules will invariably lead to solar energy installers commenting on that particular issue. This could also lead to a disregard for other issues, such as grid stability and resiliency, and affordability for lower income families.

The ability of state legislator staff to do substantive analyses that lead to useful legislation to effectively inform and direct regulators as to how they should proceed is usually limited. New laws may look good in the near term, but can create the potential for significant interpretation and implementation problems in the future. Success will require a societal contract between utilities, their regulators, and the general public. This contract must incorporate mechanisms for addressing environmental and socio-economic consequences of locating large renewable resource generation facilities and new transmission corridors. Many communities are in favor of reducing carbon emissions, but do not want these facilities close to their homes and schools. Sometimes, the cultural values of local communities are impacted. It may become increasingly difficult to site new major facilities near communities or in locations where impacts on the environment and/or cultural values are deemed too significant.

In balancing these disparate issues, regulators must also consider time scale. Many states have goals to be carbon-free or carbon-neutral in less than thirty years. Because of this legislation, decisions that appear helpful in the near term may lead to negative unintended consequences that can impede the ability of a state to attain its goals cost effectively.

Time scale is also important in another context as legislators and regulators need to consider ‘multigenerational’ justice. An obvious problem is saddling future generations with escalating debt as a result of decisions made in the near future. Additionally, other systems (land and water) may be impacted by assumptions about near-term conditions which may change over the years. Water is an important example since poor near-term use of water resources and rash decisions can impact future water availability and quality.

It is also important to realize that ‘one size doesn’t fit all’. That is, as regulators wrestle with decisions, certain factors may be key in one state, and not in another. Regulators will need to define the relevance of competing issues on a case-by-case basis. Decisions must involve local considerations as local issues will be essential from political, legislative, and regulatory perspectives. There should be better approaches to risk analysis that will better define choices and to put those choices in context. These analyses will also allow regulators to better examine the unintended consequences of decisions.

These burdensome issues require that the federal government use its substantive expertise and experience in energy systems analysis to help state agencies as it has substantive expertise and experience in energy systems analysis. The federal government needs to develop innovative mechanisms to properly integrate multiple issues (affordability, decarbonization, justice, reliability, resilience, environmental impacts, and societal and cultural) into the planning process. Planning methodologies should be agnostic as major developments on one state grid may be substantively different for another grid. To conclude, state-based and local needs are considerable and daunting, but are critical in achieving national goals. Without help from the federal level to the states, national goals will not be met. While policy can be made at a national level, it is at the state level that ‘the rubber meets the road’ to determine whether or not major national goals are feasible, practical, and can be met at all.


C. Politics Level

Political leadership plays a crucial role in championing sustainable energy initiatives. To achieve consistent and effective governance , it is essential to encourage bipartisan support for renewable energy policies and set aside ideological differences. It is also vital to ensure transparency in decision-making processes as well as accountability in order to meet energy transition targets. Political systems which prioritize transparency in policymaking and hold stakeholders accountable for their actions foster trust among citizens and project developers.

Incorporating these governance elements enables a conducive environment for the four dimensions of sustainable energy transitions. It facilitates the alignment of interests, streamlines resource allocation, and ensures that transition processes are inclusive and just. The synergy between effective governance and the multidimensional approach to sustainable energy transitions is key to navigating the complexities 8 of this global imperative.

Beyond domestic political consideration, there is a need for re-energized international collaboration despite mounting geopolitical concerns. Issues discussed above such as trade, investment, the creation of markets for clean energy (technologies), access to critical materials, and innovation require a revolution in international cooperation and diplomacy.

D. Governance methods for sustainable energy transitions

Monkelbaan (2019) suggests a number of governance methods that may be useful for sustainability governance and for the implementation of sustainable energy transitions in particular:

- Transition management, which focuses on the long-term transformation of sociotechnical systems, including energy systems (Rotmans and Loorbach, 2010);

- Metagovernance, which is about ‘the totality of interactions of governments, private sector and civil society, aimed at solving societal problems or creating societal opportunities’;

- Polycentricity, which looks into the many centres of decision-making that are formally independent of each other (Ostrom et al., 1961: 831);

- Experimentalist governance, which has been defined as ‘a recursive process of provisional goal setting and revision based on learning from the comparison of alternative approaches to advancing them in different contexts’ (Sabel and Zeitlin, 2012: 169); and

- Adaptive management (Voss and Bornemann, 2011), which can be used for addressing the trade-offs between financial, technical, resource, and human aspects of sustainable energy transitions.

Monkelbaan (2019) further identifies three cross-cutting dimensions of governance that are critical for governance of sustainable energy transitions:

- Power (including leadership, networking capacity, and empowerment)

- Knowledge (including knowledge cooperation, adaptiveness & resilience, and reflexivity)

- Norms and values (including equity, trust, and inclusiveness) (also see Monkelbaan, 2021c).

8 The Cynefin framework can help navigate between problems that are complicated and problems that are complex (with many factors that interact in unpredictable ways). Also, for Tainter (2011), sustainability is a problem-solving strategy which increases complexity and in turn, it requires more and not less energy and resources. Alexander (2012) however disagrees with Tainter as he thinks that societies can voluntarily reduce complexity in order to reduce energy use.


3. Interlinkages Between Technological, Economic, Human, and Resource Inputs in Sustainable Energy Transitions

The shift towards sustainable energy sources involves a complex interplay between various interconnected factors, including technology, economics, human behavior, and resource utilization. For a holistic approach to sustainable energy transitions, it is crucial tu understand the linkages between these elements.

The most obvious linkages are those between the corners of the SET Diamond. Innovation and technological breakthroughs lead to improved efficiency, cost effectiveness, and scalability of technologies like solar photovoltaics, wind turbines, and energy storage systems which, in turn, improve the financial viability of these technologies. For example, the three highest-scoring themes for collaborative action to improve the supply of minerals for energy transitions are: 1. Facilitating policy dialogue; 2. Supporting investment mobilization (based on an understanding of investment needs across the critical minerals value chains and mobilizing investment to bridge the supply-demand gap); and 3. Accelerating innovation (including identifying new technologies and systematic innovations for scaling up the supply of minerals) (WEF, 2023).

Secondly, several dimensions of the SET Diamond are fulfilled but there is a hindrance in the fourth dimension. While the technological, materials, and financial challenges related to the development of utility-scale solar and wind systems can be resolved, there is resistance from local inhabitants (NIMBY). As we innovate our way to more easily scalable new energy technologies and start to use more affordable fossil fuel-based infrastructure, this may result in a substantial destruction of the value of equity markets (fossil fuel companies make up xx% of stock markets globally).

All this shows that the four critical determinants need to be fulfilled and that governance can be a critical enabler for that ‘all of the above’ approach. It is imperative to understand and manage these interlinkages for sustainable energy transitions. Striking a balance between technological innovation, economic feasibility, human behavioral change, and responsible resource management is essential for successful and equitable transitions to sustainable energy.

Policies and strategies that consider these interdependencies holistically, fostering innovation, promoting responsible resource management, empowering communities, and nurturing a culture of sustainability, will be instrumental in realizing a resilient and sustainable energy future. Systems thinking will be required for designing such policies and strategies (Monkelbaan, 2019). Systems approaches can help deal with the inherent complexity of energy systems as they place emphasis on the relationships and interactions between the SET-relevant elements and constituents. Distinguishing between complicated and complex situations, for example based on the Cynefin framework (Snowden and Boone, 2007), will be important to choose the right governance tools and approaches. For example, energy projects that are complicated but feasible from economic and technological perspectives, can become complex once social factors are taken into account, thus requiring a shift in guiding the project to success. Deliberative systems thinking goes one step further by leveraging the systems thinking that is distributed among several stakeholders (Ibid.)

Eventually, sustainable energy transitions will be driven by considerations of competitiveness. SETs will have an effect far beyond the borders of the jurisdictions implementing them, shaping the way companies and countries compete in global supply chains. The interaction between climate measures and their impact on trade is what the World Economic Forum (2023a) calls ‘carbon competitiveness’.


To assess how carbon competitiveness could affect the risks and trade-offs inherent in the effort to meet global net-zero goals, there are possibly four scenarios (see Figure 6 below). These outline how emission mitigation measures might interact with trade flows and trade policy cooperation. The scenarios are determined by the interaction of two key variables: the degree of trade-related collaboration among countries; and the extent to which countries’ climate mitigation measures are in line with the Paris Agreement and accompanied by adequate adaptation measures.

– In the ‘Climate on track’ scenario, international cooperation on climate measures and trade competitiveness topics has avoided destructive disputes. This has facilitated the trade in green goods and services, and sustainable critical minerals supply chains are open. Development banks have teamed up with corporate alliances to improve supply chain decarbonization. Global emissions decline by 43% in 2030 (compared to 2019 levels).

– In the ‘Fractured effort scenario’, protectionism is rising as countries seek to shield domestic companies from carbon leakage, where production moves to countries with less strict emissions policies. Non-inclusive climate clubs are deployed, creating a complex landscape for business to navigate and curbing innovation spread. Relative differences in green subsidies have led to imbalanced green investment, with the poorest nations suffering the consequences. Global emissions decline by 30% in 2030 (compared to 2019 levels).

Figure 6. Trade cooperation and climate efforts as two variables to create four scenarios to help strategize for carbon competitiveness.

– In the exponential disasters scenario, increasing conflict over-critical materials has slowed climate efforts and encouraged protectionism. Powerful nations seek to control the supply chains most threatened by climate change, including food, and poverty rates are on the rise. Investment has focused on adapting to climate change, pulling resources from mitigation. By 2030, global emissions have increased significantly, reaching 125% of the 2019 levels.

– Finally, in the collective avoidance scenario, international talks on climate mitigation and trade competitiveness remain superficial. Governments have pushed back emissionsreduction targets, and negotiations on green goods and services trade have also faltered. Efforts to deal with key supply-chain risks in the face of growing climate impacts have produced little action, and global growth slows. By 2030, emissions have increased, reaching 115% of the 2019 levels.

These scenarios can serve to foster thinking about each situation’s strategic implications, and the planning and potential actions businesses and government will need in each of the dimensions of the SET Diamond, no matter which future unfolds.


Transitions to sustainable energy sources are multifaceted, involving intricate interplays between economic, recource, and technological factors, as well as human behavior. In that sense, we see energy transitions emerging from the key dimensions described in this article. At the same time, this is not meant to be an exhaustive list of factors that play a role in energy transitions. We welcome discussion and suggestions on other key factors for sustainable energy transitions.

Achieving successful energy transitions demands a collaborative effort across sectors from governments, industries, communities, and individuals, including across local, national, and global levels. Striking a balance between economic imperatives and fostering sustainable values, skills, and education is pivotal to creating a future powered by clean and renewable energy sources that are mobilized more efficiently. Embracing these transitions is not just an environmental necessity but also an opportunity to shape a more resilient and equitable world for generations to come.



Alexander, S. (2012). Resilience through simplification: revisiting Tainter’s theory of collapse.

Melbourne: University of Melbourne.

Dobbyn, P. Civic Beat, November 28, 2023.

Fukuyama, F. (1995). Trust : the social virtues and the creation of prosperity. New York : Free Press.

IEA. (2021). The Role of Critical Minerals in Clean Energy Transitions. Paris: IEA.

IEA. (2023). Net Zero Roadmap: A Global Pathway to Keep the 1.5 °C Goal in Reach. Paris: IEA.

ILO. (2019). Skills for a Greener Future: a Global View. Geneva: International Labour Organization.

International Resource Panel (IRP) (2017). Assessing Global Resource Use: A Systems Approach to Resource Efficiency and Pollution Reduction. Paris: UNEP.

Mercure, J., Salas, P., Vercoulen, P. et al. (2021). Reframing incentives for climate policy action. Nature Energy, 6, pp. 1133–1143.

Monkelbaan, J. (2019) Governance for the Sustainable Development Goals. Singapore: Springer. Monkelbaan, J. (2021). ‘Interactions Between Trade and Climate Governance: Policy Options and Innovative Ways Forward Through Climate Clubs’, Global Trade and Customs Journal 16(7), pp. 325–342.

Monkelbaan, J. (2021a). Circular Economy and Trade. Working Paper No. 1 in Trade and Environmental Sustainability Series. Geneva: Quaker United Nations Office and Friedrich Ebert Stiftung.

Monkelbaan, J. (2021b). Trade & Climate Change: Quantitative Assessment of the Best Policy Tools to Achieve Climate Neutrality and Competitiveness. Paris: AFEP.

Monkelbaan, J. (2021c). From Science to Practice: Research and Knowledge to Achieve the SDGs. Geneva: UNRISD.

Monkelbaan, J. and Steenblik, R. 2021. Fossil Fuel Subsidy Reform: What Role for the World Trade Organization? Working Paper No. 3 in Trade and Environmental Sustainability Series. Geneva: Quaker United Nations Office and Friedrich Ebert Stiftung.

Monkelbaan, J. (2022). Accelerating Decarbonization through Trade in Climate Goods and Services. Geneva: World Economic Forum.

Niestroy, I. and Meuleman, L. (2016). ‘Teaching Silos to Dance: A Condition to Implement the SDGs’, IISD, 21 July 2016.

Ostrom, V., C. M. Tiebout, and R. Warren. 1961. ‘The Organization of Government in Metropolitan Areas: A Theoretical Inquiry.’ American Political Science Review 55: 831-42.

Reprinted in McGinnis 1999, Cole & McGinnis 2015.

PwC. (2017). The long view: how will the global economic order change by 2050? London: PwC.

Rotmans J. and Loorbach, D. (2010). Towards a better understanding of transitions and their governance: a systemic and reflexive approach. In: Grin J, Rotmans J, Schot J (eds) Transitions to sustainable development. New directions in the study of long-term transformative change, pp 103–220. New York: Routledge.

Sabel, C. and Zeitlin, J. (2012). Experimentalist governance. In: Levi-Faur D (ed) The Oxford handbook of governance. pp 169–185. Oxford: Oxford University Press.

Snowden, D. and Boone, M. (2007). A Leader’s Framework for Decision Making. Harvard Business Review.

Tainter J. (2011). Energy, complexity, and sustainability: a historical perspective. Environmental Innovation and Societal Transition. 1:89–95.

Voss, J., and B. Bornemann. 2011. The politics of reflexive governance: challenges for designing adaptive management and transition management. Ecology and Society 16(2): 9.


Wiser, R., Bolinger, B., Hoen, D., Millstein, J., Rand, G., Barbose, N. Darghouth, W. Gorman, S., and Paulos, B. 2022. Land-Based Wind Market Report: 2022 Edition.

World Economic Forum (WEF). 2023. Securing Minerals for the Energy Transition. Geneva: World Economic Forum.

World Economic Forum (WEF). 2023a. What Future for Climate and Trade? Scenarios and Strategies for Carbon Competitiveness. Geneva: World Economic Forum.


Book review

Split the Pie: A Radical New Way to Negotiate by Barry Nalebuff (2022). HarperCollins. ISBN 9780063135482(hardcover).

Reviewed by Claude Cellich, Vice president International Institute in Geneva

In his book, the author introduces a radical new way of splitting the difference. His approach differs from the traditional way of splitting the difference 50-50. To split the difference, negotiators must first agree to frame the problem correctly. The author argues that the best way to satisfy each party is not to divide the pie evenly but first to expand the pie. For this to happen, negotiators have to develop their respective BATNAs. The author suggests that giving what the other party wants, will likely make it give you what you want. This assumes that both parties trust each other, share information and are willing to create options to expand the pie. For this to happen it is essential that each party sees things from the other party’s perspective rather than seeing things from one’s own perspective. In other words, put yourself in the other person’s shoes to have a better understanding what the other party interests are1.This requires both sides to move from being egocentric to allocentric.

Expanding the pie by creating additional value where both sides benefit calls for advance preparation including identifying potential objections, finding appropriate counterarguments, knowing what is valuable to the other party and less valuable to you in order to trade concessions and estimate one’s BATNA. In other words, each party strives to gain over their collective BATNAs. Negotiators need to remember that BATNA is not static but dynamic and can change when interacting with the other party as new information becomes available as well as the influencing external factors.

As far as estimating one’s BATNA as well as the other side’s BATNA is concerned, the author could have given greater importance to intangibles. For example, negotiators can consider various intangibles such as goodwill, brand image, reputation, trademarks, software, patents and so on. These intangibles are likely to grow faster than intangibles due to market sophistication, digital technologies and globalization2. Although it is more difficult to put a price on intangibles, they are useful trade-offs to break an impasse as well as increasing the number of options thereby expanding the zone of agreement.

Throughout the book, the reader is provided with examples illustrating how 2 or more parties can reach agreement by dividing additional value from an expanded pie. Moreover, he describes how he negotiated the sale of his company producing Honest Tea to Coca-Cola and his second one (Kombrewcha) to AB InBev. These two examples show how a small firm negotiating with a large one can negotiate successfully by being well prepared, expanding the pie and dividing the additional value.

In his book, the author has expanded our knowledge concerning how to split the pie by developing a radical new way of negotiating. His novel approach should be part and parcel of any courses or handbooks as it would contribute to negotiating agreements between two or more parties that are mutually beneficial.


1. Fisher, R. & Ury, W. (1991). Getting to Yes: Negotiating agreement without giving in (2nd ed). New York, NY: Penguin Books.

2. Cellich, Claude (2021). Creative Solutions to Global Business Negotiations, (3rd ed). Business Expert Press, NY.

Issuu converts static files into: digital portfolios, online yearbooks, online catalogs, digital photo albums and more. Sign up and create your flipbook.