Volume 4
ISSN 1581-6311
Global
Boštjan Antončič
International
tr n R^V^fy*
[vJ^cIllvl
journal
Managing Global Transitions
International Research Journal
EDITOR
Boštjan Antoncic, University of Primorska,
Slovenia
ASSOCIATE EDITORS
Egon Žižmond, University of Primorska,
Slovenia
Dušan Lesjak, University of Primorska,
Slovenia
Anita Trnavčevič, University of Primorska,
Slovenia
Roberto Biloslavo, University of Primorska,
Slovenia
EDITORIAL BOARD
Zoran Avramovič, University of Novi Sad,
Serbia and Montenegro
Terrice Bassler Koga, Open Society Institute,
Slovenia
Cene Bavec, University of Primorska,
Slovenia
Jani Beko, University of Maribor, Slovenia
Vito Bobek, University of Maribor, Slovenia
Štefan Bojnec, University of Primorska,
Slovenia
Suzanne Catana, State University of New
York, Plattsburgh, usa
David Dibbon, Memorial University
of Newfoundland, Canada
Jeffrey Ford, The Ohio State University, usa
Tim Goddard, University of Calgary, Canada
Noel Gough, La Trobe University, Australia
George Hickman, Memorial University
of Newfoundland, Canada
Robert D. Hisrich, Thunderbird - The Garvin
School ofInternational Management, usA
Andras Inotai, Institute for World Economics
of the Hungarian Academy of Sciences,
Hungary
Hun Joon Park, Yonsei University,
South Korea
Štefan Kajzer, University of Maribor, Slovenia
Jaroslav Kalous, Charles University,
Czech Republic
Leonard H. Lynn, Case Western Reserve
University, usA
Monty Lynn, Abilene Christian University, usa
Neva Maher, Ministry of Labour, Family and
Social Affairs, Slovenia
Massimiliano Marzo, University of Bologna,
Italy
Luigi Menghini, University of Trieste, Italy
Marjana Merkac, College
ofEntrepreneurship, Slovenia
Kevin O'Neill, State University of New York,
Plattsburgh, usA
David Oldroyd, Independent Educational
Management Development Consultant,
Poland
Susan Printy, Michigan State University, usA
Jim Ryan, University of Toronto, Canada
Hazbo Skoko, Charles Sturt University,
Australia
David Starr-Glass, State University of New
York, usa
Ian Stronach, Manchester Metropolitan
University, uk
Ciaran Sugrue, Dublin City University,
Ireland
Zlatko Šabic, University of Ljubljana,
Slovenia
Mitja I. Tavcar, University of Primorska,
Slovenia
Nada Trunk Širca, University of Primorska,
Slovenia
Irena Vida, University of Ljubljana, Slovenia
Zvone Vodovnik, University of Ljubljana,
Slovenia
Manfred Weiss, Johan Wolfgang Goethe
University, Germany
Min-Bong Yoo, Sungkyunkwan University,
South Korea
Pavel Zgaga, University of Ljubljana, Slovenia
EDITORIAL OFFICE
University of Primorska
Faculty of Management Koper
Cankarjeva 5, sI-6104 Koper, Slovenia
Phone: ++386 (0) 5 610 2021
Fax: ++386 (0) 5 610 2015
E-mail: mgt@fm-kp.si
www. mgt.fm-kp.si
Managing Editor: Alen Ježovnik
Editorial Assistant: Tina Andrejašic
Copy Editor: Alan McConnell-Duff
Cover Design: Studio Marketing jwt
Text Design and Typesetting: Alen Ježovnik
Managing Global Transitions
International Research Journal
VOLUME 4 • NUMBER 4 • WINTER 2006 • ISSN I58I-63II
Table of Contents
283 The Editor's Corner
285 Enhancing the Transformative Potential
of Business Internships
David Starr-Glass
299 Impact of Strategic Initiatives in Management
Accounting on Corporate Financial Performance:
Evidence from Amman Stock Exchange
Husam Aldeen Al-Khadash
Mete Feridun
313 Risk Taking Propensity and Export Performance
of Croatian Exporters
Mirna Leko-Šimic
Jasna Horvat
327 A Comparison Between Recent and Prospective Critical Success
Factors in Lithuanian Printing Industry
Vilte AuruškeviCiene
Laura ŠalCiuviene
Ruta Kazlauskaite
Andrius Trifanovas
347 Globalization of Slovenian Agricultural
and Food Trade
Štefan Bojnec
Darja MajkoviC
363 Impact of Personality and Emotional Intelligence
on Successful Training in Competences
Aleksander Zadel
The Editor's Corner
We set ourselves an ambitious task at the beginning of this year, namely
that we would publish four issues of Managing Global Transitions a year.
We are now proud to announce that we have reached this objective. Since
we have lately received a number of interesting articles dealing with find-
ings and studies in a variety of fields, we believe that publishing four
issues of our journal a year is a realistic project.
The Winter issue (Volume 4, Number 4) continues gaining interna-
tional recognition and focusing on transition research, as well as empha-
sizing its openness to different research areas, topics, and methods and
the international and interdisciplinary research nature of scholarly arti-
cles published in the journal.
The current issue covers topics such as business internship, experien-
tial learning, strategic initiatives, financial performance, export perfor-
mance, agriculture and food industry, the issue of personality traits, and
training.
The first paper is by David Starr-Glass, who looks at enhancing in-
ternship experience. The author suggests redesigning and evaluating in-
ternships by emphasizing transferable learning. He claims that such re-
defined internships may optimize learning opportunities and the growth
of human and social capital for all stakeholders.
In the second paper, Husam Aldeen Al-Khadash and Mete Feridun
present the Amman stock exchange. In addition, the article aims at in-
vestigating the link between the practice of Activity Based Costing, Just
In Time and Total Quality Management as strategic initiatives and the
improvement in corporate financial performance of some companies in
Jordan.
In their paper, Mirna Leko-Šimic and Jasna Horvat discuss export per-
formance as one of the most widely used measures of company perfor-
mance today. The authors also analyze the rather poor export perfor-
mance of Croatian companies.
The Lithuanian authors, Vilte Auruškeviciene, Laura Šalciuviene, Ruta
Kazlauskaite, and Andrius Trifanovas look into the problems of identi-
fying critical factors in an industry. They also examine what makes some
firms highly successful, when others have rather moderate success within
the same industry.
The fifth paper explores globalization patterns in Slovenian agricul-
ture and food trade. It also examines prevailing trade structures and
trade types to study differences and similarities between the trade of pri-
mary and processed agricultural and food products. It was authored by
Štefan Bojenec and Darja Majkovic.
Finally, Aleksander Zadel argues that managers are able to develop top
quality management and top quality competences irrespective of their
personality traits. He also looks at different stages of an individual train-
ing programme and the development of competences.
Boštjan Antoncic
Editor
Enhancing the Transformative Potential
of Business Internships
David Starr-Glass
Business internships involve students, sponsoring firms, and institu-
tions of higher learning. As part of a program to enhance internships,
we reviewed the experience of a small number of business interns
working in Central Europe. Their experiences were characterized as es-
sentially situation-specific learning, competence training, and affirma-
tion of coursework. Student perceptions suggest prematurely defined
boundaries that limit the theoretical advantages of internships. In order
to enhance the internship experience, we suggest redesigning, sustain-
ing, and evaluating internships emphasizing transferable learning, dis-
covery of self in work, reflection and process, liminal experiences, and
challenging espoused theory. We suggest that such redefined intern-
ships may optimize learning opportunities and the growth of human
and social capital for all stakeholders, which are of particular benefit in
the transforming business contexts of central and southern Europe.
Key Words: business internships, experiential learning, career,
transitional economies, transforming education
jEL Classification: 121,123, J24
Introduction
Potentially, collegiate internships provide constructive and insightful ex-
periences for all stakeholders, namely the participating student interns,
sponsoring firms, and collegiate initiators. As an accredited American
college operating in the Czech Republic, we were interested in creating
local internships for our senior business students; however, the result-
ing internships were more a product of personal connections than of
thoughtful design, or concern, for all stakeholders involved. In common
with many other transforming social and economic environments, the
economies of Central Europe are characterized by an impetus for change,
residual inertia from previous totalitarian command economies, slowly
developing managerial confidence, and challenges and possibilities for
career development (White 2005). These task environment characteris-
David Starr-Glass mba M.Ed, is an Associate Professor with the
Center for International Programs (Prague Unit), Empire State
College, State University of New York, usa
tics suggest challenging opportunities for local firms, new business grad-
uates entering the job market, and local institutions of higher education.
Nevertheless, our initial internships were more concerned with student
interest, and narrower practical and pragmatic issues.
This paper results from the experiences of a small group of students
who successfully completed internships with our college in Central and
South Eastern Europe. We were interested in understanding their as-
sumptions about internships and the ways in which they structured the
internship experience to negotiate relationships and roles. However, we
believe that uncritical and pragmatic student assumptions and experi-
ences may also have resulted in what we understand as 'self-limiting
internships', which provide impoverished learning opportunities for all
stakeholders. Before considering the specifics of student perception, we
will examine the general models and theoretical foundations upon which
professional and collegiate internships are constructed.
Internship Models: Professional and Collegiate
In America, professional internships have a long history in fields such
as architecture, education, engineering, and medicine. When associated
with a profession, internships center on the acquisition of a corpus of
specialist and technical knowledge under the supervision, authority, and
jurisdiction of a designated professional body. In this setting, internships
serve many functions: defining the profession, socializing the novice, and
lending the credence of competence to the various publics that lie outside
the profession (Wilensky 1964).
In professional internships, power and authority are asymmetrically
distributed, being almost exclusively located in the sponsoring orga-
nization. Traditionally, educational goals have focused on the specific
with experiences geared to train interns in given tasks, to shape their
work behavior, and to socialize them into the language, conventions,
and norms of the profession. Increasingly, however, professional bod-
ies have viewed these goals as excessively focused, or restrictive, and have
sought to broaden the educational goals. For example, the revised in-
ternship regulations in architecture (Quinn 2003), and school leadership
(Williams, Matthews, and Baugh 2004), point to such a purpose.
Collegiate internship programs initially mirrored professional intern-
ship models. In what is reputedly the first such program - an accounting
internship at the University of Cincinnati in 1906 (Henry, Razzouk, and
Hoverland 1988) - a narrow range of skill acquisition, professional so-
cialization, and limited generalizable learning were all emphasized. It is
unclear whether this was the result of purposeful design or default. The
loci of power, supervision, authority, and jurisdiction in collegiate in-
ternships are different: they are shifted from a narrow, pragmatically de-
fined profession to the more educationally diffuse academy. Potentially,
such a shift might have been expected to lead to a broader educational
perspective; however, this has not generally been the case.
Within American business education, internship opportunities have
increased dramatically over the last 25 years. In 1980, only about 3% of
undergraduates had been interns, but by the year 2000 that number had
risen to more than 50% (Coco 2000). More students were involved, but
the perceived legitimacy of the internship had also increased. In a recent
study of 242 business departments, almost all of them (91%) offered in-
ternship programs as an undergraduate option. Students were equally
enthusiastic with almost a third (32%) having been interns by their ju-
nior year; even more (39%) opting for this experience in their senior year
(Coco 2000).
Early research showed that students perceived internships as supple-
menting or enhancing their academic studies (Hite and Bellizzi 1986).
Perceptions regarding academic benefits have persisted and strength-
ened (Cook, Parker, and Pettijohn 2004). Students have also increasingly
considered that a positive internship experience correlated with subse-
quent hiring success (Scott 1992); that a differential hiring advantage
existed vis-ä-vis non-interns (Pianko 1996); and that internships pro-
vided opportunities for wider job searches including the chance to ex-
plore different business sectors and to sample organizational contexts
(Cannon and Arnold 1998). Many of these perceptions seem realistic.
For instance, speculation that successful internships are associated with
improved academic and employment outcomes proved to be generally
accurate (Knouse, Tanner, and Harris 1999), although the nature of that
relationship may be more subtle and tenuous (Gault, Redington, and
Schlager 2000).
As an accredited American college with an international program in
the Czech Republic, we tacitly accepted that our business students would
have similarly positive perceptions regarding successful internships. In
their senior year, our students must complete a capstone experience that
can be either a supervised dissertation or internship. In Czech higher ed-
ucation, the dissertation is a standard element in earning a degree and
it is understandable that, given this cultural preference, most of our stu-
dents complete a dissertation. However, a small but increasing number
of students has completed the internship option. We wished to examine
the experiences of these students as part of a process of increasing the
quantity, and enhancing the quality, of internship offerings.
Methodology
Twelve students completed business internships within the last two years.
All but one had completed the internship for academic credit; the excep-
tion used her internship experiences indirectly as the basis of a formal
dissertation. Internships were carried out in Czech Republic (8), Austria
(1), Croatia (1), Hungary (1), and Slovakia (1). Most interns were male
(9), reflecting the composition of the student body. Sponsoring firms
were equally divided between small (often family) businesses (6) and in-
ternational companies (6). Interns typically served a minimum of 150-
hours in quality assurance, marketing, and sales departments of mainly
service sector industries.
To qualify for academic credit, students were required to maintain a
reflective journal and write a series of short papers on relevant theo-
retical issues connected with the experience. We reviewed the journals
and papers that had been submitted and also conducted unstructured
individual exit interviews with interns, where we sought their opinions
and impressions of the experience. We analyzed all of this material for
themes and linkages without imposing restrictive a priori data classifica-
tion (Adam and Schvaneveldt 1985; Shaffir and Stebbins 1991). We believe
that this resulted in a purposeful exploration of intern experiences, 'less
driven by specific hypotheses ... more concerned with emergent themes'
(Cassel and Symond 1994, 4).
We appreciate that our conclusions are limited in their generalizability
by the small number of interns and the purposeful sampling employed.
We recognize that a fuller and richer appreciation of the impact of intern-
ships would have been gained had we also interviewed corporate super-
visors associated with the internships. Anecdotal feedback suggests that
this relationship was generally very formal and bureaucratic; only occa-
sionally did an informal mentoring scenario develop. We do not consider
that the benefits of the internship experience accrue only for the intern;
we consider that it is more likely that such benefits arise within the con-
text of the shared interaction between all stakeholders. In a subsequent
phase of this study we plan to capture the reactions, attitudes, and un-
derstandings of those working with interns in the sponsoring firm.
How Interns Perceived their Experiences
Six perceptions emerged from our analysis: (1) situation specific learning;
(2) competence training; (3) product and instrumentality; (4) terminal
engagements; (5) acceptance practice encountered; and, (6) 'coloring be-
tween the lines'. This cluster of perceptions can be seen as describing the
internship experience; however, as we will suggest later, it can also be
seen as setting implicit although unarticulated boundaries, and limits,
on the experience.
Situation Specific Learning. In selecting and undertaking internships,
students saw them as providing specific and focused utility. All interns
reported positive and enjoyable experiences but saw those experiences
not in a general social terms but as associated with specific tasks, or in-
terests, in the firm. On completing the internship, learning gains and
experience was considered limited to the tasks and departments within
which the intern was involved.
Competence Training. Many students saw a culmination, or confirma-
tion, of their theoretical business studies in the workplace. There was a
broadly held sense of the dichotomy between theoretical underpinnings
and a more robust work world. Often, students came to see differences
between what they have learned and what the corporate sponsor actually
did. While comparing, questioning, and reflecting on differences is un-
doubtedly valuable, interns generally considered that they were learning
new skills and approaches rather than reflecting on difference.
Product and Instrumentality. Most internships were understood as fo-
cused on a product, or specific outcome: completing an assigned project,
assisting with a special report, etc. If there was an educational element it
was associated with the work product rather than with the process by
which that product was completed. Interns placed value on new skills
and competencies, and internships were perceived as providing valuable
assets for future employment, or for career - at least as an addendum to
the intern's resume.
Terminal Engagements. In our program, as is generally the case in Amer-
ica (Coco 2000), students completed internships in their senior year. Per-
haps because of this positioning, the internship was perceived as a termi-
nal academic engagement rather than as the beginning of a career, or a
transition between the two. Interns often saw their experiences in terms
of psychological closure with respect to their academic studies. We spec-
ulate that internships perceived as terminal engagements result not only
in interns seeing themselves as temporary and transient participants, but
being considered as such by sponsoring firms.
Acceptance of Practices Encountered. Students often saw internship as
contexts for testing the academic knowledge they had acquired. Some-
times, they discover that what they have been told in the classroom, or
had been led to believe was done, clashed with their work experience.
Sometimes interns came to appreciate that the sponsoring firm had dif-
ferent priorities and practices. Internships represent socialization expe-
riences, where business or professional norms and culture are explored.
They are also potentially intellectual and learning experiences. However,
interns generally elected to affirm work practices with which they were
confronted and rarely challenged, corrected, or expressed concern if they
felt that practice did not conform to prior academic knowledge. This was
variously attributed to politeness, uncertainty, lack of empowerment, or
a sense that such differences should not be shared.
Coloring Between the Lines. This theme, which is similar to the last, de-
scribes an attitude, sometimes expressed as a strategy, associated with
limited engagement in the sponsoring firm. Interns saw their 150-hours
engagement and visitor status, as circumscribing their ability to alter
the organizations in which they were hosted. They saw the internship
as something that was to be completed successfully and expeditiously
and engaged in 'color between the lines': conforming to organizational
rules, accepting existing organizational culture, and diligently complet-
ing their projects. A lack of actual power, or a perceived sense of lack of
empowerment, led to the limitation of criticism and the consideration
of more creative approaches to the tasks that they were given. 'Coloring
between the lines' was more concerned with observing organizational
norms rather than with work practices and procedures.
Capstone Experiences and their Liminal Possibilities
Internships, like any social arrangement, can develop into systems that
do not distribute power, cost, and benefit symmetrically. Internships that
provide optimal advantages for all stakeholders distribute learning ben-
efits to all those engaged in the process. When there is a more even dis-
tribution of benefits, stakeholders are encouraged to maximize their in-
vestment by sharing and contributing to the system rather than seeking
short-term, private gains. Collegiate business internships - which bring
together capable students, interested firms, and far-sighted colleges - are
essentially synergistic: capable of producing more benefits than their in-
dividual resources might indicate possible.
Synergism is desirable in all internship programs, however within the
context of transforming societies and economies the possibility of gen-
erating synergistic outcomes is particularly salient. By moving all par-
ticipants beyond self-perceived boundaries for engagement and inter-
action, internships can become powerful ways of disseminating knowl-
edge, initiating information networks, and promoting productive reflec-
tion on practice. Thus conceived, internships can act as pathways that
allow for the flow of information and innovation. Internships can also
set the scene for an increase in both personal and social capital within
the system constituted by stakeholders - a point we shall return to later.
Internships become self-limiting when stakeholders define, or antici-
pate, learning objectives or program outcomes that are excessively nar-
row, specific, or non-generalizable. Internships can certainly be narrow
training experiences and as such they will have limited short-term ad-
vantages to stakeholders. However, they can also be understood as much
richer educational and experiential opportunities. For all parties to ben-
efit from such opportunities, care must be taken in setting, and commu-
nicating, learning outcomes that are useful to interns, sponsoring firms,
and collegiate initiator.
Potentially, internships represent a powerful form of capstone experi-
ence in professional education. Capstone experiences can be defined as
(Fairchild and Taylor 2000): 'Culminating experiences in which students
synthesize subject-matter knowledge they have acquired, integrate cross-
disciplinary knowledge, and connect theory and applications in prepa-
ration for entry into a career.'
Significantly, from the outset, capstone experiences were recognized
as being vital social experiences, marking rites de passage between aca-
demic study and the work-world, and allowing for liminal introspection
and adjustment (Durel 1993). In the mechanics of initiating and support-
ing internships, the significance of the rite de passage and the powerful
liminal space that these experiences offer is often marginalized by more
pressing administrative, technical, and practical requirements.
Internships perceived by stakeholders as excessively instrumental, be-
come mere functional arrangements that lack - or at least do not allow
sufficient room for - liminal consideration. Often, students do not ap-
preciate the complexity of the transition from structured college learning
to self-directed work life and career. They may see the present and the fu-
ture, as it were, but remain unclear about middle stage in the tripartite
rite de passage - the liminal stage, which provides psychological space
and social ambiguity for the transition (van Gennep 1960; Turner 1969).
Rites de passage are not limited to students. In contexts where organi-
zation, or the economics and societies within which they are embedded,
are themselves in transition, liminal opportunities provide the chance
for members of the sponsoring organization to reframe, reorder, and re-
present change. The internship can thus serve as a liminal space in which
all stakeholders - not simply the interns - can meet and reconsider past
and future. Liminality requires a dislocation from previous norms, roles,
and expectations: Victor Turner (1969) referred to it as a 'moment in and
out of time'. Moments in and out of time are beneficial for individuals,
or organizations, moving from one state to another.
reframing internships: enhancing opportunities
The themes that emerged from the experiences of our interns were de-
scriptive of their experience; however, we see them as also represent-
ing limits prematurely imposed on the internship experience. Compared
with the language of richness, liminal quality, and space for adjustment
(Durel 1993), interns described an experience that was much more lim-
ited and bounded.
We believe that the original richness of the internship experience is
particularly salient for business graduates and organizations in Central
Europe. We also believe that this experiential richness can be reinstated.
To do this, we suggest that internships should be constructed around six
dimensions that contrast with those revealed in our analysis. These di-
mensions, which must be clearly articulated as learning objectives and
supported institutionally throughout the internships, are: (1) generaliz-
able and transferable learning; (2) discovery of self in work; (3) reflection
and process; (4) liminal experiences; (5) challenging and reconsidering
theory; and, (6) considering transformational possibilities. We will con-
sider briefly what we mean by each of these.
generalizable and transferable learning
This can involve: (a) an integration of 'theory and practice, classroom
learning, and professional experience', and (b) 'learning how to learn
from experience' (Clark 2003). The collegiate-sponsored business intern-
ship is primarily a learning experience, not a work commitment. Expe-
riential learning that is encouraged and supported is most valuable to
the intern when the experiences can be reflected upon and generalized.
Skills acquired, and knowledge gained, are optimized when they can be
transferred from a specific task environment to a broader one.
discovery of self in the work
The internship can lead specific competencies and skills but it can also
provide a much broader challenge: discovering something about the na-
ture of work and about ourselves. While interns have previously seen
narrow range competence acquisition as important, the nature of work
and of career continues to change significantly (Arnold 1997). Adaptabil-
ity, innovation, a greater propensity to work with others, and personal
ownership of career trajectories all mean that intra- and interpersonal
skills are increasingly required in the workplace.
Interns, rather than leaning more about what to do, can begin to un-
derstand why things are done and often done in ways that seem strange
and counterintuitive. For example, while an internship can enhance spe-
cific marketing skills this does not preclude using the experience to gain
a deeper insight into the culture of the workplace, distribution of power,
organizational behavior, and the politics and dynamics of change.
reflection and process
Work experiences can provide the basis for understandings about self
and generalizable knowledge of organization contexts, but this requires
interns to reflect on what is being done, or being experienced (Kolb
1984). Argyris and Schön (1978) characterized this as 'double loop learn-
ing'; Schön (1987) as 'reflective practice'. Sue Campbell Clark (2003) sug-
gests strategies such as requiring interns to produce academic work prod-
ucts regarding their experiences, give presentations, keep daily journals,
and focus on interpersonal competencies within the work setting. Re-
flection encourages students to consider what they have encountered to
recognize the process of which they have been a part. Reflection chal-
lenges interns not to consider themselves passive in the internship expe-
rience, but rather as active observers and commentators on their work
engagement.
liminal experiences
Internships neither mark the end of academic studies nor the beginning
of employment: they exist as an interface between the two. We believe
that students should be advised and helped to view the internship as a
liminal experience (Gennep 1960) - a 'threshold' period disconnected
from, but related to, an academic past and a work-centered future. Limi-
nal experiences present an opportunity for participants to detached from
the ongoing process of 'becoming' and consider their present more criti-
cally: 'the characteristics... are ambiguous; he [sic] passes through a cul-
tural realm that has few or none of the attributes of the past or coming
state' (Turner 1969, 94). A focus on liminality allows interns to recognize
the 'living moment' from which they can consider the structures that
shaped their academic pasts and the work engagements that will shape
their futures.
CHALLENGING AND RECONSIDERING THEORY
Interns are eager to see their coursework and theory in action. They want
to understand the applicability of what they have learned, and to im-
press their sponsors with their ability to perform. They consider them-
selves lacking organizational power and are not usually empowered by
the firm in which they are working. We consider that they should be
at least minimally empowered, perhaps through formalized mentoring
programs, and encouraged to reappraise and reconsider theory in prac-
tice. We should demand that interns consider critically the extent to
which theoretical positions and explanations are helpful in their work
context. Internships should provide students with the opportunity to
make up their own minds on matters that have often been presented in
the classroom as remote, confirmed, and immutable. Internships should
also encourage interns to communicate and share these experiences and
findings with the firms that they have worked with.
transformational possibilities
Rather than internships being regarded as passive events, we see them as
a powerful confluence of benefits and opportunities for all stakeholders.
Rather than focusing on limited, short-term benefits, interest internships
should be recast as the opportunity for student and organizational learn-
ing. Rather than color between the lines we see the opportunity, and the
resulting benefit, for novel, creative, and challenging engagements be-
tween interns and their sponsors. Again, such an opportunity cannot
lead to truly transformational possibilities unless there is a reconsidera-
tion of not only the scope but also the power associated with internships.
Enhancing the Transformative Potential of Business Internships 295
Conclusion
Potentially, internships are powerful experiences for all stakeholders.
They bring interns who are engaged - sometimes thoughtfully, some-
times not - with their own rites de passage into work environments that,
while often seeming stable, are not themselves immune from the turbu-
lence of internal and external environments. They often bring together
different perspectives, knowledge, and outlooks. Internships are most
powerful when they allow reconsideration, new learning, and reflection
to take place among those involved.
Internships are not costless, and often the sponsoring organization
questions the use of resources, or sees the intern as a source of free,
or cheap, labor (Scott 1992). However, rather than being understood as
short-term costs, internships can be more productively viewed as long-
term investments in both human and social capital. Internships create
new networks, which would probably never have existed otherwise, be-
tween participating actors. These networks allow for the flow of infor-
mation, creation of personal contacts, and may provide bridging social
capital within the wider community (Granovetter 1973). We recognize
that in the transformative economies within which our internships have
taken, or will take place, one of the post-communist legacies has been
an erosion of social capital (Fidrmuc and Gerxhami 2005; Paldam and
Svendsen 2001). Internships, viewed and organized as investments in so-
cial capital, may be more attractive to all stakeholders rather than when
considered as limited investments in human capital.
While students see internships as being useful and positive experi-
ences, they also view them in a manner that restricts an expression of
the richer possibilities of the engagement. Interns, and those providing
internships possibilities, may benefit from a more carefully articulated
understanding of the possibilities afforded by these learning experiences
and a more active support system during the actual engagement. Intern-
ships provide multiple benefits for all stakeholders but, our analysis sug-
gests that many of these benefits - such as the possibility of a liminal
space, room for reflection on the nature and process of the job, syner-
gistic linkages, and bridging social capital investments - are not being
utilized. Of the three stakeholders, it is the initiating institution of higher
learning that is best placed to redefine the learning goals and possibilities
of internships and to provide an academic framework not only for en-
suring that academic credit is awarded for valid educational experiences,
but also for allowing the other participants to obtain optimal benefit.
Interns need to be better prepared for the learning opportunities that in-
ternships provide; encouraged to recognize short-term assumptions and
limits of instrumentality in the internship; and receive ongoing support
in their process of reflection on the experience. Likewise, sponsoring or-
ganizations should be helped to view internship programs as long-term
human and social capital investments, benefiting all those who engage in
the process.
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Impact of Strategic Initiatives in Management
Accounting on Corporate Financial Performance:
Evidence from Amman Stock Exchange
Husam Aldeen Al-Khadash
Mete Feridun
This article aims at investigating the link between the practice of Activ-
ity Based Costing (abc), Just-in-Time (jit), and Total Quality Man-
agement (tqm) as strategic initiatives and the improvement in corpo-
rate financial performance of 56 industrial shareholding companies in
Jordan. Ordinary Least Squares Regression analysis is used to test the
association between the awareness level of the importance of using the
initiatives and the level of adopting these initiatives. It is also used to
identify the improvement in roa as a mean of financial performance
which is associated with the initiatives. Analysis shows that 26.8% of
the companies under consideration use at least one ofthe strategic ini-
tiatives. In addition, the awareness level of the importance of using the
strategic initiatives is found to be significantly high among the financial
managers, but such awareness is not reflected in the implementation of
these initiatives. Furthermore, strong evidence emerges that the use of
strategic initiatives leads to improvement in financial performance of
the companies under consideration.
Key Words: abc, jit, tqm, strategic initiatives, improvement
in financial performance
jel Classification: E32, E50
Introduction
Productivity and quality are the watchwords in today's business com-
petition. Companies are not only measuring productivity and insist-
ing on improvements but also insisting that quality means bringing to
market products that satisfy customers, improve sales, and boost prof-
its. With greater competition in the manufacturing environment defined
by cost, quality and time issues, there exists a prevalent conviction that
conventional accounting-based measures of organizational performance
Dr Husam Aldeen Al-Khadash is an Associate Professor at the
Accounting Department of the Hashemite University, Jordan.
Mete Feridun, ms c, is a Lecturer at the Faculty of Economics and
Administrative Sciences, Cyprus International University.
are outdated (Nixon 1998). Hence, there are moves to adopt newer tech-
niques due to greater needs to be more responsive to investor and cus-
tomer needs. It is argued that the traditional approaches of managerial
accounting have limited evidence of technical development in response
to the major changes in manufacturing technology in the past 15 years.
Management accounting was the captive of financial reporting. It had
limited value by its focus on the factory floor. Consequently there was
a need for developing a management accounting project oriented to-
wards the strategic accounting rather than the management control pro-
cess. Some of the strategic initiatives techniques are Activity Based Cost-
ing System (abc), Just-in-Time (jit), and Total Quality Management
(tqm). Pricing decisions are usually based on an accurate calculation of
the costs of service and units produced. This is in turn calls for creating
an effective costing system. The most appropriate system in this regard
is an Activity-Based Costing System (abc). In fact, the Activity-Based
Costing System is an alternative system that can replace the conventional
systems used for allocating common costs. However, the growing inter-
est and tendency to use this system is attributed to various advantages
achieved through the system. Perhaps, most prominent of these advan-
tages involve improving performance measures, providing more accu-
rate and appropriate measures for pricing decision-making, rationaliz-
ing production costs, and choosing the optimal production combina-
tion. Another production system, Just-In-Time (jit), adopts a precise
system for inventory control along with an efficient information system
for full coordination between productivity on the one hand, and sup-
pliers on the other hand. In addition, coordination is also sought for
transporting supplies according to proper specifications, quantities and
in a timely manner and within the framework of a stable business en-
vironment. This system reduces costs of production, preparations, re-
operation, transport, disposes of surplus production and waiting time,
and continually improves performance especially within the context of
the prevailing severe competition. Total Quality Management (tqm), on
the other hand, represents a natural expansion of the intensive efforts
which are intended to upgrade and improve firm performance through
quality control of products. The present study aims at filling the gap in
our literature concerning the case of using strategic management ini-
tiatives such as abc, jit and tqm, and to investigate its impact on the
financial performance. Few attempts have been found in terms of de-
veloping countries, and that includes Jordan. Under this reality, many
researchers concluded that most of strategic management practices sur-
veys and literature have focused upon developed countries. Therefore,
the principal objective of this study is to provide evidence about the ex-
tent of using abc, jit and tqm, and to investigate its impact on the
financial performance. Specifically, the objectives of this study are as fol-
lows:
1.	Providing an up-to-date description of the level of using abc, jit
and tqm in the Industrial Jordanian Shareholding Companies.
2.	Investigating the associations between companies' financial perfor-
mance and the level of using abc, jit and tqm.
Literature Review
Several studies such as Hendricks and Singhal (1999) have provided ev-
idence that strategic initiatives are associated with improved financial
performance. Some proponents of abc argue that its methods are nec-
essary to trace overhead costs to objects, and thus properly account for
batch and product-level costs (Cooper, 1990), manufacturing complexity
(Jones 1991), specialty produce costs (Srinidhi 1992) and diverse business
environments (Cooper & Kaplan, 1988). Although abc systems are most
of ten associated with manufacturing companies, they can be applied in
all types of organizations (Tanju and Helmi 1991). Many authors recom-
mend using abc to support process improvement (Turney 1991) while
several reservations have been expressed regarding the efficacy of abc
(Innes, Mitchell, and Sinclair 2000). jit is simple in theory but hard
to achieve in practice. This is because a problem anywhere in the sys-
tem can stop all production. Hence, supplies must provide defect-free
materials when they are required and equipments must be maintained
so that machine failures are eliminated. One example: Coca-Cola enter-
prises and fast-food operators in usa have adapted jit strategy and that
leads to reducing the costs and to speeding the flow of finished products
to customers (Atkinson et al. 2001). Total Quality Management (tqm)
has been one of the most popular business models of the last fifteen years,
widely embraced by many organizations (Hendricks and Singhal 1999).
tqm is a concept based on continuous improvement in the performance
of all processes in an organization in the quality of the products and ser-
vices that are the outputs of those processes. Several quality experts have
suggested that a commitment to total quality will result in improved per-
formance in profitability measures (Hendricks and Singhal 1999).
Many previous studies (Roberts and Sylvester 1996; Dixon 1996) sug-
gested that organizations adopted the management initiatives such as
abc, jit and tqm to obtain benefits that directly or indirectly impact
financial performance measures. From the theoretical perspective many
evidences regarding the benefits of abc have been provided (Barnes
1991; Brimson 1991). Empirically researches on abc have generally con-
sisted of modeling the factors that lead to successful abc system. Suc-
cess has been defined as 'use for decision making' (Innes and Mitchell
1995; Krumwiede 1998), satisfaction with the costing system, perceived
financial benefits or non financial benefits (Krumwiede 1998; McGowan,
1998). Also some researches such as Cagwin and Bouwman (2000) pro-
vided evidence that abc improves financial performance. A local study
done by (Khasharmeh 2002) about the practice of abc in Jordanian
manufacturing companies in 2002 revealed that only 10% of Jordanian
manufacturing companies use the abc system. It also revealed that 75%
of the respondents agree and 25% strongly agree that the use of abc im-
proves the company's performance in general. Huson and Nanda (1995)
find that jit adopters have enhanced earnings per share after control-
ling for average industry unit costs, margins, turnover and employees per
sales dollar. Kaynak (1996) finds that financial and market performances
are enhanced for firms using both tqm and jit purchasing. Easton and
Jarrell (1998) find evidence that a very broadly defined tqm is associ-
ated with the variance between actual financial performances. Kinney
and Wempe (1998), on the other hand, report that jit positively affects
ROI in the 1-4 year period following jit adoption. Finally Hendricks and
Singhal (1999) find a link between change in roa and implementation of
tqm for a sample of quality award winners.
In light of the theoretical framework of this study and related previous
studies, the null hypotheses are provided as follows:
H01: Jordanian shareholding companies do not use strategic initiatives
(i. e. abc, jit, tqmJ.
This hypothesis aims at testing the level of applying the new strategic
initiatives which are widely known in management accounting, it will
provide an up-to-date description of the level of using abc, jit and tqm
in the Industrial Jordanian Shareholding Companies.
H02: Financial managers of industrial Jordanian shareholding compa-
nies are not aware enough of the importance of using strategic initia-
tives (i. e. abc, jit, tqmJ.
It is generally known that using a new strategy in an appropriate way
necessitates that users should be aware enough of the benefits which
come out as a result of that use, otherwise the importance of utilizing
a new strategy will not be sustained, consequently this hypothesis aims
at testing the level of awareness of the financial managers in the Jorda-
nian shareholding companies of the importance of utilizing the strategic
initiatives in management accounting.
h03: No significant relationship exists between the awareness level of fi-
nancial managers of the importance of using abc, jit and tqm and
the level of adopting these initiatives.
This hypothesis aimed at testing if there is any relationship between
the awareness level of using the strategic initiatives and the actual adap-
tation of these initiatives, it is expected that high level of awareness might
lead to more application of the initiatives and, if that is factual, so the
level of adaptation might be predicted with level of awareness.
H04: No significant relationship exists between the level of using abc,
jit and tqm and the financial performance.
From the theoretical point of view and based on the results of some
previous studies it is expected that using strategic initiatives in man-
agement accounting will lead to provide management with a consider-
able information that might enhance the way that the management is
running, and offcourse that will affect the financial performance of the
company. Consequently this hypothesis aims at testing the relationship
between the level of using abc, jit and tqm and the financial perfor-
mance.
In order to support the result of this hypothesis the following one is
also suggested to see if any difference exists between the financial per-
formance of Industrial Jordanian Shareholding Companies which use at
least one of the initiatives and those are not.
H05: No significant difference exists between the financial performance
of Industrial Jordanian Shareholding Companies which use at least
one of the initiatives (i. e. abc, jit, tqmJ and those companies which
do not use any of such initiatives.
Data and Methodology
The study population consists of all Industrial Jordanian Shareholding
Companies which are listed at Amman Stock Exchange by the end of
2003. However, the following companies will be excluded:
1.	Companies which are still in the foundation phase and which have
not yet commenced their business operations.
2.	Companies whose shares have not been traded within Amman
Stock Exchange during 2003.
3.	Companies under liquidation.
The industrial companies sector has been selected for conducting this
study because it is one of the largest sectors listed within the Amman
Stock Exchange, and which most needs to implement modern concepts
of managerial accounting (i.e. abc, jit, tqm). The total number of
companies included was 59, and phone calls were made to all these
listed industrial companies to identify those companies which applied
the strategic initiatives. In other words, this total number (59) is thought
to be 'large' enough from which to get meaningful and reliable results
and 'small' enough not to consider determining a sample. Out of the
total (3) companies did not cooperate, so at the end (56) companies were
investigated. It is found that six companies are using the abc and eight
companies are using the jit while just four companies are using the con-
cept of tqm. In total, the number of companies which use at least one of
the initiatives was 15 out of 59. The survey was sent to the 59 companies
and the financial managers were asked to answer some specific questions
and to indicate their level of agreement with a number of closed-end
statements. These statements are based on a five-point scale. The survey
was personally handed to all respondents. To improve the response rate,
all selected companies were then followed up with a phone call and later
on by a personal visit to collect the 'filled' copy of the survey. A striking
feature of our survey is the response rate. Due to the fact that the head-
quarters of most of the companies are located in the capital (Amman),
and a specific person has been appointed for a period of two months
to follow up the respondents and to collect all responses, it is not really
surprising that the response rate is about 95%.
data collection tool (questionnaire)
The survey instrument was developed based on the discussion presented
in the theoretical framework and the questions were developed after a
thorough review of strategic management techniques survey questions
found in prior research. Questions were reviewed, critiqued by other
quality researchers and accounting departments at several universities
and went through several rounds of revisions. Careful attention was
given to making sure that the wording of each question was clear, con-
cise and described only one concept. The survey intended to measure
the extent to which level Industrial Jordanian Shareholding Companies
are using strategic initiatives of managerial accounting (i.e. abc, jit,
tqm) along with the extent of the financial managers' belief in the im-
portance of such use, and their awareness of such importance. The main
four parts of the questionnaire are as follows: Part One which seeks to
find out the extent of using the initiatives (i.e. abc, jit, tqm) and the
respondent's belief in the importance of using such initiatives. Part Two
aims to measure the degree of awareness on the implementation of the
Activity-Based Costing (abc) system. Part Three is intended to measure
the degree of awareness on the implementation of the Just-In-Time (jit)
production system and finally Part Four is designed to measure the de-
gree of awareness on the implementation of concepts of Total Quality
Management (tqm). It is noteworthy that the answers to questions in
parts two, three and four have been worded by using the Likert scale for
measuring degrees of agreements. So, five answers have been given to
determine the extent of responses (i. e. extremely large, large, medium,
little and very little).
methods of data analysis
For the purpose of analyzing the data and testing the hypotheses, the cur-
rent study used the descriptive statistical analysis such as the mean and
the standard deviation, also simple regression analysis is used to test the
association between the level of awareness of the importance of using the
initiatives and the level of adopting these initiatives. Multiple regression
analysis is used to identify the improvement in roa as a mean of finan-
cial performance which was associated with the initiatives. Furthermore
one sample t-test is used to test hypothesis number 5.
the models of the study and analyzing the results
As mentioned earlier, the survey instrument intended to gather infor-
mation about the level of using the well-known strategic initiatives: abc,
jit and tqm in addition to some information about financial managers'
awareness of the importance of using these initiatives. Also annual re-
ports were used to collect information about the roa in order to test
to what extent the initiatives are related to the level of financial perfor-
mance (roa). As expected, and as has been noted by some other studies
such as Balakrishnan, Linsmeier, and Venkatachalam (1996) in their dis-
table 1 Non-users vs. formal users of initiatives
Initiatives (abc,	jit and tqm)	Number	Percentage
Users		15	26.8%
Non-users		41	73.2%
Total		56	100%
table 2 The Awareness Level of the Importance of Using Initiatives			
	abc	jit	tqm
Mean	4.475	4.393	4.467
Std.	0.48	0.63	0.51
cussion of strategic initiatives, a firm's pre-adoption operating efficiency
will influence its roa response to the increased efficiency of initiatives
use. The strategic initiatives implementation variables measure the ex-
tent to which a firm is actually practising the strategic initiatives philos-
ophy. The variables are expressed as a percentage of total possible strate-
gic initiatives implementation, and calculated using the responses to the
management practices questions from the survey. As tabulated in table 1,
it is noted that (26.8%) of the selected companies showed a use of at least
one of the strategic initiatives i. e. abc, jit and tqm.
Consequently, the first null hypothesis will be rejected and we can
say that the Industrial Jordanian Shareholding Companies are using the
strategic initiatives.
the level of awareness
In order to reach a level of good practice of the strategic initiatives, there
is a need to get support from the top management. The top management
might do so if it is aware enough of the importance of using the strategic
initiatives. Top management is responsible for strategic planning, setting
goals, authorizing strategic initiatives and allocating resources to enable
implementation and support of all plans and initiatives. Top manage-
ment awareness and commitment is necessary to implement and sustain
a quality program and is an essential element for achieving successful
implementation of strategic initiatives (Ahire, Golhar, and Waller 1996;
Barker and Cagwin 2000). The results of analyzing the answers to the
questions were used to measure the top management awareness, and are
shown in table 2.
Consequently, and based on the results shown in table 2, it might be
concluded that financial managers of Industrial Jordanian Shareholding
Companies are aware enough of the importance of using the strategic
initiatives, i. e. abc, jit and tqm. The means for initiatives are all above
4, so hypothesis number two is rejected, since the maximum score was 5
which indicates strongly agree.
The Association between Adopting the abc, jit and tqm and the
Awareness Level of the Importance of Using the Initiatives:
This section comes to test if there is any association between the aware-
ness level of the importance of using abc, jit and tqm and the level
of practicing the initiatives. It might be argued that if the managers are
aware enough of the importance of using the initiatives, then the level of
practicing these initiatives is higher in comparison with a case of lower
level of awareness. Consequently, testing of hypothesis number three is
achieved through estimation of the following regression models:
ABCit = a + lAABCit + eit,	(1)
where
ABCit represents the level of adopting the abc,
AABCit represents the awareness level of financial managers of the im-
portance of using the abc,
eit represents the unexplained error of the regression model utilized.
JITit = a + lAJITit + eit,	(2)
where
JITit represents the level of adopting the jit,
AJITit represents the awareness level of financial managers of the im-
portance of using the jit,
eit represents the unexplained error of the regression model utilized.
TQMit = a + lATQMit + eit,	(3)
where
TQMit represents the level of adopting the tqm,
ATQMit represents the awareness level of financial managers of the
importance of using the tqm,
eit represents the unexplained error of the regression model utilized.
As shown in table 3 none of the suggested regression models was sig-
nificant at the level of .05. This result confirms that no relationship exists
between the awareness level of the financial managers of industrial Jor-
danian shareholding companies of the importance of using abc, jit and
table 3 Use of Management Initiatives and the Awareness Level
Regression model	Adjusted R2	F	Sig
Regression model 1 (abc)	.253	4.045	.079
Regression model 2 (jit)	-.087	.277	.613
Regression model 3 (tqm)	.042	1-391	.272
tqm and the level of adopting abc, jit and tqm respectively. Conse-
quently hypothesis three is accepted. This result gives an indicator that a
high level of awareness is not associated with a real practice of the initia-
tives, an expected explanation for such results might be that while finan-
cial managers are aware enough to the importance of using the strate-
gic initiatives of managerial accounting as shown in the previous results,
the top management - which is the decision maker - probably does not
take a real action toward adopting these initiatives. So the high awareness
level of financial managers does not mean a high awareness level of top
management.
test of association between strategic initiatives
and financial performance
Testing of hypothesis number four is achieved through estimation of the
following multiple regression:
ROAit = + lABCit + 2 JITit + 3 TQMit + eit,	(4)
where
ROAit represents the change on return on assets,
ABCit represents the level of adopting the abc,
JITit represents the level of adopting the jit,
TQMit represents the level of adopting the tqm.
The result of testing model 4 shows a significant relationship between
financial performance and the level of using strategic initiatives. Conse-
quently, and based on the figures shown in table 4 and table 5, hypothe-
sis number four is rejected, so it might be argued that the level of using
abc, jit and tqm has a positive effect with the financial performance.
This confirms with the results of the previous studies which found a sig-
nificant positive association between the use of management initiatives
and improvement in financial performance.
Furthermore, a t-test is utilized in order to test hypothesis number
five which examines if any difference exists between the financial perfor-
Impact of Strategic Initiatives in Management Accounting 309
table 4 The results of regression model 4
F	152.73
P-value	0.000
R2	0.762
Adjusted R2	0.743
Coefficients (dependent variable: roa)	T Sig.
Constant	5.265 .000*
tqm	3.693 .004*
jit	2.717 .020*
abc	2.590 .025*
*	Significant at a = 0.05
table 5 Correlation matrix of the study variables
roa abc	jit tqm
roa 1.00 —	— —
abc .265* 1.00	— —
jit .346 .195**	1.00 —
tqm .393 .287**	.673** 1.00
*	Significant at a = 0.05, ** significant at a = 0.01.
mance of Industrial Jordanian Shareholding Companies that use at least
one of the initiatives (i. e. abc, jit, tqm) and those do not use any of
such initiatives. The results of the formal test of the hypothesis are re-
ported in table 6. The model is significant with an F-statistic of 6.841 and
the level of significance was .031.
Consequently, a significance difference exists between the financial
performance of Industrial Jordanian Shareholding Companies which use
at least one of the strategic initiatives and those companies which do not
use any of such initiatives. Such results confirm the previous results in
table 6 anova analysis
roa	F	Significance	T
Equal variances	6.841	.031*	1.587
assumed			
Equal variances	—	—	1.587
not assumed			
* Significant at a = 0.05.
terms of the relationship between the using of strategic initiatives and
improvement in financial performance.
Conclusion and Recommendations
As management accounting continues to evolve and become more in-
volved in the strategic management of the firm, it is important for man-
agement accountants to understand not only how to account for strate-
gic initiatives (e.g., tqm), but also how these initiatives should be im-
plemented and managed to achieve maximum benefit for the firm. This
paper investigates whether the financial managers of the Industrial Jor-
danian Shareholding companies are aware of the importance of using the
initiatives and whether strategic initiatives are associated with improve-
ment in financial performance in the manufacturing sector or not. The
primary goal of the firm is to achieve and improve financial profitability
(Galbraith 1985; Chenhall 1997) and it is vital that firms have empirical
evidence of the effectiveness of strategic initiatives. This is particularly
true in the case of abc, jit and tqm since there is considerable doubt as
to the efficacy of abc, jit and tqm as initiatives that can assist in achiev-
ing improved financial performance. Based on the empirical results, it is
found that 26.8% of the Industrial Jordanian Shareholding Companies
are using at least one of the strategic initiatives. Moreover, the empirical
evidence shows that the awareness level of the importance of using the
strategic initiatives is high among the financial managers, but such a high
level is not associated with the level of adopting these initiatives. Further-
more, it is found that there is a strong positive association between us-
ing abc, jit and tqm and improvement in financial performance. This
is consistent with prior research such as Balakrishnan, Linsmeier, and
Venkatachalam (1996) and Huson and Nanda (1995). A fruitful direction
for further research would include replicating similar models on a larger
sample and a longer time series to see whether these results continue
to hold for the ase. The conclusion of the study was directed from the
results of this research that might be subject to some limitations. One
of these is the model specification, consequently some of the results de-
pend on the accuracy of the linear regression models. If the model is
not relevant so the results would be distorted. The other limitation to
be mentioned is the dealing with the industrial sector and ignoring the
other sectors in the ase. Furthermore, aalthough the respondents were
targeted top executives with knowledge of abc, jit and tqm, it is possi-
ble that their responses do not represent actual company practices.
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Risk Taking Propensity and Export Performance
of Croatian Exporters
Mirna Leko-Šimic
Jasna Horvat
Export performance is today one of the most widely used measures of
a company's success, due to the globalization and market liberalization
processes. The rather bad export performance of Croatian exporters
can be explained by a number of factors, one of which is assumed to
be the low level of risk taking propensity, which is one of the three ma-
jor dimensions of entrepreneurial behavior. The aim of this paper is
to analyze company age, size and type of business as determinants of
risk taking propensity in Croatian exporting companies. Cluster anal-
ysis based on four variable criteria was used in order to determine risk
and non-risk takers' clusters and analyze the significant differences be-
tween them in relation to their export performance. The paper is based
on research of 88 Croatian exporters.
Key Words: export performance, risk taking propensity, statistical
analysis, international business, entrepreneurship
jel Classification: d21, M13
Introduction
Globalization and market liberalization processes determine to a large
extent companies' behavior in both the domestic and the international
market. Doing business internationally becomes a crucial element of
company survival and growth, but it also involves higher risk. Therefore
a number of studies are concerned with companies' risk taking propen-
sity (Begley 1995; Keh, Foo, and Lim 2002; Das and Teng 2001 and others).
Some of the studies of risk taking propensity deal with it specifically in
the context of internationalization of business (Hisrich et al. 1996; Oviatt,
Shrader, and McDougall 2004; Fernandez and Nieto 2005). This research
is focused on Croatian exporting companies and analysis of their risk
taking propensity.
Dr Mirna Leko-Šimic is a Professor at the Faculty of Economics,
University of Josip Juraj Strossmayer in Osijek, Croatia.
Dr Jasna Horvat is an Associate Professor at the Faculty of Economics,
University of Josip Juraj Strossmayer in Osijek, Croatia.
Out of 67,000 registered companies in Croatia there are only about
6,700 (10%) exporting companies. Among them, only 3,144 can be called
active exporters that made export value of over 1 million kuna (Croatian
currency equaling about 135,000 Euro) in 2003. Over 95% of Croatian
exports are made by large groups or companies. At the same time, the
long-term export results in Croatia are rather unsatisfactory: imports are
constantly growing and exports are stagnating, thus creating a disturbing
balance of trade deficit.
The research (Izvoznik 2004) has shown that most managers in Croatia
see several reasons for such a situation:
•	problems with export financing,
•	non-competitive export prices,
•	insufficient or bad promotion activities, and
•	export products' quality.
Obviously, some of the mentioned reasons can be associated with risk
taking propensity. The aim of this paper is to analyze the risk-taking
propensity of Croatian managers of exporting companies and find out
if and how it influences their export performance.
There are four major hypothesis tested in this paper:
h1: Risk taking propensity is correlated with company size.
As it was noted by Balabanis and Katiskea (2003) company size directly
influences risk taking propensity; a greater pool of resources gives larger
companies more space to take risks and spread them among different
products and markets. It also enables larger companies to tolerate losses
from unsuccessful entrepreneurial efforts. Therefore, it was expected that
larger companies would have a higher level of risk taking propensity.
h2: Risk taking propensity is correlated with company age.
The fact that older companies are usually more bound by traditions
and routines in product and market choices and therefore less willing to
take additional risks made us state the hypothesis that older companies
would have a lower risk taking propensity.
H3: Risk taking propensity is correlated with type of business.
In our research the distinction was made between traditional, i. e. la-
bor intensive and non-traditional, i. e. technology and knowledge inten-
sive types of businesses. The non-traditional types of businesses were ex-
pected to have the higher level of risk taking propensity, since technology,
and especially knowledge are more likely to develop learning skills for
adaptation and successful growth in new environments than are compa-
nies more dependent on traditional tangible resources (Autio, Sapienza,
and Almeida 2000).
H4: Higher risk taking propensity results in better export performance.
As export markets are by definition more hostile than domestic one,
and they differ to a certain level in market dynamism and diversity, it
is usually necessary to take more risks when exporting than when do-
ing business only in the domestic market. Therefore it was expected that
companies that have better export performance would also have a higher
level of risk taking propensity.
In order to test this hypothesis, a sample of 88 Croatian exporters
was analyzed: they were clustered into 'risk-taking' and 'non-risk tak-
ing' segments, and their differences according to sample characteristics
and managers' perception of external market characteristics (environ-
ment hostility, diversity and dynamism) were analyzed. Thereafter, the
two clusters were analyzed with statistical inferential analysis against dif-
ferent aspects (objective and subjective) of export performance. The re-
sults are presented in this paper.
Theoretical Framework
risk taking propensity and risk perception
Risk propensity can be defined as a tendency to take or avoid risks. It is
a relatively stable characteristic but can be modified through experience.
Although it is viewed as an individual characteristic, the positive associ-
ation between risk propensity and risky decision-making by individuals
is expected to translate to organizations through top management teams
(Panzano and Billings 2005).
Risk perception is the perceived degree of risk inherent in a certain
situation.
Risk taking is defined as one of the three dimensions of entrepreneurial
orientation of a company and refers to the willingness of the manage-
ment to commit significant resources to opportunities that might be
uncertain (Junehed and Davidsson 1998). Risk taking depends on risk
propensity and risk perception. The higher the risk propensity and
the lower the risk perception, the more likely it is that risky decisions
will be made. Hostile environments, as are most international markets
in comparison to the domestic one, speak in favor of using the en-
trepreneurial strategy (involving higher risk-taking willingness). There-
fore, risk-taking initiatives should be more necessary in order to achieve
good results in hostile markets. Or, in other words, mangers who dare to
take more risks, take actions that are more suitable and perform better.
Abby and Slater (1989) found that management which has an interna-
tional vision, favorable perception and attitudes toward exports, is will-
ing to take risk and has the capacity to engage positively in export activ-
ities is likely to lead a company to export success.
In order to reduce risks, managers need to know which variables influ-
ence their export performance. If they have a higher risk-taking propen-
sity, they positively affect export performance.
export performance
Export performance is today one of the most widely used measures of
a company's success, due to the globalization and market liberalization
processes. As a result of these processes, an increasing number of Croat-
ian companies have opted to engage in export activities. However, their
exporting results are far from satisfactory.
Over the years, researchers have generated numerous studies on ex-
ports many of which focus on the determinants of performance. Al-
though it is difficult to make generalizations, as much depends on the
companies' business position and the environment they operate in, some
determinants of export performance can be identified as general (Lefeb-
vre, Lefebvre, and Bourgault 1995): company's characteristics that in-
clude size and experience on international markets; competencies of a
company, i. e. how it organizes and uses its resources (management ca-
pabilities, information gathering activities and specific products or tech-
nologies); environment of the company, or what the company is influ-
enced by (characteristics of the industry, markets, government activi-
ties); and moderating factors which include strategy related variables,
such as marketing mix elements and the like.
The Appalachian Resource Centre Report (1997, see www.arc.gov) on
sme export performance includes the following findings:
•	the farther in the supply chain a company is situated, the lower its
value added, and the more closely it works with its customers, the
less likely it is to be an exporter;
•	company size is directly related to the probability that it exports,
but not necessarily to its success in exporting;
•	management is a key factor in export performance: the greater a
manager's innovativeness and knowledge, the greater the export
performance.
RISK taking propensity AND ExpORT pERFORMANCE
relationship
Internationalization process theories are rooted in behavioral models of
uncertainty avoidance. These models posit that internationalization pro-
gresses in a gradual and carefully controlled manner (Andersen 1993), in
that companies choose to export to countries that are physically and cul-
turally close to the home country and therefore require less resource in-
tensive investments and are perceived as lower risk. However, these con-
ventional theories on internationalization, where a period of domestic
growth is expected prior to a gradual expansion into foreign markets,
are being more and more contradicted today with a new term of global
entrepreneurship. Global entrepreneurship indicates an emergence of
mainly small companies that internationalize immediately or rapidly
(Jones and Coviello 2002). Its emergence is due to the following:
•	deregulation of international business,
•	improvement in transportation and information technology, and
•	emergence of knowledge based industries.
It seems that a lack of resources or appropriate knowledge is a lesser
barrier to these companies, and that they appear to recognize and accept
challenges and inherent risks in internationalization, and overcome them
in innovative and entrepreneurial ways.
The internationalization process and consequently the export per-
formance are influenced by the entrepreneurial behavior of the com-
pany owner/manager and of the company itself. Individuals, i. e. en-
trepreneurs with their mindset and attitudes towards internationaliza-
tion, as well as with the social capital they bring to the company, their
social networks, experience and general characteristics (for example, per-
ception of risk and their risk tolerance) affect organizational culture
and behavior. Beside that, company level behavior may be influenced by
other internal factors (organizational structure, strategy, resource avail-
ability, etc.) and external factors (environment hostility and diversity,
competition, legal framework, government support, etc.).
Exporting, in comparison to domestic business, is considered inher-
ently risky because it involves potential loss of profits or assets as a result
of potential changes in political, legal, economic and socio-cultural fac-
tors in foreign markets (Roth 1992). Marketing theory recognizes a whole
set of so called foreign transactional risks:
•	general stability risk, which refers to management uncertainty
about the future viability of the host country's political system,
•	ownership/control risk, which reflects the management uncertainty
about host government actions affecting the entrant's ownership or
control position,
•	operations risk, which is defined as a possibility of sanctions that
could constrain entrant's operations in the host country, and
•	transfer risk that refers to the limitations of entrant's ability to
transfer capital out of the host country.
All of these factors strongly influence the company's willingness and
commitment to exporting and, consequently, its export performance.
Miller (1992) recognizes two broad kinds of company actions consid-
ering foreign risk management: financial and strategic. Financial involve
insurance purchasing, different financial instruments, such as forward
contracts, swaps, options, etc. However, financial actions require the ex-
istence of insurance and financial markets, which sometimes do not ex-
ist. Therefore, most companies are required to use strategic actions to
manage some of the international risks. The most widely used strategies
are: imitation, i. e. copying the actions of another successful company in
market choice, marketing strategy, etc.; risk avoidance, which companies
apply when they believe that operating in a particular foreign market is
unacceptably uncertain; flexibility, which decreases the cost of internal
organizational adaptation to changing international circumstances; co-
operation with foreign or domestic partners in order to share risk, and
control, usually applied through vertical and horizontal integration.
Research
We have conducted a research into Croatian exporters in the period
March-May 2004. The data collection model was postal survey. A ques-
tionnaire was sent to a sample of 300 exporters, which were randomly
drawn from the Croatian Chamber of Commerce database as 10% of ac-
tive exporters. The sample covers the whole territory of Croatia, 25 types
of businesses according to sitc, three different company size groups ac-
cording to Croatian law, and five age groups ranging from 1 to 300 years.
The sample structure regarding the mentioned criteria does not differ by
more than + 4% of the total Croatian exporters. The key informant ap-
proach was used and the recipients of the questionnaire were chosen to
be managing directors of the companies. Four weeks after initial mailing
a reminder letter and a new questionnaire was sent to non-respondents.
At the end, a total of 90 questionnaires were returned and 88 of them
were usable for our research (2 companies were not exporting anymore).
The effective responsive rate reached 29.3%.
sample description
Table 1 (see p. 320) shows the major characteristics of the sample. Ac-
cording to business activity the sample was divided into two groups: one
that consisted of so called traditional activities that are characterized by
labor intensity, and the other that is mostly technology or knowledge in-
tensive. 46 companies (52.9% of the sample) belong to the first group
and 42 (47.1% of the sample) to the second.
The most common measure of company size in entrepreneurship as
well as in exporting research is the number of employees. According to
this criterion, 20.5% of the sample has 100 or fewer employees. 50% of
the sample employs 215 or fewer employees. Almost half (45.5%) of the
sample belongs to large companies. The largest company has 3,880 em-
ployees.
According to the company age the following pattern in our sample
shows: 50% of the sample is 44 years old or younger, i. e. 44 years old or
older. The oldest company is 400 years old. Only 12 companies in our
sample (13.6%) can be considered young (10 years or less).
Export performance was measured by objective measure of export
sales ratio and subjective measure of perceived satisfaction of company
managers with export performance. The analysis of exports sales ratio
shows that the majority of companies (46.6%) in the sample are large
exporters, selling over 50% of their products abroad. Overall export per-
formance was marked with an average of 3.36, which is not very high.
However, 47.7% of the sample marks the overall export performance with
very good or excellent.
questionnaire
Company risk-taking propensity was tested on two levels: one is accord-
ing to the sample characteristics: traditional vs. non-traditional activity,
company size and age; and the other according to general managers' eval-
uation on a 5 point Likert scale of the following criteria:
table 1 Sample description
n	Valid percent
Type of activity
Traditional (labor intensive) activities	46	52.9
Non-traditional (technology or knowledge	42	47.1
intensive) activities
Number of employees
Up to 50	13	14.8
50-250	35	39.8
250 and more	40	45.5
Company age
0-10	12	13.6
10-30	24	27.3
30-50	18	20.5
50-80	18	20.4
80-300	16	18.2
Export sales ratio
Less than 10%	9	10.2
10-25%	17	19.3
25-50%	21	23.9
Over 50%	41	46.6
Perceived satisfaction of export performance
Unsatisfactory	4	4.7
2	10	11.6
3	31	36.0
4	33	38.4
Excellent	8	9.3
Unanswered	2	0.01
•	risky business activities,
•	gradual implementation of new projects,
•	conservative approach to major business decisions,
•	strong hold onto existing and experienced procedures and projects.
The results were then checked against variables describing environ-
mental hostility (reliability of financial and material resources, possibili-
ties for business development, competition, industry settings and general
climate for business), environmental diversity (key foreign markets and
their economic and cultural diversity) and dynamism (importance and
influence of political, economic and cultural changes in the key export
markets).
Upon describing major differences of the defined clusters of'Risk tak-
ers' and 'Non Risk takers', we have checked the differences in export per-
formance of the two clusters.
Export performance was measured by the already mentioned objective
measure of export sales ratio and subjective measures of perceived satis-
faction of company managers with the following trends in their compa-
nies, again on a five point Likert scale:
•	export growth,
•	export profits growth,
•	international image and corporate identity development, and
•	overall export performance.
All these trends were used in order to capture both financial and non-
financial aspects of export performance.
The correlation between the export sales ratio and different aspects
of export performance measured by managers' satisfaction was checked,
and analysis has shown that the only statistically significant correlation is
between export sales ratio and mangers' satisfaction with export growth
(r = .293; p = 0.006)
Analysis and Results
Cluster analysis was used on the four above-mentioned variables that de-
fine risk-taking propensity, including the managers' personal opinion on
risk propensity. There are no completely satisfactory methods for deter-
mining the number of population clusters for any type of cluster analysis
(Everitt 1979; 1980; Hartigan 1975; Bock 1985), but our aim was to define
two stable clusters: risk-takers and non-risk-takers in order to test their
differences in relation to export performance. The analysis was started
with hierarchical cluster analysis to generate and profile the clusters and
then nonhierarchical analysis was used to fine-tune the cluster member-
ship. In this case, the centroids from hierarchical clustering were taken
as the seeds for nonhierarchical clustering.
The dendrogram, a graph of hierarchical cluster analysis, has con-
firmed the existence of two clusters centers. The non-hierarchical k-
means cluster analysis has segmented companies into two clusters of the
table 2 Analysis of clustering criteria
Variable evaluation*	Cluster	n	M	sd	t-test	P
New projects are implemented gradually, step-by-step	Non-risk takers	45	3.98	.75	3.491	.001
	Risk takers	41	3-2 9	1.03		
We have a conservative ap- proach to major business deci-	Non-risk takers	45	3.67	.93	8.247	.000
sions						
	Risk takers	41	2.22	.69		
We hold strongly onto known projects and procedures	Non-risk takers	45	3.78	.67	8.716	.000
	Risk takers	41	2.59	•59		
Notes: * 5-point Likert scale; m - mean; sd - standard deviation.
same size (n = 43). However, anova has shown that managers' personal
opinion on risk propensity was not statistically significant (p = 0.388)
and it was omitted in further analysis. The second cluster analysis based
on three variables resulted in two clusters that can be defined as 'Risk-
takers' (n = 41), and 'Non-risk-takers' (n = 45).
Interestingly enough, no statistically significant differences were found
between the two clusters in basic company characteristics: company size,
age and type of business activity. Therefore, the hypothesis H1, H2 and H3
cannot be accepted. They also do not differ in their export performance
measured by the export ratio and by managers' personal evaluation of
different financial and non-financial measures of export performance.
This means that hypothesis H4 cannot be accepted, too.
The only statistically significant difference was found in their percep-
tion of some important factors that influence their company's business:
competition and industry settings, as can be seen in table 3. Industry
settings in the context of this research can be defined as the level of orga-
nization and cooperation of companies within the branch on the foreign
market.
The risk-takers cluster evaluates competition and industry settings as
of lesser influence and importance for their international business activ-
ities.
Further on, no statistically significant differences between risk-takers
and non-risk takers cluster were found in managers' evaluation of all ele-
ments of their company's environment diversity or dynamism that were
subject to our analysis.
table 3 Statistically significant differences between the two clusters
	Cluster	n	m	sd	t-test	P
Competition	Non-risk takers	45	3.98	.94	2.158	.034*
	Risk takers	40	3-48	1.18		
Industry settings	Non-risk takers	45	3.33	1.02	2.317	.023*
	Risk takers	40	2.80	1.09		
Notes: m - mean; sd - standard deviation.
Discussion
The statistical analysis was based on exporters' clustering according to
their evaluation of the three variables used for measurement of their
risk-taking propensity in the international market. According to this,
exporters were divided into two segments: the first one being 'non-risk
takers' whose average score of criteria variables was 2.7, and the second
one being 'risk takers' whose average score of criteria variables was 3.81.
Although, this is a significant difference, we might say that Croatian ex-
porters, according to this research, in general do not have a very high
risk-taking propensity when doing business internationally. This prob-
ably can be explained by the findings of Estrin, Meyer, and Bytchkova
(2005) who state that economies in ex-socialist countries are still run
bureaucratically and that their previous concentration on plan econ-
omy still suppresses the appetite for risk and breeds habits of obedience
and 'playing it safe' strategy. Also, the meta-analysis of Stewart and Roth
(1999) found that growth oriented individuals, i. e. companies, no mat-
ter what their size or age, have a higher risk taking propensity. Due to the
rather bad macroeconomic situation indicators as problems with export-
ing mentioned in the introductory section, many Croatian companies -
including exporters - are concentrating not on growth, but on survival
in either the foreign or the domestic market. The last but not least pos-
sible reason for such a situation in Croatia might also be the fact that a
significantly larger proportion of entrepreneurial activities are so called
'necessity entrepreneurship' (tea 3.09) than 'opportunity entrepreneur-
ship' (tea 2.92) (Singer et al. 2006), meaning that a significantly larger
proportion of businesses in Croatia are started because of necessity - un-
employment - than because of opportunity recognition. Therefore, it is
quite understandable that such companies are trying to minimize their
risks.
According to the theory, we have expected that both internal and ex-
ternal factors would influence the risk-taking propensity. Balabanis and
Katiskea (2003) argue that company size and age strongly influence the
risk-taking propensity of exporters: large companies have more financial
and technical capabilities and resources than small ones that allow them
to take risks. On the other hand, newer firms are not bound by traditions
and routines and as a result have more freedom in making decisions and
taking risks. We also have expected that non-traditional activities would
be more risk-taking by their nature. However, all these internal factors
show no significance in relation to the level of risk taking propensity of
Croatian exporters.
This research shows that the only statistically significant differences
between the two clusters - risk-takers and non-risk-takers - exists in
their perception of the competition and industry settings as important
factors of environment hostility. In both cases, the risk-takers' cluster
evaluates these two factors as less important for making business deci-
sions than the non-risk-takers' segment. Risk-takers consider competi-
tion more influential than industry settings. Other analyzed external el-
ements that define environment hostility, dynamism and diversity show
no significant differences between the two clusters.
Finally, no statistically significant differences were found in export-
ing results and managers' evaluation of export performance between the
two clusters. This can be partly explained by the company characteris-
tics, especially age: namely, 50% of the sample is 44 years old or more,
so it could be assumed that these companies have spent a number of
years doing business internationally and therefore they perceive it as less
risky. Most of them probably have long-term business relations and ac-
tive networks. Furthermore, the export orientation of the sample follows
a specific pattern: about 1/3 of the sample has more than 50% export con-
centration in ex-Yugoslavian markets, which are perceived as 'quasi do-
mestic' and, in any case, not very hostile or diverse. Also, the dynamism
of changes in these markets is very similar to those in the domestic mar-
ket.
Consequently, it can be presumed that Croatian exporters heavily lean
on market avoidance and imitation strategies in managing foreign mar-
ket risks, as is described by Miller (1992).
Limitations and Future Research
This research has some limitations. One of them surely is a relatively
small sample of 88 exporting companies. However, Stewart and Roth
(1999) give a list of studies on risk propensity with samples of 50 or even
fewer respondents. We also assume that the sample might have been bi-
ased to a certain extent, in a sense that only those who have recognized
the research problem have taken part in the research. The other limita-
tion is the fact that many managing directors are also company owners in
Croatia, so their objectivity might be questioned. Last but not least, wide
generalizations of the research results cannot be made due to the rather
specific local context of the research. It would however, be interesting to
do comparative research of the topic in other ex-Yugoslavia countries.
To a great extent, the results of this research were not what was, accord-
ing to the theory, expected. Therefore future research might take into
account the application of a statistical instrument for measuring compe-
tition and industry settings as limiting factors of risk taking propensity.
The other interesting avenue of future research might be analysis of
interaction of all entrepreneurial features for exporters - innovativeness,
proactiveness and risk taking propensity.
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A Comparison Between Recent and Prospective
Critical Success Factors in Lithuanian
Printing Industry
Vilte Auruškeviciene
Laura Šalciuviene
Ruta Kazlauskaite
Andrius Trifanovas
The paper looks into the problem of identifying critical success factors
in an industry. Though by definition all business organisations aim to
be successful, companies within an industry differ a lot as regards their
level of success. What makes some firms highly successful, when oth-
ers have rather moderate success within the same industry? Can the
above problems be explained by the wrong choice of strategic alter-
natives or inadequate strategy implementation? An empirical research
of the Lithuanian printing industry was carried out with the purpose
of identifying and differentiating the dominant success factors that are
critical for the creation of competitive advantages.
Key Words: critical success factors, sustainable competitive advantage,
printing industry
jel Classification: L10, M30
Introduction
Though by definition all business organisations aim to be successful,
companies within an industry differ a lot as regards their level of success.
What makes some firms highly successful, when others have rather mod-
erate success within the same industry? Can the above problems be ex-
plained by the wrong choice of strategic alternatives or inadequate strat-
egy implementation?
According to Aaker (1989), the essence of strategic management rests
Dr Vilte Auruškeviciene is an Associate Professor at the ism University
of Management and Economics, Lithuania.
Dr Laura Šalciuviene is a Lecturer at the Manchester Metropolitan
University, United Kingdom.
Ruta Kazlauskaite is an Associate Professor at the ism University
of Management and Economics, Lithuania.
Andrius Trifanovas is a General Manager at Nuera Ltd, Lithuania.
Managing Global Transitions 4 (4): 327-346
on the ability to develop and maintain meaningful assets and on skills,
and the selection of competitive strategies and arenas that would enable
the above assets to form sustainable competitive advantages, which in
turn should be created in view of critical success factors (csfs). Most
industries have a set of critical success factors that are determined by each
industry's specific features and characteristics. A fit between competitive
advantages and critical success factors of a particular industry may form
a firm foundation for a firm's successful performance in that industry.
Identification of critical success factors in a particular industry is a
valuable practice for a number of reasons. First of all, it leads to a better
understanding of the competitive environment, which in turn may assist
in making decisions related to new product development and marketing
activities. According to Ketelhohn (1998), understanding and develop-
ment of critical success factors enables a firm to make a successful entry
into an industry, find a different position among other firms and suc-
cessfully combine creation of the perceived value and cost reduction.
Vasconcellos, Sousa, and Hambrick (1989) carried out research which
was aimed at testing the following two hypotheses:
1.	critical success factors vary from one industry to another;
2.	firms with strengths that are identical to the industry's success fac-
tors operate considerably more successfully within it.
Research carried out by an expert group on critical success factor
rating in six industries supported the above hypothesis. Other expert
groups from the same industries provided additional data that revealed a
strong correlation between a firm's profitability and the fit of its strengths
to an industry's critical success factors.
Scientific problem. The scientific problem maybe formulated as a ques-
tion: is there any difference in the perceived significance of current and
prospective critical success factors among successful and unsuccessful
companies?
Research object - critical success factors.
Research objective is to identify critical success factors leading to the
creation of sustainable competitive advantage in a particular industry
through a comparison and analysis of differences in the perceived sig-
nificance of critical success factors among successful and unsuccessful
firms.
Research methods. In parallel to its objective, the paper first provides
an analysis of scientific literature on critical success factors, which then is
followed by an analysis of empirical research findings. Since critical suc-
cess factors are industry specific, the paper focuses on the analysis of a
particular industry, i. e. the Lithuanian printing industry. The above em-
pirical research consisted of two parts: a qualitative research - interview
with printing industry experts, which led to a primary list of critical suc-
cess factors in an industry, and a qualitative research - survey of printing
companies' managers.
The concept of Critical Success Factors
origin and definition of the concept of critical
success factors
The concept of critical success factors was introduced in 1961 by Ronald
Daniel (Daniel 1961). The author employed the above concept to identify
information that is necessary in performing managerial duties. Accord-
ing to him, a firm's information system should focus on 'success factors'
(Daniel 1961, 116). He also proposed that in most industries success is
determined by three to six success factors. The above tasks should be
carried out with particular care to ensure a company's success.
Anthony, Dearden, and Vancil (1972) further developed Daniel's con-
cept by introducing the term 'critical success factors'. The above authors
uplifted the above concept to the managerial level and demonstrated that
at this level critical success factors vary from one company to another and
one manager to another.
In the search for new methods of meeting the information needs of
top level management, Rockart (1979) defined critical success factors as
'the limited number of areas in which results, if they are satisfactory, will
ensure successful competitive performance for an organization' (Rockart
1979, 85). If the results in these areas are not satisfactory, performance of
an organisation will fall short of expectations.
Rockart (1979) introduced four primary sources of critical success fac-
tors: the structure of a particular industry; competitive strategy, position
in the industry, and location; environmental and temporal factors.
Munro and Wheeler (1980) applied the concept of critical success fac-
tors in their research on the managerial needs for information. Accord-
ing to them, the concept of critical success factors may be successfully
employed to direct a company's effort towards the formation of a strate-
gic plan. Furthermore, the concept may be applied not just merely for
the selection of appropriate strategies, but also for the identification of
major problems that arise in the strategy implementation process.
Dickinson, Ferguson, and Sircar (1984a) studied critical success fac-
tors in relationship to the design of management information systems.
The authors offered a rather comprehensive definition of critical success
factors, which comprises all levels of critical success factors. According
to them, critical success factors can be defined as events, circumstances,
conditions, or activities that, due to their significance, demand special at-
tention (Dickinson, Ferguson, and Sircar 1984a). Critical success factors
can be internal or external, and may have a positive or negative impact
on a company's success. Their distinctive feature is the need for a spe-
cial awareness or early warning system to avoid unpleasant surprises or
missed opportunities.
critical success factors: advantages and
disadvantages
Dickinson, Ferguson, and Sircar (1984a) distinguished the following
three advantages of critical success factors: operational value, compre-
hensiveness, and flexibility. In another work, Dickinson, Ferguson, and
Sircar (1984b) studied the applicability of critical success factor approach
to small businesses and stated that analysis of the critical success factors
may be effective at various levels: evaluation of the chances of a start up,
planning process of a company's further activities, and effective imple-
mentation of planned activities.
Boynton and Zmud (1984) approached the analysis of critical success
factors' advantages and disadvantages on the basis of two case studies
and an overview of earlier research results. They pointed out two advan-
tages of the critical success factors approach that mostly contribute to
its success: firstly, the fact that it has gained recognition among top level
management, and, secondly, its input in promoting and easing struc-
tural analysis and planning processes. First, the critical success factors
approach focuses on a set of critical success factors, whereas later on the
analyst goes deeper into each of them, constantly checking on their thor-
oughness and appropriateness.
Boynton, Shank and Zmud (1985) analysed the application of the crit-
ical success factors approach in the planning of the management infor-
mation system (mis). Their research results exceeded expectations and
demonstrated that the critical success factors approach can be success-
fully applied not only in mis planning but also in information resource
planning, strategic planning, and individual goal setting. This approach
brings top management closer to other members of the organization,
and assists in matching personal and departmental goals to overall orga-
nizational goals. The above research also proved the usefulness and intu-
itive character of the critical success factors approach. It enables natural
interrelating of tactical and strategic planning and promotes structural
analysis processes.
CRITICAL SuCCESS FACTORS CLASSIFICATION
In their study of the dependence of critical success factors on the hierar-
chical nature of an organisation and the level at which strategic decisions
are made, Bullen and Rockart (1986) distinguished industry, corporate,
sub-organisational, and individual success factors, which may be viewed
as a critical success factors hierarchy. According to the assumption that
business success is the attainment of pre-set goals, critical success factors
become its prerequisites, which are strongly interrelated with business
goals. In a hierarchical structure of the kind, business goals are depen-
dent on certain factors that in their turn are dependent on other factors,
which creates a logical dependency hierarchy.
The above hierarchical classification is just one approach to critical
success factors grouping. Brotherton, Heinhuis, Medema and Miller
(2003) distinguish internal and external critical success factors. The first
are determined by the characteristics of a company's internal environ-
ment, i. e. its products, processes, people, and structures. These critical
success factors reflect a company's core capabilities and competencies
that are critical to its competitive advantages. The other group, i. e. ex-
ternal success factors, is conditioned by a company's external environ-
ment. According to Brotherton and Shaw (1996), external critical success
factors are more difficult to control than the internal ones, though they
may be measured and controlled to a certain degree. Critical success fac-
tors may also be viewed from their universality perspective. Accordingly
they can be grouped into context specific and generic, the latter being
common to a given combination of industry, market and broader envi-
ronment conditions (Geller 1985). Grunert and Ellergard (1993) classified
critical success factors into 'conjunctive or compensatory' and 'perceived
or actual'. Ketelhohn (1998) studied differences between industry and
operational critical success factors, which reflect the above-mentioned
Brotherton, Heinhuis, Medema and Miller's (2003) context specific-
generic dichotomy.
Starting with the lowest hierarchical level of critical success factors, i. e.
individual managers, the critical success factor approach may be helpful
in defining major tasks, their selection from the multitude of everyday
tasks that a manager has to perform, and setting priorities in a way that
would enable the manager to focus on the core activities. Similarly, a
managerial group may define their organisational critical success factors,
and organisations within the same industry may identify industry critical
success factors.
Bullen (1995) provided an example of the critical success factor ap-
proach application in an American high-technology engineering com-
pany, which serves as a good illustration of the possible benefits of the
process for an organisation. At a critical success factors review meet-
ing, the company's top management had to introduce their personal
critical success factor lists. After ceo presented his critical success fac-
tors, the other managers were most surprised to find out that most of
ceo's critical success factors were operational and almost identical to
theirs. It became clear to everyone that the ceo, who was the company
founder as well, was not willing to give up his control of everyday ac-
tivities, which inhibited activities of the top management team without
their clear recognition of it. Due to a clear focus on what each person
considered vital, the critical success factor process revealed a conflict and
enabled the top management team to find a constructive solution to the
above problem. The above example also emphasises the significance of
the critical success factors perceived significance. It is only natural that
individuals have different views on the same matters. The top manage-
ment, however, must not forget that, and from time to time get together
to analyse and accommodate differences in the individually perceived
significance of critical success factors.
critical success factors and sustainable
competitiv advantages
Grant (1998) suggests that critical success factors of an industry provide
possibilities for creating competitive advantages. The identification of
critical success factors reveals the potential for competitive advantages
in a given industry. In order to survive in a market and prosper, an or-
ganisation must meet two criteria: offer a product/service that matches
the demand and withstand the competition. According to Grant (1998),
identification of critical success factors shall start with two key questions:
what do our customers want and how can the company survive the com-
petition?
According to Aaker (2001), critical success factors that most rivals in a
given industry posses, and the absence of which may weaken an organi-
sation's position in the market, make strategic necessities; whereas assets
and competencies that enable a company to stand out from among its
rivals and to outride them form strategic strengths.
Critical Success Factor Research Methodology
There is no universal critical success factor research method. Rockart
(1979) proposed a three to six hour interview with company executives as
a critical success factor data collection method; however, this approach
focused on managerial information needs and did not attempt to look
into the strategic planning issues and their solutions. With the growth
of the problematic and organisational scope of critical success factors,
consultants and researchers used numerous critical success factor meth-
ods such as 'onion technique' interviews, analysis of related organisa-
tional activities, a priori list of critical success factors based on literature
sources, mailed questionnaires, interviews in combination with subse-
quent questionnaires. Jenster (1987) supported the idea that critical suc-
cess factor identification should be exclusively a ceo prerogative. Gen-
gler, Peffers and Tuunanen (2003) claimed critical success factors to be
one of a few approaches and methods applied in the planning profil-
ing, which comprise company data simulation, company process sim-
ulation, application and database profiles, feasibility and risk analysis,
exploratory research and interview.
Leidecker and Bruno (1984) suggested a number of methods for criti-
cal success factor identification: environment scanning, structural anal-
ysis of an industry, industry expert opinion, analysis of the competi-
tion, best practice analysis, company internal environment analysis, fac-
tor identification based on intuition, and profit impact of market strat-
egy (pims) data analysis, which are further briefly described.
Environment scanning. This method is applied to forecast economic,
political, and social forces surrounding and influencing activities of an
organisation. Organisations often combine this method with the swot
analysis. However, one of the method's limitations is its rather compli-
cated application. A broader version of the method is the pestel system
according to which environmental factors may be divided into political,
economic, social, technological, environmental, and legal. As the system
application requires plentiful resources, only large companies are able to
use it.
Structural analysis of an industry. Analysis of the kind is usually based
on Porter's five forces of competition framework, comprising the fol-
lowing five components: entry barriers, substitutes, bargaining power of
buyers and suppliers, and rivalry among existing firms. Analysis of each
of these factors and their interrelationship may provide an organisation
with a lot of useful data for critical success factors identification. This
method is usually applied to identify general industry critical success fac-
tors and is not appropriate for individual company critical success factor
identification.
Industry expert opinion. This method depends on the subjective opin-
ion of individuals with rich work experience and comprehensive indus-
try knowledge. Despite its subjectivity, the intuition of highly experi-
enced experts often serves as a good source of critical success factors,
which used along with other more objective methods provides lots of
valuable information for critical success factor analysis.
Analysis of the competition. This method focuses on the competitive
environment: how do companies compete, what are their competitive
strategies, etc. The main drawback of the method is inability to provide
any data on critical success factors not pertaining to rivalry among the
companies.
Best practice analysis. This method is highly valuable in industries with
one or two major market players. Critical success factors are identified
through the determination of a company's most successful practices.
However, due to a methodologically limited field of analysis, the method
may inhibit identification of other critical success factors.
Factor identification based on intuition. The method relies on the in-
tuition and insight of individuals with expert knowledge of an organisa-
tion's internal environment. It enables identification of temporal critical
success factors that a company may fail to identify by means of a formal
analysis. However, the method relies mainly on a subjective opinion.
pims data analysis. pims allows for identifying critical profitability
factors that may be further used in the critical success factor analysis.
The main advantage of the method is that it relies on empirical data;
however, critical success factors identified by pims are of rather general
character and lack specific information.
The authors of this paper support an integrated application of a num-
ber of the above methods for critical success factors identification. A
combination of different methods should enable one to neutralise the
drawbacks of the selected methods and provide rather objective results.
Such analysis could start with a survey of industry experts, which could
result in a primary list of the industry's critical success factors that could
enable further identification of the major dominant critical success fac-
tors. The application of such methods as the analysis of the competition,
best practice analysis and factor analysis based on intuition may serve as
a basis in the development of a questionnaire that would enable a quan-
titative determination of a given industry's critical success factors.
Research Design
Research hypotheses
H1: critical success factors of the Lithuanian printing industry do not
change in the course of time.
H2: there are significant differences in the perceived critical success fac-
tors' significance among successful and unsuccessful companies.
Research sample. As critical success factors are industry specific, it is
necessary to start with the definition of the scope of the industry under
analysis, which will be based on Johnson and Scholes' (2002) definition
of an industry that focuses on the prime product. The principal prod-
uct of the printing industry is information transfer onto paper or any
other physical substratum for commercial purposes. In other words, the
principal product of the printing industry is commercial printing work.
Based on the data of the Lithuanian Department of Statistics (2004),
there were 442 companies in Lithuania that fell under the publishing,
printing and replication of record medium industry. As there are no spe-
cific data on the number of companies in the printing industry, the pri-
mary task was to define the research population. Companies were as-
cribed to the industry under research according to the following criteria:
1.	The company does printing work itself or is engaged in secondary
printing activities, such as bookbinding, production of plates, and
photographic typesetting, which make a concurrent part of the
printing industry.
2.	Primary activities of the company shall be generating revenue, no
less than half of which shall comprise income from sales.
The above selection criteria helped to eliminate companies that were
not directly related to printing activities or undertook printing as a side
activity. The primary company selection was executed based on the data
provided in the online catalogue 'The Whole of Lithuania'. 108 compa-
nies were selected in line with the pre-set criteria. Based on the national
statistics, 9 per cent of the above 108 companies fall under the category
of large-scale companies (over 250 employees), 15 per cent - medium-
size companies (50-250 employees), and the rest are small-size compa-
nies (under 50 employees). Since the selection data related to a relatively
small population, it was decided to survey top management of all the
companies falling within the population.
Questionnaire design. To make a primary - unranked in order of im-
portance - list of printing industry critical success factors, interviews
were executed with experts from seven Lithuanian printing companies,
two of which were ceos of large printing companies, three were owners
- general managers of smes, and two were specialists with many years
of work experience in the printing industry. The above expert selection
allowed for collection of miscellaneous information based on different
experience in the same industry.
The above experts were given open questions. Following to Grant
(1998), critical success factors were formulated in respect to the gener-
alisation of replies to the following two questions:
1.	What do customers of the printing industry want?
2.	How does a company survive the competition?
Analysis of the expert responses led to a list comprising twelve critical
success factors of the Lithuanian printing industry, which are as follows:
long lasting relationship with clients, timely service/product develop-
ment, reputation and reliability, new product/service development, ge-
ographical location, implementation of new technologies (latest electro-
static equipment, direct computerized control of printing machines, etc),
active search for new clients, equipment upgrading (most of the equip-
ment can only be used for specific purposes, besides there is practically
no market for used equipment, which makes equipment upgrading more
difficult and costly), order delivery time, employee qualification (Lithua-
nian printing companies have to train their labor themselves, which is
highly time-consuming and necessitates possession of qualified and ex-
perienced staff capable of training others), service complexity, increase of
production capacity. The above factors are listed in random order; they
are not ranked as to the respondents' perceived significance.
It is also noteworthy that the respondents denied the significance of
such widely acclaimed success factors as product and brand differentia-
tion, access distribution channels, and good relationship with suppliers.
Industry experts state that the above factors are not significant in the
Lithuanian printing industry because the produce in the industry is by
large not differentiated, and brands do not play a major role. The larger
part of product costs comprises the cost of materials (about 34 per cent),
paper being the dominant one. Paper is a commodity good and its price
is regulated by the world market, so suppliers cannot be taken as a success
factor in the Lithuanian printing industry. As to distribution, it is usu-
ally done by publishers, thus access to distribution channels is of minor
significance in the industry.
The questionnaire was developed on the basis of the twelve success
factors identified in the qualitative research. It comprised four groups of
questions. The first two were developed on the basis of the critical success
factors list made after the expert interviews. In the first part of the ques-
tionnaire, respondents were asked to indicate the present significance of
the critical success factors on a Likert-type ten-point scale, where 1 stood
for 'totally irrelevant' and 10 - 'extremely significant'. The second group
of questions was aimed at the evaluation of the significance of the anal-
ogous critical success factors for the respondent's business success in five
to seven years on the same measurement scale. The 5-7 year period was
selected intentionally - it is a typical time-span of lease agreements on
the purchase of high-tech equipment, which is a popular way of pur-
chasing equipment among companies in the Lithuanian printing indus-
try. Besides, strategic plans of companies usually rest on the above time-
span too. A comparative analysis of the questionnaire data was thought
to provide a basis for the identification of tendencies in critical success
factors changes, if there were any, thus supporting or rejecting the first
hypothesis.
In the third part of the questionnaire, respondents were asked to indi-
cate their company success level on a ten-point Likert-type scale, where
1 stood for 'not very successful' and 10 - 'highly successful'. The above
question was one of the few that led to the identification of successful
and unsuccessful companies.
The fourth part of the questionnaire looked into the company pro-
file and objective evaluation of its level of success. Each company was
described in terms of the following factors: employee number, yearly
turnover, production and export proportion among all production.
Company success was measured against the dynamics of the employee
number, turnover and profitability, and the level of investment.
Data collection. The quantitative research was carried out by mail-
ing questionnaires to the respondents. Questionnaires were posted to
all 108 companies in the Lithuanian printing industry. To raise the re-
table 1 Distribution of respondents' companies under various criteria
Criterion	Number of companies	Percentage
Employee number		
Under 50	17	68
51-250	6	24
Over 250	2	8
Yearly turnover		
Under 1 mio €	12	47
1-3 mio €	9	35
3-7 mio €	2	9
Over 7 mio €C	2	9
Export percentage		
Under 20%	11	44
Up to 20%	11	44
20-50%	0	0
Over 50%	3	12
sponse rate, respondents were guaranteed anonymity and were provided
a prepaid return envelope. Filled-in questionnaires could also be re-
turned by fax (the number indicated in the questionnaire). In two weeks'
time, companies e-mail addresses which were of access were e-mailed re-
minders requesting them to fill in the questionnaire. In the six weeks
after the questionnaires had been mailed to the respondents, 26 were re-
turned, 25 of which qualified as fitting.
Table 1 presents respondents' company characteristics. The survey re-
sults show that the distribution of companies under the survey corre-
sponds to the general industry structure as regards company size and
export proportion.
Low response rate is the principal factor conditioning the limitation
of this research, as it did not allow for statistical procession of some data.
Thus part of the survey results may be viewed only as tendencies, and
does not allow for drawing solid conclusions.
Research Results
evaluation of the perceived significance of recent
and prospective critical success factors
Firstly, spss package was used to calculate the rank mean of the per-
ceived significance of recent critical success factors and estimate the sta-
Timely service/product delivery
Reputation and reliability
Order delivery time
Employee qualification
Establishment of long lasting
relationship with clients
Service complexity
Implementation of new technologies
Active search for new clients
New product/service development
Equipment upgrading
Increase of production capacity
Company geographical location
5.96
+
5.60
5.20 I
9.36
9.00
9.28
9.32
9.16
9.00
9.04
8.76
8.84
8.84
8.56
8.36
7.76
8.28
■ 7.52
7.28 j
I 7.40
7.28
6.52
7.96
S.00
4	5	6	7	8	9	10
figure 1 Comparison and ranking of recent and prospective critical success factors
tistical importance of individual critical success factors' significance. Sta-
tistical analysis of the collected data employed Wilcoxon's nonparametric
signed-rank test. Differences between variables were considered signifi-
cant where the respective p value was lower than the allowed significance
level a = 0,05. Evaluation of the average value of each recent critical suc-
cess factor significance is presented in figure 1.
Recent critical success factors are ranked from most significant to least
significant. Four critical success factors were given the highest score with
means exceeding 9, i. e. timely product/service delivery (mean = 9.36),
reputation and reliability (9.28), order delivery time (9.16), and employee
qualification (9.04). Analysis of the statistical significance of differences
in the above factor value proved differences between all pairs of variables
within the group to be statistically insignificant. Furthermore, the scor-
ing of the less valued factor of long lasting relationship establishment
with clients was statistically insignificant in comparison to the scoring
of the factors under the first group. In comparison to the five top fac-
tors, differences in the value scoring among all other recent critical suc-
cess factors, with the exception of service variety (8.56), is statistically
insignificant.
Based on the results of the Wilcoxon test, the five top recent critical
success factors may be ascribed to a separate group, i. e. dominant critical
table 2 Statistical significance of value differences among recent and prospective
critical success factors
Factors	P
Establishment of long lasting relationship with clients	0.851
Timely delivery of products/services	0.086
Reputation and reliability	0.854
Newproduct/service development	0.251
Company geographical location	0.234
Implementation of new technologies	0.194
Active search for new clients	0.750
Equipment upgrading	0.157
Order delivery time	0.546
Employee qualification	0.254
Service complexity	0.501
Increase of production capacity	0.059
success factors as regards their perceived significance. The second most
important group of critical success factors includes service complexity
(8.56), implementation of new technologies (7.76), active search for new
clients (7.52), new product (service) development (7.40), and equipment
upgrading (7.28). Two critical success factors with the lowest score - pro-
duction capacity increase (5.96) and geographical location (5.60) - may
be considered of little significance in the contemporary Lithuanian print-
ing industry.
Parallel spss estimations were done in the evaluation of the prospec-
tive critical success factors' significance. Picture 1 also depicts the arith-
metical means of individual prospective critical success factors' signifi-
cance.
The spss package was also used to estimate the Wilcoxon test for each
pair of recent and prospective critical success factors (see Table 2). Re-
sults of the test demonstrate that differences in significance between re-
cent and prospective critical success factors are statistically insignificant
for all pairs of variables, i. e. from the point of view of statistical signifi-
cance, the significance of recent and prospective critical success factors is
equally valued. Regarding to the survey results, it may be stated that the
dominant most significant critical success factors do not change in the
course of time.
Research results proved the first hypothesis H1, i. e. critical success fac-
tors of the Lithuanian printing industry do not change in the course of
time.
estimation of the perceived critical success factor
significance among successful and unsuccessful
companies
The research aimed to analyse the perceived significance of critical suc-
cess factors among successful and unsuccessful companies. Unfortu-
nately, the very low response rate of the respondents made statistical
analysis of the kind and testing of the second hypothesis impossible.
Nevertheless, some general premises and tendencies may be suggested.
Table 3 provides data of the analysis of the perceived significance of
recent and prospective critical success factors. This comparison helps to
identify critical success factors that may serve as a basis in the competitive
advantage formation.
Company success was estimated on the basis of objective criteria, such
as company sales growth, profitability dynamics, and investment in-
dexes, as well as respondents' subjective judgement. After summing up
the above indicators, seven companies with the highest scores were as-
cribed to the group of successful companies, whereas seven with the
lowest scores were grouped as unsuccessful. The analysis of the evalu-
ation of the perceived significance of recent critical success factors re-
vealed greatest differences in the evaluations of the following factors: new
product development (difference in the means of successful and unsuc-
cessful companies is +3.29), service complexity (+1.71), implementation
of new technologies (+1.43), employee qualification (+1.29) and order
delivery time (+1.15). In addition, research demonstrated that the eval-
uations of unsuccessful companies were parallel to the earlier defined
group of dominant recent critical success factors with respect to their
perceived significance. In the evaluations of successful companies, there
were just three parallels of the kind. In comparison to unsuccessful com-
panies, successful ones attach considerably more attention to new prod-
uct (service) development, service complexity, and implementation of
new technologies. These critical success factors do not fall under domi-
nant as per perceived significance, though it is quite possible that namely
these critical success factors ensure competitive advantage in the printing
industry.
The analysis of the evaluation of the perceived significance of prospec-
table 3 Evaluation of the critical success factor perceived value in successful and
unsuccessful companies
Critical success factors	Evaluation of	Evaluation of
recent critical	prospective criti-
success factors	cal success factors
	a	s	i	a	s	I
Establishment of lasting relationships with clients	8.84	8.57	8.29	8.84	8.14	8.43
Timely delivery of products/services	936	9.29	9.14	9.00	9.29	8.43
Reputation and reliability	9.28	8.86	9.29	9.32	9.43	8.71
New product/service development	7.40	9.00	5.71	7.96	8.57	6.29
Company geographical location	5.60	6.00	5.00	5.20	5.86	4.00
Implementation of new technologies	7.76	8.14	6.71	8.28	7.86	6.71
Active search for new clients	7.52	6.86	6.57	7.28	7.57	6.57
Equipment upgrading	7.28	7.43	6.71	8.00	7.14	7.29
Order delivery time	9.16	9.29	8.14	9.00	9.57	7.57
Employee qualification	9.04	9.29	8.00	8.76	9.29	7.43
Service complexity (order acceptance to delivery)	8.56	9.00	7.29	8.36	8.00	7.00
Increase of production capacity	5.96	5-71	5.14	6.52	6.43	5.14
notes Five highest scores in bold; a - all companies, s - successful companies,
i - unsuccessful companies.
tive critical success factors demonstrated major differences in the evalua-
tions of these factors: new product (service) development (+2.28), order
delivery time (+2.00) and employee qualification (+1.86). It should be
noted that new product (service) development ranked tenth according
to the means of the perceived significance estimation among prospective
critical success factors of unsuccessful companies. However, in the eval-
uations of successful companies, this critical success factor fell under the
five top critical success factors. The above critical success factor does not
fall under the group of dominant critical success factors as per perceived
significance, however, it is quite likely that this factor is actually one of
the leading critical success factors that ensure competitive advantage and
will probably remain of utmost importance in the future too.
Conclusions
Considering to the literature review provided in this paper, identification
of an industry's critical success factors leads to a better understanding of
the competitive environment. The empirical research described in scien-
tific literature (Vasconcellos, Sousa, and Hambrick 1989) demonstrates a
strong correlation between company profitability and the fit between a
company strengths and critical success factors of a given industry. It has
also been noted that different authors tend to identify different critical
success factors and often combine factors that condition surviving com-
petition and factors ensuring a unique competitive position. The authors
of this paper support Aaker's (2001) differentiation attitude, according to
which critical success factors can be divided into strategic necessities and
strategic strengths.
The conducted research allows for making the premise that critical
success factors that are dominant in the Lithuanian printing industry are
strategic necessities, as their relative significance is similarly valued by all
industry companies.
A comparison of the perceived significance of critical success factors
among successful and unsuccessful companies makes a clear distinction
between strategic necessities and strategic strengths - dominant critical
success factors are ranked similarly in both groups, whereas evaluations
of a number of critical success factors that do not fall under the dominant
group tend to differ considerably. Thus a conclusion may be drawn that
success factors with the greatest differences in ranking between success-
ful and unsuccessful companies are strategic strengths. The pointed out
differences may also indicate inability of some companies in the given
industry to identify all industry critical success factors, which also means
that they do not attach sufficient significance to them. Research limi-
tations conditioned by insufficient data for a statistical analysis inhibit
a strong assertion of this conclusion. A further development of this re-
search necessitates collection of more plentiful data that would allow for
calculating the statistical significance of the above mentioned differences
and would eliminate doubts regarding the validity of the above conclu-
sions.
To sum up the analysis of the dominant industry critical success fac-
tors and differences in the perceived significance of critical success fac-
tors in successful and unsuccessful companies, the following differenti-
ation of critical success factors in the Lithuanian printing industry may
be made:
• Strategic necessities: timely product (service) delivery; reputation
and reliability; establishment of lasting relationships with cus-
tomers.
•	Strategic strengths: new product development; service complexity;
implementation of new technologies.
•	Integrated critical success factors: order delivery time; employee qual-
ification. Integrated critical success factors combine strategic neces-
sities and strengths. Their presence points to the fact that part of
the dominant industry factors may also serve as factors ensuring
creation of competitive advantages.
Research results indicate that, at the time of conducting the survey,
dominant critical success factors of the Lithuanian printing industry are
not liable to change in the course of time, as their perceived recent and
prospective significance does not manifest any significant statistical dif-
ference. More marked differences in the means of the perceived signifi-
cance of individual critical success factors may signal tendencies in their
change. To sustain or refute these tendencies, further research is necessi-
tated.
Managerial Implications
Research results demonstrated that critical success factors vary across in-
dustries (from the point of view of product and geographical location).
Companies may lack financial recourses to conduct independent strate-
gic market analysis, in which case they are recommended to merely use
the critical success factor method as a means of strategic analysis. The
application of the above method assists in associating short-term tactical
and long-term strategic planning, and enables best allocation of effort
and resources. This method can be used not only at an industry level;
it is also highly practical at a business unit or organization department
level as well.
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Globalization of Slovenian Agricultural
and Food Trade
Štefan Bojnec
Darja Majkovic
This paper analyses globalization patterns in the Slovenian agricultural
and food trade. It examines prevailing trade structures and trade types
to study differences and similarities in trade specialization patterns be-
tween primary and processed agricultural and food products across
product groups, over time and in comparison with some other Euro-
pean Union countries. We distinguish agricultural and food trade flows
by the degree of processing on primary, processed and other agricul-
tural and food products separately for direct household consumption
and for industry. With this, we add to the existent literature for Slove-
nia and for other new European Union members this product classi-
fication. Most of Slovenian agricultural and food trade is in the pro-
cessed products. One-way or inter-industry trade dominates Slovenian
agricultural and food trade structures. Within the matched two-way or
intra-industry trade the significance in specialization is on low-quality
vertical intra-industry trade. This kind of trade types in agricultural
and food trade structures is not consistent with the findings for coun-
tries with developed food processing, suggesting that restructuring of
the Slovenian food-processing sector has not yet been completed.
Key Words: agri-food, trade-structures, trade-types,
intra-industry trade
jel Classification: F020, F140, Q170
Introduction
Agricultural and food trade over the last few decades have been widely
analyzed for developed and developing countries. Attempts to explain
agricultural and food trade flows have followed a number of different
theoretical and methodological approaches of comparative trade advan-
tage and intra-industry trade (iit) (e. g. Balassa 1965; Grubel and Lloyd
1975). Several approaches have been developed in the literature for both
Dr Štefan Bojnec is an Associate Professor at the Faculty of
Management Koper, University of Primorska, Slovenia.
Darja Majkovic is a Young Researcher at the Faculty of Agriculture,
University of Maribor, Slovenia.
the analysis of comparative trade advantages and iit. The focus in this
paper is on iit. We investigate effects of trade liberalization and effects
of adjustments toward the European Union (eu) on the degree of iit in
agricultural and food products.
The most widely used measure of iit is the Grubel-Lloyd's (1975) in-
dex of degree of matched two-way trade in a certain product category.
This measure distinguishes between iit and inter-industry trade, but is
not enough for in-depth analyses of trade types. Two main approaches
using unit export and unit import values have been developed for assess-
ing trade types. Greenaway, Hine, and Milner (1994) proposed the first
methodological approach. They calculate iit using the Grubel-Lloyd in-
dex. iit is then split into horizontal and vertical components on the basis
of the unit values of exports and imports. Fontagne, Freudenberg, and
Peridy (1997) - ffp - proposed the second methodological approach.
They employ a different definition of iit in two-way trade flows when
the value of the minority trade flow represents at least 10% of the major-
ity trade flow in the similar product. When the minority flow is less than
the set boundary the trade flow is defined as inter-industry or one-way
trade. Similar as in the first approach, iit can be separated into hori-
zontally and vertically differentiated products, and the latter into high
and low quality vertical iit. The vertical iit represents specialization in
varieties of different quality requiring different factor endowments.
These approaches have been developed for analyzing trade types in
general, but applied also in specific sector studies, including for agri-
cultural and food products. Ferto (2004 and 2005) conducted analyses
of agricultural and food trade in Central Europe focusing on Hungar-
ian trade with the eu. Bojnec and Hartmann (2004) conducted a study
on Slovenian agricultural and food trade developments using the iit
approach. However, their in-depth study does not cover the empirical
analysis of horizontally and vertically differentiated products according
to the level of processing. In spite of the fact that several studies on
trade structures, nature of iit and comparative trade advantage have
been conducted for Central and Eastern European (cee) countries (e. g.
Hoekman and Djankov 1997; Eiteljörge and Hartmann 1999; Bojnec 2001;
Fertö and Hubbard 2003), so far very rare studies have differentiated be-
tween processed and unprocessed agricultural products in the analysis of
agricultural and food trade for cee transition countries. Therefore, this
paper adds differentiation between unprocessed and processed agricul-
tural and food products to the analyses of the trade types in the Slovenian
agricultural and food products using the second approach by ffp. iit
is separated between horizontal and vertical product differentiation to
study differences and similarities in trade specialization patterns between
primary and processed agricultural and food products, over time and in
comparison with some other countries. According to ffp, the different
countries with different economic distances are likely to be engaged in
iit in vertically differentiated quality products, whereas similar ones are
likely to be engaged in iit of varieties within similar qualities. iit be-
tween different varieties of the same product implies that neither sub-
stantial specialization process nor displacement of resources between in-
dustries is required. So this is the pattern that might be observed among
similar countries with small economic distances. In such a case, reallo-
cation costs, factor mobility and distribution of income are not a subject
of special interest. However, the sector adjustments while entering in the
economic integration may follow two different paths. On one side, the
increased specialization along comparative trade advantages may rise in
inter-industry trade with simultaneous exports and imports between in-
dustries, which may lead to more costly adjustments. On the other side,
a convergence in production structures is likely to increase iit. The lat-
ter specialization, based upon similarity of nations, may lead to cost-free
adjustments, which are likely to increase efficiency and welfare gains as-
sociated with variety. In the late 1970s, Pelzman (1977) denoted that trade
between centrally planned cee economies was characterized by inter-
industry specialization. As presented in this paper, this has remained
strong for agricultural and food trade even after the decades passing.
In the structure of the global agricultural and food trade there is a
tendency in trade from primary agricultural products towards processed
food products. This is observed by Gehlhar and Coyle (2001), who found
that agricultural and food trade over time tends to be more in processed
foods rather than in primary agricultural produce in world exports of
agricultural and food products. They argued that an important factor
in the changing structures of the world agricultural and food trade is
the dominant role of food consumption by the developed countries. The
latter import a much greater share of processed consumer foods than
do developing countries, while the opposite is true for bulk commodi-
ties. Surry, Herrard, and Le Roux (2002) also presented the increasing
tendency in agricultural and food trade towards processed food prod-
ucts in their econometric investigation for France, using a differentiated-
product approach. wto (2004) reported that with the economic growth
the significance of processed food products in the world trade is in-
creasing. The processed food products prevail in the trade of rich coun-
tries, while primary agricultural produce prevail in the trade of poor and
less developed countries. Although the relative importance of primary
agricultural products in trade declines, there is a considerable structural
change within agricultural and food trade. Trade in processed food prod-
ucts tends to increase, while trade in primary agricultural products may
even explore a declining tendency across some countries and product
groups. The growth in imports of processed food products by devel-
oped countries is a reflection of increased per capita consumption, diet
upgrading and diversification of consumption towards foreign varieties.
Therefore, in this paper we investigate whether empirical evidence of a
trade shift from unprocessed primary agricultural products to more pro-
cessed food products in Slovenia is consistent with a well-known trend in
world merchandise trade capturing the shift towards an increased share
of manufactures at the expense of raw materials and primary products.
We first present the methodology and data used. Then we present em-
pirical results, followed by the final section, conclusion.
Methodology and Data
Trade flows on the basis of the overlap in trade flows can be classified
into one-way and two-way trade, whereas the latter can be further clas-
sified by trade types according to the similarity/differences in unit values
(uv) of exports vis-a-vis imports. Two main approaches to distinguish-
ing trade types and the overlap in trade flows are developed in the liter-
ature. The first approach is developed by Greenaway, Hine, and Milner
(1994; 1995) - ghm. They calculate iit versus inter-industry trade com-
ponents in trade flows using the Grubel-Lloyd (gl) index (1975). The
iit component is divided into horizontal and vertical components on
the basis of a range of the similarity/differences in uv of exports and im-
ports. The second approach is developed by Fontagne, Freudenberg, and
Peridy (1997) - ffp. They apply a different definition of iit or two-way
trade: 'Trade in an item is considered to be "two-way" when the value of
the minority flow (for example imports) represents at least 10% of the
majority flow (exports).' The remaining part of trade is inter-industry
(one-way) trade, depending on the degree of trade overlap. Therefore,
the results of two-way versus one-way trade in the ffp procedures are
sensitive to an overlapping criterion. As illustrated by Ferto (2004 and
2005) for agricultural and food trade between Hungary and the eu, the
Globalization of Slovenian Agricultural and Food Trade 351
table 1 Classification criteria for decomposition of trade flows
(1) (2)
Yes (horizontal differentiation) No (vertical differentiation)
Yes Two way trade in similar
products
Two-way trade in vertically
differentiated products:
plies low export prices (indicates low ex-
port quality) and high quality of imports
hqviit: if UV£k,pt/UVMk,pt > 1. 15 implies
No
high export quality and low import quality
One-way trade
Note: Column headings as follows: (1) Degree of overlap between exports (X) and im-
ports (M) values: Does the minority flow represent at least 10% of the majority flow?
(2) Similarity of exports and imports unit values: Do X and M unit values differ less
than 15%? lqviit = low quality vertical iit, hqviit = high quality vertical iit. Source:
Bojnec, Majkovic, and Turk 2005.
ffp measure implies results for two-way trade which are slightly higher
than those by ghm, because once the overlap threshold is met the entire
trade flow is treated as two-way. In spite of these differences and instabil-
ities in results between the ghm and ffp approaches, these approaches
are complementary in disentangling the importance of different trade
types.
In our case, we are focusing on the bilateral agricultural and food trade
flows. The ffp approach is used. Table 1 summarizes the criteria for de-
composition of trade flows and trade flows' classification, as it is used in
the empirical part of this paper. As can be seen, we are using two crite-
ria. Firstly, the 10% ffp trade overlapping criteria to distinguish between
the one-way trade and the two-way trade. Secondly, the 15% range of
the similarity/difference in uv of exports and imports to distinguish be-
tween horizontal iit, low quality vertical iit and high quality vertical
iit.
This classification is applied to the agricultural and food trade data
for Slovenia and other new eu member states. As agricultural and food
trade are considered the first 24 chapters of the Combined Nomenclature
(cn). The data used in the empirical analysis come from two main data
sources. First, from the Slovenian Statistical Office, whose trade data are
disaggregated at the six-digit cn product level for the selected years. Sec-
ond, from the Statistical Office of the European Communities (Eurostat)
that provided the Comext trade database. In this case the data base is at
the eight-digit cn product level for the period from 1999 to 2003. These
basic trade data for agricultural and food products are then disentangled
by the value added content according to the United Nations (un) classifi-
cation of the products using the Broad Economic Categories (bec) clas-
sification Revision 3. According to this criteria classification, agricultural
and food products are classified into the following categories by the de-
gree of processing and the purpose (final or intermediate) in consump-
tion: first, primary products (food and beverages) mainly for industry,
which are captured in the three-digit bec product category 111, and pri-
mary products mainly for household consumption (category 112). Sec-
ond, processed products mainly for industry refer to product category
121, while category 122 captures processed food and products intended
for final consumption in households. Third, some of agricultural and
food products are labelled in the category of industrial supplies, not else
specified. Primary ones refer to category 21, and processed ones fall into
category 22.
Results with Discussion
The general finding in literature on trade patterns in agricultural and
food products explains that developed countries largely specialize to-
wards exports in high value-added processed food products, while devel-
oping countries tend towards exports in primary agricultural products
(Gehlhar and Coyle 2001; wto 2004). According to relative income per
capita, Slovenia is classified as a high-income non-oEcD country (wto
2004,197). On this basis one may expect that, if structures in the econ-
omy are approximately equally developed - including in agriculture and
the food sector - then Slovenia should be among those countries spe-
cializing in exports of high value-added processed agricultural and food
products. However, an examination of the trade structures and trade
patterns suggests that low value-added products prevailed among the
matched two-way trade structures and only a minority of the matched
two-way agricultural and food trade is in higher value-added products
(table 2). This suggests a comparative trade disadvantage in agricultural
and food trade for Slovenia. Moreover, Bojnec and Ferto (2005) have
presented the bilateral Hungarian-Slovenian agricultural and food trade
developments. They found that one-way, inter-industry trade from Hun-
gary to Slovenia is far the most significant component among types of
agricultural and food trade, where Hungary experienced considerable
surplus in agricultural and food products. The degree of the matched
table 2 Slovenian agricultural and food trade balance (x-m) by degree of
processing* and by regions (in mio € and in % of x or m) in the year 2002
Primary products
Processed products
	mio €C	%	mio €	%
Eu-15				
Exports (x)	26.78	31.61	56.41	17.48
Imports (m)	155.01	50.79	258.95	57.05
Balance (x-m)	-128.22	-19.18	-202.55	-39-57
Ex-Yugoslav markets				
Exports	51.25	60.49	218.04	67.55
Imports	13.58	4.45	66.65	14.68
Balance	37-67	56.04	151-39	52.87
Central European Free	Trade Agreement (c	efta^* countries		
Exports	3.08	3.64	8.26	2.56
Imports	67.14	22.00	62.53	13.78
Balance	-64.06	-18.36	-54.26	-11.22
Other				
Exports	3.60	4.25	40.05	12.41
Imports	69.48	22.76	65.79	14.49
Balance	-65.88	-18.51	-25-75	-2.08
Total				
Exports	84.72	100,00	322.77	100.00
Imports	305.21	100,00	453.93	100.00
Balance	-220.49	-	-131.16	-
Notes: * primary group of products includes the following three bec categories: 111, 112
and 21. In the processed group of products are included the remaining bec categories:
121, 122, and 22; **cefta includes Hungary, Poland, the Czech and Slovak Republics,
Bulgaria and Romania. Source: Own calculations (Majkovic 2005) based on data from
the Slovenian Statistical Office.
two-way iit is found to be relatively low. Within Hungarian iit, trade
in vertically differentiated agricultural and food products is the most sig-
nificant component of iit. Almost all Hungary's vertical iit is in high-
valued products, but less so for Slovenia. This indicates that Hungarian
agricultural and food exports' specializations in the matched two-way
trade flows are in high quality varieties, but less so for Slovenia.
Looking from the trade perspective, Slovenian agriculture is certainly
not a driving force of the Slovenian economy. This is confirmed by the
empirical results in tables 2 and 3 for the year 2002, which more or less
reflects average Slovenian agricultural and food trade structures and per-
formances before the eu accession. The Slovenian agricultural and food
trade sector has performed with a traditionally negative trade balance in
the last decade. The negative balance is recorded with all main trading
partners, except with the former Yugoslav markets. To the latter mar-
kets, Slovenia exports more processed food products than primary agri-
cultural products. The major proportion of agricultural and food trade
deficit is in trade with the eu, particularly in processed food products,
but also in primary agricultural products. Prior to the eu accession, trade
deficit was also substantial with cefta countries. Trade deficit in agri-
cultural and food trade is also with the rest of the world, where deficit in
primary agricultural products is a bit more significant than in processed
food products. Considerable Slovenian trade deficit in agricultural and
food products and significant asymmetry in the geographical structures
of agricultural and food trade flows with imports from the eu (and pre-
viously from the cefta countries, most of which are now new eu mem-
bers) and exports to the former Yugoslav markets provide the indication
that Slovenia lacks competitiveness in the agricultural and food sector
vis-a-vis the majority of its developed trading partners.
These findings are also consistent with some other most recent studies.
In the year 2004, compared to the year 2003, as reported by the Ministry
of Agriculture, Forestry and Food (Mistrstvo za kmetijstvo, gozdarstvo
in prehrano 2005), the substantial increase in agricultural and food im-
ports by 15%, and decreased exports by 11.4% occurred. The agricultural
and food trade deficit increased from 370 million € in 2003 to 531 mil-
lion € in 2004. The similarities in trade patterns and in trade geograph-
ical asymmetry continued as the surplus is observed only with the for-
mer Yugoslav countries. But even in these former traditional markets, the
Slovenian agricultural and food exports decreased by 15%, whereas im-
ports increased by 7%. In 2004, the Slovenian agricultural and food trade
surplus in the former Yugoslav markets was reduced by 19%. The con-
tinuation of trade asymmetry is with the eu countries, where Slovenian
agricultural and food imports increased by 31%, whereas in the same pe-
riod Slovenian agricultural and food exports to these markets increased
only by 1%.
For Slovenia and other cee countries during the last decade, Falcetti,
Sanfey, and Tepic (2005) argued that it has taken time for business to
table 3 Structure of trade types (%) in Slovenian agri-food trade
by the value added content groups in 2002
	(1)	(2)	(3)	(4)
Primary products mainly for industry	98.86	0.17	0.97	0.00
Primary products mainly for household consumption	95.85	2.96	1.05	0.14
Processed products mainly for industry	85.53	3.09	10.00	1.38
Processed products for con- sumption in households	83.53	2.58	13.75	0.13
Primary industrial supplies, not else specified	92.42	1.90	5.18	0.50
Processed industrial supplies, not else specified	86.88	1.09	12.00	0.03
Notes: Column headings as follows: (1) one way trade; (2) two way trade in low quality;
(3) two way trade in high quality; (4) two way trade in similar products. Source: Own
computations (Majkovic 2005) based on data from Slovenian Statistical Office.
make new contacts, to develop acquired new marketing skills and to
convince the eu and other clients abroad to trust that they are and will
be the reliable partners. They also argued that the break-up of the for-
mer Yugoslavia had a significant effect on trade relations in the region
as a whole. The cee countries represent the third largest trading part-
ner in the Euro's area, after the United Kingdom and the United States,
whereas the Euro's area represents the most important trading partner
for the majority of cee countries, namely for the Czech Republic, Hun-
gary, Poland, Romania, Slovakia and Slovenia (around 60% of their to-
tal trade) (Bussiere, Fidrmuc, and Schnatz 2005). However, this general
trade orientation is not confirmed in the case of Slovenian trade in agri-
cultural and food products.
Furthermore, table 3 presents trade types in Slovenian agricultural
and food products, which are distinguished into the six product groups
by the degree of processing on primary agricultural and processed food
products and further disentangled by their final consumption. The an-
alyzed trade types groups behave in a relatively stable way. Four main
stylized facts can be derived from these results for Slovenian agricultural
and food trade. Firstly, Slovenian agricultural and food trade is in gen-
eral characterized by very high share of one-way, inter-industry trade
suggesting a trade specialization along lines of comparative advantages.
Secondly, iit is the lowest for primary agricultural products mainly for
industry and the highest for processed food products for consumption in
households. This finding is somehow consistent with theoretical expec-
tations that iit is increasing with the degree of food processing, where a
greater role is given to product differentiation in varieties and qualities.
Thirdly, within iit, vertical iit is far the more important component
than horizontal iit in similar variety products. Horizontal iit is almost
inexistent for primary agricultural products mainly for industry. It is the
highest, but still relatively very low for processed food products mainly
for industry. Finally, vertical high quality iit, except for primary agri-
cultural products mainly for household consumption, is much more im-
portant than vertical low quality iit. This finding is inconsistent with the
finding by Bojnec and Ferto (2005) for Slovenian agricultural and food
exports to Hungary, but it holds for Hungarian agricultural and food ex-
ports to Slovenia. This suggests that our results for Slovenia are biased
to the Slovenian agricultural and food trade to the former Yugoslav mar-
kets where Slovenia exports high quality agricultural and food products
in exchange for lower quality ones in terms of their international trade
prices.
As a result of the membership of Slovenia in the eu, we can expect
an increase of iit at the expense of inter-industry trade particularly in
trade with the eu countries. This was the case in the previous eu en-
largements, for example for Spain and Portugal, whose rise of iit began
already well before their entry into the eu. The greater proportion of
iit means that more trade exchanges within a certain product category
are leading to greater varieties and qualities in similar products. How-
ever, there are some factors and circumstances in the Slovenian agricul-
tural and food sectors that explain the Slovenian agricultural and food
specificities and situation more deeply (see also Bojnec and Hartmann
2004). Firstly, the level of protection in the agricultural and food sec-
tor in Slovenia remained high over the transition period and adjust-
ments towards the eu. Relatively high protection measurs, particularly
border ones, hampered trade and trade creation effects. Secondly, Slove-
nian agricultural and food producers have not been successful in reap-
ing economies of scale particularly in agricultural production due to the
fragmental farm and agricultural structures but also in the food process-
ing industry due to slow privatization and restructuring process of the
food processing enterprises.
table 4 Structure of trade types (%) in agri-food products of the new member states
(nms-10) of the eu in 1999 and 2003
(1)	Ü)	(3)	(4)
1999
Czech Republic	89.41
Cyprus	98.56
Estonia	92.65
Hungary	95.77
Latvia	88.05
Lithuania	95.97
Malta	96.82
Poland	95.70
Slovakia	76.88
Slovenia	92.55
2003
Czech Republic	81.64	6.87	6.09	5.41
Cyprus	98.04	0.55	1.30	0.11
Estonia	90.00	1.71	3.39	4.90
Hungary	92.54	3.38	2.66	1.43
Latvia	87.43	8.81	2.02	1.74
Lithuania	91.72	1.88	3.85	2.55
Malta	97.69	0.58	0.60	1.13
Poland	93.62	2.99	2.53	0.86
Slovakia	72.29	11.86	7.52	8.32
Slovenia	92.79	2.19	3.15	1.87
Notes: Column headings as follows: (1) one way trade; (2) two way trade in low quality;
(3) two way trade in high quality; (4) two way trade in similar products. Source: Own
computations (Majkovic 2005) based on data from Comext (Eurostat) database.
The structure of trade types in agricultural and food products of the
ten new eu member states' (nms-10), including Slovenia, are compared
in table 4. Four main stylized facts are clearly observed. Firstly, a very
high level of one-way, inter-industry trade represents the common char-
acteristic of agricultural and food trade, but it varies between the nms-
10. While it is often around 90%, it is the lowest for Slovakia and the
highest for Cyprus. Between 1999 and 2003, except for Malta and Slove-
nia, inter-industry trade has declined. This is consistent with theoretical
2.78	5.14	2.67
0.38	0.81	0.25
2.47	2.56	2.31
1.31	2.01	0.91
4.18	5.77	2.00
1.55	1.58	0.91
0.68	1.83	0.67
1.71	1.94	0.65
8.98	11.20	2.95
2.65	3.63	1.17
expectations that trade liberalization and economic growth induces in-
creases in iit, which do not hold for the Slovenian agricultural and food
trade pattern. Secondly, the highest degree of iit is significant for Slo-
vakia with almost a third of its agricultural and food trade characterized
as a two-way iit, either with similar or vertically differentiated (high
and low quality) products. So in this case, the biggest step toward eu av-
erage of agricultural and food trade structure is noticeable. The higher
share of iit of all ranges (vertically and horizontally differentiated prod-
ucts) is often arising due to the country similarities and similar tastes of
consumers. Thirdly, vertical iit is more significant than horizontal iit.
Horizontal iit in similar quality products is the highest for Slovakia and
then the Czech Republic, but the lowest for Cyprus. The structures of
Slovak trade types in agricultural and food products seem to arise from
strong orientation to the Czech markets, while the latter is more ori-
ented towards the eu. Between 1999 and 2003, except for Cyprus and
Latvia, horizontal iit in the nms increased. Finally, the nms-10 agricul-
tural and food trade types in general have not changed substantially over
the analyzed period. The vertically differentiated products have gained a
slightly higher proportion. Within vertical iit the prevalence is on high
quality vertical iit rather than on low quality viit. However, some most
recent changes have occurred in the cases of the Czech and Slovak Re-
publics, Hungary, Poland and Latvia where increases in vertical iit were
in low quality vertical iit, but less in high quality vertical iit.
Dimensions of trade adjustments over time might, in the case of verti-
cal differentiation, mean that a country might specialize inside industries
on products with different levels of price ranges. For example it can spe-
cialize in high quality vertical iit by importing low qualities and export-
ing high quality ones. Conversely, differences in quality would mean dif-
ferentials arising from some specific factor endowments such as skilled
and highly qualified labor, advanced capital or research and develop-
ment. Specialization for a specific quality spectrum (high or low) may
imply income distribution differences among individual countries and
their trading partners. Table 5 presents historical developments in trade
types in intra-Eu trade. It compares between more processed food and
beverages with primary agricultural products as well as with all trade in
merchandise goods. iit prevails in non agricultural and food products in
intra-Eu trade, but one way-trade prevails in agricultural and food prod-
ucts. From the dynamic point of view, one-way trade is reduced and thus
iit has increased with trade liberalization and economic growth. The
Globalization of Slovenian Agricultural and Food Trade 359
table 5 Trade types in intra-Eu trade by selected industries and for all industries
Industry	Structure in 1994 (%)	Variation 1994 to 1985 (%)
	(1)	(2)	(3)	(1)	(2)	(3)
Food and beverages	12.5	26.6	60.9	0.8	8.7	-9.5
Agriculture	9.3	16.8	73.9	2.6	5.2	-7.8
All industries	19.2	42.3	38.5	2.0	3.1	-5.1
Notes: Column headings as follows: (1) two-way trade in similar products; (2) two way
trade in vertically differentiated products; (3) one way trade. Source: Fontagne, Freuden-
berg, and Peridy (1997).
increase in iit was faster for food and beverages than for agriculture as
well as for non agricultural and food products. Within two-way iit, ver-
tically differentiated products are at least twice as important as horizon-
tal similar products. The significance of both components is increasing
by the degree of processing or product's sophistication, being the low-
est for agriculture, higher for food and beverages, and being the most
significant for non agricultural and food products. However, the fastest
increases in vertical iit are recorded for agriculture and particularly for
food and beverages. Due to the relatively low proportion of iit in agri-
cultural and food products, also agriculture and the food sector during
the last twenty years have been under the increased pressures for restruc-
turing. The lower share of iit often during liberalization implies higher
pressures for adjustments due to restructuring and reallocation of indus-
tries. Such restructurings between industries are much more painful and
costly than adjustments along the product differentiation within a same
industry, which alters product lines.
Conclusion
Agricultural and food trade has been analyzed for Slovenia in compari-
son with the eu and the other NMs-9. Agricultural and food trade flows
have been analyzed using iit approaches. The significance of the pro-
cessed food products in Slovenian agricultural and food trade is increas-
ing. The Slovenian agricultural and food sectors are becoming more ex-
posed to global competition. Trade structures, trade types and the nature
of iit are changing under pressures of internal and external factors. The
large proportion of Slovenian agricultural and food trade is in one-way,
inter-industry trade. Among determinants of inter-industry trade type
specialization are differences in factor endowments and productivity dif-
ferential, which are causing restructuring and adjustment costs along the
economic activities, more than along the qualities.
The significance of iit is increasing with the degree of product pro-
cessing. It is the lowest for primary agricultural products and the highest
for processed food products for household consumption. With income
per capita increases, demands are towards varieties and qualities. Within
iit low-quality exports in vertical iit prevail. This type of agricultural
and food trade specialization on lower value-added products raises the
question of the Slovenian agricultural and food sector competitiveness.
The potential effect of eu integration is likely to lead to the specialization
along comparative advantages. Greater efforts are needed to upgrade the
relative quality of agricultural and food exports. This can be induced by
internal restructuring at industry and firm level, and also by new invest-
ment activities to improve quality and international price competitive-
ness.
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Impact of Personality and Emotional Intelligence
on Successful Training in Competences
Aleksander Zadel
Many modern management theories and researches deriving therefrom
seek those personality features and traits that ought to ensure the effi-
cient development of an individual's competences. In my research we
found out that managers are able to develop top quality management
and top quality competences irrespective of their personality traits.
Since there is no uniform method that would offer an explanation as
to how individuals should develop their competences, we presented
how an individual training programme and the development of com-
petences should proceed. However, we can only attain optimum success
in training needed competences if we take into consideration individ-
ual features of a person, his/her emotional intelligence and the require-
ments of his/her working environment. What the dynamic and variable
working environment expects from a modern leader is a wide range of
good or even perfect competences. The article at hand presents the im-
portance of a long-term basis training that has a systematic influence
on the improvement of management techniques.
Key Words: competences, training, personality traits,
management, behaviour
jel Classification: J24, M53, M54
Introduction
A leader in a modern company has, for quite some time now, not only
played the role of a manager and director of activities in the narrower
sense of the word but has also been more and more becoming a person
who makes sure that the people for whom he/she is made responsible
are able to reach and maintain optimum work performance. Therefore
his/her interaction competences are gaining increasing importance. The
changing conditions in the world of management have led to the sit-
uation where business knowledge, financial management, information
technologies and other types of managerial expertise are generally ac-
cessible and commanded by the majority of managers or management
teams in successful companies. Distinguishing successful leaders from
Dr Aleksander Zadel is an Asistant Lecturer at the Faculty of
Management Koper, University of Primorska, Slovenia
unsuccessful ones today are their competences. However, I do not have
in mind the competences in the sense of the scope of their responsibili-
ties but in the sense of their ability to apply their knowledge in solution
solving. Svetlik (2001) lists five groups of competences:
•	methodological competences constitute the ability to perform time
management, the ability to make decisions, the knowledge to de-
liver solutions to problems, communication skills;
•	social competences are persuasive abilities, abilities to conduct nego-
tiations, ability to manage people;
•	standpoint (value) competences include the ability to establish values
and positive standpoints;
•	learning competences comprise the ability to learn, ability to assess
what will bear crucial importance for an individual in the future,
the ability to collect and process information;
•	specific work-related competences are competences that distinguish
one line of work from the other.
The world of modern management undoubtedly requires a new style
of leadership and a new type of leader. The trend is shifting from lead-
ership, characteristic of which was delegating and assigning orders or
instructions (reactive leadership), towards the agenda-driven leadership
based upon the formation of a company's visions and goals as well as the
mobilisation of its employees with their participation (Svetlik 1996). An
important role in this process is also attributed to interactive leadership,
rendering the leader into an instructor who learns together with his col-
leagues in the processes of problem solving and developing new projects
(Rasmunsson 1992). Furthermore, according to Svetlik (1996) the locus
of leaders' activities is shifting from 'hard' to 'soft' factors, such as organ-
isational culture, knowledge, communication, motivation through work
and career, and so forth.
Even though leadership researchers (Hickman 1990; Kotter 1988; Yukl
1994) believe that it is reasonable to consider management and leadership
as two distinct roles, they at the same time deem it inappropriate to view
managers and leaders as two different types of people. While an individ-
ual may be both a leader and a manager, this does not necessarily mean
that a good manager can also be a good leader. According to Conger and
Kanungo (1998), the key distinction between a manager and a leader is
provided in the book by Burns (1978). At that time, Burns was the author
who first introduced a claim that the style of leadership may be defined
as transformational or transactional. In his opinion, both the leader and
the led are in a position to offer each other certain advantages. Trans-
formational leadership involves mutual encmyagement of the leader and
the led, the inclusion of the led into the processes of creating new visions
and establishing the processes of continuous changes. This results in the
changes that occur in both, the leader and the led. Transactional leader-
ship, on the other hand, involves a completely different process, since it
is founded exclusively on a one-way influence that the leader has on the
led. Burns' work bore a major influence on Bass. The latter claims that
transformational leadership is that which has been subject to the most
insightful research in the last decade (Bass 1998). The reasons for such an
interest are most likely based on the findings that transformational lead-
ership, in principle, delivers the greatest share of positive results (Barling,
Weber, and Kelloway 1996).
With transformational leadership the leader stimulates the employees
with ideals and values. He/she makes use of intrinsic motivation. Trans-
formational leadership derives from my fundamental premises (Bass and
Avolio 1993):
•	charisma: the leader presents the vision and the meaning of the
company's mission, instils pride, evokes respect and confidence;
•	inspiration: motivates high expectations, makes use of symbols in
effort-oriented guiding, expresses crucial intents in a simple man-
ner;
•	intellectual stimulations: develop creativity, rationality and system-
atic problem solving methods;
•	consideration of the interests of individual staff members: invests per-
sonal interest in an individual's development, treats each individual
as a respective personality, coaches, offers advice.
Transactional leadership is founded upon concertations between the
leader and his/her subordinates concerning all kinds of material, per-
sonnel, social and other advantages that an employee may benefit from,
insofar they comply with the rules or requirements stipulated by their su-
perior. The transactional leader makes use of extrinsic motivation, and
complies with rules and regulations. The transactional leader's work is
based on (Bass and Avolio 1993):
•	rewarding: negotiates rewards for accomplished tasks, promises
rewards for future job performance, gives acknowledgements for
achievements;
•	leadership-by-exception (active): monitors ongoing activities, looks
for divergences from the rules and standards, makes decisions on
corrective actions;
•	leadership-by-exception (passive): intervenes only in the event of the
set standards not being met;
•	laissez faire leadership: renounces the responsibility and avoids
team-based decision-making.
Transformational leadership development programmes have proven
to be very effective. Their purpose is to teach those techniques and meth-
ods of leadership that maybe defined as transformational forms of lead-
ership. The key conditions for efficient functioning of learning models
for transformational leadership relate to appropriate feedback informa-
tion. The employees improve their effectiveness if they can assess that
their superiors apply those leadership techniques that may be classified
as transformational. In order for this to happen we have to provide for
a flow of information as direct as possible on the manner of leadership
and reactions thereto (Kelloway, Barling, and Helleur 2000).
Is it Possible to Influence the Development of Competences?
Let us look at an example of competence development within the con-
text of emotional intelligence. Among the authors dealing with and con-
ducting research on this phenomenon there is a strong consensus that
emotional intelligence may be developed through emotional compe-
tences (Goleman 1998; Steiner 1997; Höpfl and Linstead 1997; Cooper and
Sawaf 1997; Martinez 1997). There is an enormous body of literature de-
voted exclusively to the development of emotional competences. Despite
the indisputable fact that emotional competences are easiest to learn in
childhood and that this form of learning poses greater problems at later
stages of life, it also cannot be denied that high quality programmes can
bear significant influence on the development of emotional competences
in the desired direction.
The research conducted in management, sport and behavioural psy-
chology shows that the competences may be enhanced, developed or ac-
quired. In this case it is also necessary to take into account the fact that
social and emotional learning differs from cognitive and technical learn-
ing. Therefore this type of learning requires a different approach. Man-
agers are aware that competences constitute an important herald of suc-
cess in work; however, it is in their interest to know how to ensure that
a maximum number of employees will develop their competences to the
highest level possible. In order to facilitate my understanding of the likely
influence on the improvement of competences, let us take a look at two
types of learning.
There are two fundamental reasons as to why it is appropriate to strive
for the on-the-job improvement of competences.
1.	Competences constitute a crucial factor in work performance. The
results obtained from various studies make it evident that more
than two thirds of competences necessary for successful job perfor-
mance are determined by emotional competences.
2.	A vast majority of adults involved or introduced in the working pro-
cess do not have the appropriate competences that are required by
ever more demanding working environments. A particularly acute
problem is posed by the lack of motivation and the absence thereof,
respectively.
The Significance of Effective Training
With their roots in the early 1950's, trainings influencing the develop-
ment of social skills present no novelty. The effectiveness of such train-
ings has been proven by objective criteria (reducing absenteeism and
increasing profit). Even greater, however, was the subjective perception
of the changes that were measured by means of various questionnaires.
The results have shown an improved level of self-assurance, heightened
sensitivity to other people's problems, increased confidence and so forth
(Cherniss 2000).
Figure 1 shows the plan and implementation of the process for the
development of competences. The learning process comprises fmy key
phases. Figure 1 clearly demonstrates what approach has to be taken in
education and competence training. The more defined the methodology
is, the easier it is to follow the plan and the greater the opportunity is
to succeed. The complexity of the scheme crucially relies on the essential
differences between cognitive learning and competence learning.
Let us take a closer look at respective phases within the entire process
of influencing the changes in organisations' competences. Applying the
following rules it is possible to ensure an optimum systematic impact on
the objectives concerning the development of employees' competences.
Such guidelines can bear influence on the development of the widest
scope of activities, including team work, leadership, conflict and stress
Preparing for changes	Training
figure 1 Optimum process for the development of competences in organisations
(adapted from Cherniss and Goleman 1998)
management, as well as the enhancement of customer and buyer rela-
tions. The rules apply to the changes in an individual's behaviour; due to
their synergic effect, they increase the chances of success, provided also
that they are consistently implemented. The rules are grouped into the
following fmy spheres of activities: preparation, training, maintenance
and evaluation, with each of them being further subdivided (Cherniss
and Goleman 1998).
Preparing for Changes. The initial period, which is critical to the suc-
cess of the competence-developing process, comprises preparations for
changes. Preparations are implemented on both levels, personal and or-
ganisational. Motivation of participants is of key importance to the suc-
cess of training. Generally, adult people have deep-rooted behavioural
patterns. Altering these patterns constitutes a rather difficult task.
Training. Training includes all the activities which allow for the intro-
duction of changes. The quantity of time, energy and potential fear of
change invested by individuals during the period of training in compe-
tences is so abundant that it may bear a significant impact on reducing
the motivation for changes. For this reason, the trainers must be aware
of such obstacles at all times and actively contribute to the reduction of
their negative impacts on motivation.
table 1 Average age and number of senior staff members included in the research
Gender	Average age	N
Women	40.08	10
Men	44.03	30
Total	43.22	40
Maintenance and Transfer. Maintenance and transfer relates to post-
training phases and ensures that the acquired and trained competences
will be transferred into all desired spheres of activities. When the train-
ing participant returns to his/her old working environment, he/she will
most likely encounter numerous factors that will encourage the applica-
tion of those former behavioural patterns which we have been trying to
replace during the training process.
Evaluation. Evaluation1 must at all times be an inherent part of the train-
ing process, since it is only in this way that the effectiveness of performed
activities can be measured (Cherniss and Goleman 1998).
Research
The research was conducted on the sample of 40 managers and 154 per-
sons who assessed the competences of participating managers. The arti-
cle at hand will focus on the managers, their personality traits and emo-
tional competence.
Let us first take a look at the tables containing basic socio-demographic
variables for managerial staff. Since the numerus is below 100 I did not
calculate percentage values. Despite the low numerus in the case of the
experimental group I was able to apply classic statistical procedures,
since on the other hand I had a group of 154 assessors. Their socio-
demographic data were not statistically processed due to the fact that
an appreciable number of them wished to remain anonymous, not only
by virtue of their names but other personal data as well. Their wish, of
cmyse, was respected.
The results obtained from the Eysenck's Personality Questionnaire
(epq) show average values for fundamental personality traits. Eysenck's
Personality Questionnaire is the most frequently used and quoted per-
sonality questionnaire in psychological practice (Musek 1993).
Table 2 compares the difference between the results obtained from my
sample and the standardised results obtained from the sample of the
Slovenian population. What can be noticed is that there is no signifi-
table 2 Average values for my sample and standardised result obtained from
a sample of the Slovenian population that was subject to subtests contained
in the Eysenck's Personality Questionnaire for managerial staff
	Average value of the sample	Average value of the standardised result
epq p	5.45	4.27
epq e	16.55	15.84
epq n	7.28	5.05
epq l	10.50	13.84
cant difference between the results obtained from the first two subtests
and the standardised results. Slightly higher are the levels of psychoticism
(amounting to a little more than one point) and extraversion; the neu-
roticism/emotional stability dimension exhibits an average result that is
higher by two points; a little more than three points lower is the result
on the sincerity scale.
The result on the psychoticism scale (p) is somewhat higher than its
counterpart typical of the Slovenian population sample. With regard
to the fact that the psychoticism dimension at the higher end of the
continuum is determined by the characteristics of aggression, tough-
mindedness, inconsideration and so forth, I can claim that the slightly
higher result obtained for the group of leaders does not come as a sur-
prise. The characteristics of strictness in mutual relations are, as a rule,
fairly desirable. A somewhat higher result on the p scale for managerial
staff is expected and in agreement with the indications from the relevant
literature.
On the extraversion scale (e), the result exceeding the value of the
standardised result determines the typical characteristics of talkativeness,
outgoingness, sociableness, good communication skills and the ability to
establish social contacts. This result, as well, is expected in the case of
my experimental group. A good leader should have the communication
skills which will enable him/her to effectively manage the social network.
A good measure of extraversion will facilitate his/her achieving this goal.
With regard to the neuroticism/emotional stability dimension, the
above-average result means a higher level of emotional instability or neu-
roticism. The persons who attain an above-average number of points
are restless, moody and easily become anxious. This result serves as a
warning that the managerial staff has to be provided with the knowledge
and the means to help them tackle the major environment-induced stress
factors. Since it is very difficult to bring influence to bear on the work-
ing environment, the main effort should be invested in people. One of
the methods to reduce the impact of a stressful environment is training
for the purposes of more efficient leadership that would ensure a higher
quality fulfilment of needs and requirements. Or, in other words, stress
constitutes nothing else than a very condensed series of unsatisfied needs
(Glasser 1998).
Finally, there is also the sincerity dimension, which, according to
Eysenck, does not constitute a real personality dimension, but a mere
tool for measuring the tendency 'to pretend'. Measuring this personal-
ity characteristic is crucial when we wish to verify as to what extent an
individual tends to opt for socially more acceptable answers2 (i. e. tries
to present himself/herself in a different light). According to Eysenck, the
tendency to pretend is made more evident in certain situations when
a person in question wishes to make a better impression (for example,
when filling out the questionnaire accompanying the employment inter-
view; Musek 1993). In addition to pretence, this scale also demonstrates
the level of social naivety or conformism. The higher the result is, the
more explicitly expressed the characteristics are. Persons included in my
research on average achieved up to three points lower results on this
scale. This means that we are dealing with people who convey a typically
lower tendency to pretend, as well as a lower level of conformism. For
senior managers such a result is as much expected as it is desirable.
In conducting my research I used the epq with a view to establish-
ing whether the personality characteristics were in correlation with emo-
tional competence.
The Association between Personality Traits
and Emotional Competence
This part of the task will deliver answers to the questions of my re-
search. I will establish in what way emotional competences are associated
with personality traits and whether leaders with better evaluated emo-
tional competences also work with subordinates who are more satisfied
in terms of both their personal and the organisation's needs. Thus I will
be able to set up the foundations to confirm or reject the hypothesis on
the association between emotional competences and personality traits.
Table 3 presents calculated correlations between personality traits and
the result from the personality questionnaire on emotional competences.
With regard to emotional competences and personality traits there are
80 calculated correlations and 16 with regard to the clusters of emotional
competences and personality traits. According to Petz, in the event of
a large number of calculated statistical values the amount of envisaged
statistically characteristic correlations will depend on the height of the
risk3 (Musek 1993). In my case, where I am dealing with 96 calculated
correlations, I may confirm the 'zero hypothesis' when we do not obtain
more than five statistically characteristic correlations. It is also important
to emphasise that such conclusions can be drawn only when we deal with
large numbers.
In reviewing the correlation matrix, I conclude that among all calcu-
lated correlations there are three statistically characteristic correlations
at the 5% risk level. The first is the correlation between the P dimen-
sion and organisational awareness, the second is the correlation between
the E dimension and prudence, with the third being the correlation be-
tween the L scale and self-control. Since, owing to the large number of
calculated correlations, I will accept the interpretation on accidental sta-
tistically characteristic correlations, I will not interpret these associations
as substantial but accidental.
According to claims made in the relevant literature, emotional compe-
tences are not deemed to be in correlation with personality traits (Mayer
and Salovey 1993; Goleman 1995). The results of my research confirm
these claims. I can conclude that personal characteristics merely consti-
tute a specific potential that acquires its substantial validity in associ-
ation with competences and behaviour. Personal characteristics do not
bear influence on the level of the possibility that someone will develop a
certain emotional competence. Therefore, even though I can find differ-
ences in personal characteristics between 'normal'4 population and man-
agers, these characteristics do not constitute a factor that is crucial for a
successful leadership.
Conclusion
My presupposition was that there was no statistically characteristic cor-
relation between emotional competences and personality traits. The re-
sults of my research proved this hypothesis. My conclusions match with
the results from the literature, which confirm that emotional intelligence
is independent from fundamental personality traits (Mayer, Caruso, and
Salovey 2000). How could we apply the acquired knowledge for a better
understanding of leadership?
table 3 Correlations between personality traits in the epq questionnaire
and emotional competences in the eci questionnaire
epq p	epqe	epq n	epql
	r	P	r	P	r	P	r	P
Self-acknowledgement	-0.01	0.962	0.06	0.723	0.00	0.986	0.02	0.883
Emotional self- acknowledgement	0.13	0.438	0.22	0.191	0.03	0.867	0.08	0.620
Self-assessment	0.02	0.885	-0.04	0.798	-0.04	0.827	-0.10	0.536
Self-confidence	-0.07	0.679	0.04	0.813	0.02	0.891	0.06	0.707
Self-control	-0.07	0.663	-0.11	0.499	-0.06	0.739	0.17	0.307
Self-supervision	-0.06	0.740	-0.14	0.400	-0.08	0.630	0.32	0.048*
Reliability	-0.09	0.608	0.04	0.813	-0.09	0.579	0.22	0.183
Prudence	-0.09	0.586	-0.35	0.034*	0.05	0.755	-0.05	0.765
Adaptability	0.09	0.604	0.04	0.823	0.01	0.976	0.17	0.314
Achievement- orientedness	0.00	0.992	-0.08	0.612	-0.19	0.242	-0.01	0.953
Initiative	0.04	0.818	0.03	0.836	0.01	0.965	0.18	0.274
Social awareness	0.01	0.929	-0.04	0.818	-0.14	0.395	0.13	0.449
Empathy	0.03	0.879	0.02	0.918	-0.23	0.163	0.19	0.263
Obligingness	-0.16	0.329	-0.13	0.436	-0.03	0.844	-0.14	0.401
Organisational awareness	0.34	0.038*	0.02	0.908	0.03	0.844	0.20	0.231
Social skills	-0.10	0.549	-0.01	0.975	-0.20	0.224	0.09	0.595
Developing others	-0.07	0.664	-0.12	0.475	-0.09	0.574	0.00	0.995
Leadership	-0.18	0.283	-0.11	0.530	-0.05	0.755	-0.02	0.920
Influence	-0.02	0.901	0.08	0.651	-0.13	0.447	0.23	0.160
Communication	0.08	0.624	0.14	0.410	-0.09	0.584	-0.01	0.948
Fostering changes	-0.24	0.150	-0.17	0.299	-0.23	0.164	0.10	0.567
Conflict management	-0.03	0.867	0.02	0.928	-0.26	0.109	0.16	0.333
Establishing contacts	0.02	0.884	0.21	0.209	-0.08	0.615	0.13	0.447
Team work and cooperation	-0.14	0.387	-0.01	0.969	-0.23	0.158	0.02	0.918
* Statistically characteristic correlations with less than 5% risk.
We often look for the differences between successful and unsuccessful
people, between successful and unsuccessful leaders. In a similar vein,
we also wonder whether leaders possess specific personal qualities that
other people do not. Since an appreciable number of researches deliver
affirmative answers to these questions, we tend to make over-generalised
statements based on the conclusions that these personality traits and dif-
ferences are crucial for a successful performance in leadership. But this is
far from true.
How is an individual, without any psychological education and psy-
chological questionnaires, able to establish the type of personality traits
of a person with whom he/she is in a certain relationship? By observ-
ing their behaviour. Personality traits are thus expressed through an in-
dividual's behaviour. Behaviour may be effective or ineffective, socially
more or less acceptable, or more or less appropriate. But at all times, it is
something that an individual has learnt (excluding instinctive and reflex
behaviour). Personality and behaviour are interrelated only to the extent
on the basis of which we are able to draw conclusions on the fundamental
personality traits.
If we can define behaviour as good or bad, are we then, in a similar
vein, also able to determine an individual's personality traits? No. Even
though the general, non-professional opinion states otherwise, the qual-
ity of behaviour is completely independent from personality traits. The
latter, more likely, constitute a potential. They represent the material that
may be developed through learning into a certain type of personality
which, in itself, cannot be deemed as good or bad.
Why did we claim that we can draw conclusions on personality traits
on the basis of an individual's behaviour? Because the quantitative side
of behaviour is, in fact, directly determined by personality traits, while
the same does not apply to its qualitative side. An individual who has
achieved a high result on the E scale (extraversion) will, undoubtedly, be
more talkative than an individual who has attained a lower result. How-
ever, the quality of their respective communication behaviours will be
determined by factors that are completely different from their personal-
ity traits.
Personality is a relatively permanent system of an individual's be-
havioural, emotional and physical characteristics (Musek 1993). Person-
ality potentials are genetically determined. The way in which an indi-
vidual realises his/her personality potential, however, is not completely
defined in his/her genetic system. At least with regard to behaviour we
can claim that it can be acquired through learning, subject to change or
given up. Today we can also claim with certainty that it is also possible to
improve competences that constitute a crucial factor for an individual's
successful performance.
In principle, each individual has to accept his/her personality as a po-
tential determining the quantity of his/her behaviour. The selected be-
haviour quality, conversely, will depend on other, situation-specific fac-
tors.
Competences are expressed through behaviour. I can conclude that
leaders are able to develop high quality form of behaviour and thus also
high quality competences, irrespective of their personality traits. Each
individual has to be aware of his/her potentials and translate them into
best possible practice. However, there is no single recipe for all. Within
the process of training in competences we will be able to deliver optimum
results only if we will take into consideration respective characteristics of
each individual and the requirements posed by a specific working envi-
ronment. Dynamic and variable working environments require from a
modern leader a wide spectrum of good or even perfect competences. It
is only in this manner that a leader can play his/her role successfully and
efficiently.
Notes
1	Evaluation is a procedure used for the assessment of the current state
or process. It does not present a critique, since it does not treat the per-
sonality traits of an individual but merely establishes the gap between
the actual and the desired states.
2	The first three personal dimensions were proven by Eysenck also by
human physiology studies. Eysenck discovered physiological corre-
lants that confirmed the existence of three key personality traits. The
fourth dimension is a type of a tool that helps us determine the level of
reliability of the results obtained with regard to the first three scales. If
the result on the l scale is too high, (above 17 points), Eysenck recom-
mends that great care is taken in interpreting the other three dimen-
sions (Musek 1993).
3	In adopting conclusions with a 5% risk, there is a possiblitiy of ac-
cidentally obtaining five statistically characteristic correlations in 100
calculated correlations. In accepting 1% risk, we would most probably
accidentally obtain one statistically characteristic correlation.
4	In statistical terms, the word 'normal' means normal distribution.
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volume 4 ■ number 4 ■ winter 2006 ■ issn i581-63ii
285 Enhancing the Transformative Potential
of Business Internships
David Starr-Glass
299 Impact of Strategic Initiatives in Management
Accounting on Corporate Financial Performance:
Evidence from Amman Stock Exchange
Husam Aldeen Al-Khadash
Mete Feridun
313 Risk Taking Propensity and Export Performance
of Croatian Exporters
Mirna Leko-Šimić
Jasna Horvat
327 A Comparison Between Recent and Prospective Critical Success
Factors in Lithuanian Printing Industry
Vilte Auruškeviciene
Laura Šalciuviene
Rüta Kazlauskaite
Andrius Trifanovas
347 Globalization of Slovenian Agricultural
and Food Trade
Stefan Bojnec
Darja Majkovic
363 Impact of Personality and Emotional Intelligence
on Successful Training in Competences
Aleksander Zadel
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