pa ge 1 pa ge 86 american journal of economics and business innovation (ajebi) research on sustainable development of china’s green enterprise economy yulinqin1, jun li2* volume 2 issue 2, year 2023 issn: 2831-5588 (online), 2832-4862 (print) doi: https://doi.org/10.54536/ajebi.v2i2.1891 https://journals.e-palli.com/home/index.php/ajebi article information abstract received: july 09, 2023 accepted: august 04 2023 published: august 10, 2023 this paper aims to explore how china’s green economy can promote the sustainable development of enterprises. with the rapid growth of china’s economy, problems such as environmental pollution, resource depletion, and ecological imbalance have become increasingly prominent. the article first expounds the meaning and consensus of green economy and sustainable development. then it discusses the environmental protection industry as an important part of the green economy, including its rise, international trends and development status. the article analyzes the impact of the green economy on the sustainable development of enterprises, including environmental benefits, economic advantages and social impact. discusses the challenges and opportunities faced by enterprises in technological innovation, market demand, and policy support in the green economy. finally, the article proposes strategies for enterprises to achieve sustainable development, including practices such as sustainable resource management, clean production technology, and corporate social responsibility. . therefore, the author’s research provides guidance for chinese enterprises to realize the sustainable development of green economy, and provides insights and suggestions for promoting the development of green economy and sustainable development of enterprises. keywords green economy, business development strategy, sustainable development 1 belarusian state university, minsk, belarus * corresponding author’s e-mail: jli701788@gmail.com introduction environment and development are two major themes in today’s world, with green economy and sustainable development at its core. china’s economy is growing rapidly, and economic growth indicators continue to improve. however, this growth has also been accompanied by serious environmental pollution, resource depletion and ecological imbalance. if environmental costs are deducted, china’s real economic growth index has not yet reached the level of the statistics. china’s economic growth must change, and a green economy is one of the most important ways to meet this challenge. with the rapid growth of china’s economy, problems such as environmental pollution, resource depletion, and ecological imbalance have become increasingly prominent. a green economy is seen as an effective way to address these issues. enterprises embody the concept of sustainable development by emphasizing the production of green economic products and the recycling of products.therefore, a large number of small and medium-sized enterprises in my country have started the transformation of low-carbon enterprises to meet the needs of sustainable economic development. low-carbon economy is a green economy with “low energy consumption, low emission and low pollution”, which is in line with a new economic model of sustainable development. the development of lowcarbon economy, promote green development, based on the theory of sustainable development, is an important idea and solution to solve the global climate problem, it is different from the traditional mode of economic development model (meng et al., 2020). the current climate change problem is becoming more and more serious, the development strategy of green low-carbon economy is getting more and more widespread attention, as a high-carbon industry oil companies, should comply with the current general trend of social and economic development, the implementation of green low-carbon economy sustainable development strategy. green economy is an economic form that focuses on resource efficiency and environmental friendliness. it is characterized by low resource consumption, low environmental pollution, high value-added products, strong technological innovation, and intensive production methods. 2006 to 2020, china entered the first phase of green transformation, and 2020 to 2030 is the second phase of large-scale emission reduction, focusing on reducing carbon dioxide emissions. the widespread adoption of the green development concept is rapidly affecting all aspects of china’s economic and social development, including the resource environment (wang et al., 2022), technological progress, economic agglomerations, industrial restructuring, government interventions, and public transportation (shaoet al., 2022 ). contemporary economies are increasingly emphasizing the development of environmentally friendly economies. in this context, sustainable development of any economy involves increasing environmental benefits in any area. the promotion of green jobs is becoming increasingly important and employment policies and strategies at national and european level are increasingly supporting green jobs. in a green economy, the development of green jobs becomes the basis for sustainable economic pa ge 87 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(2) 86-92, 2023 development. green jobs are at the heart of sustainable development and key to addressing global challenges such as environmental protection, economic development and social inclusion (wang et al., 2022). this paper describes the role of green jobs in ensuring sustainable economic development and emphasizes china’s position in this regard. this study starts with a conceptual analysis of the terms sustainable development, green economy and green jobs to capture the linkages between these concepts. it aims to explore how china’s green economy can contribute to sustainable business development and provide practical recommendations for future green economy development and sustainable business development. literature review basic overview of the green economy there is a broad consensus on the content of green economic activities. one is the industrialization of environmental protection, aimed at protecting the environment, promoting scientific and technological progress, and preventing the emergence of new factors detrimental to the environment and ecological damage during the implementation of environmental protection measures. the second is the greening of the primary industry focusing on agriculture. the realization of ecological agriculture is the common ideal of mankind. the last is the greening of the secondary industry, or more broadly the greening of all manufacturing industries. green economy represents the concept of harmonizing human economic activities with environmental protection. it mainly refers to the emerging environmental protection industry and the changes in industry and agriculture triggered by environmental protection. green economy can be regarded as a general term for the ideal economic activities of human beings in the future, and all economic activities should be based on ecological principles. it is the pursuit of harmony between human beings and nature, which meets the current needs of human survival and development while also protecting the ecological environment and realizing the important prerequisite of sustainable development. theoretical overview of green economy loiseau e, saikku l, antikainen r emphasized that the traditional way of economic growth has caused significant environmental damage, and advocated an economic model that focuses on environmental protection to achieve simultaneous development of the economy and the environment (loiseau e et al.,2016). since then, the concept of green economy has been globally recognized and promoted, and has become a prominent symbol of the economic model in the new era. song jinzhao, hu xiangxiang, wang xiaoping, and wang keyang proposed a new green economy theory (song jz et al.,2022). they proposed to add a new element social organization capital on the basis of traditional economic factors such as labor, land and capital. under the green economy framework, social organizational capital is considered a key factor in achieving green economic development. this perspective goes beyond the overreliance on physical capital in economics in the past and emphasizes the importance of non-material resources so as to achieve a balance between material and non-material aspects. many scholars have also contributed to defining this concept, loiseau et al. (2016) emphasized the close relationship between green economy and sustainable development. prof. cai linhai is the founder and advocate of the green economy theory in china, and has proposed a more comprehensive green economy theory and practice (cai ,2009). he further emphasized that the green economy pursues efficient, harmonious, and sustainable development, with ecological agriculture, recycling industry, and sustainable service industry as the core composition of economic structure, growth mode, and social form. the development of green economy needs to realize the efficient use of resources and sustainable economic growth through technological innovation, industrial transformation, policy guidance and other measures. to summarize, green economy is not only an important new research topic today, but also a necessary research direction for the development of the times. therefore, how to develop the green economy, the development of green economy enterprises as well as sustainable development is the important research object of this paper. the relationship between green economy and sustainable development the introduction of the theory of sustainable development was accompanied by a big discussion on the two theories of limit of growth and infinite growth. both theories have their drawbacks. former norwegian prime minister mrs. brundtland pointed out in the report “our common future” that the world has a tendency to change the earth’s environment, threatening the lives of many species, including human beings. the report cites a series of major global environmental problems and reveals the relationship between the environment and development, namely, that development in the traditional sense leads to the destruction and depletion of environmental resources, while environmental degradation restricts economic development. the report provides a comprehensive and systematic evaluation of the current problems facing mankind in terms of economic development and environmental protection. she pointed out that we recognize the importance of economic interdependence among countries, and we are now feeling the interdependence of the economies of the globalized economies. the current economic development, however, should not be irreversible on the premise of ecology and environment, but should follow a cyclical and gradual development. general secretary xi jinping of china has also put forward the development pa ge 88 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(2) 86-92, 2023 goal that only green water and green mountains are mountains of gold and silver, and is striving to achieve the goal of carbon neutrality by 2050. status of green economy development the development of green economy aims to realize the synergistic development of economic growth and environmental protection. market-oriented, it promotes the transformation and upgrading of traditional industries, adopts new production methods, technologies and management concepts, and minimizes the impact on the environment and the consumption of resources. the development status of green economy is reflected in economic growth premised on the protection of ecological and environmental protection and resource conservation. with its emphasis on ecological and environmental protection and resource conservation, the green economy has been able to better meet the growing environmental protection and health needs of the people, and has therefore gained the support and widespread attention of an increasing number of countries and all sectors of society. figure 1: the measurement curve of green economic benefits in the past four years as can be seen from figure 1, the distribution curve of china’s green economy development shows an overall trend of rightward shift (liu et al.,2022 ). the magnitude of this change is relatively small, and the height of the main peak increases year by year, but at a slow pace. the distribution curve also shows a right-sloping tail, indicating that some regions have a greater potential for green economic development, but overall there is a dominant peak and no obvious regional polarization. this indicates that the level of green economy development in china’s central and western regions is generally improving, and the absolute differences between regions are gradually narrowing. overall, the efficiency of china’s green economy development is improving, but the growth rate is relatively slow, and there is still a certain degree of volatility and instability in certain aspects. methodology china’s green economy policies and practices this paper uses data analysis method, literature research method, induction and summary method, and data analysis method to evaluate chinese enterprises in many aspects. these include the evaluation of green figure 2: analysis of china’s green economy transition and low carbon economy from 2014-2022 pa ge 89 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(2) 86-92, 2023 production products of enterprises, the evaluation of environmental protection performance of enterprises, the evaluation of green energy application rate of enterprises, the evaluation of low-carbon resourcesaving enterprise transformation, and the transformation factors of enterprises manufacturing green.and through excel, orgin and other production software to display the data in the form of charts in the thesis research. the transition to a green economy represents china’s transformation to a low-carbon, resource-saving society, which is inextricably linked to economic prosperity, social development, and ecological harmonization (li, jiang et al.,2013). the column analysis of carbon pollution emission is shown in figure 2. influencing factors of green economy transition at present, the influencing factors and realization paths of green economic transformation mainly focus on green economy and natural resource endowment, green economy and environmental pollution. some scholars have analyzed the driving factors of green transition potential, emphasizing the importance of carbon emission reduction, green innovation, and public green awareness. they believe that energy saving and emission reduction mainly through promoting technological progress to promote the growth of green total factor productivity, which in turn realizes the win-win situation of the environment and the green economy (wang et al.,2016), and demonstrates the carbon emission reduction effect of figure 3: influencing factors of enterprise transformation in green economy environmental regulation green economy technological innovation (jiang et al.,2022).relevant influencing factors are shown in figure 3. in summary, the factors affecting the green transformation of the manufacturing sector can be summarized at three levels: basic level fundamentally, the international economy plays a crucial role as a fundamental influencing factor. turbulence in the international economy will affect china’s carbon neutral strategy and prompt industrial restructuring of the manufacturing industry. climate cooperation is a fundamental factor influencing carbon neutral targets. intermediate level includes factors such as financing capacity, business model innovation, supply chain management, and energy structure. these factors interact with each other and are influenced by the carbon trading market, new infrastructure projects, energy infrastructure development, and the willingness of enterprises to make a green transition. enhancing financing capacity, improving technology introduction, and optimizing supply chain management are important initiatives at this level. surface level focuses on the actual initiatives of enterprises to realize green transformation and upgrading. this includes improving production efficiency, restructuring energy mix, and developing new market competitiveness under the carbon neutrality goal. by considering these three dimensions together, policymakers and enterprises can synthesize multiple factors and take comprehensive actions to promote green transformation in manufacturing. impact of relevant policies inadequate policy measures. green low-carbon economic development model is mainly to solve the problem of energy utilization, control of greenhouse gas emissions, waste treatment and recycling, etc., has a strong policy, and requires sound laws and regulations to escort the policy. for all walks of life, low-carbon economic development should bear the brunt, should be constrained by a number of policies and regulations, but at present china’s policy in this regard, the formulation of laws and regulations is not sound, the lack of special laws and regulations specifically for the low-carbon economy, there is no better implementation of the system, there is no legal, institutionalized, supervision and regulation of the laxity of the phenomenon, resulting in a number of enterprises bidding for carbon emissions, waste waste discharge phenomena, seriously polluting the surrounding production and living environment, the waste treatment and recycling. serious pollution of the surrounding production and living environment. so to carry out the road of green economic transformation, the need to force enterprises to implement energy saving and emission reduction and energy consumption double pa ge 90 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(2) 86-92, 2023 control measures. at the same time, it also emphasizes the role of government administrative intervention in the control of environmental pollution within the enterprise and the development of green technological innovation. such intervention can effectively reduce the marginal abatement cost of enterprises, increase their income, and promote the development of green economic development model, low-carbon energy system and modern circular economy industry from the source. results and discussion impact of green economy on the life cycle of enterprises and related suggestions the impact of the green economy on the life cycle of corporate sustainability the impact of the green economy and the birth period of the enterprise. the green economy will also have an important and direct impact on other stages of the enterprise life cycle. green marketing of green product strategy and green strategy 4p (i.e., green probe, green segmentation, green priority, green positioning) requires the birth of the enterprise, in the product investment and process selection to prioritize low consumption, no pollution, no side effects, no adverse consequences of the products and processes; in the development of the market, pay attention to the probe of the green market, the size of the green market and the selection of green economy enterprises in the product in the minds of consumers green positioning; the green economy in the product in the minds of consumers; and the green economy in the product in the consumer’s mind; the green economy in the product in the consumer’s mind; the green economy in the product in the consumer’s mind. green positioning in the minds of consumers; at the same time, but also to the concept of green marketing, and gradually establish a green corporate image recognition system. visible, in the current green market, green business concepts are not mature conditions, the green economy, although the short-term increase in the birth of some of the work of the difficulty (such as the development of green market and the establishment of green identification system), but it reduces some of the work (such as the approval of the work) of the resistance, and for the sustainable development of enterprises to lay a solid foundation (wei et al.,2011). green economy and business growth. green economy due to the implementation of green strategy 4p and tactics 4p (green products, green channels, green price, green promotion), although the enterprise’s green products due to the addition of de-pollution costs have higher prices, but because of its friendly to the social environment and the ecological environment, coupled with the role of the green promotions, the product is more likely to be accepted by the market, the market share may be larger, the sales volume rose faster, the enterprise has more room for development. the enterprise has more space for development. however, if the enterprise only from the growth period began to import the green economy concept, in the green market is not mature, its development speed will be limited. green economy and enterprise maturity. with the further launch of green demand and green consumption, the green market will continue to expand, the non-green market will be squeezed, the saturation of the green product market slows down, when more enterprises to implement the green economy model, split the green market and lead to market saturation, the enterprise enters the maturity period. in the maturity period, due to the formation of green mode business philosophy and the establishment of green image recognition system of enterprises, enterprises and products have a high reputation, therefore, the maturity period of enterprises will last for a long time. strategies and suggestions for promoting sustainable development of enterprises each enterprise should actively and rationally develop new technologies to utilize new energy. china’s green economy enterprises to implement green low-carbon economic development strategy, need to actively and rationally develop new technologies to utilize new energy. the rational development and utilization of new energy is the fundamental way out to solve the increasingly serious environmental and energy problems. from a policy perspective, new projects and products should be strictly reviewed, and energy efficiency standards should be strictly enforced and improved; backward production capacity should be eliminated, and enterprises should be encouraged to develop low-carbon technologies and utilize low-carbon energy. strengthen the exchange and cooperation with developed countries in carbon emissions, carbon treatment, biological carbon sequestration and other technologies, promote technology transfer from developed countries to china, strengthen digestion, absorption and utilization of innovation, and jointly construct a technological cooperation platform for energy resources and ecological environment, so as to promote the development of green and low-carbon technologies and the comprehensive utilization of new energy sources (wang .,2012). enterprises should strengthen scientific and technological innovation and develop low-carbon industries. as a petroleum enterprise to strengthen scientific and technological innovation, the development of low-carbon industry, mainly from the innovation of new energy research and development technology, innovation of low emission technology, innovation of carbon dioxide treatment technology, innovation of new energy research and development technology, accelerate the effective use of energy or the pace of renewable energy; innovation of low-emission technology, reduce the standard of carbon emissions; innovation of carbon dioxide treatment technology, effective recycling of carbon emissions or purification of air quality low carbon awareness enterprises should be firmly low-carbon awareness. green economy enterprises should combine enterprise pa ge 91 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(2) 86-92, 2023 development with skills and emission reduction, solid lowcarbon awareness, and advocate low-carbon consumption. first of all, green economy enterprises should formulate a macro strategy and long-term planning for low-carbon development, reflecting low-carbon awareness from the overall strategy; secondly, they should establish corresponding energy saving and emission reduction systems, and strengthen the low-carbon awareness of enterprise personnel from the perspective of the management system; thirdly, they should formulate an effective low-carbon evaluation system and incentives, which not only manages the carbon efficiently, but also reduces the carbon emissions effectively, improves the economic benefits, and makes the carbon management and economic benefits linked to daily life. conclusion first of all, the development of green economy can effectively improve the ecological environment, improve the economic efficiency of enterprises, promote the transformation and upgrading of industrial structure, and realize the organic unity of economic, environmental and social benefits. promoting the high-quality development of green economy enterprises and the development of green economy requires the joint efforts of the government, social groups and enterprises. enterprises in social environmental protection as the main body is particularly important to create green economic value. it needs to balance social responsibility, economic benefits and ecological benefits, and constantly innovate the enterprise development model in the process of developing the green economy to enhance market competitiveness. secondly, the green low-carbon economic development model reflects the concept of sustainable development, the implementation of the green low-carbon economic development strategy is the way to implement the sustainable development strategy, and the development of the green low-carbon economy is also the current trend of international economic development. constructing a green low-carbon economic development mode with high efficiency and energy saving and low emission, implementing a green low-carbon economic development strategy, establishing a responsible image by actively participating in the formulation of low-carbon policies, laws and regulations, and effectively carrying out carbon management; technological innovation, development of low-carbon industries, rational development of new energy sources, optimization of the industrial product structure, and improvement of the competitiveness of enterprises as well as their benefits; and setting up a low-carbon awareness to enable enterprises to carry out daily low-carbon management and establish a sound low-carbon management mechanism. in addition, it is necessary to establish a sound low-carbon management mechanism. in short, the implementation of green low-carbon economic strategy is the inevitable road for enterprise development in all walks of life. in short, with the continuous and stable development of the social economy, maintaining the ecological environment has become a factor that must be considered for the development of every small and medium-sized enterprise in china, and it is also an indispensable factor for the development of green economic enterprises. small and medium-sized enterprises must not only implement the concept of sustainable development, it is also necessary to promote green economy enterprises and products. because nature is the basis for our survival and development, it has a great influence on the production and development of green environmental protection and sustainable development. it is also the primary goal of meeting the goal of comprehensive carbon neutrality in 2050. therefore, green economy enterprises are not only the core lifeline of future enterprise development, but also an important goal of human economic transformation. references bin, w., xiaoyang, l., chenguang, g., yangyi, c. 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(2020). mechanism and effect analysis of environmental regulation affecting green economy development (j). china soft science, 26-38. pa ge 1 am. j. econ. bus. innov. 1(1) 39-45, 2022 the american journal of economics and business innovation (ajebi) is a blind peer-reviewed international journal publishing article that emphasizes research, development, and application within the fields of business, economics, finance, marketing, management, business analytics, etc. the ajbei reviews papers within approximately one month of submission and publishes accepted articles online immediately upon receiving the final versions. frequency: three issues per year area of publication: business, economics, finance, marketing, management, business analytics, start-ups, business and financial innovations and technologies. editorial team professor dr. constance leyland dean of business & accounting, american national university, usa professor dr. a. k. m. ahasanul haque faculty of economics and management sciences (kenms) international islamic university malaysia (iium), malaysia dr. gus del rivero lecturer, california state university, long beach and monterey bay, usa dr. cansu tor kadioğlu associate professor, faculty of applied sciences international trade and logistics department, tarsus university, turkey dr. lauren vantalia graduate programs faculty, southern states university, san diego, usa dr. hafizah hammad ahmad khan faculty of business & management, universiti teknologi mara, malaysia dr. razali haron associate professor, iium institute of islamic banking and finance (iiibf) international islamic university malaysia (iium), malaysia dr. sejuti mondal texas state university, usa dr. nida jafri consultant, green empowerment, portland, usa dr. marhanum che mohd salleh associate professor, faculty of economics and management sciences (kenms) international islamic university malaysia (iium), malaysia professor dr. wael al-aghbari university president, international university of technology twintech iutt, yemen dr. abdullah sarwar senior lecturer, department of business studies multimedia university, cyberjaya, malaysia dr. md aftab anwar associate professor, department of business studies state university of bangladesh dr. sofia binte ehsan department of environmental science university kebangsaan malaysia contact: american journal of economics and business innovation (ajebi) e-palli llc address: 2055 limestone rd ste 200c, zip code: 19808, wilmington, delaware, usa email: ajebi@e-palli.com phone: +1 3024070506 url: https://journals.e-palli.com/home/index.php/ajebi https://journals.e-palli.com/home/index.php/ajebi/about/submissions mailto:mailto:ajebi%40e-palli.com?subject= https://journals.e-palli.com/home/index.php/ajebi pa ge 39 american journal of economics and business innovation (ajebi) socio-economic impact of covid-19 on marginalized youth in malaysia zainatul shuhaida abd rahman1, sardar md humayun kabir2* and mohamad saleeh bin rahamad3 volume 1 issue 1, year 2022 issn: 2831-5588 (online) doi: https://doi.org/10.54536/ajebi.v1i1.165 https://journals.e-palli.com/home/index.php/ajebi introduction the global pandemic caused by covid-19 has grown into a socio-economic crisis with countable and uncountable effects. rising adverse effects on jobs, wages and livelihoods, supply chain and manufacturing disruptions, less consumption, insecurity and struggles, particularly among the most vulnerable, are slowing the economy (lim, 2020). maintaining social distancing prohibits individuals from working in close proximity to each other. three forms of operations are automatically affected (mckibbin and fernando, 2020): high-density collective output, which is an aspect of many manufacturing factories where workers need to work closely together; high-density collective consumption, which is an aspect of many facilities, such as entertainment (sports , music, and cinema), restaurants, and transport, where customers need to visit; and immediate development and consumption involving vendors reaching customers, which is a component of personal care, health care, shopping and household management. the pandemic made most of the individuals turn to streaming movies from going to the cinema; from meeting people to using more data and speech; businesses are switching from selling what is not needed (cars) to what is needed (medical equipment); people are moving from demanddriven jobs or social distance restrictions, such as face-toface retail, to those that are not, such as electronic retail. there are several studies analysed the impacts of covid-19 most of which concentrate on the health risk and environmental effects. very few studies have interpreted information on social and economic impacts caused by the pandemic in malaysian context. it is difficult to forecast the effect and extent of the social and economic crisis on individuals as a consequence of the pandemic, as many uncertainties surround the extent of the crisis, i.e. “lockdowns”, “quarantine”, “social distancing”, the article information abstract received: february 25, 2022 accepted: march 06 , 2022 published: march 09, 2022 the impacts of covid-19 on society and economy are now a global concern. with the continuous growth of global pandemic caused by covid-19 infectious disease, limitations on daily living and reduced business operations have squeezed the society and the economy. although scientists are busy with coronavirus vaccine studies, sociologists and economists are taking policy measures to alleviate the crisis. this paper aims to focus on the social and economic impacts of covid-19 in malaysia. the study was conducted through interviews using a semi-structured questionnaire among marginalized youths. using snowball sampling technique from 36 participants, it was found that 69% youths confirmed strengthening their relationships with family members, 25% youths are having psychological discomfort, 72% youths acknowledged reduced income due to the pandemic and 26% lost their job because of the pandemic. the findings are expected to help the researchers and policymakers to strategize their future actions towards a better malaysia. keywords social; economic, impacts of covid-19, marginalized youth, malaysia length of “stay-at-home” orders, as well as the industries affected and the societies reacted during the crisis. therefore, the objective of this study is to explore the social and economic impacts of covid-19 in malaysia. literature review covid-19 in malaysia covid-19 is a respiratory virus that has become a global pandemic on march 11, 2020 according to the world health organization (who, 2020). this new type of virus that affects respiratory organs in human bodies, was first reported in wuhan province of china. it has not only impacted countries in the east asia and pacific region but has increasingly spread to all countries and territories across the world. it has spread quickly in almost all parts of the world because of high transmissibility, zero herd immunity and high population mobility. in malaysia, from 3 january 2020 to 5:42pm cet, 23 february 2022, there have been 3,273,958 confirmed cases of covid-19 with 32,433 deaths, reported to who. as of 23rd february 2022, there were more than 31,000 confirmed cases daily (figure 1) in malaysia as stated by the malaysian ministry of health (moh, 2022). figure 2 represents the overall dashboard of covid-19 in malaysia. marginalized youth youths are an energetic segment of every nation and they are similarly important for continuous growth. given the long history of youth growth in malaysia, which seems to be at risk due to the pandemic, it is clear that the path forward is based on a far more optimistic transition agenda. this poses enormous potential as well as dire challenges. approximately, 73% of malaysian households are bumiputera and are in the multi-dimensional group of low-income backgrounds; uneducated, unemployed and have experienced a social breakdown (kasim et al., 2014). they are having only malaysia certificate of 1 college of creative arts, universiti teknologi mara, shah alam, selangor, malaysia 2 department of business administration, international islamic university malaysia 3 department of media and communication studies, universiti malaya * corresponding author’s e-mail: kabir.sardar@live.iium.edu.my https://doi.org/10.54536/ajebi.v1i1.165 https://journals.e-palli.com/home/index.php/ajebi mailto:mailto:kabir.sardar%40live.iium.edu.my?subject= pa ge 40 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(1) 39-45, 2022 education (spm) for household heads; that is, 11 years of education or lower qualifications, and self-employment or employment as general staff. the bottom 40 percent of households are constrained in their economic mobility due to their lower degree of expertise and, in many situations, their distant areas, and do not receive higher paid employment (muzafar and kunasekaran, 2020). this has left them feeling marginalised and victimised. youth in these disadvantaged populations lack equitable opportunities to receive social and economic resources regardless of all related causes for culturally, socially lowincome parents and insecure young people aged between 15 and 25 years. marginality is described by leonard (1984) as ‘being beyond the norm of productive activity and/or reproductive social activity’ (p.180). the probability of marginalisation will either increase or decrease at some points of one’s life cycle. for example, as they grow older, the potential marginalised status of children and young people will decline, while as they become elderly, the potential marginalised status of adults will rise (salman et al., 2017). regardless of the reasons or mechanisms behind marginalisation, the traditional impacts of marginalisation in terms of social isolation are also common, weather it is social behaviours such as disability, race, nationality, etc. or social conditions such as closing of the workplace and lack of adequate housing, etc. in addition, based on the personal and social capital available to them, marginalised individuals respond differently to marginalisation (burton & kagan, 1996). therefore, in this study, the social and economic impacts due to covid-19 in malaysia has been undertaken for marginalized youth community. impact of covid-19 on society and economy covid-19 has impacted the life of every human being on earth. because of the unprecedented nature since of its inception in the late of 2019, it has devasted billions and took millions of human lives till date. there is a wide saying in medical science as “prevention is better than cure”. but, covid-19 being a new infectious and highly contagious disease, both prevention and cure for the disease are not globally approved yet. the new norm is on taking extensive safety measures such as regularly washing of hands, maintaining social distancing among family, friends and peers, wearing of face masks, and so on (haleem et al., 2020; jin et al., 2020; campbell, 2020). therefore, covid-19 has impacted mostly the social lives beside other exponential impacts (kabir et al., 2020). some impacts are consequences of another impacts. impacts can be positive or negative depending on its development over time. although, most of the impacts of covid-19 are negative, some impacts may lead to a more sustainable future by increasing flexibility of the socio-ecological systems (cheval et al., 2020). government reform choices are often described as a straightforward compromise between saving lives and figure 1: covid-19 confirmed case graph in malaysia (source: ministry of health) figure 2: covid-19 dashboard in malaysia (source: ministry of health) https://journals.e-palli.com/home/index.php/ajebi pa ge 41 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(1) 39-45, 2022 saving the economy. more stringent sanctions, according to this rationale, help curb the pandemic and minimize the overall death rate but brought more economic pain as more families hold spending, more companies go bankrupt, and more employees risk their jobs. individual spending is also partially on behalf of other members of the household; for example, a person may buy flights for himself and his wife and children from his personal account. many forms of ingestion exist in areas with a high human population (e.g., restaurants, mass transit) or require close physical interaction (e.g., hair dressers, dentists) and lead to the transmission of the disease. most forms of customer purchasing (e.g. retail shopping) require proximity and can often raise risks to shop assistants and other customers (martin et al., 2020). most jurisdictions also enacted regulations on social distancing that regulate some of these economic practices. however, the severity of these restrictions varies greatly across nations, and in reaction to recent research on covid-19 cases and mortality, many policymakers are debating dayby-day whether to relax, retain, or tighten restrictions. according to business sectors, a report comprising income loss schedule in the united states of america was undertaken to model the shock of the covid-19 crisis on households from economic impacts attributable to disease, shortages and loss of activity due to social distancing orders. the analysis used 15 aggregated business sectors listed by the bureau of economic analysis (bea) reported that construction, retail trade, travel, arts and entertainment are believed to be the hardest hit sectors (leatherby and gelles, 2020). during the stay-at-home order, which in the study was referred to as the crisis era, impacted people are believed to have a 100 percent loss of labour income. the reduction of income for impacted people is expected to begin at the initial stages of the crisis and to continue for the length of the crisis. the affected people achieve full jobs at the outset of the rehabilitation process and the marginal rate of savings is estimated to be 10 percent of consumption. this is an optimistic prediction, but due to the broad macroeconomic impact of the coronavirus and the prospects for a slowdown, several workers who were laid off after the depression would have trouble re-entering the market (avalos, 2020). in comparison, household consumption is believed to be steady during the recession, where families share income revenue, state and federal aid and consumption replenishment savings. in fact, due to the delay in assistance, the crisis could have worsen savings exhaustion, especially for the marginalized youth community (flanders et al., 2020). key reviews of labour force status in malaysia as of november 2021 stated by dosm (release date : monday 10, january 2022) are mentioned below. • the number of employed people increased for the fourth month in a row in november 2021, with a gain of 55.7 thousand people (0.4 percent) month over month, bringing the total to 15.61 million (october 2021: 15.55 million persons). in november 2021, the employment-to-population ratio, which measures an economy’s capacity to produce jobs, increased by 0.2 percentage points to 66.0 percent (october 2021: 65.8 percent ). • employment in the services sector continued to rise, mostly in wholesale and retail commerce, food and beverage services, and transportation and storage operations. employment in the manufacturing and construction sectors followed a similar pattern, while employment in agriculture and mining and quarrying stayed flat. • during the month, the workers’ category, which accounted for 76.9% of all employed people, increased by 0.2 percent (+27.1 thousand people), to a total of 12.0 million people (october 2021: 11.97 million persons). similarly, the own-account workers category, which includes mostly daily wage earners who work as small business operators such as retailers, hawkers, market and stall sellers, and smallholders, continued to rise by 0.8 percent (+20.1 thousand people) in november to a new high of 2.63 million people (october 2021: 2.61 million persons). • the number of jobless people fell below 700,000 for the first time in november 2021, the lowest since april 2020, with a monthly reduction of 1.5 percent (-10.6 thousand people) to 694.4 thousand unemployed people (october 2021: 705.0 thousand persons). the unemployment rate for the month was 4.3 percent, unchanged from october 2021, as more people who were unemployed looked for work. • in november 2021, the number of people in the labour force increased by 45.1 thousand, or 0.3 percent, to 16.30 million (october 2021: 16.26 million persons). as a result, the labour force participation rate (lfpr) for the month increased to 68.9%. (october 2021: 68.8 percent ). • in november 2021, the number of people working outside the home fell by 20.1 thousand people, or 0.3 percent, to a new low of 7.34 million people (october 2021: 7.36 million persons). with 42.2 percent, the category of outside labour force due to schooling/training was the highest, followed by the category of housework/family duties with 41.1 percent. • since august 2021, malaysia’s labour force situation has steadily improved, with most economic and social activities continuing to run smoothly in compliance with tight standard operating procedures. the continued operation of such operations may result in additional job openings, providing more prospects for job searchers and, as a result, strengthening the labour market in the future months. the recent flood catastrophes that affected the country’s central and east coasts are expected to have a more localized effect and may not have a significant influence on the whole labour market. in addition, the existence of a novel covid-19 type of omicron might complicate the healing process. https://journals.e-palli.com/home/index.php/ajebi pa ge 42 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(1) 39-45, 2022 methods the study consisted of data obtained through targeted qualitative interviews using whatsapp social media platform and a random selection of phone calls. it was administered in bahasa malaysia and later translated to english. to meet the objectives of the study, a semistructured open-ended questionnaire was used. the following questions are being asked during the interviews: 1. how do you see the positive side of social impact due to covid-19? 2. how do you see the negative side of social impact due to covid-19? 3. how do you see the positive side of economic impact due to covid-19? 4. how do you see the negative side of economic impact due to covid-19? using the snowball sampling procedure, the participants were randomly chosen as it was the most appropriate approach for this analysis. compared to other sampling methods, snowball sampling solves many other limitations of the sampling process, needs less preparation, and needs fewer workers. this is because, in addition to reducing sampling bias, it is easier to start interacting with a small population, especially when reaching unknown people (taherdoost, 2016; creswell and creswell, 2017). the questionnaires were circulated to the contacts of the researcher, as well as to those who fulfilled the requirements of marginalised youth and malaysian citizenship. each participant was required to nominate another participant. there were 36 interviews conducted in three months of time from may 2021 to july 2021. the data was scrutinized using nvivo 12 professional software program which is widely used by researchers for analysing qualitative and mixed mode research. all data coded independently and unbiased by the author. results table 1 represents the number of respondents who have participated in the interviews. the selected respondents are mainly youth from marginalised community of malaysia, i.e. youths with parents whose incomes are below rm 2,000 and living in rural areas; and below rm 3,500 for those living in urban areas. the ages of youths are between 15 to 25. the interviews verbatim have been transcribed and organized according to bazeley and jackson’s (2013) qualitative data analysis with nvivo. figure 3 and 4 represents the word clouds generated during analysis for social and economic impact groups. table 1: distribution of respondents name of states number of participants perak 3 johor 10 kedah 4 pulau pinang 1 kelantan 3 negeri sembilan 2 pahang 3 selangor 5 sabah 2 melaka 1 terengganu 1 kuala lumpur 1 total 36 figure 3: word cloud of social impact figure 4: word cloud of economic impact the word frequency count shows the highest words spoken in the interviews was “youth”, “time”, “social”, “friend”, “mental”, “group”, “marginalized”, “employment”, “money”, “work”, “affected’. the mapping among most used words in the interviews was built upon the codes found in word frequency count. the tree maps of words for social and economic groups are presented in figure 5 and 6. https://journals.e-palli.com/home/index.php/ajebi pa ge 43 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(1) 39-45, 2022 then, the codes are recoded and categorised in six themes for each group respectively. these six themes are labelled and put on a hierarchy model (table 2) depending on number of sources and number of references from high to low. discussion this paper studied how marginalized youths respond in a pandemic coupled with job loss, mental dissatisfaction as negative side and being more productive, caring in family matters as positive side, where both are investigated figure 5: tree map of words (social impact) figure 6: tree map of words (economic impact) table 2: social and economic impact of covid-19 social economic 1. family relationship 1. unemployment 2. psychological stability 2. salary structure 3. online presence 3. financial stability 4. recreation 4. job opportunity 5. participation in social events 5. online business 6. educational barrier 6. household consumption with considerable volatility. 69% youths stated that their relationships with other family members became more interactive and better. whereas 25% youths stated that they are having mental problems due to the movement control order. overall, the negative side of the impact has come up significantly. there has been substantial understanding among malaysian marginalized youth community of possible uncertainty in the future. it was found that there is a large income loss effects which is aligned with decision-making regarding basic needs. however, closing down sectors and regulating business activities with sops with social distancing measures decreases the occurrence of the virus in society at large in the sense of the pandemic. malaysian households also bear a lot of debt and have no savings (muzafar and kunasekaran, 2020); many households will easily lose access to basics like food or accommodation without a source of income. the malaysian government has produced a series of stimulus packages in response to covid-19. stimulus packages to tackle the impact of https://journals.e-palli.com/home/index.php/ajebi pa ge 44 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(1) 39-45, 2022 ongoing pandemic have been launched in many countries over the world. however, in the next few months, majority of the respondents in the interview are still fearing of running out of money. even before the covid-19 pandemic crisis started in 2020, the problem of job-loss has been predicted in malaysia in recent times. according to bank negara, which is the central bank of malaysia, in their 2019 economic and monetary review released on april 3rd, 2020 projected that the unemployment rate would increase to 4%, significantly higher than the unemployment rate (3.7%) during the great recession of 2008-2009 (flanders et al., 2020). therefore, in 2020, the prevalence of global pandemic crisis caused by covid-19 has triggered the crisis moment once more. the findings of this study supports the study conducted by the department of statistics malaysia (2020) to gain a better understanding on how the pandemic crisis affects the economy and social lives. majority of the respondents (72%) experienced income loss one way or around. these youths used to work day and night to meet the end’s need and this pandemic has deprived them from working due to closure of many business sectors (i.e. tourism). 26% youths acknowledged that they have lost their jobs due to the outbreak and now waiting for business sectors to reopen. self-employed respondents are the most heavily impacted group, as they have minimal savings that can only last for less than one month. these youths are the most underprivileged group, the marginalized community. implications globally, for every country, the society and economy are having very challenging days. when contemplating the influence of the covid-19 pandemic on malaysian society and economy, there is a considerable gap. at this time, we have little knowledge of the true effects of the pandemic on heterogeneous people from all walks of life. if malaysian policymakers wish to further protect the country from budget crises after disbursement of all the stimulus economic packages, they should be more strategic about their future actions. identifying the most economically affected groups of the community and making public-private partnership programs more effectively can reduce the impact in the long run. like social distancing breaking the infection chain, social awareness programs need to be in place for breaking the psychological dilemma. enhancing emotional intelligence, spiritual intelligence for youths can result better mental stability (gardner, 1999). the issue of internet speed has been raised by some of the respondents in the interview. so, there is no alternative to improve the ict infrastructure in rural areas so that the adaptation of technology for marginalized youths in their daily lives can be smoother in crisis moment. limitations and scope for further research this study has some limitations: the interviewees are not representative as the number of respondents from each state are oddly distributed. the responses came during the mco period, so the number of malaysians who have lost their jobs or have confronted reduced income after the mco are not considered. in addition, the research has been done using qualitative content analysis which has issues with generalization. therefore, the recommendations are only preliminary, so the outcomes can only be considered indicative. future researchers who wish to study more on the socio-economic impacts of covid-19 with marginalized youth community in malaysia can consider the themes depicted in this study for further statistical analysis with larger sample size. additionally, the demographic variables (i.e. gender, education level, cultural background) can be good moderators in assessing the impacts in a country like malaysia where multi-cultural races exist. conclusion in malaysia, this research is among the few studies that tells how marginalized youths effected by socially and economically due to covid-19. given different policy measures to the management of the containment of covid-19 in different nations, the malaysian government has launched equally large measures to alleviate the financial loss to companies and households incurred by the crisis. in this paper, we have focused on discussing counterfactual scenarios to get a rough estimate on the positive and negative sides of the impact due to covid-19 in malaysian society and economy from marginalized youth community perspective. the pandemic has caused a global crisis, and, while malaysia has controlled the infection effectively more than most of the countries by imposing early mcos, sops which eventually affected the social and economic lives of most malaysians. because of covid-19, social distancing ultimately creates major socio-economic sacrifices. it threatens job loss and cause depression for the marginalized youths in malaysia. therefore, better mitigation plans need to be in place urgently for post-pandemic crisis management. conflict of interest there is no conflict of interest as declared by the authors. ethical approval ethical approval is not required. references avalos, g. (2020). coronavirus unemployment: one out of six californians out of work during lockdowns. the mercury news, april 23, 2020. retrieved from: www.mercurynews.com/2020/04/23/coronavirusunemployment-3-4-million-californians-lose-jobsduring-lockdowns-economy-tech-retail-restauranthotel-construction-layoff/ bazeley and jackson (2013). qualitative data analysis with nvivo, 2nd edition, sage publications ltd. burton, m., & kagan, c. (1996). rethinking empowerment: shared action against powerlessness. in i. parker & r. spears (eds.), psychology and society: radical theory https://journals.e-palli.com/home/index.php/ajebi pa ge 45 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(1) 39-45, 2022 and practice. london: pluto press. campbell, d.b. (2020). unlike anything seen in peacetime: nhs prepares for surge in covid-19 cases. retrieved from: www.theguardian.com/world/2020/mar/13/ unlike-anything-seen-in-peacetime-nhs-prepares-forsurge-in-covid-19-coronavirus-cases. cheval, s., mihai, a.c., georgiadis, t., herrnegger, m., piticar, a. and legates, d.r. (2020). observed and potential impacts of the covid-19 pandemic on the environment. international journal of environmental research and. public health. 17, 4140. creswell, j.w. and creswell, j.d. (2017). research design: qualitative, quantitative, and mixed methods approaches. sage publications. dosm (2020). department of statistics malaysia. retrieved from: www.dosm.gov.my/v1/uploads/ files/covid19/report_of_special_survey_on_ effects_of_covid-19_on_economy_and_ individual-round-1.pdf flanders, s., nungsari, m. and yin, c.h. 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(2020). the global macroeconomic impacts of covid-19: seven scenarios. cama working paper no. 19/2020, available at ssrn: https://ssrn.com/ abstract=3547729 or http://dx.doi.org/10.2139/ ssrn.3547729 moh (2020). ministry of health malaysia. source url: https://www.moh.gov.my/ muzafar, p.m.m. and kunasekaran, t. (2020). the impact of covid-19 on the urban poor: three major threats – money, food and living conditions, kri. available at: http://www.krinstitute.org/assets/contentms/ img/template/editor/the%20impact%20of%20 covid-19%20on%20the%20urban%20poor.pdf. salman, a., samsudin, a. and yusuf, f. (2017). civic and political participation: a study of marginalised and mainstream youth in malaysia. pertanika journal of social science and humanities, 25, 67-75. taherdoost, h. (2016). sampling methods in research methodology; how to choose a sampling technique for research. international journal of academic research in management. 5(2), pp. 18-27. who (2020). world health organization march situation reports on coronavirus disease (covid-2019). https://journals.e-palli.com/home/index.php/ajebi p ag e 1 american journal of economics and business innovation (ajebi) volume 2 issue 2, year 2023 issn: 2831-5588 (online), 2832-4862 (print) doi: https://doi.org/10.54536/ajebi.v2i2.1020 https://journals.e-palli.com/home/index.php/ajebi qualitative characteristics of accounting information (declared with ifrs standards) and financial performance : statistical study and correlation test khaddouj karim1, mohammed ait bahabbaz1* abstract in an international context characterized by the dismantling of economic barriers, the globalization of monetary operations and the fluidity of financial movements, the application of ifrs standards is no longer a luxury, but rather an increasingly persistent necessity for moroccan and international companies. in this context, and using a statistical analysis on spss, this research aims to assess the correlation between the quality of accounting information (declared in accordance with ifrs standards) and the financial performance (in short term and in medium and long term) of moroccan companies. this quantitative research which uses a likert-type questionnaire scored from 1 to 5, and through the responses collected from a sample of 314 individuals (composed of accountants, chartered accountants, professors, trainers, doctors and doctoral students), target to demonstrate and verify, statistically, the relationship of correlation and interdependence that connects between « the qualitative characteristics of accounting information » and « the financial performance ». the results confirmed a negative correlation « in the short term » between the aforementioned variables and a positive correlation relationship between the same variables « in the medium and long term ». in the medium and long term, the positive correlation between « the qualitative characteristics of the accounting information declared according to ifrs » and « the financial performance », will probably be a factor that encourages companies to practice international accounting standards despite the costs incurred to ensure this passage. introduction the financial scandals that appear on a global level (money laundering, tax evasion, corruption, scams, etc.) raise several questions and provoke a more sincere dialogue on the quality of accounting information and financial figures declared by companies. this notion of the quality of accounting information has never been unanimously accepted in the scientific community. many authors and theoreticians have tried to formulate valid definitions and quantitative indicators of measurement (mono-criteria and multidimensional) in order to assess the quality of accounting and financial informations. otherwise, local and international standard setters have tried, alternatively, to classify the qualities of accounting information according to qualitative approaches. in morocco, as well as france, the both standard setters did not identify all the qualities of accounting information, and they only mentioned some essential qualities (relevance and reliability). on the other hand, and at the international level, the american standard setter, financial accounting standards board (fasb), has attempted to identify, in a conceptual framework, the exhaustiveness of the qualitative characteristics of accounting and financial information. the fasb has categorized two groups of qualities of accounting information, a first class which includes the fundamental qualitative characteristics (relevance and faithful representation) and a second set which contains the enhancing qualitative characteristics of accounting information (comparability, verifiability, timeliness and intelligibility). the qualities of accounting information (declared according to ifrs standards) mentioned in the aforementioned conceptual framework ensure the reliability and transparency of information, facilitate their comparability, help stakeholders to better understand financial communication, motivate shareholders to invest and banks to finance projects, offer companies the possibility of generating additional profits and maximizing their financial performance. this notion of financial performance, complex and differently measured by researchers and practitioners, remains the first target to be maximized for any company opting for a declaration of financial statements in accordance with the requirements of ifrs standards. in our moroccan context, this research will aim to evaluate, statistically, the impact of the quality of accounting information (declared according to international standards) on the financial performance of moroccan companies and to answer, consequently, our main question of research formulated as follows: what is the impact of the qualitative characteristics of accounting information on the financial performance of companies in morocco ? literature review a qualitative characteristis of financial and accounting information: in this work, and in order to ensure the internal consistency of our study, we have opted for the qualities of the accounting information specified by the fasb. the fasb has distinguished two types of qualities 1 université mohammed v university in rabat, morocco * corresponding author’s e-mail: a.b.med.compta@hotmail.com published: august 14, 2023 keywords qualitative characteristics, accounting information, financial information, ifrs standards, financial performance, correlation received: november 23, 2023 accepted: december 22, 2022 article information p ag e 9 3 am. j. econ. bus. innov. 2(2) 93-100, 2023 https://journals.e-palli.com/home/index.php/ajebi of accounting information : the fundamental qualitative characteristics and the enhancing qualitative characteristics. fundamental qualitative characteristics the fundamental qualitative characteristics are relevance and faithful representation. relevance: relevant financial information is capable of making a difference in the decisions made by users. financial information is capable to make a difference in decisions if it has predictive value, confirmatory value or both : its has predictive value if it can be used as an input to processes employed by users to predict future outcomes. its has confirmatory value if it provides feedback about (confirms or changes) previous evaluations. the predictive value and confirmatory value of financial information are interrelated. faithful representation: financial reports represent economic phenomena in words and numbers. to be useful, financial information must not only represent relevant phenomena, but it must also faithfully represent the phenomena that it purports to represent. to be a perfectly faithful representation, a depiction would have three characteristics. it would be complete, neutral and free from error. enhancing qualitative characteristics comparability, verifiability, timeliness and understandability are qualitative characteristics that enhance the usefulness of information that is relevant and faithfully represented. comparability: comparability is the qualitative characteristic that enables users to identify and understand similarities in, and differences among, items. unlike the other qualitative characteristics, comparability does not relate to a single item. a comparison requires at least two items. verifiability: verifiability helps assure users that information faithfully represents the economic phenomena it purports to represent. verification can be direct or indirect. direct verification means verifying an amount or other representation through direct observation. indirect verification means checking the inputs to a model, formula or other technique and recalculating the outputs using the same methodology. timeliness: timeliness means having information available to decisionmakers in time to be capable of influencing their decisions. understandability: understandability is the quality of information that enables users to comprehend its meaning. b financial performance: according to cochran and wood (1984), the definition of corporate financial performance is not debated in literature. such a lack of discussion has caused disagreement on how to measure the phenomenon. in the banking sector, alami y. & boughaba s. (2022) noted a large presence of three indicators used by financial analysts: tobin’s q with a rate of 15.56%, the return on equity with a fraction of 23.56% and the return on assets with a usage frequency of 45.78%. in our present research, we also tried to analyze a sample of scientific articles, made up of 24 publications, and to determine, consequently, the measurement indicators most used to evaluate the financial performance of companies. table 1: the measurement indicators used in 24 research works. researchers / authors measurement indicator used idrissi nabaouia & talibi abdelghafour (2021) roe, dividendyield & per. hind ben khayat zeggari hassani & ayoub errahoui (2021) eva, altman model, sva. salma el imrani & ahmed taqi (2022) roa. tijana soja & svjetlana vulic (2021) roe, roa, eps, net profit & indebtedness. belaynesh teklay, kevin e. dow, davood askarany, jeffrey wong & yun shen (2022) operating margin, roa, ros & roi. rony dwi cahyono, ely siswanto, lulu nurul istanti, yuli soesetio, fadia zen (2021) tobin's q and roe. amitava saha & kushal de (2022) net sales of the product, retained earnings, earnings per share, profit after tax. martin kamau muchiri, szilvia erdei-gally & mária fekete-farkas (2022) net profit after tax. tariq tawfeeq yousif alabdullah, ries ahmed, abdulkarim m. jamal kanaan jebna (2022) roa. deresa goshu desalegn, anita tangl, fekete farkas maria (2022) roa. hanyu wang (2022) roe & roa. p ag e 9 4 am. j. econ. bus. innov. 2(2) 93-100, 2023 https://journals.e-palli.com/home/index.php/ajebi charles katua kithandi (2022) roe. hassan kablay, victor gumbo (2021) roa, roe & cost-to-income (ci). john guay pagaddut (2021) roa. hiyam sujud & joyce tannous (2020) roa & roe. anthony magoma , haika mbwambo, alfred a. sallwa & nuran mwasha (2021) roe. shahid ali, ghulam murtaza, martina hedvicakova, junfeng jiang & muhammad naeem (2022) roa & roe. dil krishna shahu (2022) tobin's q & roa. lenny phulong mamaro , tsholofelo gladys legotlo (2021) roa. ikin solikin, muhamad ardi nupi hasyim, abdurokhim abdurokhim (2022) roe. olayinka erin , omololu bamigboye, jonah arumona (2020) roa. samuel ojor osigbemhe , oliver ikechukwu inyiama, olubukunola ranti uwuigbe (2022) roa. quang linh huynh, maryam ashraf, erum shaikh and waqas ahmad wattoo (2022) profitability. gerçek özparlak (2022) market value, roa, roe & tobin’s q. source : personal development. the results of our quest show that “11 out of 24” of the scientific articles analyzed used the roe index to measure financial performance (with a percentage of 45.83%), while 15 of the scientific works opted for the roa to evaluate this performance (with a major percentage of 62.5%). the other measurement indicators were applied with negligible percentages. from this research, we can easily deduce that the most practiced indicators in scientific research are roe and roa. the return on equity (roe) measures the financial return on equity. roe is formulated mathematically by the ratio between net income and equity. on the other hand, return on assets (roa) measures the ratio between net income and total assets and expresses the ability of a company to generate income from its resources. research methodology a research approach: the main objective of this work is to analyze the statistical correlation between the quality of financial information (with ifrs) and the financial performance of companies publishing financial reports adapted to international accounting standards. for this, the present research will essentially aim to dissect this correlation relationship between: the qualitative characteristics of financial and accounting information identified by the conceptual framework developed by the iasb and the fasb in 2008 (the fundamental qualitative characteristics ; the enhancing qualitative characteristics). & financial performance (in the short, medium and long term). b research model: the relationship that connects these variables can be schematized and visualized in the model undermentioned: figure 1: research model. source : personal development. p ag e 9 5 am. j. econ. bus. innov. 2(2) 93-100, 2023 https://journals.e-palli.com/home/index.php/ajebi c administration of the questionnaire: the questioned sample: our selected sample includes 314 people, it is made up of:  accountants;  chartered accountants;  accounting teachers;  doctors and doctoral students. the population questioned must have, at least and at a minimum, a master’s degree in accounting and auditing. collection of responses: the questionnaire was distributed (paper version) to an initial sample of 232 people and the responses were immediately collected. the questionnaire was sent for a second sample by the google platform and the answers were received, on average, after a duration of 23 days. software used for data analysis: ibm spss statistics is a powerful statistical software platform. it offers a user-friendly interface and a robust set of features that lets quickly extract actionable insights from data. ibm spss statistics is the world’s leading statistical software used to solve business and research problems by means of ad-hoc analysis, hypothesis testing, and predictive analytics. researchers use ibm spss statistics to understand data, analyze trends, forecast and plan to validate assumptions and drive accurate conclusions. results and discussion a statistical interpretation of the results: table 2: answers on questionnaire. response code 1 2 3 4 5 meaning valueless little – slightly moderately acceptable quitte well very well number of answers – relevance 12 16 44 63 179 number of answers faithful representation 2111 27 81 108 77 number of answers – understandability 18 48 145 60 43 number of answers – comparability 24 143 113 23 11 number of answers verifiability 9 16 48 72 169 number of answers – timeliness 21 69 161 43 20 number of answers financial performance in st 293 13 7 1 0 number of answers financial performance in mlt 14 11 59 128 102 source : personal development. interpretations: from the results, we find that: 57.01% of people confirmed that the application of ifrs standards makes accounting & financial information very relevant; 34.39% say that the adoption of ifrs makes the representation of accounting & financial information quite faithful ; 46.18% of respondents declare that the application of ifrs standards moderately facilitates the comprehensibility of accounting & financial information; 45.54% of the population questioned think that the application of ifrs standards slightly simplifies the comparability of accounting & financial information; 53.82% of respondents believe that the application of ifrs standards makes accounting & financial information very verifiable; 51.27% of the target population see that the application of ifrs standards moderately increases the celerity of accounting information; 93.31% of respondents estimate that financial performance does not improve in the first year of adopting ifrs and 40.76% confirmed that the application of ifrs standards sufficiently improves the financial performance of the company in the medium and long term. the relevance of the accounting & financial information (declared with ifrs standards), and on average, was assessed by an score of 4,21 out of 5 (with a variance of 1,216 and a standard deviation of 1,103); the faithful representation of the same information was assessed by an average score of 3,61 out of 5 (with a variance of 1,305 and a standard deviation of 1,142); the understandability was assessed by an average score of 3,61 out of 5 (with a variance of 1,085 and a standard deviation of 1,042); the comparability was assessed by an average score of 2,54 out of 5 (with a variance of 0,761 and a standard deviation of 0,872) ; the verifiability was assessed by an average score of 4,20 out of 5 (with a variance of 1,117 and a standard deviation of 1,057); the « timeliness » was assessed by an average score of 2,91 out of 5 (with a variance of 0,874 and a standard deviation of 0,935); the financial performance in the short term (after using ifrs standards was assessed by an average score of 1,1 out of 5 (with a variance of 0,151 and a standard deviation of 0,388) and the financial performance in mlt (after using ifrs standards) was assessed by an average score of 3,93 out of 5 (with a variance of 1,053 and a standard deviation of 1,026). p ag e 9 6 am. j. econ. bus. innov. 2(2) 93-100, 2023 https://journals.e-palli.com/home/index.php/ajebi bcorrelation analysis: theoretical review: definitions: a correlational study is a type of research design that looks at the relationships between two or more variables. correlational studies are non-experimental, which means that the experimenter does not manipulate or control any of the variables. a correlation refers to a relationship between two variables. correlations can be strong or weak and positive or negative. sometimes, there is no correlation (kendra cherry 2023). a correlation coefficient is a number between -1 and 1 that tells you the strength and direction of a relationship between variables. in other words, it reflects how similar the measurements of two or more variables are across a dataset (pritha bhandari 2022). correlation, in the finance and investment industries, is a statistic that measures the degree to which two securities move in relation to each other. correlations are used in advanced portfolio management, computed as the correlation coefficient, which has a value that must fall between -1.0 and +1.0 (adam hayes 2022). interpretations: there are three possible results of a correlational study: a positive correlation, a negative correlation, and no correlation: positive correlation: when one variable changes, the other variables change in the same direction. zero correlation: there is no relationship between the variables. negative correlation: when one variable changes, the other variables change in the opposite direction. correlation vs causation: causation means that one variable (often called the predictor variable or independent variable) causes other (often called the outcome variable or dependent variable). experiments can be conducted to establish causation. an experiment isolates and manipulates the independent variable to observe its effect on the dependent variable, and controls the environment in order that extraneous variables may be eliminated. a correlation between variables, however, does not automatically mean that the change in one variable is the cause of the change in the values of the other variable. a correlation only shows if there is a relationship between variables. pearson correlation coefficient: the most commonly used correlation coefficient is pearson’s r because it allows for strong inferences. the pearson’s product-moment correlation coefficient, also known as pearson’s r, describes the linear relationship between two quantitative variables. mathematically, the relationships that estimate the covariance and the pearson coefficient are represented by these formulas: cov (x, y) = ∑(xi − x̅). (yi − ȳ)/n n i=1 . ρ(x, y) = cov (x, y) / [√ var(x).√ var(y)]. c correlation tests on spss: correlation test between « fundamental qualitative characteristics of accounting and financial information -declared with ifrs standards-» & « financial performance »: test 1: correlation test between « fundamental qualitative characteristics of accounting and financial information declared with ifrs standards-» & « financial performance in short term »: table 3: correlation test n°1. correlations relevance f. representation fp_in_st relevance corrélation de pearson 1 ,573** -,429** sig. (bilatérale) ,000 ,000 n 314 314 314 faithful representation corrélation de pearson ,573** 1 -,356** sig. (bilatérale) ,000 ,000 n 314 314 314 fp_in_st corrélation de pearson -,429** -,356** 1 sig. (bilatérale) ,000 ,000 n 314 314 314 **. la corrélation est significative au niveau 0.01 (bilatéral). source : spss. we observe that : the correlation between « relevance of accounting and financial information declared with ifrs standards » & « financial performance in short term » is negative. the correlation between « faithful representation of accounting and financial information declared with p ag e 9 7 am. j. econ. bus. innov. 2(2) 93-100, 2023 https://journals.e-palli.com/home/index.php/ajebi ifrs standards» & « financial performance in short term » is negative. test 2: correlation test between « fundamental table 4: correlation test n°2. qualitative characteristics of accounting & financial information -declared with ifrs standards» and « financial performance in medium and long term» : correlations relevance f. representation fp_in_mlt relevance corrélation de pearson 1 ,573** ,436** sig. (bilatérale) ,000 ,000 n 314 314 314 faithful representation corrélation de pearson ,573** 1 ,460** sig. (bilatérale) ,000 ,000 n 314 314 314 fp_in_mlt corrélation de pearson ,436** ,460** 1 sig. (bilatérale) ,000 ,000 n 314 314 314 **. la corrélation est significative au niveau 0.01 (bilatéral). source : spss we deduce that: the correlation between « relevance of accounting and financial information -declared with ifrs standards-» & « financial performance in medium and long term » is moderate. the correlation between « faithful representation of accounting and financial information -declared with ifrs standards» & « financial performance in medium and long term » is strong. table 5: correlation test n°3. correlation test between « enhancing qualitative characteristics of accounting & financial information declared with ifrs standards » and « financial performance »: test 3: correlation test between « enhancing qualitative characteristics of accounting & financial information declared with ifrs standards» and « financial performance in short term »: correlations understand compara verifiabi timeliness fp_in_st understand corrélation de pearson 1 ,720** ,651** ,619** -,385** sig. (bilatérale) ,000 ,000 ,000 ,000 n 314 314 314 314 314 compara corrélation de pearson ,720** 1 ,530** ,499** -,284** sig. (bilatérale) ,000 ,000 ,000 ,000 n 314 314 314 314 314 verifiabi corrélation de pearson ,651** ,530** 1 ,570** -,545** sig. (bilatérale) ,000 ,000 ,000 ,000 n 314 314 314 314 314 timeliness corrélation de pearson ,619** ,499** ,570** 1 -,307** sig. (bilatérale) ,000 ,000 ,000 ,000 n 314 314 314 314 314 fp_in_st corrélation de pearson -,385** -,284** -,545** -,307** 1 sig. (bilatérale) ,000 ,000 ,000 ,000 n 314 314 314 314 314 source : spss we notice that : the correlation between « understandability of accounting and financial information declared with ifrs standards» & « financial performance in short term » is negative. the correlation between « comparability of accounting and financial information -declared with ifrs p ag e 9 8 am. j. econ. bus. innov. 2(2) 93-100, 2023 https://journals.e-palli.com/home/index.php/ajebi standards » & « financial performance in short term » is negative. the correlation between « verifiability of accounting and financial information -declared with ifrs standards» & « financial performance in short term » is negative. the correlation between « timeliness of accounting and financial information declared with ifrs standards » table 6: correlation test n°4. & « financial performance in short term » is negative. test 4: correlation test between « enhancing qualitative characteristics of accounting & financial information declared with ifrs standards» and « financial performance in medium and long term»: correlations understand compara verifiabi timeliness fp_in_mlt understand corrélation de pearson 1 ,720** ,651** ,619** ,807** sig. (bilatérale) ,000 ,000 ,000 ,000 n 314 314 314 314 314 compara corrélation de pearson ,720** 1 ,530** ,499** ,665** sig. (bilatérale) ,000 ,000 ,000 ,000 n 314 314 314 314 314 verifiabi corrélation de pearson ,651** ,530** 1 ,570** ,781** sig. (bilatérale) ,000 ,000 ,000 ,000 n 314 314 314 314 314 timeliness corrélation de pearson ,619** ,499** ,570** 1 ,669** sig. (bilatérale) ,000 ,000 ,000 ,000 n 314 314 314 314 314 fp_in_mlt corrélation de pearson ,807** ,665** ,781** ,669** 1 sig. (bilatérale) ,000 ,000 ,000 ,000 n 314 314 314 314 314 source : spss we remark that: the correlation between « understandability of accounting and financial information -declared with ifrs standards» & « financial performance in medium and long term » is very strong. the correlation between « comparability of accounting and financial information -declared with ifrs standards» & « financial performance in medium and long term » is quite strong. the correlation between « verifiability of accounting and financial information -declared with ifrs standards» & « financial performance in medium and long term » is very strong. the correlation between « timeliness of accounting and financial information -declared with ifrs standards» & « financial performance in medium and long term » is quite strong. conclusion : in explanation of the results, and according to the confirmations deduced after the realization of the semi structured interviews with the aforementioned sample: the negative correlation relationship between « qualitative characteristics of accounting and financial informationdeclared with ifrs standards» & « financial performance in short term » is necessarily due to the increase in equity of the entities without any immediate impact on the net result. the positive correlation relationship between « qualitative characteristics of accounting and financial information -declared with ifrs standards» & « financial performance in mlt » is explained by the increase in net profit caused by the enrichment of fixed assets and the strengthening of the production capacity of entities. finally, this study, more statistical, forms an exploratory research and the beginning of a broader scientific work and a confirmatory study which aims to model the interrelationships between these studied variables. references : adam hayes (2022) correlation : what it means in finance and the formula for calculating it internet source (www.investopedia.com). alami y. & boughaba s. (2022) banking financial performance: an analytical essay in the moroccan banking context page : 6. amitava saha & kushal de (2022) the impact of advertisement on financial performance : a case study page : 65. anthony magoma, haika mbwambo, alfred a. sallwa & nuran mwasha (2021) financial performance of p ag e 9 9 am. j. econ. bus. innov. 2(2) 93-100, 2023 https://journals.e-palli.com/home/index.php/ajebi commercial banks and the camel model page : 617. belaynesh teklay, kevin e. dow, davood askarany, jeffrey wong & yun shen (2022) transportation quality, customer satisfaction and financial performance page : 30. charles katua kithandi (2022) monetary policy and financial performance of commercial banks in kenya page : 42. cochran, p. l., wood, r. a. (1984) corporate social responsibility and financial performance pages : 4256. deresa goshu desalegn, anita tangl, fekete farkas maria (2022) greening bank financial innovation for better financial performance : evidence from ethiopia page : 58. dil krishna shahu (2022) revenue diversification, financial performance, and risk of banks page : 32. gerçek özparlak (2022) does esg disclosure of companies impact on their financial performance page : 283. hanyu wang (2022) determinants of financial performance of the sports industry in china page : 11 &12. hassan kablay, victor gumbo (2021) financial performance of banks in botswana page : 386. hind ben khayat zeggari hassani & ayoub errahoui (2021) l’impact de l’audit fiscal sur la performance financière page : 3. hiyam sujud & joyce tannous (2020) : financial performance of the lebanese bank page : 67. idrissi nabaouia & talibi abdelghafour (2021) la politique de dividende et la performance financière des entreprises marocaines page : 1032. ikin solikin, muhamad ardi nupi hasyim, abdurokhim abdurokhim (2022) the impact of company internal financial performance on firm value page : 396. john guay pagaddut (2021) the financial factors affecting the financial performance of philippine msmes page : 1527. kendra cherry (2023) what is a correlation ? internet source (www.verywellmind.com). lenny phulong mamaro, tsholofelo gladys legotlo (2021) the financial performance and financial leverage of retail listed firms in south africa page : 124. martin kamau muchiri, szilvia erdei-gally & mária fekete-farkas (2022) effect of csr on the financial performance of financial institutions in kenya page : 8. olayinka erin, omololu bamigboye, jonah arumona (2020) risk governance and financial performance : an empirical analysis page : 762. pritha bhandari (2022) correlation coefficient : types, formulas & examples internet source (www.scribbr. com). quang linh huynh, maryam ashraf, erum shaikh and waqas ahmad wattoo (2022) financial structure and firm’s financial performance : empirical evidence of financial sector of pakistan page : 2024. rony dwi cahyono, ely siswanto, lulu nurul istanti, yuli soesetio, fadia zen (2021) impact of corporate governance on financial performance page : 301. salma el imrani & ahmed taqi (2022) relation entre la responsabilité sociale des entreprises et la performance financière page : 133. samuel ojor osigbemhe, oliver ikechukwu inyiama, olubukunola ranti uwuigbe (2022) environmental costs and financial performance of brewery firms in nigeria page : 31. shahid ali, ghulam murtaza, martina hedvicakova, junfeng jiang & muhammad naeem (2022) intellectual capital & financial performance : a comparative study page : 1. tariq tawfeeq yousif alabdullah, ries ahmed, abdulkarim m. jamal kanaan jebna (2022) corporate governance system and firm financial performance page : 100. tijana soja & svjetlana vulic (2021) ownership structure and corporate financial performance page 304. p ag e 1 0 0 american journal of economics and business innovation (ajebi) abstract introduction a qualitative characteristis of financial and accounting information: research methodology b research model: c administration of the questionnaire: the questioned sample: our selected sample includes 314 people, it is made up of:  accountants;  chartered accountants;  accounting teachers;  doctors and doctoral students. the population questioned must have, at least and at a minimum, a master’s degree in accounting and auditing. collection of responses: the questionnaire was distributed (paper version) to an initial sample of 232 people and the responses were immediately collected. the questionnaire was sent for a second sample by the google platform and the answers were received, on average, after a duration of 23 days. software used for data analysis: a statistical interpretation of the results: bcorrelation analysis: theoretical review: definitions: interpretations: c correlation tests on spss: test 1: correlation test between « fundamental qualitative characteristics of accounting and financial information -declared with ifrs standards-» & « financial performance in short term »: conclusion : references : pa ge 1 pa ge 17 american journal of economics and business innovation (ajebi) does external debt stocks have an asymmetric effect on inflation dynamics in cameroon? an application of nonlinear ardl enongene betrand ewane1*, etape felix mejame2 volume 2 issue 2, year 2023 issn: 2831-5588 (online), 2832-4862 (print) doi: https://doi.org/10.54536/ajebi.v2i2.1396 https://journals.e-palli.com/home/index.php/ajebi article information abstract received: march 16, 2023 accepted: april 27, 2023 published: may 01, 2023 external debt is indispensable, especially in developing countries which usually face budget deficits to cover up their saving-investment gap. however, the effect of external debt on inflation depends on whether it is increasing or decreasing. hence, this study aims to examine the effect of external debt stocks on inflation using world bank data from 1980 to 2020 in cameroon. the study makes use of non-linear ardl to examine the positive and negative changes in external debt stocks and their effects on inflation. the results indicate a long-run increasing and decreasing asymmetry effect of external debts on inflation. only the coefficient of positive external debt stock on inflation is positive and significant in the long run while in the short run, positive and negative external debt stocks respectively have a negative and positive significant impact on inflation. the study recommends that the government should be mindful of increasing external debt as it will become inflationary in the long run. keywords asymmetry effect, cameroon, external debt, inflation 1 department of economics, university of buea, cameroon 2 department of economics and management sciences, university of dschang, cameroon * corresponding author’s e-mail: betrandenongene@yahoo.com introduction most developing countries face the problem of mismanagement of resources due to corruption and embezzlement. this increased their budget deficit which result to external borrowing to cover up their savingsinvestment gap. hence, external financing is primordial to facilitate investment in poor countries that usually face a budget deficit. the government borrows principal to increase welfare and stimulate growth which is either through taxation, seignorage, or debt (ngangnchi & joefendeh, 2021). however, failing to effectively utilize borrowed money increase the external debt stock of a country which results to inflationary pressure(kwon et al., 2006a; sims, 2016). excessively borrowing by countries may also result in debt repayment difficulties which makes further borrowing difficult. the repayment of these debts is highly determined by exchange rate fluctuation in the forex market, which may increase the cost of paying the debt through inflation. this has made monetary authorities and policymakers increasingly worried over the effect of inflation pressure due to exchange rate appreciation and public debt (philip and oseni, 2012). the nexus has been a subject of concern over time with heterogeneous conclusions among researchers(aimola & odhiambo, 2021). the monetarist believes inflation is a monetary phenomenon arguing that price level and real output may increase in the short run due to an expansionary monetary policy but only the price level may increase in the long run (friedman, 1968). however, other studies have proven that inflation is no longer a monetary phenomenon but a fiscal policy problem (lin & chu, 2013; nastansky & strohe, 2015). in ldcs, high inflation, debt stocks, and poor economic performance are predominant due to fiscal deficit(islam & wetzel, 1991). in cameroon in particular, external debt has been growing at an alarming rate coupled with a very weak exchange rate currency. according to the magazine business in cameroon, cameroon’s public debt was estimated at cfa12,374 billion in september 2022, 11% higher than in the same period of 2021 which represents almost half the country’s gdp (45.8%)(s.a, 2022). in addition, the appreciation of us dollar value makes cameroon incur an extra cost of 3 billion cfa to finance its external debt in july 2022(aboudi, 2022). the world bank data for cameroon indicate that total external debt has been rising from 2011 onward (see figure 1). hence, cameroon is at high risk of external and overall public debt distress as the value of public debt-to-gdp ratio is above the benchmark(vivek et al., 2022). even with the debt relief program of hipc (heavily indebted poor countries) and mdri (multilateral debt relief initiatives) to strip cameroon off its debts, external debt has still been steadily rising (see figure 1). in fact, since 2010, total external plus domestic public debt augment to 35.2 % of gdp in 2016, doubling the median for ssa countries between 2009 to 2015 (ngangnchi & joefendeh, 2021). the world bank statistics indicate that cameroon’s external debt as a percentage of gni has increased from 24.4%, 27.8%, 33.1%, and 34.7% in 2017, 2018, 2019, and 2020 respectively. this has also caused a continuous rise in inflation through rising prices (see figure 2). these extreme levels of external debt hinders economies ability to invest as their limited income is used in debt servicing leading to a vicious cycle of debt and exposing the country to exchange rate risk. atique & kamran (2012) indicates that numerous poor countries become even more poorer after borrowing externally from world bank, imf, and paris club. this increasing deficit financing may worsen https://doi.org/10.54536/ajebi.v2i2.1396 https://journals.e-palli.com/home/index.php/ajebi pa ge 18 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(2) 17-23, 2023 inflation leading to political pressure (veronique & jack, 2022). this excess debt further affects interest rates, which may crowd out private sector investments leading to lower productivity and low wages. external debt can have nonlinear impacts on inflation where a low level of indebtedness causes inflation to be low while a high level of indebtedness causes high inflation. hence, the study aims to examine the positive and negative changes in external debt stocks and their effect on inflation in cameroon. no study exists in cameroon context that specifically examines the asymmetric relationship between external debt and inflation. thus, this study fills the gap by providing answers on non-linearity in the external debt inflation nexus. the study is paramount as cameroon is yet to establish a stable inflation rate. argues that monetary authorities have control over price. hence, for the government to contain its budget deficit, she must keep printing money and utilize the surplus budget to pay the debt. the fiscal theory of price level (ftpl) which looks at the nexus between fiscal policy, public debt, and inflation also explains that it is not only money supply that determines inflation but inflation is influenced by other factors such as fiscal deficits and the debt(farmer & zabczyk, 2019). the theory claims that if the government has an unsustainable fiscal policy, then it will pay them off by inflating the debt away. the theory stipulates that the price level is determined by government debt. hence, inflation breaks out when people don’t expect the government to fully repay its debts(bassetto, 2008). this theory is of relevance to developing countries like cameroon as they lack the fiscal capacity to mobilize fiscal revenue giving rise to interest rates, higher taxes, and inflation. keynes also argues that inflation is “a method of taxation” that the government uses to protect the use of real resources”(keynes, 1971). friedman proposed a fixed monetary rule where “the fed should be required to target the growth rate of money to equal the growth rate of real gdp for price to remain unchanged” (jahan & papageorgiou, 2014). empirical literature review studies on the effect of external debt on inflation are inconclusive. the heterogeneity is based on case studies, estimation procedures, and the use of variables (aimola & odhiambo, 2021). however, many empirical studies have established a positive relationship between both terms. mweni et al (2016) examine the effect of external debt on inflation in kenya from 1972 to 2012. regression results indicates that external debt have a positive and significant effect on inflation. similarly, baxter & stockman (2011) indicates that an increase in the supply of money often leads to the upward price movement of goods and services. likewise, nguyen (2015) used pmg estimation and different gmm to investigate the effect of public debt on inflation in 15 less developed asian countries for 22 years. the study found public debt to have a positive and significant effect on inflation for gmm estimates while pmg estimation indicated that public debt is deflationary in the short run but inflationary in the long run. equally, heba (2021) found that external debt elevates prices both in the short and long runs in egypt. his findings are consistent with that of aisen, & veiga (2006) who conclude that external finance deficit increases both inflation and interest rates. also, ekinci (2016) using simple linear regression conclude that a strong positive nexus exists between the consumer price index and external debt in turkey from 2003 to 2015. similarly, mweni et al (2016) indicates that rising inflation rate increases the level of external debt in kenya using ols from 1972 to 2012. their findings are contrary to that of assibey-yeboah & mohsin (2014) who concluded that figure 1: cameroon total external debt source: computed by authors from wdi figure 1: consumer price index (cpi) source: computed by authors from wdi, 2022 literature review theoretical literature the most widely accepted theory of inflation is that inflation is a monetary phenomenon(friedman, 1968). friedman advocates that an expansionary monetary policy will increase both real output and the general price level in the short run but only the price level would increase in the long run (aimola & odhiambo, 2020). the theory https://journals.e-palli.com/home/index.php/ajebi pa ge 19 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(2) 17-23, 2023 external debt decrease when the inflation rate increase. helmy (2021) using egypt as a case study concludes that in the short run and long run, external debt deteriorates inflation. similarly, boshra (2023) indicates that in both the short and long run, inflation has a decreasing impact on external debt. gathendu (2021) using the vecm in kenya, uganda, and tanzania for 30 years found that external debt has a positive effect on inflation in the long run. he further indicates a unidirectional relationship between both terms. lopes da veiga et al (2016) using 52 african from 1950 to 2012 reveals a positive link between high levels of public debt with inflation. their finding is consistent with that of afonso & ibraimo (2018) who established a positive link between public debt and inflation in mozambique using var. these findings are true with that of lopes da veiga et al (2016) who further confirm that developing countries with high public debt witness a high rate of inflation. in a related study, reinhart & rogoff (2010) revealed that rising public debt levels lead to higher inflation for emerging market economies. romero & marin (2017) using 52 countries from 1961 to 2015 indicates that for countries that have already experienced high public debt, a further increase in public debt will coincide with inflation. kwon et al (2006) noted that rising public debt aggravates inflation for indebted developing countries but it weakly leads to inflation for non-indebted developing countries while it is absent in developed countries. sunderplassmann (2020) investigate the link between sovereign debt, default, and inflation. the results reveal that increasing nominal foreign debt leads to inflation while domestic debt is less inflationary. in addition, aimola & odhiambo (2022) using a nardl for 41 years, indicate that total public debt and inflation have an asymmetric relationship in the gambia. other empirical investigations have found a negative relationship between external debt and inflation (essien et al., 2016; karakaplan, 2009; taghavi, 2000; wheeler, 1999). karakaplan (2009) support the hypothesis that for countries with well-developed financial market, external debt have less impact on inflation. arisa (2020) using a svar method in kenya from 1993 to 2018 indicates that changes in the external debt negatively affect inflation. el aboundi & khanchaoui (2021) reveals that low inflation makes debt repayment difficult in morocco. other authors find evidence of threshold limit. dumitrescu et al (2022) using 22 emerging nations examine the nonlinear effect of government debt on inflation. they conclude that shadow economy whose gdp exceeds 24.3% experience high costs of inflation while low shadow economy can accommodate increases in public debt without any cost associated with inflation. reinhart & rogoff (2009) indicates that when nations move from a lower debt ratio to a higher debt ratio, they suffer a median inflation rise from 6% to 16.5% per year. a study found an insignificant relationship between external debt and inflation. aimola & odhiambo (2021) found that the impact of public debt on inflation is statistically insignificant in both the short and long run in nigeria from 1983–2018. data and methodology the study makes use of time series data from wdi spanning from 1980 to 2020. external debt, which is the dependent variable is measured in total external debt stock in dollars while inflation is measured by the consumer price index. real exchange rate, trade openness, and domestic investment are control variables. the study uses the nonlinear ardl to explore the increasing and decreasing effect of external debt on inflations. the standard ardl captures only the linear or symmetric relationship between variables but not nonlinear or asymmetric linkage (shin et al., 2014). hence, the standard ardl is extended to incorporate the nonlinear dynamics amongst variables but maintain all the qualities of the conventional ardl. the idea behind this model is to understand the effect of increasing or decreasing the regressors on the dependent variable. to investigate if external debt have a nonlinear relationship with inflations in cameroon, the study adopts the nardl of shin et al (2014). the general specification on nardl is given as follows; where b1 edt + and b2 edt are the partial sum of positive and negative changes in total external debt which is derived as follows with the inclusion of all variables, the nardl looks thus; where; ed= external debt: rer= real exchange rate: to= trade openness: di= domestic investment, μ1t=white noise error term; ∇ = the difference operator; b1-b6 are shortrun coefficient while b7-b12 are longrun coefficient; p is the optimal lag length; b0 is the constant; b2i + and b3i are the short-run asymmetric coefficients while b8 + and b9 capture the longrun asymmetric coefficient. to ascertain the long run relationship in nonlinear or asymmetric ardl, cointegration is primordial. pesaran et al (2001) computed f-statistics is compared with the computed upper critical bound. the technic test the null hypothesis of no cointegration (ho: b7i=b8 +=b9 =b10i=b10i=b11i=b12i=0 against the alternatives of cointegration (ho:b7i ≠b8 + ≠b9 ≠b10i≠ b10i ≠b11i≠b12i≠0). once the computed f-statistic is greater than the critical values for the upper bound, cointegration is evidence. to determine if long or short run asymmetry relationship https://journals.e-palli.com/home/index.php/ajebi pa ge 20 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(2) 17-23, 2023 exists between inflation and external debt, the walt test is used which tests the null hypothesis of short run or longrun symmetry against the alternative hypothesis of short run or long-run asymmetry(aimola & odhiambo, 2022). the long run representation of the ecm in the nonlinear equation 5 is given as follows; where ectt-1 is the one-period lagged error correction term. the coefficient 𝜆 is the speed of adjustment and it must be significant and negative to show long run convergence. results and discussion unit root and cointegration test determining stationarity is vital to avoid spurious regression(gujarati, 2004). this is also to make sure none of the variables are integrated of order two. the dfgls of elliott et al (1996) and phillip perron unit root test of phillips & perron (1988) are used to account for the presents of unit root. the results in table 1 below reveals a mixed order of integration. however, these conventional unit root tests are usually weak in cases of structural breaks. hence, the zivot-andrew unit root test which accounts for a single break point is also applied in this study(andrews & zivot, 1992). the results in table 2 also reveals a mixed order of integration confirming the traditional unit root test. in all cases, the test statistics must be greater than the 5% critical value to affirm stationarity either at levels or first differences as indicated in both tables. this warrant the application of nonlinear ardl applied in conditions of i(1) and i(0). the results of the nardl bounds test for cointegration in table 3 indicates cointegration amongst the variables even at a 1% significant level. the calculated f-statistic of the nardl bound test is greater than the upper bound at all critical values. thus, the short and longrun relationship can be determined in the study. table 1: dfgls and pp unit root test test variables test statistics at levels test statistics at first difference decision with trend with no trend with trend with no trend dfgls infla -4.127 -2.89 ------i(0) loged -1.648 -1.026 -2.661 -2.659 i(1) exr -2.131 -1.263 -4.353 -3.581 i(1) to -4.055 -2.29 ------i(0) loginv -1.359 1.164 -4.234 -3.585 i(1) pp infla -6.181 -5.768 ------i(0) loged -1.588 -1.514 3.478 -3.528 i(1) exr -2.08 -1.579 -5.464 -5.543 i(1) to -6.184 -5.403 ------i(0) loginv -2.414 -0.758 -7.22 -7.295 i(1) note: test statistics @ 5% cv for no trend= -3.190 and -1.950 for trend for dfgls test statistics @ 5% cv for no trend= -2.961 and -3.544 for trend for pp source: computed by authors the nardl result presented in table 4 above reveals the positive and negative short run and long run external debt stocks on inflations. the result of the positive external debt stocks on inflation is positive and significant in the longrun revealing that an increase in external debt stocks will increase inflations in the longrun. this finding is true with that of mweni et al (2016) in kenya. also, positive and negative external debt stocks have a negative and positive impact on inflation in the shortrun respectively. hence, an increase in external debt stocks will decrease inflation while a decrease will increase inflation in the shortrun. a negative exchange rate has a negative and significant effect on inflation in the longrun. that is a fall in the exchange rate will decrease inflations in the longrun but both the negative and positive exchange rates were insignificant in the shortrun. in addition, both positive and negative trade openness has a positive and significant effect on inflation in the longrun indicating table 2: zivot-andrew unit root test variables test statistics at levels test statistics at first difference break date decision break in trend break in intercept break in trend break in intercept infla -6.202 -6.823 ----1987 i(0) loged -2.149 -4.609 -4.456 -4.68 2014 i(1) exr -2.247 -5.269 ----1999 i(0) to -6.272 -6.569 ----1987 i(0) loginv -2.149 -4.609 -4.456 -4.609 1997 i(1) note: test statistics @ 5% cv for break in intercept= -4.80 and -4.42 for break in trend source: computed by authors https://journals.e-palli.com/home/index.php/ajebi pa ge 21 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(2) 17-23, 2023 that an increase or decrease in trade openness increases inflation in the longrun while only positive trade openness has a positive and significant impact on inflation in the short run. lastly, only negative domestic investment has a positive and significant impact on inflation in the longrun. however, it was significant but negative in the shortrun. the result further indicates that the cointegration equation is negative and significant as expected. it indicates that the rate of adjustment speed to long run equilibrium is 38.9%. the r-square value of 0.9689 indicates that about 96.9% of variation in inflation is explained in the model while 3.1% is explained by error term. the regression results are also of good fit as indicated by the adjusted r-square of 90.1%. the f-statistic value is significant at 1% suggesting the prediction of the overall model is a good fit. table 3: nardl bounds test for cointegration results f-statistics=61.938 lower bound upper bound conclusion 1% 3.74 5.06 cointegration even at 1% significant level5% 2.86 4.01 10% 2.45 3.52 source: computed by authors table 4: short and long run nonlinear ardl estimates variables coefficient standard error p-values longrun regression coefficient loged_pos 0.077*** 0.086 0.001 loged_neg -0.022 0.057 0.705 exr _pos 0.002 0.007 0.73 exr_neg -0.025** 0.009 0.02 to _pos 0.399*** 0.081 0 to_neg 0.404*** 0.081 0 logdi_pos -0.101 0.166 0.556 logdi_neg 0.957* 0.521 0.091 constant 6.802*** 1.307 0 model statistics r-square 0.9689 adj r-squared 0.9015 prob (f-statistic) 0 f-statistic 14.37 shortrun regression coefficient δloged_pos -9.297** 3.509 0.021 δloged_neg 4.041* 4.041 0.059 δexr_pos 0.0031 0.003 0.764 δexr_neg -0.002 0.004 0.634 δto_pos 0.307* 0.171 0.097 δto_neg 0.293 0.171 0.113 δlogdi _pos 0.059 0.11 0.604 δlogdi _neg -0.447* 0.238 0.085 cointegration. equation -0.389*** 0.074 0 diagnostics test breusch-godfrey lm test 0.3303 portmanteau test 0.6204 breusch/pagan heteroskedasticity test 0.4011 arch test 0.7967 ramsey reset test 0.1747 jarque-bera test on normality 0.8267 note: *** denotes 1 % significant level, ** 5%, and * 10%, source: computed by authors https://journals.e-palli.com/home/index.php/ajebi pa ge 22 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(2) 17-23, 2023 the diagnostic tests in table 4 reveals that all post estimation test are insignificant. hence, there is no autocorrelation, heteroscedasticity, no arch effect, misspecification error, and non-normality respectively. the model is also stable as indicated in appendix 3. the walt test results in table 5 indicate a long run increasing and decreasing asymmetry effect of external debts on inflation. the alternative hypothesis that the variables in the long run, are asymmetric is accepted. the positive and negative partial sums of squares support an asymmetric relationship in the model. when the external debt increases, it decreases inflation by 23.15% but when external debt decreases, it increases inflation by 11.97%. no short run asymmetry effect was found to exist in the study. table 5: short-run and long-run asymmetry test walt test f-test p-values decision long run asymmetry(+) 23.152 0.000 positive long run asymmetry nexus exist long run asymmetry(-) 11.973 0.046 negative long run asymmetry nexus exist short run asymmetry 0.006145 0.938 short run asymmetry nexus does not exist source: computed by authors conclusion and recommendation external debt is an unavoidable condition for countries with low financial strength to boost growth and development. however, external debt if not properly managed can lead to budget deficit, inflationary pressure, and trap a country in the vicious circle of debt financing. this study was out to examine the effect of external debt stocks on inflations. to examine the increasing and decreasing impact of external debt stocks on inflation, the study adopts the nonlinear ardl approach. the results indicate a long-run increasing and decreasing asymmetry effect of external debts on inflation. only the coefficient of positive external debt stocks on inflation is positive and significant in the long run while in the short run, a positive and negative external debt stocks both have a negative and significant impact on inflation. based on this conclusion, the study recommends that the cameroon government should initiate strategies to reduce its external debt stocks such as reproductive debt strategy, increase accountability in the use of borrowed money, and debt refinancing. this will boost revenue with much lower taxes and decrease inflation. reference aboudi, o. 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(1999). the macroeconomic impacts of government debt: an empirical analysis of the 1980s and 1990s. an empirical analysis of the 1980s and 1990s. an empirical analysis of the 1980s and 1990s., 27(3), 273–284. https://doi.org/https://doi. org/10.1007/ https://journals.e-palli.com/home/index.php/ajebi pa ge 1 pa ge 73 american journal of economics and business innovation (ajebi) what is the development strategy for a service-based business? otong karyono1* volume 1 issue 3, year 2022 issn: 2831-5588 (online) doi: https://doi.org/10.54536/ajebi.v1i3.824 https://journals.e-palli.com/home/index.php/ajebi article information abstract received: october 23, 2022 accepted: november 11, 2022 published: november 27, 2022 this study aims to map out how to develop strategies for service-based businesses to take advantage of opportunities and maximize the role of resources by anticipating weaknesses and threats. this research was conducted on a service-based business. the research method used is descriptive qualitative, with research subjects being business owners, employees, and some consumers in the laundry business in watampone city. the analytical technique used in this research is swot analysis (strength, weakness, opportunity, treatment) as an alternative mapping strategy that will be implemented in future business development. from the results of research using swot analysis in the laundry business in watamponen city, implementing a laundry business development strategy has excellent prospects and opportunities, so the strategy that is considered suitable is based on the research results using a growth-oriented strategy. keywords service business, strategy development, swot analysis. 1 department of business and economics sharia, institut agama islam negeri bone, indonesia * corresponding author’s e-mail: otong.karyono@iain-bone.ac.id introduction the service industry is one of the business fields that focus on service, so in its implementation, the service industry focuses on customer satisfaction. customer satisfaction will be created from how much benefit is received or felt by the customer compared to the sacrifices incurred. the vital role of the service industry today dramatically affects the dynamics of an increasingly competitive business because services are an effort to meet customer needs and provide satisfactory service to customers among the quite competitive competition. competition in the service industry in this digitalization era is very complex, along with the increasingly critical customers in assessing whether a service is a quality or not. business defense against increasingly competitive dynamics for the service industry and other industries. the key word in strengthening and maintaining competitiveness in the competitive era is the strategy (stephen p kaufman; a steven walleck, 1980). this statement is reinforced by several research results which show that strategy is a tool that is considered effective in building competitive advantage (abdulwase et al., 2021; maryani & chaniago, 2019; s et al., 2021). more specifically (milano, 2021) states that one way to create a competitive advantage is to make your product’s features or benefits superior to your competitors. problems in small and medium-sized businesses, based on products and services, are lack of business capital, lack of knowledge about how to develop a business, lack of product innovation, and lack of understanding of digital marketing and bookkeeping factors manual (luthfa, 2021). highlighting the problem of lack of knowledge about how to develop a business, this research will try to contribute empirically to conducting business development studies in small and medium-sized enterprises by identifying external and internal factors as inputs in strategy assessment. the development of business strategies in the service industry in the current era is a concern for researchers because business development will become a driving force or motivation factor for business actors in determining future strategic steps. previous researchers who were interested in conducting studies on business strategies in small and medium enterprises, such as those conducted by (abdillah et al., 2018; raymond & bergeron, 2008; sawangchai et al., 2018), each conducted research on strategy formulation in developing alternative strategies for small and medium enterprises. the difference with the research that will be carried out lies in the aspect of the study and output, that the research to be carried out will try to provide empirical confirmation regarding the identification of business opportunities in the service industry by paying attention to and analyzing external and internal environmental factors so that this will make it easier business actors in carrying out their strategies following the research results. a laundry business is a business whose core business is customer service. the core business of laundry is the activity of washing textile materials or a place to wash textiles. this business activity is very much needed by people with a dense activity so that an alternative community can use this laundry service. however, this business is because it is easy to practice, resulting in higher competition. this is also felt in the laundry business in bone regency, south sulawesi, which shows increasingly competitive competition in the laundry business, whether the business can still grow by taking advantage of opportunities and strengths and minimizing existing weaknesses and threats. therefore, this study aims to map the potential and opportunities of https://doi.org/10.54536/ajebi.v1i3.824 https://journals.e-palli.com/home/index.php/ajebi mailto:%20otong.karyono%40iain-bone.ac.id?subject= pa ge 74 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(3) 73-81, 2022 the laundry business in a very competitive environment for the future. therefore, the role of this research is significant as an empirical reference on how a business can survive and have a competitive advantage so that it can continue to meet customer needs. the maximum is to meet customer satisfaction, ultimately providing added value for customers and enabling the business to survive in an increasingly competitive business environment. literature review strategy, according to porter, is a tool to achieve a competitive advantage. strategy is a joint means to achieve long-term targets. strategy can also be regarded as an action potential that, in its implementation, requires managerial decisions in allocating or deploying relatively large amounts of resources. the strategic importance of its position in a company because the strategy can affect the company’s development in the long term, for example, for the next five years, so it can be said that the strategy is always oriented to the future. the strategy has multifunctional or multidivisional consequences and must consider the company’s external and internal factors (david, 2011). hamel and prahalad argue that strategy is an action that has an incremental (increasing) and continuous nature and is carried out based on aspects of what customers expect in the future (umar, 2005). strategic planning always begins with the question “what can happen,” not “what happens.” the speed of new market innovation and changes in consumer patterns must require core competencies, so companies must look for core competencies in their business. strategy is a comprehensive plan of how the company will achieve its mission and goals (thomas l. wheleen and j. david hunger, 2010). the strategy will maximize competitive advantage and minimize competitive limitations (thomas l. wheleen and j. david hunger, 2010). in conclusion, the strategy is a series of decisions and actions implemented to win the competition and achieve company goals. business development is the commitment of business actors to achieve the desired growth pattern through profit acquisition from new or existing customers. a business development strategy is a process used to identify, maintain and acquire new customers and capture business opportunities to achieve maximum business growth. the scope of business development will differ from one company to another; this depends on the business model implemented. eight strategic steps in the business development process are considered adequate, as quoted by (redaksi ocbc nisp, 2021), including: building a brand a brand or brand is a sign associated with a product. a brand has a purpose as a differentiator between a product and other products, making it easier for consumers or potential consumers to recognize the products to be sold. therefore, to get the public’s attention, it is imperative to increase consumer awareness of a brand. one way is to be diligent in introducing brand identity to potential consumers through social media. increase capital for a business development plan to run smoothly, adequate capital is needed. capital is needed to fulfill several things, from increasing production capacity to maximizing promotions to increasing sales. several alternative ways can obtain additional capital, including savings or selling assets. another step is to apply for credit from the bank. third, ask for financial support from investors. the right sales strategy the business development strategy cannot be separated from the sales strategy used. several sales strategies are commonly used today. one buys a market share, selling the same product to the same people. in this case, three things will be compared: quality, service, and price. another sales strategy is hunting for new customers (hunt) or managing existing customers (farm). hunting for new customers requires much effort because you must introduce the product from scratch. meanwhile, managing old customers is the easiest and most likely way for business owners. visible expert with content marketing one strategy to develop a contemporary business is visible experts using content marketing. this strategy aims to make one or the entire team look like experts in their field to potential customers. this business development strategy is very effective if you apply it, especially to service businesses such as agencies or outsourcing. one way for the visible expert strategy to work is by writing, speaking, or uploading content that discusses expertise/ business and how the shared content can solve client problems. many experts have built their reputations with this strategy so that their business brands become strong and known by potential consumers. however, executing this strategy takes a good part of a would-be expert’s career. one example of the implementation of this strategy is being a speaker at various webinars, being a guest writer on reputable sites, to sharing freely on social media about expertise. even today, many experts have turned to social media such as youtube. optimizing swot analysis although it sounds classic, the swot (strength, weakness, opportunity, threats) analysis method is still quite relevant for business development. this method can be used to determine a company’s current conditions. strengths are various strengths owned by the company and can have a positively impact. weakness is a weakness owned by the company and harms the company’s development. weaknesses should be improved so as not to hinder the company’s progress. opportunity is an opportunity that can be optimized by the company so that it survives in the market. threats are threats that can hinder https://journals.e-palli.com/home/index.php/ajebi pa ge 75 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(3) 73-81, 2022 the development of the company. knowing these four things will make making effective and profitable decisions easier. join the community currently, there are many communities or business forums initiated by entrepreneurs. a business can join the community to get information, share, and establish relationships. it is not impossible, and a well-established relationship can be a gateway for business collaboration to reach new business consumers and develop the business. participate in charity events the following business development strategy is to participate in charity events. one of them is being one of the sponsors to make the event a success. in addition, it can also help victims experiencing disasters, be it natural disasters from earthquakes to forest fires. not only financially, but the company can also help by sending an emergency response team in the company if there is one. indirectly, these things will impact increasing the brand of a business. innovate if you want your business to grow, another step that should not be ignored is to innovate. business innovation can prevent loyal customers from switching to other brands while attracting the attention of new consumers. new things embedded in innovative products are expected to increase the interest of potential buyers. however, innovation should not be carried out at random. there must be careful consideration and calculation so the user will need the innovation results. well, the principal capital to innovate is research and customer data. based on the description above, this research is focused on how to develop a business by maximizing swot analysis. based on the information above, although the swot analysis is a classic analysis, in practice, it is still essential to do, considering this analysis is very relevant in assessing and identifying external and internal factors so that, in reality, this analysis can adapt to a dynamic environment. based on the description above, building a strategy in this study, a swot analysis is used. previous researchers have used swot analysis to study empirically, from strategic planning to choosing alternative strategies for large-scale and small-scale businesses (dilfuza ilhomovna, 2021; hashemi et al., 2012; wardhani, 2020). based on previous research, this research focuses on building and developing a business through swot analysis to analyze how many opportunities and strengths are owned and how to anticipate weaknesses and threats. conceptually and theoretically, swot analysis is a strategic planning method used to evaluate strengths, weaknesses, opportunities, and threats that occur in a project or a business venture or evaluate own product lines or competitors. to perform the analysis, the business objectives are determined or identify the object to be analyzed. strengths and weaknesses are grouped into internal factors, while opportunities and threats are identified as external factors (rangkuti, 2014). pearce and robinson’s swot stands for the company’s internal strengths and weaknesses and the opportunities and threats in the environment facing the company. swot analysis is a systematic way to identify factors and strategies that represent the best fit between them. this analysis assumes that an effective strategy will maximize strengths and opportunities and minimize weaknesses and threats. when applied accurately, this simple assumption profoundly impacts the design of a successful strategy (a. pearce ii, john dan richard b. robinson, 2008). this analysis can logically help in the decision-making process. the decision-making process is related to the company’s vision and mission as well as the company’s goals. so swot analysis can be used as an effective tool to analyze the factors that affect the company and as a decisionmaking process to determine the strategy. figure 1: swot analysis of a company https://journals.e-palli.com/home/index.php/ajebi pa ge 76 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(3) 73-81, 2022 • quadrant 1: this is a very favorable situation. the organization has opportunities and strengths to take advantage of current opportunities. the strategy applied in this condition is a strategy that supports an aggressive growth policy (growth-oriented strategy). • quadrant 2: despite facing various threats, the organization still has internal strength. the strategy applied is to use strength to take advantage of long-term opportunities using a diversification strategy (product/ market). • quadrant 3: the organization faces enormous opportunities but, on the other hand, faces some internal constraints/weaknesses. this organization’s strategy focuses on minimizing the company’s internal problems to seize better opportunities. • quadrant 4: quadrant 4 shows a very unfavorable situation; the organization faces various internal threats and weaknesses. immediately find a strategy to survive (defensive) wiradhana dalam (haerawan & magang, 2019; wattimena, 2017). furthermore, another source mentions an example of a swot analysis matrix. swot matrix is a tool used in compiling the organization’s strategic factors. this matrix clearly illustrates how the internal opportunities and threats can be adjusted to their internal strengths and weaknesses. this matrix can generate four sets of possible strategic alternatives, as shown in the following table: based on the swot matrix, the following 4 strategic table 1: swot matrix efi / efe strength (s) (determine the internal strength factor) weaknesses (w) (determine internal weakness) opportunities (o) (determine the external opportunity factor) strategi so list of strengths to take advantage of the opportunities that exist strategi wo register to minimize weaknesses by taking advantage of existing opportunities threats (t) (determine external threat factors) strategi st list of forces to avoid threats strategi wt sign up to minimize weaknesses and avoid threats steps are obtained: • a) so strategy. this strategy is made based on the organization’s way of thinking, namely by utilizing all strengths to seize and take advantage of opportunities as much as possible. the so strategy uses the company’s internal strengths to take advantage of external opportunities. • b) st strategy. this strategy uses the strengths of the organization to overcome threats. st strategy uses the company’s internal strengths to avoid or reduce the impact of external threats. • c) wo strategy. this strategy is implemented based on the utilization of existing opportunities by minimizing existing weaknesses. wo strategy to improve internal weaknesses by taking advantage of external opportunities. • d) wt strategy. this strategy is based on activities that are defensive in nature and seek to minimize weaknesses and avoid threats. wt strategy aims to reduce internal weaknesses by avoiding external threats materials and methods the qualitative research method is a research method based on the philosophy of postpositivism, used to examine the condition of natural objects (as opposed to experimentation) where the researcher is the key instrument, data collection techniques are carried out by triangulation (combined), data analysis is inductive/ qualitative, and the results of qualitative research emphasize meaning rather than generalization (sugiyono, 2015, p. 9). the method used in this research is qualitative. the qualitative research method is a research method based on the philosophy of postpositivism, used to examine the condition of a natural object (as opposed to an experiment) where the researcher is the key instrument, the data collection technique is done by triangulation (combined), the data analysis is inductive/qualitative, and the results of qualitative research emphasize meaning rather than generalization (sugiyono, 2015). this study uses a descriptive qualitative research approach, and as an analytical tool, a swot analysis is used to process and produce a strategy formulation. in this study, observations on the laundry business unit in watampone city, indonesia, are both business situations, business locations, business activities and activities, owners and employees in the work process in the laundry service business as well as observing interactions with consumers, this research is an implementation of a swot analysis that will be implemented in laundry service businesses in watampone city including bunda laundry, hail laundry, king laundry bone, oxygen laundry, daeng laundry, laundry barokah 313, armi klin laundry bone, laundry dede, aliyah laundry, family laundry, laundry 27 dry & clean, ambo laundry, nurul laundry, myka laundry, and citra laundry, all of which are located in watampone city, indonesia. analysis in the laundry service business research, while the unit of observation is the owner, employees, and also the situation and condition of the laundry service business, as a source of information that can be extracted information about things needed by researchers. to test whether the data obtained is valid or not then, it is necessary to do testing; the test used is triangulation. identification of the internal and external environment in the laundry service business needs a particular https://journals.e-palli.com/home/index.php/ajebi pa ge 77 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(3) 73-81, 2022 approach to obtain objective information. at the same time, the nature of this research is a case study, wherein the object of research some cases need to be solved, and for that, it needs to be explored in depth. the types of data used are primary data and secondary data. primary data is obtained directly in the field, either in the form of interviews or filling out questionnaires conducted by research informants. secondary data is used as supporting data in the form of company statistical data documents, books, journals, or other information related to research. informant determination techniques must meet several criteria, which are explained as follows: • 1. the subject has long and intensively integrated with the laundry service business activities, • 2. the subject is still fully and actively engaged as a laundry service business entrepreneur, • 3. the subject has time and providing opportunities to be asked for information about laundry service businesses, • 4. subjects in providing information as it is, honest and not fabricated or engineered by spradley in research (inayati et al., 2018). data collection techniques were conducted by conducting initial observations and interviews, filling out a list of statements, and collecting the required documents. analysis of the data used in this study with qualitative methods and using swot analysis. according to (rangkuti, 2014), the swot analysis is the result of systematically identifying various factors to formulate how the opportunities for developing a laundry service business strategy can be carried out as follows: • 1. identifying internal and external factors, weighting, and ranking. the weight multiplied by the rating of each factor gets a score for that factor. • 2. determine the weight based on the contribution of the influence of the strength or weakness on the achievement of the company’s goals and mission or vision. the greater the weight, the higher the contribution/ influence on achieving the goal of making a laundry service business development strategy. • 3. determine the branch by comparing the position of each factor with the leading competitors. strengths and weaknesses rating values and opportunities, and threats are always contradictory in assigning values to strengths and weaknesses. swot analysis, based on the score obtained, whether there is an opportunity (positive value) or threat (negative) and whether the strength factor outperforms (+) weakness (-), then we get four recommendation quadrants. • 4. performing the analysis stage, the values of internal factors and external factors are described in the form of a swot diagram; the next weighting score shows the position of the laundry service business quadrant. all information is compiled in a matrix, then analyzed to obtain a suitable strategy for optimizing efforts to achieve effective, efficient, and sustainable performance. • 5. decision-making stage. ie matrix (internal external) is a portfolio matrix that promotes laundry service businesses in a 9-cell display. the position is determined from the results of the ifas and efas analysis. the total score from the ifas matrix on the x axis and the total score from efas on the y axis. the results of this ie matrix will be the basis for making decisions to determine the right business development strategy in determining future opportunities for the laundry service business. results and discussion the stages in developing a strategy for a service-based business are the same as those of a product-based business. however, the most fundamental difference is related to the final product received. companies based on products are tangible, and services are the value of the benefits obtained from these service providers. at the same time, the processes in business development have one thing in common: how to survive in a dynamic competitive environment. the initial stage in developing a strategy for a laundry service business is to map external and internal conditions obtained from direct observation or a study of the literature related to the research theme. the external and internal factors successfully identified by researchers are as follows. table 2: swot analysis on laundry business strength a) quality and service to consumers b) conducive work atmosphere c) supervision of work processes d) shuttle service e) have a complaint number weakness a) not yet using sophisticated technology b) financial management that has not been well organized c) lack of promotion d) location is not strategic e) lack of human resources opportunity a) changes in people’s lifestyles b) business location c) weather changes d) lack of household assistants e) the existence of several college campuses threat a) the price of raw materials is not stable b) difficult to get employees c) the rental price of the place is always going up d) the number of competitors e) quality that must be maintained properly ifas matrix (internal factor analysis summary) the next step is to formulate these internal strategic factors in the company’s strengths and weaknesses framework. the stages are: • 1. determine the factors that are the strengths and weaknesses of the company in column 1. • 2. give each factor a weight on a scale from 1.0 (most important) to 0.0 (not significant) based on the influence of these factors on the company’s strategic position. (all these weights must not exceed the total score of 1.00). https://journals.e-palli.com/home/index.php/ajebi pa ge 78 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(3) 73-81, 2022 • 3. give a rating of 1 to 4 for each factor to indicate whether the factor has a significant weakness (rating = 1), a minor weakness (rating = 2), a small strength (rating = 3), and a significant strength (rating = 4). so, the rating refers to the company, while the weight refers to the industry in which the company is located. • 4. multiply each weight by its rating to get a score • 5. add up the total score of each variable. regardless of how many factors are included in the ifas matrix, the total weighted average ranges from a low of 1.0 and a high of 4.0 with an average of 2.5. if the total average is below 2.5, the company is internally weak, while a total value above 2.5 indicates a strong internal position. from the analysis results in table 2 of ifas, the strength and weakness factors have a total score of 2,267. because the total score is above 2.0, the company’s internal position is quite strong. table 3: ifas matrix (internal factor analysis summary) internal factors weight rating score strength quality and service to consumers 0.113 4 0.452 conducive work atmosphere 0.070 3 0.210 work process supervision 0.087 3 0.261 shuttle service 0.115 3 0.460 have a complaint number 0.088 4 0.352 total strength 1.735 weakness not yet using advanced technology 0.058 2 0.116 financial management that has not been well organized 0.054 2 0.108 lack of promotion 0.046 2 0.092 location is not strategic 0.049 2 0.098 lack of human resources 0.059 2 0.118 number of weaknesses 0.532 total 2.267 efas matrix (external factor analysis summary) there are five stages of compiling the external strategy factor matrix, namely: • 1. determine the factors that become opportunities and threats. • 2. give each factor a weight from 1.0 (very important) to 0.0 (unimportant). these factors are likely to have an impact on strategic factors. the sum of all weights must equal 1.0. • 3. calculate the rating for each factor by giving a scale from 1 to 4, where 4 (excellent response), 3 (above average response), 2 (average response), and 1 (below average response). this rating is based on the effectiveness of the company’s strategy; thus, the value is based on the company’s condition. • 4. multiply each weight by its rating to get a score. • 5. add up all scores to get the company’s total score. this total value shows how a particular company reacts to its external strategic factors. of course, in the efas matrix, the highest possible total score is 4.0, and the lowest is 1.0. a total score of 4.0 indicates that street vendors respond to opportunities particularly and avoid threats in their industrial markets. the total score of 1.0 shows that the strategies implemented by ms. daeng do not take advantage of the need. the analysis results in the efas table show that the opportunity and threat factors have a total score of 2.22. because the total score is close to 3.0, the laundry table 4: efas matrix (external factor analysis summary) external factors weight rating score opportunity changing people's lifestyle 0.118 4 0.432 business location 0.112 4 0.306 changes in the weather 0.095 3 0.285 the minimum number of household assistants 0.090 2 0.180 college campus 0.085 3 0.255 number of opportunities 1.640 threat raw material prices are unstable 0.064 2 0.128 https://journals.e-palli.com/home/index.php/ajebi pa ge 79 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(3) 73-81, 2022 difficult to get employees 0.072 2 0.144 the rental price is always going up 0.083 2 0.166 number of competitors 0.083 2 0.166 quality that must be maintained properly 0.079 2 0.158 number of threats 0.765 total 2.402 business responds well to the opportunities that exist by avoiding threats in the market. furthermore, the total score of each factor can be broken down, strength 2.735, weakness 0.532, opportunity 1.640, and threat 0.765. then it is known that the difference in the total score of the strength and weakness factors is (+) 1.203, while the difference in the total score of the opportunity and threat factors is (+) 0.875. the cartesian diagram above clearly shows that the laundry business in watampone is in the growth figure 2: cartesian diagram quadrant, where this quadrant is a perfect situation. the laundry business has opportunities and strengths to take advantage of current opportunities. the strategy that must be applied in this condition is to support an aggressive growth policy (growth oriented strategy); with the implementation of gos, the laundry business can maximize its strengths to take advantage of various opportunities to balance other competitors who sell similar products. swot matrix the swot matrix is a tool used to measure the company’s strategic factors. this matrix can clearly describe how external opportunities and threats are owned. this matrix can produce four possible alternative strategy cells, as seen in the table below. based on the results of the analysis above, it can be concluded that the opportunity for the laundry business is in a position with good prospects, namely being in a opportunity (o) a) changes in people’s lifestyles b) business location c) weather changes d) lack of household assistants e) the existence of several college campuses ancaman (w) a) the price of raw materials is not stable b) difficult to get employees c) the rental price of the place is always going up d) the number of competitors e) quality that must be maintained properly strength (s) a) quality and service to consumers b) conducive work atmosphere c) supervision of work processes d) shuttle service e) have a complaint number strategy (so) a) provide the best service so that customers feel comfortable and safe b) complete facilities to support employees and consumers c) increase employees to take care of their consumer goods d) provide pick-up and drop-off services at an affordable cost e) providing services to receive complaints from consumers strategy (wo) a) updating all systems to facilitate service and work b) using technology for management c) utilizing social media as a medium for promotion d) the location is not far from the highway and easy to pass by the community https://journals.e-palli.com/home/index.php/ajebi pa ge 80 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(3) 73-81, 2022 weakness (w) a) not yet using sophisticated technology b) financial management that has not been well organized c) lack of promotion d) location is not strategic e) lack of human resources strategy (st) a) availability of adequate raw materials can improve quality and service b) keeping the location clean so that it attracts consumers c)creating price promotions or discounts that attract consumers strategy (wt) a) improving a better service system, so that consumers feel comfortable b) opening employee vacancies to produce maximum work and according to target growth strategy position with a total ifas value of 2,267 and an efas value of 2,402. the primary purpose of this study is to answer how to build a laundry business development strategy in watampone city, which has been answered empirically, namely by implementing and improving and focusing on the st strategy. st strategy is a strategy by using all internal strengths possessed in order to take full advantage of opportunities. the st strategies that can be carried out by the laundry business based on research findings include providing the best service so that customers feel comfortable and safe, focusing on facilities, focusing on employee attitudes, and maintaining consistently good consumer goods and innovation breakthroughs, namely providing services. shuttle at a cost that is affordable to consumers. conclusions from the results of research using swot analysis in the laundry business in watampone city, implementing a laundry business development strategy has excellent prospects and opportunities, so the strategy that is considered suitable is based on the research results using a growth-oriented strategy. this is because, on the cartesian diagram, the swot analysis shows that the highest total score is in the first quadrant, where the quadrant is a very profitable situation owned by the laundry business in watampone city. after all, it has many opportunities and strengths to maximize the opportunities that arise. exist while minimizing weaknesses and can overcome various kinds of threats. references a. pearce ii, john dan richard b. robinson, j. 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(2017). strategi pengembangan pesisir pantai desa liang sebagai kawasan objek pariwisata. jurnal manis, 1(1), 19–26. https://journals.e-palli.com/home/index.php/ajebi pa ge 1 pa ge 54 american journal of economics and business innovation (ajebi) click, share, buy: the transition of general commerce into social commerce in bangladesh: the impact of consumer’s psychological perceptions on iewom and consumer intention to purchase md shahriar kabir1* volume 2 issue 2, year 2023 issn: 2831-5588 (online), 2832-4862 (print) doi: https://doi.org/10.54536/ajebi.v2i2.1523 https://journals.e-palli.com/home/index.php/ajebi article information abstract received: april 06, 2023 accepted: may 02, 2023 published: may 09, 2023 as social media platforms continue to rise in popularity, they are quickly becoming an integral part of the retail industry, giving birth to the concept of social commerce. bangladesh has seen a similar transition, with general commerce slowly making way for social commerce. this study investigates the role of brand image as a mediator between psychological perceptions and consumer behavior in the context of social commerce. the independent variables of perceived trust, perceived connectedness, perceived responsibility, and perceived competence are examined to understand their impact on brand image and subsequent consumer intentions to purchase and engage in intention to electronic word-of-mouth recommendations. the results of this study suggest that consumers’ psychological perceptions are crucial to the formation of a brand’s image, which in turn affects their intention in purchasing and intention in electronic word-of-mouth recommendations. this highlights the importance of building and maintaining a brand’s image in the era of social commerce. furthermore, this study provides insights into the factors that drive consumers’ perception of trust, connectedness, responsibility, and competence towards brands in the context of social commerce. in conclusion, this study provides a unique perspective on the transition from general commerce to social commerce in bangladesh, and the critical role of brand image and psychological perceptions in shaping consumer behavior. these findings have significant implications for marketers and retailers operating in the social commerce space. keywords social commerce in bangladesh, brand image, consumer psychological perceptions, electronic word-of-mouth, purchase intention 1 dept. of digital business, chonnam national university, 72-7, yongju-ro, yongbong-dong, gwangju, south korea * corresponding author’s e-mail: shaonkabirju40@gmail.com introduction in recent years, the rapid growth of social media has significantly impacted the way consumers engage with brands and make purchasing decisions. this has led to the emergence of social commerce, which involves the integration of social media and e-commerce platforms. in bangladesh, social commerce has gained significant momentum and is expected to continue growing in the coming years (hossain et al., 2019). however, despite its increasing popularity, little is known about the factors that influence consumers’ purchase intentions and wordof-mouth recommendations in the context of social commerce. one of the key factors that can influence consumers’ behavior towards brands in the context of social commerce is their psychological perceptions. specifically, consumers’ perceived trust, perceived connectedness, perceived responsibility, and perceived competence towards a brand can significantly impact their intention to purchase and intention to engage in wordof-mouth recommendations (zhang et al., 2019; wang et al., 2018; huang et al., 2020). additionally, the role of brand image as a mediator between these psychological perceptions and consumers’ behavior has been widely studied in the literature (kim and kim, 2017; chen et al., 2018; wu et al., 2019). therefore, the main objective of this research is to examine the impact of consumers’ psychological perceptions (perceived trust, perceived connectedness, perceived responsibility, and perceived competence) on their intention to purchase and intention to engage in word-of-mouth recommendations in the context of social commerce in bangladesh. furthermore, the study aims to investigate the mediating role of brand image in this relationship. by addressing these research objectives, this study can provide valuable insights for marketers and brand managers operating in the context of social commerce in bangladesh. the findings can help these stakeholders develop more effective marketing strategies that take into account consumers’ psychological perceptions towards brands and the role of brand image in shaping their behavior. furthermore, the study can contribute to the academic literature by advancing our understanding of the factors that influence consumers’ behavior in the context of social commerce. background of the research over the past decade, social media has become an increasingly important platform for businesses to reach out to their target consumers (kaplan and haenlein, 2010). the integration of social media and e-commerce platforms has led to the emergence of social commerce, which has changed the way consumers interact with brands and make purchasing decisions (wang and zhang, 2012). social commerce allows consumers to browse, review, and purchase products directly from social media platforms, such as facebook, instagram, and twitter (tang and wang, 2016). this has made the process of purchasing goods and services more convenient for consumers and has opened up new marketing channels https://doi.org/10.54536/ajebi.v2i2.1523 https://journals.e-palli.com/home/index.php/ajebi mailto:shaonkabirju40@gmail.com mailto:shaonkabirju40@gmail.com pa ge 55 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(2) 54-63, 2023 for businesses. in bangladesh, social commerce has gained significant momentum, with more and more consumers turning to social media platforms for their shopping needs (hossain et al., 2019). this trend is expected to continue in the coming years, with the market size of social commerce in bangladesh projected to reach usd 5 billion by 2025 (eshop online, 2021). however, despite the growing popularity of social commerce in bangladesh, little is known about the factors that influence consumers’ purchasing behavior and word-of-mouth recommendations in this context. one of the key factors that can impact consumers’ behavior towards brands in the context of social commerce is their psychological perceptions. consumers’ psychological perceptions of a brand refer to their subjective beliefs about the brand, which are based on their experiences, emotions, and expectations (chen et al., 2018). these perceptions can significantly influence consumers’ attitudes toward the brand and their behavioral intentions, such as their intention to purchase and intention to engage in word-of-mouth recommendations (zhang et al., 2019). previous studies have identified several psychological perceptions that can influence consumers’ behavior toward brands in the context of social commerce. perceived trust, for example, refers to consumers’ belief that the brand will deliver on its promises and provide high-quality products and services (wang et al., 2018). perceived connectedness refers to consumers’ feelings of closeness and attachment to the brand (huang et al., 2020). perceived responsibility refers to consumers’ belief that the brand has a moral obligation to act in its best interest (choi and chu, 2011). perceived competence refers to consumers’ belief that the brand has the necessary knowledge and expertise to provide high-quality products and services (kim and kim, 2017). while the impact of these psychological perceptions on consumers’ behavior has been widely studied in the literature, the role of brand image as a mediator between these perceptions and consumers’ behavior has received less attention. brand image refers to consumers’ overall perception of the brand, which is shaped by various factors such as advertising, word-of-mouth, and personal experiences (keller, 1993). previous studies have suggested that brand image can mediate the relationship between psychological perceptions and consumers’ behavior (chen et al., 2018; wu et al., 2019). given the lack of research on the factors that influence consumers’ behavior in the context of social commerce in bangladesh, the present study aims to fill this gap by examining the impact of consumers’ psychological perceptions on their intention to purchase and intention to engage in word-of-mouth recommendations in the context of social commerce. furthermore, the study aims to investigate the mediating role of brand image in this relationship. by addressing these research objectives, this study can provide valuable insights for businesses operating in the context of social commerce in bangladesh and contribute to the academic literature on consumer behavior. literature review the rise of social media has led to the growth of social commerce, which integrates social media and e-commerce platforms. in bangladesh, social commerce has become a popular way for consumers to purchase products and services (hossain et al., 2019). however, little is known about the factors that influence consumers’ behavior toward brands in the context of social commerce. one of the key factors that can influence consumers’ behavior is their psychological perceptions of a brand. perceived trust, perceived connectedness, perceived responsibility, and perceived competence are four important psychological perceptions that can significantly impact consumers’ behavior (zhang et al., 2019; wang et al., 2018; huang et al., 2020). perceived trust refers to consumers’ confidence in the reliability, integrity, and credibility of a brand (mayer et al., 1995). trust is a crucial factor in building and maintaining relationships between brands and consumers, as it can affect consumers’ intention to purchase and intention to engage in word-of-mouth recommendations (wu et al., 2019). in the context of social commerce, trust has been found to have a positive impact on consumers’ intention to purchase (chen et al., 2018). perceived connectedness refers to consumers’ sense of affiliation and attachment to a brand (escalas and bettman, 2003). consumers’ sense of connectedness can be influenced by the brand’s personality, values, and image (gould et al., 2000). research has found that perceived connectedness can significantly impact consumers’ intention to purchase (wang et al., 2018). perceived responsibility refers to consumers’ perception of a brand’s social and environmental responsibility (mohr et al., 2001). consumers are becoming increasingly concerned about the social and environmental impact of their purchases, and as such, perceived responsibility can influence their behavior toward a brand (loureiro and kaufmann, 2014). research has found that perceived responsibility can have a positive impact on consumers’ intention to purchase (zhang et al., 2019). perceived competence refers to consumers’ perception of a brand’s ability to provide high-quality products and services (he and harris, 2018). consumers are more likely to trust and engage with brands that they perceive as competent (huang et al., 2020). in the context of social commerce, perceived competence has been found to have a positive impact on consumers’ intention to purchase (wang et al., 2018). furthermore, the role of brand image as a mediator between these psychological perceptions and consumers’ behavior has been widely studied in the literature (kim and kim, 2017; chen et al., 2018; wu et al., 2019). brand image refers to consumers’ overall perception of a brand based on its attributes, benefits, and personality (keller, https://journals.e-palli.com/home/index.php/ajebi pa ge 56 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(2) 54-63, 2023 1993). research has found that brand image can mediate the relationship between consumers’ psychological perceptions and their intention to purchase and intention to engage in electronic word-of-mouth recommendations (chen et al., 2018). the study of consumers’ psychological perceptions (perceived trust, perceived connectedness, perceived responsibility, and perceived competence) in the context of social commerce is important for marketers and brand managers operating in bangladesh. by understanding the impact of these perceptions on consumers’ behavior and the role of brand image as a mediator, marketers, and brand managers can develop more effective marketing strategies that take into account consumers’ preferences and concerns. hypothesis design previous research has identified trust as a key driver of consumer behavior in e-commerce contexts (kim and kim, 2017; wu et al., 2019). based on the above context, we make the following hypothesis in this research. h1. rust, as a psychological perception of consumers towards an sns, is believed to have a positive impact on their intention to purchase and engage in intention to word-of-mouth recommendations on social commerce platforms. according to the social identity theory, individuals form their identities based on their group memberships and seek to maintain positive social relationships with in-group members (tajfel and turner, 1979). so, we hypothesize, h2. consumer perceived connectedness with a social commerce platform is expected to positively influence their intention to purchase and engage in word-of-mouth recommendations. previous research has suggested that consumers’ perception of a brand’s social responsibility can enhance their trust and loyalty toward the brand (chen et al., 2018). and we hypothesize, h3. consumers’ perceived responsibility towards an sns is expected to positively impact their intention to purchase and engage in word-of-mouth recommendations on social commerce platforms. the following hypothesis we made is based on the theory of self-efficacy, which suggests that individuals’ belief in their ability to perform a task can influence their behavior (bandura, 1977). h4. consumers’ perceived competence of a social platform is hypothesized to have a positive effect on their intention to purchase and engage in word-of-mouth recommendations on social commerce platforms. consumers who have a high intention to purchase and recommend a brand are more likely to share their experiences and opinions with others on social media (hennig-thurau et al., 2004). so, we hypothesize as follows. h5. the enhanced brand image in consumers’ minds through social networking sites mediates the relationship between consumers’ psychological perception and their intention to purchase and electronic word-of-mouth (ewom) behavior. consumers who have a high intention to purchase and recommend a brand are more likely to follow through with their purchase behavior (zhang et al., 2019). and previous research has suggested that ewom can influence consumers’ attitudes and purchase behavior toward a brand (huang et al., 2020) which results in we hypothesized the following hypotheses. h6. consumers’ intention to ewom of a brand on social commerce platforms is expected to positively impact their purchase intention (pi). in the context of bangladesh’s social commerce market, understanding the factors that influence consumers’ behavior on social media platforms is crucial for marketers and brand managers. by testing these hypotheses, this study can provide valuable insights into the underlying psychological perceptions and behaviors of bangladeshi consumers on social commerce platforms. the findings can help marketers and brand managers to develop more effective strategies for engaging consumers on social media and driving sales. based on the above hypothesis design, the research model is represented in the following figure 1. figure 1: conceptual framework methodology this research utilized a survey questionnaire to collect data for hypotheses testing regarding the causal relationships between consumer psychological perceptions, bi and its backgrounds and significances, iewom, and ip. the survey was distributed through email and social media messengers to individuals in bangladesh, which has a large number of snss users, particularly young people https://journals.e-palli.com/home/index.php/ajebi pa ge 57 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(2) 54-63, 2023 between the ages of 18 and 24. simple random sampling was used to ensure an equivalent sample and avoid sampling bias. after removing incomplete responses, the final sample consisted of 335 participants. in order to effectively gauge the perceptions of our subjects, we employed the ubiquitous 7-point likert scale. this reliable tool facilitated the exploration of how participants responded to statements, ranging from “strongly disagree” at the lower end to “strongly agree” at the upper end of the scale. to measure the variables of interest, we carefully selected items from various established studies. for instance, the perceived trust variable was assessed using items derived from chu and kim’s (2011) research, while the perceived connectedness variable was measured using items from the work of algesheimer et al. (2005) and cheung and lee (2012). for the perceived responsibility variable, we adopted items from bosnjak et al. (2005), while the perceived competence variable was measured using items adapted from kankanhalli et al. (2005). as for the brand image variable, we employed items that were found to be reliable and valid measures of brand image in previous research, such as those used in the studies of davis et al. (2009) and jalilvand and samiei (2012). on the other hand, the intention to purchase variable was assessed using items adapted from shukla’s (2010) work and jalilvand and samiei’s (2012) study. finally, we measured the intention to e-wom variable using items from the research of bock et al. (2005), cheung and lee (2012), and bambauer-sachse and mangold (2011). the collected data were analyzed using partial least squares structural equation modeling (pls-sem) in stata 16. pls-sem was chosen due to its ability to factor observed variables into constructs and verify relationships between constructs. it is also less restrictive in terms of sample size, as it does not require normality assumptions for multivariate analyses. the model fit was verified through confirmatory factor analysis (cfa), which assessed the convergent and discriminant validity and reliability of the research model before verifying the hypothesis. finally, the indirect effects were verified through bootstrap with a re-sample after confirming meaningful results in the structural model. the goal of the open innovation mediation model was to maximize the explained variance differences in intellectual property rights and government support related to green innovation, making pls-sem an appropriate approach. overall, this methodology provided a rigorous and reliable approach to test the research hypotheses and explore the causal relationships between the key concepts. descriptive analysis of the 335 respondents who answered the survey questionnaire in those 183 belonged to male and 152 to female and it`s almost 55% male and 45% female, most of the participants were between 18-25 years of age, (n = 131) and it is 39.1% of total participants, then 26-35 years of age (n = 122) and it is 36.4% from total participants and then 36-45 years of age (n = 82) and 24.5% from total participants. most of the participants were well educated (master’s degree completed) (n = 100) and almost 30% of the total respondents, 29% of the participants (n = 97) were completed bachelor’s degrees, and the rest of the participants received basic education 25.1% (n = 84). from the respondents their income was quite good enough, almost 30% of the participant’s income was above 40k (bdt) per month and the second height 25% were earning less than 10k (bdt) and the majority of them were employed almost 58%, then 18.2% were students, housewife almost 15% and 9% were unemployed. the top three social networks site for the participants were a user of facebook (43.9%), instagram (29.3%), and youtube (26.9%). based on the collected data the descriptive statistics are presented in the following table. table 1: descriptive statistics measurement items frequency percentage(%) age 18-25 131 39.i 26-35 122 36.4 36-45 82 24.5 total 335 100 gender male 183 54.6 female 152 45.4 total 335 100 education basic 84 25.i bachelor 97 29 masters 100 29.9 doctorate 54 16.i total 335 100 occupation student 61 18.2 housewife 50 14.9 https://journals.e-palli.com/home/index.php/ajebi pa ge 58 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(2) 54-63, 2023 results and discussion the acceptability of the model was assessed based on reliability, convergence validity, and discriminant validity. a high level of reliability was achieved, as indicated by factor loading values exceeding the threshold of 0.7. after removing irrelevant items, 25 items were selected, all of which had factor loading values higher than 0.7 and were significant at the 0.001 level. internal consistency was deemed appropriate when both cronbach’s alpha and composite reliability values exceeded 0.7. employed 194 57.9 unemployed 30 9 total 335 100 income less 1han iok 84 25. i i ok-20k 54 16.i 20k-30k 36 10.7 30k-40k 63 18.8 more than 40k 98 29.3 total 335 100 social media facebook 147 43.9 youtube 90 26.9 lnstagram 98 29.3 total 335 100 table 2: confirmatory factor loadings factor item component cronba ch's ὰ1 2 3 4 5 6 7 percieved trust pt1 0.801 0.696 pt2 0.799 pt3 0.762 perceived connectedness pc1 0.800 0.792 pc2 0.759 pc3 0.802 pc4 0.775 perceived responsibility pr1 0.830 0.747 pr2 0.808 pr3 0.805 perceived competence pcom1 0.856 0.664 pcom2 0.871 brand image bi1 0.783 0.781 bi2 0.780 bi3 0.781 bi4 0.762 intention to purchase ip1 0.827 0.695 ip2 0.822 ip3 0.709 intention to e-wom iewom1 0.711 0.831 iewom2 0.765 iewom3 0.735 iewom4 0.710 iewom5 0.729 iewom6 0.764 ***p < 0.001 https://journals.e-palli.com/home/index.php/ajebi pa ge 59 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(2) 54-63, 2023 the correlations between latent variables and average variance extracted (ave) were analyzed in table 3. to evaluate the model’s reliability, convergence validity, discriminant validity, internal consistency, cronbach’s alpha, composite reliability values, and ave was assessed. all composite reliability values were 0.8 or higher, indicating high convergence validity. the aves for all latent variables were above 0.5, indicating that each variable was more closely related to self-measurement than other constructs, demonstrating discriminant validity. additionally, the pls-sem showed high validity, with a rho value greater than 0.7. the lowest rho value for a latent variable in the model was 0.665, and the highest model was 0.834. table 3: inter-construct correlations, convergent and discriminant validity pt pc pr pcom iewom bi ip pt 1 pc 0.279 1 pr 0.159 0.466 1 pcom 0.133 0.413 0.51 1 iewom 0.227 0.433 0.395 0.46 1 bi 0.226 0.383 0.288 0.343 0.556 1 ip 0.224 0.376 0.368 0.317 0.456 0.405 1 ave 0.62 0.615 0.663 0.749 0.542 0.603 0.621 cr 0.83 0.865 0.855 0.856 0.876 0.859 0.83 rho_a 0.702 0.795 0.753 0.665 0.834 0.784 0.713 (ave=average variance extracted, cr=composite reliability) common method bias test this study has validated the items used through reliability, convergence validity, and discriminant validity tests. however, potential issues with common method bias (cmb) in confirmatory factor analysis (cfa) were considered. the variance inflation factor (vif) between constructs was checked to determine the presence of cmb. the vif values were found to be less than 3.3, indicating a very low possibility of cmb. the single-factor model recommended by podsakoff et al. (2003) was also analyzed, and it was found that the cmb problem was still relatively small. furthermore, the number of samples analyzed was found to decrease the error caused by cmb, table 4: structural modelmulticollinearity check (vif) variables iewom ib ip pt 1.393 pc 2.377 pr 2.474 pcom 2.246 iewom 2.252 ib 1.000 2.252 implying that there is no problem even if the number of samples exceeds ten times per construct. the results of the multicollinearity check (vifs) are presented in table 4. exploratory factor analysis table 5 shows the results of an exploratory factor analysis that used the maximum likelihood method and 335 observations to analyze the 15 items. the eigenvalues and their corresponding proportions of variance explained by these eigenvalues are presented. the first factor explains the highest amount of variability, which is approximately 39%, followed by the second factor at 12%, the fourth factor at 5.8%, and the eighth factor at 7.2%. there are four eigenvalues greater than 1, and the cumulative proportion of variance explained by all factors is equal to 1. the lr (likelihood ratio) test was conducted to compare the fit of the independent model to the saturated model. the results showed a chi-square value of 3760.44 with 300 degrees of freedom, indicating that the independent model is a poor fit. additionally, the lr test was conducted to compare a 15-factor model to the saturated model, but due to the presence of a heywood case, these tests were not formally valid. the chi-square value for this test was table 5: factor analysis/correlation maximum likelihood method factor eigenvalue difference proportion cumulative factor! 6.8474 1 4.74238 0.3905 0.3905 factor2 2.10503 1.25788 0.1201 0.5106 factor3 0.847 15 -0.18638 0.0483 0.5589 factor4 1.03352 0.40833 0.0589 0.6178 factors 0.62519 -0.15197 0.0357 0.6535 factor6 0.777 16 -0.08252 0.0443 0.6978 https://journals.e-palli.com/home/index.php/ajebi pa ge 60 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(2) 54-63, 2023 13.58 with 30 degrees of freedom, and the probability of obtaining this result by chance was 0.9956. structural model assessment using pls-sem the pls-sem estimation results, presented in figure 2, indicate that all seven hypotheses were supported with significant standardized path coefficients between constructs. trust (β=0.193), sense of belonging (β=0.296), moral obligation (β=0.052), and knowledge of self-efficacy (β=0.288) all had significant paths to endogenous variables. brand image (β=0.299), electronicword-of-mouth (β=0.), and purchase intention (β=0.12) were all found to be significant. the r2 values for the endogenous variables were all reasonable, and the model fit gof level was suitable. all path coefficients were significant, satisfying the confidence interval, and the explanatory power determining coefficient r2 of the model was at a meaningful level. the average r-squared, average communality, absolute gof, relative gof, and average redundancy values were all reasonable. factor7 0.85967 -0.41575 0.0490 0.7469 factor8 1.27542 0.59435 0.0727 0.8196 factor9 0.68107 -0.20070 0.0388 0.8584 factorlo 0.088177 0.43454 0.0503 0.9087 factor! 1 0.44723 0.05293 0.0255 0.9342 factorl2 0.39429 0.05273 0.0225 0.9567 factor13 0.34156 0.11260 0.0195 0.9762 factorl 4 0.22896 0.04059 0.0131 0.9893 factor! 5 0.18837 0.0107 1.0000 figure 2: results of pls-sem notes: (1) path coefficients are standardized, (2) *p < 0.05, **p < 0.01, ***p < 0.001. tests on mediation table 6 compares the direct and indirect effects of the study. the results indicate that perceived trust, perceived connectedness, perceived responsibility, and perceived competence have direct effects on brand image, which in turn has a direct effect on the intention to purchase (0.299). however, the indirect effect of brand image with intention to electronic-word-of-mouth (iewom) (0.746) and iewom with intention to purchase (0.452) table 6: tests on mediation effect direct indirect p-value biiewom 0.749 0 iewomip 0.452 0 bi ip 0.299 0 is significant. the study also used bootstrapping to verify the mediating effect, and the results showed that the coefficient of the mediating effect of iewom on intention to purchase from brand image was 0.746, which was significant (p < 0.001). the standard error was 0.079, and 2000 re-sampling systems were used with a confidence level of 95%. overall, the results demonstrate a contrast between the direct and indirect effects of the study. https://journals.e-palli.com/home/index.php/ajebi pa ge 61 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(2) 54-63, 2023 table 7: significance testing of (standardized) indirect effect statistics sobel delta bootstrap indirect effect 0.337 0.337 0.337 standard error 0.047 0.047 0.079 z statistic 7.232 7.232 4.275 p-value 0 0 0 confidence interval (0.246, 0.429) (0.246, 0.429) (0.196, 0.483) confidence level: 95%, bootstrap replications:50 mediation effect confint: non-zero = sig baron and kenny’s approach to testing mediation the first step involves testing the relationship between the independent variable (x) and the mediator (m), which in this study is the relationship between electronic word-of-mouth (ewom) and brand image (bi), with a beta coefficient (b) of 0.746 and a p-value of 0.000. the second step involves testing the relationship between the mediator (m) and the dependent variable (y), which in this study is the relationship between ewom and purchase intention (pi), with a beta coefficient (b) of 0.452 and a p-value of 0.000. the third step involves testing the relationship between the independent variable (x) and the dependent variable (y), which in this study is the relationship between brand image (bi) and intention to purchase (ip), with a beta coefficient (b) of 0.299 and a p-value of 0.000. since all three steps are significant and sobel’s test is also significant, it is concluded that the mediation is partial. conclusion branding on social media platforms has become a vital component of marketing for businesses in bangladesh. as consumers rely more on social media to gather information about products and brands before making purchasing decisions, it is crucial to recognize and evaluate the key drivers of brand image (bi) on social media and comprehend the impacts of bi, such as the intention to electronic word-of-mouth (iewom) and consumer intention to purchase (ip). drawing from social psychology literature, a recent study discovered that perceived trust, perceived connectedness, perceived responsibility, and perceived competence are critical drivers of consumer bi behavior in social media among bangladeshi customers. the study also revealed that bi had a positive impact on iewom and influenced consumer ip both directly and indirectly through iewom (ahn, j., & kim, s. 2021). for bangladeshi customers, perceived trust is a crucial component of engaging in iewom. when customers trust members of their social networks, they are more likely to rely on these relationships and disseminate promotional information and messages to their social network members. sensitivity to relational influence is also a crucial factor that affects consumer behavior and attitudes. cultural values play an essential role in shaping human behavior, and an individual’s behavior reflects their cultural value system. perceived connectedness is another vital driver of consumer bi behavior in social media among bangladeshi customers. customers who feel a stronger connectedness to their social networks are more likely to participate in bi. in online communities with a high level of connectedness, members value shared demonstrative ties and acquaintances and rely on each other for support, considering other members as their kin. perceived responsibility is another factor that influences consumer bi behavior in social media among bangladeshi customers. people in a social network develop a certain obligation to the group based on a shared sense of membership, which makes them feel responsible for helping other members. in social media, people with a greater sense of perceived responsibility are more likely to engage in bi behavior. perceived competence is also a crucial driver of consumer bi behavior in social media among bangladeshi customers. customers who perceive themselves as knowledgeable about products and brands are more likely to participate in bi. they may share their competence and knowledge of products and brands with other members of their social network to help them make purchasing decisions and protect them from undesirable experiences. finally, we found, understanding the key drivers of consumer bi behavior in social media among bangladeshi customers, such as perceived trust, perceived connectedness, perceived responsibility, and perceived competence, is crucial. moreover, comprehending the impacts of bi, such as iewom and consumer ip, is essential. as social media platforms continue to play an increasingly important role in shaping consumer attitudes and behavior in bangladesh, businesses must recognize the factors that drive customer engagement in bi behavior and use them to build a strong brand image. implications the previous studies on consumer behavior in social networking and online contexts have focused on the impact of consumers’ behavior and attitudes towards bi on others, rather than the factors that contribute to bi behavior itself. this study aims to fill this gap by exploring the determinants of bi and its effect on purchase decisions. this study stands out in that it presents a theoretical model to evaluate the causes and consequences of consumer bi behavior in social networks, based on social psychological constructs. https://journals.e-palli.com/home/index.php/ajebi pa ge 62 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(2) 54-63, 2023 the results of this study have significant implications for bangladeshi marketers and advertisers, who can personalize their marketing strategies and target consumers of their products and brands on social networking sites. they should also try to identify market insiders and encourage social network members to participate in positive bi while preventing negative bi. online platform providers can also benefit from their members’ behavioral knowledge by understanding the social ties between sns members and monitoring when and how they are willing to engage in iewom behavior. furthermore, this study suggests that iewom behavior can lead to ip, which is particularly relevant for product producers. businesses in bangladesh can strengthen bi by improving product quality and providing adequate aftersales services, while also using marketing techniques to encourage consumers to use iewom services and view products in-store. marketers can monitor the iewom of their brand and competitors and engage consumers through online games related to their products and brands, given the widespread internet access in bangladesh. to conclude, this study adds to the existing literature on bi by exploring the factors that contribute to bi behavior and its effect on purchase intention. its results are valuable for bangladeshi marketers, advertisers, online platform providers, and product producers, who can utilize the findings to enhance their marketing strategies and engage with bangladeshi consumers on social networking sites. limitations and future research scope this study examined brand image (bi) on social networks, but there were some limitations. the sample size only included students and professionals, which may not represent all social networking service (sns) users in bangladesh. future research should also explore how bi differs among age groups and cultures. moreover, the impact of bi on different types of products, like hightech or luxury goods, should also be studied. while this study identified some factors that affect bi related to social relationships, other factors like technology affinity, self-presentation, and market expertise were not explored. additionally, the study did not consider how bi affects other aspects of a brand, like its personality. the study used a quantitative approach to measure all constructs with one questionnaire. however, a more comprehensive understanding of bi requires a mixedmethods approach. furthermore, the impact of social influence, information overload, and information quality on bi and intercultural electronic word-of-mouth (iewom) was not considered. lastly, the study did not investigate how negative bi affects consumer behavior and the moderating role of brand reputation in this relationship. references ackerman, r., & gollan, j. 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(2010). interactivity and its facets revisited: theory and empirical test. journal of computer-mediated communication, 16(4), 1-24. https://doi.org/10.1111/ j.1083-6101.2010.01537.x https://journals.e-palli.com/home/index.php/ajebi pa ge 1 pa ge 68 american journal of economics and business innovation (ajebi) institutional quality, corruption, and income inequality: a panel study of selected saarc economies faisal abbas1*, babar shahzad1, sabila raees1 volume 2 issue 3, year 2023 issn: 2831-5588 (online), 2832-4862 (print) doi: https://doi.org/10.54536/ajebi.v2i3.1957 https://journals.e-palli.com/home/index.php/ajebi article information abstract received: september 10, 2023 accepted: october 06, 2023 published: october 17, 2023 previous studies have primarily focused on issues related to income inequality, aiming to identify the underlying causes and urging swift action to mitigate such disparities. in this context, the current article expands upon existing literature by introducing the influence of corruption and institutional quality. this study contributes to the existing knowledge by investigating the interplay between institutional quality, corruption, and income inequality within saarc countries spanning 2000 to 2021, sourced from world governance indicators, transparency international, global consumption and income project, and world development indicators. after analysed the properties of data, fmols analytical approach employed. the empirical analysis validates the enduring effects of the examined factors on income inequality over the long term. the findings indicate that institutional quality exerts a notable and favorable influence in reducing income inequality. conversely, corruption, the combined impact of corruption and institutional quality substantially and adversely affect income inequality. addressing the imperative of ensuring an equitable income distribution across the saarc economies necessitates implementing comprehensive strategies to foster enduring institutional quality and effectively manage corruption. study’s conceptual and empirical advancements carry significant implications for policy formulation within this region. they offer valuable insights for the region’s endeavors to ameliorate income inequality. this study underscores the importance of measures to enhance institutional quality and combat corruption within saarc countries. such measures should be strategically designed to tackle income distribution challenges and promote greater equity. keywords institutional quality, corruption, income inequality, saarc 1 department of economics, university of sargodha, punjab, pakistan * corresponding author’s e-mail: abbas.eco383@gmail.com introduction income inequality is a significant concern for economists and policymakers worldwide. it refers to the uneven distribution of income within a population, often accompanied by wealth inequality. when resources in the economy are unequally distributed among its residents and the flow of resources continue to grow from poor to rich, such situation is described as income inequality (staff 2009). recent evidence suggests that countries with high economic growth rates have experienced an increase in income inequality. institutional processes have been identified as a contributing factor to rising income inequality, as they can lead to corruption, political clientelism, and other irregularities that undermine property rights. poor institutional quality has been found to have a detrimental effect on income distribution. institutions, as defined by chong and calderón (2000), encompass the norms, legal and political frameworks, and cultural factors that shape economic activity within a nation. healthy institutions are associated with economic development and a more equitable distribution of income. countries with higher levels of institutional quality, such as denmark, sweden, and new zealand, tend to have more equal income distributions. conversely, countries with higher levels of corruption and lower institutional quality, such as bangladesh, india, and pakistan, exhibit greater income inequality. corruption has direct and indirect impacts on economic and governance aspects, magnifying the existing inequalities (sanjeev et al., 1998). the issue of corruption gained attention in the mid-1990s when international donor institutions and researchers focused on measuring corruption cross-country. corruption is viewed as an indicator of other governance failures, and it hampers economic growth and financial performance in south asian countries. political instability, poor institutional quality, and governance crises are key factors hindering further improvement in economic growth and performance in the region. as societies prosper, expectations for better government services, rule of law, accountability, transparency, and welfare improvements increase. rising income and wealth inequality pose significant challenges for governments globally. in developing economies, public expenditure is prioritized over taxation mechanisms due to the small size of tax revenues and the perceived low quality of governance and institutions. in cases where there is a presence of strong institutional quality, characterized by minimal corruption and significant political competition, public expenditure can contribute to the advancement of a more equitable society. in the context of the saarc countries, poor governance, political instability, income inequality, and corruption are prevalent issues. it is crucial to study these issues to identify effective solutions. this paper aims to analyze institutional quality, income inequality, corruption, pa ge 69 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 68-76, 2023 government effectiveness, and political stability in the saarc countries. historical context reveals that many of these countries were colonized by the british empire, and the institutional frameworks inherited from the colonial period continue to shape their governance systems. india held a significant place among the colonies of the british empire. the gradual establishment of control by the british east india company occurred over various regions of the indian subcontinent starting from the mid-18th century (bayly, 1990). subsequently, after the indian rebellion of 1857, direct british rule, known as the british raj, was implemented across the entire indian subcontinent until india finally gained independence in 1947 (gilmartin, 1998). pakistan was also established after the partition of british india in 1947, comprising two regions: east pakistan (now bangladesh) and west pakistan (now pakistan). both east and west pakistan were part of the colonial administration of british india until they gained independence (talbot, 1998). formerly known as east pakistan, bangladesh emerged after the partition of british india in 1947. it remained under the colonial administration of pakistan until it achieved independence through the bangladesh liberation war in 1971 (raghavan, 2013). previously known as ceylon, sri lanka was one of the colonies of the british empire. the british gradually gained control over various parts of sri lanka through treaties with local rulers, establishing colonial rule. sri lanka remained under british colonial administration until it gained independence in 1948 (wickramasinghe, 2006). aim of the study is to analyze the impact of corruption and institutional quality on income inequality by using the panel data of 2000-2021 for saarc countries. this study contributes to the burgeoning literature on institutions in two ways. first, our study find that institutional quality helps to reduce income inequality. in this article we consider two types of institutional quality; institutional quality (simple mean of six governance indicators), and institutional quality with corruption impact (interaction term). second, the level of corruption is also an important factor for income distribution. more corruption has the positive impact on income inequality. the structure of the paper is outlined as follows: section 2 offers an extensive examination of the existing body of literature pertaining to the subject. moving on to section 3, we intricately explain the empirical model while also tackling any potential data-related issues. section 4 showcases the empirical findings, which are comprehensively analyzed in section 5. the paper concludes with final remarks presented in section 6. literature review batabyal and chowdhury (2015) examined corruption, financial development, and income inequality in 30 commonwealth countries from 1995 to 2008. using ols and iv estimation techniques, they found that high corruption levels in commonwealth countries hinder the benefits of financial development. financial development positively affects income inequality in all countries, with a stronger impact in lowand middle-income countries when corruption levels are high. the study suggests implementing integrated policies that tackle corruption and promote financial development to effectively reduce income inequality. n. p. r. deyshappriya (2017) conducted a study on income inequality across 33 asian nations spanning the period from 1990 to 2013. through the application of dynamic panel data analysis, the study revealed an inverse u-shaped correlation between gdp and inequality, a phenomenon known as the kuznets curve. the research identified several factors that contributed to the reduction of inequality, encompassing official development assistance (oda), education, and participation in the labor force. conversely, inflation, political risk, terms of trade, and unemployment were identified as factors that heightened inequality. initial gdp growth favored the middle class and richest groups, but further growth favored middle-income and poor groups. the study recommended sustained economic growth, improved education and employment access, price stability, and political stability to reduce income inequality in asia. chowdhury et al. (2018) investigated the connections between entrepreneurship, corruption, and income distribution in lowand middle-income countries in south and east asia from 2004 to 2012. the study employed ordinary least squares analysis. the findings revealed that entrepreneurship has a positive impact on reducing income inequality, but the type of entrepreneurship also matters. moreover, the level of corruption in a country plays a significant role. the study suggested that countries with lower corruption levels are more effective in reducing inequality through entrepreneurial activities. brei (2018) investigated the connection between financial structure and income inequality using panel data from 97 economies spanning 1989 to 2012. the study found a non-monotonic relationship, where an increase in finance initially reduces income inequality. however, beyond a certain point, expanding market-based financing leads to a rise in inequality, while expanding finance through bank lending does not. these findings align with existing literature suggesting that deeper financial systems aid in reducing poverty and inequality in developing countries. they also align with recent evidence of increasing inequality in financially advanced economies. saengchai (2019) investigated the association between government external debt, corruption, and ecng in five asean countries. using secondary data from 1990 to 2015, variables such as external debt stock, gross capital formation, gdp, interest on external debt, exports, and corruption were considered. the study revealed negative consequences for the economy resulting from increasing debt, emphasizing the importance of addressing this issue through alternative capital investment sources. the study recommended efficient management of public resources to mitigate challenges like high servicing costs, corruption, pa ge 70 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 68-76, 2023 and capital flight. strategies such as promoting economic openness, easing import restrictions, and boosting valuable exports were also suggested. law & soon (2020) conducted a study that examined how institutional quality influences the connection between inflation and income inequality. the research employed a two-step system using the generalized method of moments with unbalanced panel data encompassing the years 1987 to 2014. this dataset included 65 countries, both developed and developing. the study’s findings indicated that higher levels of inflation exacerbate income inequality, whereas enhanced institutional quality contributes to a reduction in income inequality. furthermore, the study unveiled that the impact of inflation is moderated by better institutional quality, suggesting the presence of a mediating effect. additionally, the research highlighted that both inflation and institutional quality have incremental effects in diminishing income inequality. drawing from these outcomes, policymakers are advised to prioritize the enhancement of institutional quality. this improvement holds a dual role in influencing income inequality – directly and indirectly by interacting with inflation. daud (2020) conducted a study that delved into the role played by institutional quality in the correlation between external debt and economic growth. the study adopted a dynamic threshold specification approach using panel data encompassing 53 countries. this dataset covered the time span from 2005 to 2016. the estimation process employed the system generalized method of moments. the study’s findings illuminated that external debt exerts a negative impact on a nation’s economic growth, while institutional quality yields a positive influence on growth. moreover, the research revealed that the extent of external debt’s impact on economic growth hinges on the quality of institutions. particularly noteworthy is the fact that when external debt reaches high levels, the effect of institutional quality on growth becomes relatively insignificant. in light of these outcomes, the study’s conclusion underscores the persistence of the detrimental effect of external debt on a country’s economic growth. asamoah (2021) conducted a study that investigated the presence of a threshold effect in the relationship between institutional quality and income inequality. this inquiry was carried out utilizing a dynamic panel threshold model. the study’s focus encompassed a panel of both developing and advanced countries, spanning the period from 1995 to 2017. the outcomes of the study unveiled varying impacts: i) when assessed through the world governance indicators, advanced countries displayed a quadratic effect, while developing nations consistently demonstrated a negative effect. this finding implies that enhanced institutional quality leads to a reduction in income inequality in developing countries. ii) using a measure derived from the international country risk guide, the study identified an inverted u-shaped correlation between institutions and income inequality in both advanced and developing countries. interestingly, the threshold value for this relationship was higher in developing economies. the study’s results remained robust even when accounting for measurement and endogeneity concerns. these findings carry significant policy implications, offering valuable guidance for addressing income inequality within developing economies. paulo diogo amaro nunes de sousa rego (2021) investigated the impact of corruption on income inequality and regional variations. using panel data from 108 countries over 1996-2017, the study found that controlling corruption was associated with increased income inequality in asian and eastern european countries, while western european and latin american countries saw lower inequality with corruption control. additionally, democratic political regimes were found to improve corruption control. biglaiser and mcgauvran (2021) studied the effects of debt restructurings on income distribution in 71 developing countries from 1986 to 2016. they found that debt restructurings led to reduced social spending and lower taxes, exacerbating income inequality. the results remained robust across various model specifications, shedding light on the negative impact on the less well-off following debt restructurings. obiero and topuz (2021) examined the impact of internal and public debt on income inequality in kenya from 1970 to 2018 using the ardl model. they found that both internal and public debt contribute to income inequality in the long term. internal debt has a one-way causal relationship with income inequality, while no such relationship was observed for public debt. the study recommended using non-debt financing methods to address income inequality in kenya, as debt financing is not favorable for the less privileged. bon’s (2022) research focusing on advanced economies delved into how institutional quality influences the relationship between public debt and income inequality. the study utilized data spanning the timeframe of 2002 to 2020, encompassing 30 advanced economies. the research methodology comprised the utilization of both the system-gmm and pmg estimator techniques. the study’s findings illuminated intriguing dynamics: individually, both public debt and institutional quality exhibited the potential to alleviate income inequality. however, the interaction between these two factors, as indicated by their combined effect, paradoxically intensified the existing inequality. furthermore, the study unearthed the influential roles played by economic growth and unemployment in shaping income inequality, both factors contributing to its exacerbation. conversely, the presence of education emerged as a counteracting force, actively contributing to the reduction of income inequality. the study underscores the critical need to derive actionable policy implications. it highlights the potential of harnessing the intertwined influences of public debt and institutional quality as a strategic avenue to effectively address the intricate challenge of income inequality. pa ge 71 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 68-76, 2023 kunawotor et al. (2020) undertaken a study that delved into influence of institutional quality on income inequality in the african context. they employed a dynamic two-step difference gmm approach to analyze data spanning the years 1990 to 2017. the study’s outcomes revealed intriguing patterns: while the overall impact of institutions on income inequality across africa lacked statistical significance, distinct indicators of institutional quality, notably the control of corruption and stringent adherence to the rule of law, demonstrated a notable capacity to reduce income inequality significantly. in contrast, other indicators such as ge, vac, rq, and ps failed to exhibit statistically significant effects on income inequality. the study underscored the importance of prioritizing measures aimed at curbing corruption and establishing robust rule of law systems as pivotal factors in fostering a more balanced distribution of income across africa. berisha et al. (2023) examined the differential impact of inflation on income inequality across various levels of inequality in the us states. using a quarterly dataset from 1990: q1 to 2017: q2, the study employed a panel quantile regression model with fixed effects. the results showed a negative contemporaneous effect of inflation on inequality, which was more pronounced at higher levels of income inequality. however, over a one-year period, higher inflation rates only increased income inequality when it was initially low. abbas et al., (2023) examined how well institutions function, the level of education, and corruption in lower middle-income countries. study discovered that if institutions work better, there is less corruption. furthermore, they found that having a higher level of education in institutional could lead to increase the corruption. this study highlights the crucial importance of dealing with corruption, particularly within the education system. methodology data has been gathered from various sources, namely the world governance indicators, transparency international, global consumption and income project, and world development indicators. the data spans from 2000 to 2021 and includes british colonized countries such as bangladesh, india, pakistan, and sri lanka. income inequality is measured using the gini index, while corruption is assessed using the corruption perception index, with higher values indicating increased corruption. the mean of six governance indicators is utilized as a measure of institutional quality (ismail and amjad, 2022). the study incorporated an interaction term to examine the influence of poor institutional quality. this interaction term was created by combining corruption and institutional quality. inflation was approximated using the gdp deflator. government effectiveness and political stability were employed to assess the impact of the government and political stability on the economy. model specification in the era of globalization, panel data studies often face challenges related to residual interdependence and the omission of common factors, leading to cross-sectional dependence. to address this issue, the analysis begins with a cross-sectional dependency test. this examination serves the purpose of ascertaining whether latent factors and disturbances embedded within the error term contribute to significant cross-sectional interdependence in models applied to panel data. such interdependence can potentially yield misleading and erroneous outcomes. the null hypothesis for this test postulates the absence of cross-sectional interdependence, whereas the alternative hypothesis suggests its presence. additionally, unit root tests are administered to establish the integration status of the variables, as the existence of unit roots can lead to problematic results. to ensure the robustness of the findings, the pesaran-cips unit root tests are employed for validation. prior to conducting the econometric model estimation, a crucial step involves identifying the long-term relationships among the considered variables. this goal is achieved through the utilization of diverse cointegration tests, encompassing the pedroni test (pedroni, 1999), the combined cointegration test devised by maddala (maddala and wu, 1999), and the kao residual test (mouelhi, 2021). the cointegration regression analysis utilizes the fmols method to assess long-term sensitivities. the fmols approach proves beneficial in mitigating concerns related to autocorrelation and endogeneity (marimuthu et al., 2021). in terms of unbiased estimations, both fmols and dols demonstrate superiority over ordinary least squares (ols) (akbar et al., 2021a, b; marimuthu et al., 2021; zhong, et al., 2022). the objective of the study is to examine the relationship among income inequality, corruption, and institutional quality for countries in the saarc. the study employs a specific functional form for the analysis. incinqit = ƒ (corrit, iq_corrit, iqit, infit, geit, psit, ) (1) econometric model incinqit = δi + λi + β1i corrit + β2iiq_corrit + β3iiqit + β4iinfit + β5igeit + β6ipsit + µi (2) in the provided equation, “i” represents a specific saarc country, and “t” denotes the time period. within this model, λi and δi represent the trends and countryspecific effects, while β1 to β6 indicate the magnitude of impact for corruption, institutional quality, the interaction between institutional quality and corruption, inflation, government effectiveness, and political stability, respectively. results and discussions descriptive statistics table 1 displays descriptive statistics and a correlation matrix of the variables included in the study. the statistical properties of the variables align with their suitability for pa ge 72 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 68-76, 2023 panel data estimation. furthermore, the presence of low correlation among the independent variables helps alleviate the problem of multicollinearity. cross-sectional dependence tests table 2 displays the results of the cross-sectional dependence tests, showing a probability value of 0.6325. this value exceeds the significance threshold of 0.05. based on this p-value, study can finalize that there is not enough substantiated proof to reject the null hypothesis. this null hypothesis proposes the lack of cross-sectional dependence. than 0.05, implying that they are integrated of i (0). these results provide the basis for conducting panel regression analysis to examine unexpected shocks and structural changes. results of panel cointegration and long run estimates following the completion of the unit root test, the subsequent stage involves investigating the existence of a prolonged relationship using cointegration tests. three distinct cointegration tests were deployed: the pedroni panel cointegration test, the fisher-johanson combined cointegration test, and the kao residual cointegration test. the pedroni panel cointegration test, established in 1999 and further refined in 2004, encompasses seven statistical metrics that aid in identifying enduring relationships among the variables. these metrics encompass panel adf statistics, panel v statistics, panel pp statistics, panel rho statistics, as well as three group statistics: rho, adf, and pp. the outcomes of the pedroni panel cointegration test are illustrated in table 4. the decision to reject the null hypothesis, which posits no cointegration, is contingent upon the majority of the statistical measures attaining significance levels of 1%, 5%, or 10%. the results validate the presence of a long-term association within the saarc panel encompassing income inequality, corruption, institutional quality, institutional quality coupled with corruption, inflation, government effectiveness, and political stability. the p-values and t-statistics presented in the table indicate that six of the seven statistical metrics hold significance. subsequently, the fisher panel cointegration test, introduced by maddala and wu in 1999, was executed to validate the outcomes of the pedroni panel cointegration test. additionally, the kao residual cointegration test was invoked to further reinforce the conclusions of the pedroni panel and fisher-johanson combined cointegration tests. the findings from the fisher panel and kao residual cointegration tests are showcased in table 5, corroborating the existence of enduring table 1: description of variables incinq corr iq_corr iq inf ge ps mean 0.452 2.734 -1.376 -0.762 7.710 -0.383 -1.316 median 0.431 2.600 -3.212 -1.334 6.219 -0.391 -1.25 maximum 0.571 4.000 8.766 2.369 38.512 0.405 0.090 minimum 0.394 0.400 -5.557 -2.409 1.921 -0.937 -2.810 std. dev. 0.051 0.761 4.167 1.3689 5.761 0.3458 0.668 observations 88 88 88 88 88 88 88 incinq 1.000 corr -0.207 1.000 iq_co -0.365 0.524 1.000 ge 0.459 0.455 0.338 1.000 inf -0.179 0.043 0.018 -0.107 1.000 iq -0.382 0.689 0.969 0.403 0.041 1.000 ps 0.065 0.286 0.545 0.556 -0.234 0.520 1.000 table 2: cross-sectional dependence tests test statistic d.f. prob. breusch-pagan lm 29.21791 6 0.0001 pesaran scaled lm 6.702432 0.0000 pesaran cd 0.434406 0.6640 cross-sectional dependence unit root test once the absence of csd in the data was confirmed, the unit root tests were conducted and the outcomes are presented in table 3. the test results confirmed that all variables in the study are integrated of order zero, indicating that they are stationary at the level. based on these results, study can reject the null hypotheses of a unit root for all variables. the findings demonstrate that variables are stationary, as indicated by p-values lower table 3: cross-sectional dependence unit root test variables pesaran-cips corr <0.01 ge <0.01 incinq <0.01 inf <0.01 iq <0.01 iq_corr <0.05 ps <0.05 pa ge 73 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 68-76, 2023 relationships encompassing all the variables. in essence, all three tests concur, collectively affirming a sustained connection among the variables. results fully modified ols upon verifying the existence of enduring relationships among all variables, the analysis progresses to the cointegration regression analysis stage. it’s crucial to underline that the cointegration test’s sole objective is to confirm the presence of a prolonged relationship. in order to investigate the interplay and causal flow within the saarc panel, this study opted for the utilization of the fmols technique. the outcomes, as depicted in table 6, demonstrate that within the saarc economies, institutional quality exerts an adverse influence on income inequality, yielding a negative impact (zehra et al., 2021; cheah, 2021; náplava, 2020; mehmet, 2017; borja, 2018). based on the findings, it can be inferred that a 1 unit increase in institutional quality will lead to a decrease in income inequality by 0.027%. the results of the fmols analysis reveal a significant positive relationship between poor institutional quality and income inequality. this implies that a 1 unit increase in corrupted institutions leads to a 0.07% increase in income inequality, according to the findings. in 2003, sonin presented a dynamic model that suggests how low-quality institutions can lead to the negative impact of inequality on economic growth. the core idea is that such institutions tend to favor the wealthy through wasteful redistribution, which hampers the overall growth process. in a similar vein, chong and gradstein (2004) proposed a mechanism linking low institutional quality to the intensity of rent-seeking behavior derived from public assets like technological knowledge or natural resources. sonin’s theoretical model demonstrates that in societies without strong democratic governance, where there is both political and wealth inequality, the rich and politically influential individuals tend to manipulate institutions for their own benefit, engaging in rent-seeking activities. this behavior not only leads to inefficient allocation of resources but also results in slower economic growth and increased inequality. in contrast, the analysis demonstrates a positive and significant association with corruption (bayar and aytemiz, 2019; gupta, davoodi, and alonso-terme, 2002; policardo et al., 2019; dwiputri, i. n., arsyad, l., & pradiptyo, r., 2018). this suggests that a 1 unit increase in corruption leads to a 0.019% increase in income inequality, according to the findings. government effectiveness, in contrast, exhibits a negative and statistically insignificant influence on income inequality. the findings suggest that a 1 unit increase in government effectiveness is associated with a negligible decrease of 0.004% in income inequality, although this result is not statistically significant. political stability shows a significant negative relationship with income inequality. the analysis reveals that a 1 unit increase in political stability is associated with a decrease of 0.022% in income inequality. on the other hand, inflation has a significant positive impact on income inequality. the findings indicate that a 1 unit increase in inflation leads to a 0.00065% increase in income inequality, according to the results. table 4: pedroni panel cointegration test result with dimension between dimension statistic prob. statistic prob. statistic prob. panel v-statistic 0.3 0.382 1.194 0.116 group rho-statistic -1666 0.048 panel rho-statistic 0.999 0.159 -2.112 0.017 group pp-statistic -5.903 0 panel pp-statistic -5.499 0 -4.958 0 group adf-statistic -1.846 0.033 panel adf-statistic -3.175 0 -1.588 0.056 table 5: fisher and johanson combined cointegration and kao residual cointegration results fisher and johanson combined cointegration results no cointegration: null hypothesis reject criteria: p<0.05 hypothesized no. of ce(s) fisher stat.* (from trace test) prob. fisher stat.* (from max-eigen test prob. none 57.02 0 42.57 0 at most 1 30.3 0.0002 22.57 0.004 at most 2 22.3 0.004 22.3 0.004 kao residual cointegration results no cointegration: null hypothesis reject criteria: p<0.05 -7.382701 (0.000) pa ge 74 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 68-76, 2023 table 6: long-run dynamics variable fmols coefficient prob. iq -0.02727 0.0067 iq_corr 0.017458 0 corr 0.019121 0.0006 ge -0.00377 0.7935 ps -0.02221 0.0001 inf 0.000647 0.069 conclusion the present study aimed to investigate the relationship between institutional quality, corruption, and income inequality in saarc countries from 2000 to 2021. the researchers used several statistical methods, including the padroni cointegration test, kao cointegration, and fisher test, after employing the fmols approach. the empirical analysis conducted in the study confirmed that the examined factors had long-term effects on income inequality in the saarc countries. the results indicated the following: institutional quality: it was found to have a significant negative impact on income inequality. this suggests that countries with better institutional quality tend to experience lower levels of income inequality. corruption: the study found that corruption had a significant positive impact on income inequality. this implies that higher levels of corruption in a country are associated with increased income inequality. institutional quality and corruption combined: when considering the effect of corruption along with institutional quality, the study found a significant positive impact on income inequality. this suggests that the presence of corruption can counteract the potential benefits of good institutional quality in reducing income inequality. the study highlights the importance of iq in reducing income inequality in saarc countries. it also underscores the detrimental impact of corruption on income distribution. moreover, the findings indicate that even countries with good iq may not effectively address income inequality if corruption remains prevalent. recommendation strengthen institutional quality policymakers should focus on improving institutional quality within the saarc economies. this involves enhancing the efficiency, transparency, and accountability of public institutions, as well as ensuring the rule of law and protection of property rights. strong institutions can help promote equitable economic growth and reduce income inequality. fight corruption the positive relationship between corruption and income inequality suggests that addressing corruption should be a priority. implementing effective anti-corruption measures, such as promoting transparency, enforcing strict penalties for corrupt practices, and establishing independent oversight bodies, can help reduce rent-seeking behaviour and create a more equitable distribution of resources and opportunities. reference abbas, f., raees, s., & maqsood, m. 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(2021). quality of institutional indicators and income inequality: a global panel data analysis of 114 economies. pakistan journal of economic studies (pjes), 4(2), 165204 article 262.indd pa ge 1 pa ge 43 american journal of economics and business innovation (ajebi) multi-stakeholder analysis on tourism development in zambales, philippines emelita t. madrid1* volume 3 issue 2, year 2024 issn: 2831-5588 (online), 2832-4862 (print) doi: https://doi.org/10.54536/ajebi.v3i2.262 https://journals.e-palli.com/home/index.php/ajebi article information abstract received: march 10, 2024 accepted: april 15, 2024 published: may 08, 2024 this paper outlined the fi ndings from an empirical investigation to ascertain the differences on the extent of tourism development along with pestle factor and how tourism should be sustainably developed as analyzed and perceived by three groups of stakeholders in zambales: local government unit, selected resort management/customers service offi ce and customers. based from the fi ndings, the researcher concluded that the three groups of stakeholders such as; local government unit, management/customer service offi ce and customers/guests, had important contribution for the sustainable tourism development in the province of zambales. the results of this study provide a better understanding of the perceptions held by tourism stakeholders towards the current state of the tourism industry and how it could be developed holistically. the tourism development in zambales described as high extent as to political, economic, socio-cultural, technological, legal and environmental factor. the results concluded that tourism development could signifi cantly contribute to economic growth in the province of zambales through creating new business opportunities to improve standard of living of the community by providing employment. in this regard, in order to improve the current situation of tourism industry, strategic development plan for sustainable tourism is proposed. provincial government of zambales must design and formulate programs to integrate tourism requirements into all levels of local government unit and would have to take a visionary local government offi cial who has the grit to literally fi ght for a well-defi ned and managed tourism industry because it is a chance for municipalities to move up through the help of tourism, yet it requires the cooperation or input of every social and institutional organization such as stakeholders. therefore, planning for the development of tourism based on sustainable economic development, growth and prosperity of local communities can be effective. keywords analysis, multi-stakeholder, sustainable tourism, tourism development 1 ramon magsaysay state university, masinloc, zambales & university of luzon, dagupan city, pangasinan, philippines * corresponding author’s e-mail: emy.madrid0725@gmail.com introduction tourism development is considered as important and essential element to reduce poverty and immigration, social welfare, maintaining the characteristics of traditional culture, traditional structure preservation, cultural communication, preserving natural and cultural resources, strengthening the national pride and creating more job opportunities in the agricultural and livestock activities in rural and remote areas (ghaderi, 2004). according to m. alejandria-gonzalez philippine national tourism development plan for the period of 2011–2016, the sector of cultural and heritage tourism was highlighted as an identifi ed sector for development. as stated in the report, one of the key goals of the department is to “develop uniquely filipino destinations and products” (department of tourism, 2011). this goal could be related to the concept of destination branding wherein a tourist destination markets itself using a particular theme that represents the products available in the region. tourism plays a large role in the economy of zambales. local and foreign tourist fl ock its many beaches creating many job opportunities and contributing to the economy. this study explores the status of zambales tourism development and assesses the challenges and orientations that pervade in its practice which could be developed to attain the sustainable tourism developmental goals stated in the department of tourism (dot) through political, economic, socio-cultural, technological, legal and environmental factors as analyzed by multi-stakeholders such as local government unit in all municipalities, selected resort management and customers. tourism development has signifi cant contribution to the economy as a whole which is broad and deep because it is both labor and capital intensive. it promotes skills and vocational development that can be exported, and it promotes a ‘culture of tourism’ through a safer and cleaner environment that benefi ts not only tourists but the entire community as well. it also promotes and creates strong peripheral benefi ts to other economic sectors. literature review theory of development theories of development and their defi nitions have changed over time. until recently they predominantly followed euro-american models of ‘development’ and were focused on economy. the theories assumed that ‘developed’ nation’s value standards were superior to those of ‘the developing nations. from the 1960’s, the tourism industry was, and still is, seen as an effective developmental growth-pole, and tourism has been used by many countries to improve their economic development, (telfer & sharpley, 2008). however, the processes that produce this development in tourism are pa ge 44 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 3(2) 43-53, 2024 affected by economic, socio-cultural and political forces. this essay uses dominant theories and frameworks of development, modernization, dependency, neoliberalism and alternative development. it will suggest that tourism has evolved within a trajectory of these dominant development theories and it maps the conceptual changes from development predominantly concerned with economic growth and inequality to those concerned about social, human and environmental issues. tourism also has infl uences on the environment and its components, both positive and negative, and tourists must learn to protect the environment. at the same time, it acts in the direction of enhancing ties between nations, knowing people and peoples and helping maintain peace in the world, (sofronov, b. 2018) stakeholder theory the concept of the “stakeholder” was pioneered by freeman (1984), who identifi ed a stakeholder as “any group or individual who can affect or is affected by the achievement of the organization’s objectives”. carroll (1993) expanded the defi nition of stakeholders based on freeman’s concept as being “stakeholders are those groups or individuals with whom the organization interacts, and can affect or is affected by any actions, decisions, policies, practice or goals of the organization”. later in 1995, donaldson and preston (1995) refi ned this defi nition; they proposed that as a stakeholder, the group or individual must have a legitimate interest in the organization. they also indicated that all stakeholders do no need to participate equally in the decision-making process, but all of their interests should be identifi ed and understood. generally, the fundamental idea of the theory is that the organization should consider all the interests identifi ed by their stakeholders, and increase various stakeholders’ involvement. from the early contributions of tourism planners, the concept of ‘stakeholders’ has become more important in tourism (aas et al. 2005; currie et al. 2009). the organizational structure of a destination is perceived as a network of interdependent and multiple stakeholders (cooper et al. 2009; d’angella & go 2009) on which the quality of the experience and hospitality offered by the destination depends (hawkins & bohdanowicz 2011; march & wilkinson 2009). stakeholder collaboration represents a widely accepted approach to solving the problems associated with a lack of understanding and few shared common goals between the many stakeholders often involved in the development of tourism (fyall & garrod 2005; ladkin & bertramini 2002). materials and methods the study utilized the descriptive research design with questionnaires as the main instrument in measuring the extent of tourism development in zambales through a multi-stakeholder approach focusing on the pestle strategic factors with the end in view of developing of a strategic sustainable provincial tourism plan. the descriptive research design describes, analyzes and interprets gathered data from various stakeholders such as: local government offi cials, management staff and customers regarding the political, economic, sociocultural, technological, legal and environmental factors that infl uence the operation of beach resorts. according to eugene and lynn (2017) using descriptive research designs will help provide answers to the questions of who, what, when, where and how associated with a particular research problem; a descriptive study cannot conclusively ascertain answers to why. specifi cally, the survey type of descriptive study was employed. further, comparative analysis was also resorted to. for the purpose of triangulation, the researcher conducted interviews and observations with the respondents as regards their responses relative to tourism development as well as success and limiting factors which are identifi ed with their perceived extent signifi cant in the conduct of the study. frequency, percentage and weighted mean, analysis of variance, (anova) were utilized as the statistical tools in analyzing the data. mathematical expressions and symbols x=%/100 f=1/t w = w= (∑wx)/(∑w) f=mst/mse mst=sst/(p-1) mse=sse/(n-p) sse=∑ (n-1) results and discussion extent of tourism development in zambales through a multi-stakeholder analysis along the following factors political the extent of tourism development through the analysis of three groups of stakeholders as to political factor, out of 15 indicators the overall weighted mean 3.95 with qualitative description of high extent as perceived by local government unit. an overall weighted mean of 3.98, with qualitative description of high extent as perceived and analyzed by selected resort management and customer service offi ce. as to political factors on the part of customers/guests with the overall weighted mean of 3.80 and qualitative description of high extent. table 1: extent of tourism development perceived by the three groups of stakeholders in zambales as to political factor political factor local government unit (n=130) resort management (n=130) resort customers (n=65) m de rank m de rank m de rank proper waste disposal is encouraged. 4.27 very high extent 1 4.21 very high extent 1 3.91 high extent 3 pa ge 45 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 3(2) 43-53, 2024 economic as to extent of tourism development through local government unit, the overall weighted mean of 3.83 with qualitative description of high extent as to economic factor, for management and customer service offi ce, the overall weighted mean of 3.81 high extent of qualitative description, as to customers/guests the overall weighted mean of 3.91 with qualitative description of high extent. provides infrastructure and transportation facilities for tourism development 3.65 high extent 15 3.91 high extent 10 3.69 high extent 13 the municipal leadership, despite limited funds prioritize the tourism sector as an additional means of income. 3.97 high extent 7 4.05 high extent 5 3.82 high extent 6.5 local government imposes high and strict standards for seeking permits for operation. 4.19 high extent 2 4.19 high extent 2 4.12 high extent 1 demonstrate political will to control leftist or rightist groups in the collection of revolutionary taxes. 3.83 high extent 12 3.87 high extent 13 3.82 high extent 6.5 political local leaders have a united vision for tourism development. 3.95 high extent 8 3.88 high extent 12 3.71 high extent 11 promotes awareness on the importance of tourism 4.02 high extent 4 4.07 high extent 4 3.92 high extent 2 local and national political leaders provide strong support 4.01 high extent 5 3.84 high extent 15 3.74 high extent 10 raises awareness on the concepts of tourism development among new generation. 4.04 high extent 3 3.90 high extent 11 3.85 high extent 4.5 demonstrates political will in support to the growth and development of the tourism resort industry 3.99 high extent 6 3.87 high extent 14 3.65 high extent 14 local government strictly imposes legal orders and policies that safeguard the interest of the tourism resort industry 3.92 high extent 10 3.95 high extent 9 3.85 high extent 4.5 local and regional government administer sustainable legislation 3.92 high extent 9 3.98 high extent 8 3.63 high extent 15 ensures implementation of code of conduct to guarantee sustainable tourism 3.80 high extent 14 3.98 high extent 7 3.75 high extent 9 local government earns income for community through tourism development activities 3.81 high extent 13 4.07 high extent 3 3.78 high extent 8 encourages consultation between government, tourism resort industry and local residents. 3.90 high extent 11 4.02 high extent 6 3.71 high extent 12 overall weighted mean 3.95 high extent 3.98 high extent 3.80 high extent legend: scale statistical limit qualitative description 5 4.21-5.00 very high extent 4 3.41-4.20 high extent 3 2.61-3.40 moderate extent 2 1.81-2.60 low extent 1 1.00-1.80 very low extent table 2: extent of tourism development perceived by the three groups of stakeholders in zambales as to economic factor economic factor local government unit (n=130) resort management (n=130) resort customers (n=65) m de rank m de rank m de rank contributes to income and improves standard of living of the community. 3.94 high extent 5 4.06 high extent 1 3.85 high extent 6 pa ge 46 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 3(2) 43-53, 2024 increases employment opportunities 3.98 high extent 4 4.03 high extent 2 3.86 high extent 4 creates new business opportunities to the community. 4.08 high extent 1 3.96 high extent 7 3.86 high extent 5 improves public utilities infrastructure. 3.83 high extent 8 3.89 high extent 9 3.83 high extent 7.5 provides more investment opportunities. 3.84 high extent 6 3.87 high extent 10 3.83 high extent 9 increases opportunities for shopping. 3.63 high extent 13 3.59 high extent 15 3.58 high extent 15 improves local economy by increasing tax revenues. 3.84 high extent 7 3.81 high extent 14 3.62 high extent 14 contributes to the development of society regionally and nationally through partnership and close cooperation with relevant authorities. 3.83 high extent 9 3.98 high extent 5 3.88 high extent 3 tourism income contributes in large multiplicity in areas of the national economy. 3.65 high extent 12 3.99 high extent 4 4.02 high extent 2 increases cost of living as price of goods and services increase. 3.62 high extent 14 3.85 high extent 12 3.72 high extent 13 tourism jobs increase in line with the high requirement of the society 3.76 high extent 10 3.86 high extent 11 3.83 high extent 7.5 increases potential investors. (foreign and local) 3.74 high extent 11 3.94 high extent 8 3.74 high extent 11.5 increases price of land for housing. 3.62 high extent 15 3.82 high extent 13 3.77 high extent 10 encourages partnership and balanced relationship among resort industry and local residents toward sustainable development of tourism. 3.98 high extent 3 3.97 high extent 6 3.74 high extent 11.5 tourism provides recreation as additional source of income 4.06 high extent 2 4.00 high extent 3 4.03 high extent 1 overall weighted mean 3.83 high extent 3.91 high extent 3.81 high extent sociocultural as to socio-cultural factor, the extent of tourism development, the overall weighted mean of 3.91 with the qualitative description of high extent as analyzed and perceived by the local government unit, the overall weighted mean of 3.78 with qualitative description of high extent as to selected management, the overall weighted mean of 3.99 with qualitative description of high extent as perceived and analyzed by customers/guests. table 3: extent of tourism development perceived by the three groups of stakeholders in zambales as to sociocultural factor socio-cultural factor local government unit (n=130) resort management (n=130) resort customers (n=65) m de rank m de rank m de rank meeting resort tourist is valuable experience 4.05 high extent 3 4.07 high extent 1 3.95 high extent 1 promotes cultural appreciation and understanding 3.95 high extent 7 4.05 high extent 3 3.94 high extent 2 provides opportunity to move away from the hustle and noise of modern life to enjoy the beauty and purity of nature 4.02 high extent 6 4.06 high extent 2 3.92 high extent 3 pa ge 47 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 3(2) 43-53, 2024 promotes quality of life for local residents 3.85 high extent 10 4.00 high extent 6 3.91 high extent 5 visible equitable distribution of the benefi ts of its growth 3.83 high extent 11 3.96 high extent 13 3.72 high extent 10.5 visits places for the purpose of enjoying, studying, contemplating the natural, heritage and cultural environment. 4.02 high extent 5 3.99 high extent 7 3.92 high extent 4 promotes filipino values to the hearts and mind of the children. 4.08 high extent 2 4.03 high extent 5 3.88 high extent 6 gives more opportunity to absorb positive foreign cultural values. 3.81 high extent 13 3.98 high extent 8 3.85 high extent 7 changes social status as infl uenced by other culture. 3.52 high extent 15 3.96 high extent 12 3.72 high extent 10.5 preserves the social identity of the filipino people that tourism could adversely affect. 3.82 high extent 12 4.04 high extent 4 3.77 high extent 8 enriches and promotes our socio-cultural heritage as ati-atihan. 3.77 high extent 14 3.83 high extent 15 3.48 high extent 15 readiness and acceptance of the people for social change brought by tourism development. 3.85 high extent 9 3.96 high extent 11 3.66 high extent 13 traditional culture preserves and handles carefully. 4.03 high extent 4 3.98 high extent 9 3.60 high extent 14 promotes awareness towards the preservation of cultural heritage and traditions 4.08 high extent 1 3.94 high extent 14 3.71 high extent 12 contributes to change in value system, individual behavior, family relationship and life style. 3.95 high extent 8 3.98 high extent 10 3.74 high extent 9 overall weighted mean 3.91 high extent 3.99 high extent 3.78 high extent technological the extent of tourism development through the analysis of three groups of stakeholders as to technological factor, out of 15 indicators the overall weighted mean 3.82 with qualitative description of high extent as perceived by local government unit. an overall weighted mean of 4.03, with qualitative description of high extent as perceived and analyzed by selected resort management and customer service offi ce. as to technological factors on the part of customers/ guests the overall weighted mean of 3.75 with qualitative description of high extent. table 4: extent of tourism development perceived by the three groups of stakeholders in zambales as to technological factor technological factor local government unit (n=130) resort management (n=130) resort customers (n=65) m de rank m de rank m de rank provision of high-tech equipment, facilities and amenities in resort areas. 3.72 high extent 14 3.88 high extent 15 3.69 high extent 11 using automation process in inquiry reservation and payment of bills. 3.74 high extent 13 3.90 high extent 13 3.57 high extent 15 available use of good banking and transportation technology 3.78 high extent 10 4.00 high extent 10 3.80 high extent 5 provision of portable communication system such as internet access. 3.95 high extent 1 4.11 high extent 5 3.75 high extent 7 provides modern safety equipment for swimming. 3.65 high extent 15 3.94 high extent 11 3.62 high extent 13 visible improvement of services and amenities. 3.86 high extent 6 4.05 high extent 7 3.72 high extent 9.5 pa ge 48 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 3(2) 43-53, 2024 allows traveler and tourist to communicate with any travel entity and destination. 3.93 high extent 3.5 4.06 high extent 6 3.63 high extent 12 creates great deal of convenience 3.84 high extent 7 3.89 high extent 14 3.72 high extent 9.5 uses advanced technology that supports the development of business tourism. 3.79 high extent 8 3.91 high extent 12 3.60 high extent 14 access the tourism resort area through website. 3.92 high extent 5 4.04 high extent 8 3.89 high extent 3 computer systems allow communication between client’s chains with multiple locations to connect easier. 3.75 high extent 12 4.15 high extent 2 3.82 high extent 4 speeds up operations and makes the traveling process much more enjoyable and effi cient. 3.77 high extent 11 4.02 high extent 9 3.78 high extent 6 customers, community and businesses benefi t from improved communication, reservations, and guest service systems. 3.79 high extent 9 4.12 high extent 4 3.95 high extent 2 provision of up-to-date technology to ensure the security of the customers and community such as cctv. 3.93 high extent 3.5 4.14 high extent 3 3.75 high extent 8 provision of effi cient front desk services to streamline the check-in and check-out process. 3.94 high extent 2 4.19 high extent 1 3.97 high extent 1 overall weighted mean 3.82 high extent 4.03 high extent 3.75 high extent legal as to socio-cultural factor, the extent of tourism development, as perceived and analyzed by local government unit the overall weighted mean of 4.16 with the qualitative description of high extent, the overall weighted mean of 4.16 with qualitative description of high extent as to selected management, the overall weighted mean of 3.94 with qualitative description of high extent as perceived and analyzed by customers/guests. table 5: extent of tourism development perceived by the three groups of stakeholders in zambales as to legal factor legal factor local government unit (n=130) resort management (n=130) resort customers (n=65) m de rank m de rank m de rank imposes g high and strict standards for seeking permits for operation. 4.21 very high extent 5 4.04 high extent 15 4.03 high extent 3 strongly discourages mal-practice of “lagay or padulas system” in seeking permits to the local offi cials. 4.14 high extent 11 4.13 high extent 11 4.03 high extent 4 imposes legal orders and policies that safeguard the interest of the industry. 3.97 high extent 15 4.21 very high extent 5 3.97 high extent 6 ensures implementation of code of conduct to guarantee sustainable tourism 4.10 high extent 13 4.08 high extent 13 3.83 high extent 13 monitors legal policies continuously. 4.17 high extent 8 4.15 high extent 9 3.82 high extent 14 observes rules and regulation such as proper sanitation. 4.23 high extent 4 4.22 very high extent 3.5 3.92 high extent 7 provides secure facilities in accordance to legal order. 4.04 high extent 14 4.27 very high extent 1 3.92 high extent 8 pa ge 49 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 3(2) 43-53, 2024 provides and maintains pwd and sc priority lane 4.17 high extent 8 4.18 high extent 7 4.02 high extent 5 provides and maintains emergency signages 4.17 high extent 8 4.12 high extent 12 3.91 high extent 10 observes non-discrimination law, considering the lgbtq+ 4.12 high extent 12 4.07 high extent 14 4.12 high extent 1 consistently provides information and services for the clients. 4.19 high extent 6 4.19 high extent 6 4.05 high extent 2 visible fi re extinguisher, sprinkler and smoke detector installed in every corners of the building 4.16 high extent 10 4.15 high extent 10 3.77 high extent 15 information published in promotion materials are all certifi ed true. 4.28 very high extent 1 4.26 very high extent 2 3.88 high extent 11 observes privacy and confi dentiality 4.24 very high extent 3 4.22 very high extent 3.5 3.91 high extent 9 sets standards and regulation to ensure quality service of tourism in zambales 4.25 very high extent 2 4.18 high extent 8 3.86 high extent 12 overall weighted mean 4.16 high extent 4.16 high extent 3.94 high extent environmental as environmental factors, the local government unit perceived and analyzed, out of 15 indicators the overall weighted mean of 4.13 with the qualitative description of high extent, through selected resort management and customer service offi ce the extent of tourism development, the overall weighted mean of 4.11 with high extent qualitative description, the overall weighted mean of 3.79, high extent qualitative description as perceived and analyzed by selected customers/guest. table 6: extent of tourism development perceived by the three groups of stakeholders in zambales as to environmental factor environmental factor local government unit (n=130) resort management (n=130) resort customers (n=65) m de rank m de rank m de rank public facilities are well maintained. 4.05 high extent 14.5 4.15 high extent 4 3.88 high extent 4 waste production is kept minimal. 4.06 high extent 11.5 4.14 high extent 6 3.83 high extent 7 preserves the natural environment 4.17 high extent 6 4.20 very high extent 1 4.00 high extent 1 attractions are well-managed to maintain their natural state 4.06 high extent 11.5 4.05 high extent 14 3.68 high extent 13 saves rare and precious resources, in particular water and energy. 4.07 high extent 10 4.09 high extent 12 3.65 high extent 14 designs infrastructure and programs tourism activities to protect the natural heritage 4.05 high extent 14.5 4.08 high extent 13 3.69 high extent 12 provides safe and relaxing environment that pleases all the incoming guests. 4.20 very high extent 4 4.12 high extent 7.5 3.91 high extent 3 post safety precaution for natural occurrences or phenomena like fl oods and earthquake. 4.26 very high extent 1 3.88 high extent 15 3.72 high extent 10 pa ge 50 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 3(2) 43-53, 2024 protects natural tourist attractions like beaches and other cultural activities from pollution. 4.20 very high extent 5 4.12 high extent 9 3.80 high extent 9 promotes and provides environmentally friendly locations. 4.12 high extent 8 4.18 high extent 2 3.94 high extent 2 protects and preserves areas of high habitat value for future generation 4.06 high extent 13 4.12 high extent 10 3.80 high extent 8 strengthens respect for natural areas and historic places 4.22 very high extent 2 4.15 high extent 5 3.83 high extent 6 provides orientation on proper waste disposal 4.16 high extent 7 4.12 high extent 7.5 3.54 high extent 15 demonstrates awareness of the global policies or initiatives taken by various organizations to reduce environmental pollution 4.08 high extent 9 4.09 high extent 11 3.72 high extent 11 provides good quality and adequate of water 4.22 very high extent 3 4.16 high extent 3 3.85 high extent 5 overall weighted mean 4.13 high extent 4.11 high extent 3.79 high extent table 7: summary result of the extent of tourism development in zambales as perceived by three groups of stakeholders along with pestle strategic factors factors local government unit (n=130) resort management (n=130) resort customers (n=65) overall weighted mean m m m political 3.95 3.98 3.8 3.91 economic 3.83 3.91 3.81 3.85 socio-cultural 3.91 3.99 3.78 3.89 technological 3.82 4.03 3.75 3.87 legal 4.16 4.16 3.94 4.09 environmental 4.13 4.11 3.79 4.01 overall weighted mean 3.97 4.03 3.81 3.94 signifi cant difference exists on the extent of tourism development in zambales based on the analysis of different stakeholders as a result on difference along the pestle factors between three different stakeholder groups about tourism development in the province of zambales, the fi ndings of the study indicated that the fi ve of the six factors namely political, socio-cultural, technological, legal and environmental factor, thus, there were statistically signifi cant differences at signifi cance level of 0.00 in the analysis on tourism development between stakeholder groups studied, this means that the measurable difference between the groups and the probability of obtaining that difference by chance is very small so the null hypothesis is rejected. while economic, one of the pestle factors indicated that there is no signifi cant difference at signifi cance level of 0.11, the null hypothesis is accepted, this means that analysis of three groups of stakeholders as to economic was vitally important especially when it comes to tourism provides recreation as additional source of income by creating new business to increases employment opportunities to the community. table 8: signifi cance of difference on the extent of tourism development in zambales as to pestle factors by the different sectors political source of variation sum of squares df mean square f sig. interpretation between groups 0.30 2.00 0.15 8.60 0.00 ho is rejected signifi cantwithin groups 0.74 42.00 0.02 total 1.04 44.00 pa ge 51 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 3(2) 43-53, 2024 economic source of variation sum of squares df mean square f sig. interpretation between groups 0.08 2.00 0.04 2.35 0.11 ho is accepted not signifi cantwithin groups 0.75 42.00 0.02 total 0.83 44.00 socio-cultural source of variation sum of squares df mean square f sig. interpretation between groups 0.32 2.00 0.16 10.33 0.00 ho is rejected signifi cantwithin groups 0.65 42.00 0.02 total 0.97 44.00 technological source of variation sum of squares df mean square f sig. interpretation between groups 0.60 2.00 0.30 26.11 0.00 ho is rejected signifi cantwithin groups 0.48 42.00 0.01 total 1.08 44.00 legal source of variation sum of squares df mean square f sig. interpretation between groups 0.52 2.00 0.26 36.80 0.00 ho is rejected signifi cantwithin groups 0.30 42.00 0.01 total 0.81 44.00 environmental source of variation sum of squares df mean square f sig. interpretation between groups 1.11 2.00 0.56 63.46 0.00 ho is rejected signifi cantwithin groups 0.37 42.00 0.01 total 1.48 44.00 political factors the analysis of variance on the difference in the extent of tourism development in zambales based on the analysis of different stakeholders as to political factors. shows that the sum of square between-group variability (0.30) against withingroup variability (0.74) with the degree of freedom between the group (2.00) within the group (42.00) a total of 44.00, mean square between group 0.15 within group (0.02), frequency of 8.60 at 0.00 level of signifi cance, therefore the null hypothesis is rejected, this means that there is signifi cant difference exist in the perception of three groups of stakeholder as to extent of tourism development as to political factors. economic factors analysis of variance on the difference in the extent of tourism development in zambales based on the analysis of different stakeholders as to economic factors. shows that the sum of square between-group variability (0.08) against withingroup variability (0.75) with the degree of freedom between the group (2.00) within the group (42.00) a total of 44.00, mean square between group 0.04 within group (0.02), frequency of 2.35 at 0.11 level of signifi cance, therefore the null hypothesis is accepted, this means that there is no signifi cant difference exist in the perception of three groups of stakeholder as to extent of tourism development as to economic factors. socio-cultural factors analysis of variance on the difference in the extent of tourism development in zambales based on the analysis of different stakeholders as to political factors. shows that the sum of square between-group variability (0.32) against withingroup variability (0.65) with the degree of freedom between the group (2.00) within the group (42.00) a total of 44.00, mean square between group 0.16 within group (0.02), frequency of 10.33 at 0.00 level of signifi cance, therefore the null hypothesis is rejected, this means that there is signifi cant difference exist in the perception of three groups of stakeholder as to extent of tourism development as to socio-cultural factors. technological factors analysis of variance on the difference in the extent of tourism development in zambales based on the analysis of different stakeholders as to political factors. shows that the sum of square between-group variability (0.60) against withingroup variability (0.48) with the degree of freedom between the group (2.00) within the group (42.00) a total of 44.00, mean square between group 0.30 within group (0.01), frequency of 26.11 at 0.00 level of signifi cance, therefore the null hypothesis is rejected, this means that there is signifi cant difference exist in the perception of three groups of stakeholder as to extent of tourism development as to technological factors. pa ge 52 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 3(2) 43-53, 2024 legal factor analysis of variance on the difference in the extent of tourism development in zambales based on the analysis of different stakeholders as to political factors. shows that the sum of square between-group variability (0.52) against withingroup variability (0.30) with the degree of freedom between the group (2.00) within the group (42.00) a total of 44.00, mean square between group 0.26 within group (0.01), frequency of 36.80 at 0.00 level of signifi cance, therefore the null hypothesis is rejected, this means that there is signifi cant difference exist in the perception of three groups of stakeholder as to extent of tourism development as to legal factors. environmental factors analysis of variance on the difference in the extent of tourism development in zambales based on the analysis of different stakeholders as to political factors. shows that the sum of square between-group variability (1.11) against withingroup variability (0.37) with the degree of freedom between the group (2.00) within the group (42.00) a total of 44.00, mean square between group 0.56 within group (0.01), frequency of 63.46 at 0.00 level of signifi cance, therefore the null hypothesis is rejected, this means that there is signifi cant difference exist in the perception of three groups of stakeholder as to extent of tourism development as to environmental factors. contextual issues are identifi ed by different sectors relative to multi-stakeholder analysis on the extent of local tourism development in zambales in an attempt to draw meaningful and candid answers from the representatives of the local government unit, management/customer service offi ce and customers/ guests, the researcher conducted a personal interview with some of the local government employees, customer service offi cer and guest/customer and on the last page of the instrument the respondents were given to write down their comments and suggestions. among the pestle strategic factors that affect to the development of tourism in zambales: political factors despite the fact that the government strategy aimed to develop sustainable tourism industry in zambales. the reasons why zambales has diffi culty in developing business tourism in terms of political factors are the following: • political instability in administering sustainable legislation • lack of infrastructure and transportation facilities for tourism development • continuous power struggle between political leaders in providing support for tourism development. economic factors the situation of economic crisis, high unemployment, lack of investment activity in the tourism industry as well as low-income in tourism compared to other sectors because tourism characterized by seasonal activity and short duration of the tourist season. increases price of land for housing along the tourism areas. socio-cultural factors emphasis should be put on a demonstration, presentation of traditional events, and allow tourist to experience the tainted unforgettable memories that will bring them back again for relaxation these should work on improving and perfecting. tourism industry must raise the general level of service and kindness both by employees and by the local population is also essential, general knowledge and awareness of the need that visitors should feel welcomed and satisfi ed but on the other side tourism may disturb the community’s peace and harmony. gambling, sexual abuses, prostitution and alcoholism will be increased. increased and the changes social status as infl uenced by tourist. technological factors zambales as a developing tourism business destination should learn from developed tourism destination in providing multifunctional services (conferences, banquets, gala dinners, etc.). in addition to organizing conferences and business events, should work on adoption of advanced technologies. the needs to develop the technology of transportation which means to improve the infrastructure in and within it. should modernize increasingly important institution for providing of smart service providers, such as online check-in, high-quality and modern air and bus transportation, free or paid web sites where visitors can connect with the world, as well as improve infrastructure, public and private baths, toilets and all the other services that are required by business tourists. issues on modern safety equipment for swimming, provision of high-tech equipment, facilities and amenities in resort areas and using automation process in inquiry reservation and payment of bills. legal factors legal structure, tourism legislation and laws relating to the regulation of relations that can affect the development of business tourism are mostly typical for the overall development of tourism in zambales. issues on visible fi re extinguisher, sprinkler and smoke detector installed in every corners of the building, the proper impose high and strict standards for seeking permits for operation and legal orders and policies that safeguard the interest of the industry, tourist, and the community. environmental factors local government unit, resorts owner, management, and the community needs to take account for safety precaution for natural occurrences or phenomena like fl oods and earthquake. issues regarding designs of infrastructure and programs tourism activities to protect the natural heritage, maintenance of public facilities and pa ge 53 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 3(2) 43-53, 2024 proper waste disposal and the issues concerning tourism development negatively impact on marine environment increase the pollutions. conclusion the three groups of stakeholders such as; local government unit, management/customer service offi ce and customers/guests, had important contribution for the sustainable tourism development in the province of zambales. the results of this study provide a better understanding of the perceptions held by tourism stakeholders towards the current state of the tourism industry and how it could be developed holistically. the tourism development in zambales described as high extent as to political, economic, socio-cultural, technological, legal and environmental factor. the results concluded that tourism development could signifi cantly contribute to economic growth in the province of zambales through creating new business opportunities to improve standard of living of the community by providing employment. in this regard, in order to improve the current situation of tourism industry, strategic development plan for sustainable tourism is proposed. references streimikiene, d., & bilan, y. (2015). review of rural tourism development theories. transformations in business & economics, 14(2), 21-34. hameed, b., & khalid, a. (2018). impact of ecotourism in ensuring the sustainable development of tourism industry in india. international journal of recent research aspects, 5(2), 46-50. d’mello & carmelita a., (2015). multi-stakeholders perception towards sustainable tourism jurėnienė & virginija, (2016), interaction between cultural/creative tourism and tourism/ cultural heritage industries gnanapala & athula c., (2016). community perception on tourism development and its impacts a study on passikudha, sri lanka gregoric, m. (2014). pestel analysis of tourism destinations in the perspective of business tourism (mice) trends in tourism and hospitality industry guoyun, (2015). developing a sustainable resort: a case study of a family resort in central ontario, canada harrison, d. (2015). development theory and tourism in developing countries: what has theory ever done for us?. international journal of asia pacifi c studies, 11(s1), 53-82. kariuki & phoebe n. (2013). local residents’ attitudes and perceptions towards tourism development: a study of lake nakuru national park and its environs, kenya limpho l., (2014). perceptions on local communities role and awareness in rural tourism development: a case study mohammed bala banki and hairul nizam ismail, (2014). multi-stakeholder perception of tourism impacts and ways tourism should be sustainably developed in obudu mountain resort developing country studies www.iiste.org issn 2224-607x (paper) issn 2225-0565 (online) vol.4, no.3 mugadu y., (2014). the role of tourism stakeholders in the development of ecotourism, a case study of mabira central forest reserve in buikwe district ping, l., (2013). comparisons of stakeholders’ perceptions and attitudes of tourism impact in mt qiyun, anhui province, china ramseook-munhurrun, p., & naidoo, p. (2011). residents’ attitudes toward perceived tourism benefi ts. international journal of management and marketing research, 4(3), 45-56. rezarta & brokaj, (2014) european scientifi c journal november edition vol.10, no.31 issn: 1857 – 7881 issn 18577431 local government’s role in the sustainable tourism development of a destination sastry and sushil, j., tourism hospitality, 2018, tourism industry depends on the technological integration: a study of product integration enhanced performance with banking and insurance products saygin, acar, gökkaya, (2015). residents’ attitudes and perception towards tourism development: the case of safranbolu sofronov, b., (2018). “the development of the travel and tourism industry in the world.” annals of spiru haret university. economic series, 18(4), 123-137. https://doi.org/10.26458/1848 streimikiene, d., & bilan, y. (2015). review of rural tourism development theories. transformations in business & economics, 14(2), 21-34. thomas, adelle dawn, (2012). an integrated view: multiple stressors and small tourism enterprises in the bahamas tourism, leisure and global change, volume 3 (2016), p.toc-164 pa ge 1 pa ge 35 american journal of economics and business innovation (ajebi) influence of high-involvement and high-commitment hrm practices on innovation: the mediating role of knowledge sharing ha thanh tung1, le ba phong1* volume 2 issue 2, year 2023 issn: 2831-5588 (online), 2832-4862 (print) doi: https://doi.org/10.54536/ajebi.v2i2.1589 https://journals.e-palli.com/home/index.php/ajebi article information abstract received: april 30, 2023 accepted: may 03, 2023 published: may 06, 2023 given the important role of hrm practices and knowledge resources for firms to pursue innovation, the purpose of this study is to investigate the influence of high-involvement and high-commitment hrm practices on the innovation capability of firms via mediating role of knowledge sharing. this study has developed a proposed research model and applied structural equation modeling (sem) to test proposal hypotheses using data collected from 211 participants in 65 vietnamese firms. the findings of this study support the significant impacts of both high-involvement and high-commitment hrm practices on innovation capability directly or indirectly through the mediating role of knowledge sharing. especially, the empirical findings reveal that high-involvement hrm practices induce greater effects on innovation compared to the effects of high-commitment hrm practices. the findings of this study have significantly contributed to increasing the insight of the link between specific forms of hrm practice and innovation capability. moreover, it provides an effective solution for vietnamese firms to pursuit and foster innovation capability. keywords high-involvement hrm practices, high-commitment hrm practices, knowledge sharing, innovation capability 1 hanoi university of industry, bactuliem, hanoi, vietnam * corresponding author’s e-mail: ebaphong.vn@gmail.com introduction due to the unpredictable technology change, competitive pressure, and diversity of customer needs, improving innovation capability is regarded as an optimal strategy for firms to achieve competitive advantages and overcome key rivals (yang et al., 2018; le, 2020; lei et al., 2021). innovation capability has become the main driving force for firms to attain competitive advantages (kaya & patton, 2011; ha et al., 2019; lei et al., 2021) and bring firms success in the dynamic markets in long term (le & lei, 2019; sengphet et al., 2019; le & tran, 2020; le et al., 2020). however, it is not easy for firms to develop innovation properly due to lack of understanding on hrm practices and appropriate processes that facilitate innovation (lei et al., 2021; cao et al., 2022; son & phong, 2023). to fill these theoretical gaps, this study will develop a proposed research model to examine the impacts of high-involvement and high-commitment hrm practices on the innovation capability of firms based on the mediating role of knowledge-sharing activities of employees in organizations. this study is expected to significantly expand the hrm theory and bring valuable insight of innovation management by following reasons. first, knowledge and human resources are widely accepted as the key and valuable assets for firms to create value and sustain competitive advantage in the rapidly changing environment (chen & huang, 2009; le & lei, 2018; than et al., 2021; siddiqua et al., 2022; marhil et al., 2023). hrm practices are generally accepted as the primary means for firms to shape and develop employees’ skills, attitudes, and behavior by which they can successfully innovate and achieve organizational goals (chang et al., 2011; cao et al., 2022; than et al., 2023). however, little empirical research has explored the potential effects of high-involvement and high-commitment hrm practices on innovation capability (camelo-ordaz et al., 2011; alikaj et al., 2020; le & le, 2023 a, b; than et al., 2023). moreover, haneda and ito (2018) indicated that the possible differential influences of hrm practices on innovation have not yet been sufficiently examined in previous works. accordingly, to clarify how high-involvement and high-commitment hrm practices affects innovation capability, this study proposed the first research question (rq). rq1. do high-involvement and high-commitment hrm practices induce different influences on innovation capability? second, knowledge sharing (ks) activities are seen as one of the most essential ingredients to enrich organizational knowledge resources for fostering innovation capability and key outcomes (le & lei, 2018; le & lei, 2019; phong & son, 2020; lathong et al., 2021). however, little research has examined antecedents or conditions that encourage ks processes of employees for innovation (le & lei, 2019; than et al., 2021). in addition, although several studies indicated the importance of hrm practices in the creation of an appropriate climate for ks activities, little to no study has investigated the concurrent effects of different hrm models on ks activities of employees. given the importance of hrm practices and the theoretical gaps with respect to its influence on ks process, this study attempts to bring the answers for the second research question. rq2. do high-involvement and high-commitment https://doi.org/10.54536/ajebi.v2i2.1589 https://journals.e-palli.com/home/index.php/ajebi pa ge 36 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(2) 35-44, 2023 hrm practices significantly affect knowledge sharing? third, literature highlighted the necessity of hrm practices to encourage employees to ready share more individual knowledge and expertise for innovation (camelo-ordaz et al., 2011; le & le, 2023 a, b). this implied that hrm practices enable firms to enhance employees’ capability of generating knowledge within their sphere of influence, and maximize the effects of shared knowledge for organizational innovation (tan & nasurdin, 2011; lei et al., 2021; than et al., 2023). especially, than et al. (2023) stressed the need of advancing the comprehension of how hrm practices connect with ks processes to stimulate innovation capability for firms. against such background, to bridge the theoretical gaps and provide deeper understanding on mediating mechanism of ks process on hrm practicesinnovation relationship, this study attempts to shed a light on third research question. rq3. do ks behaviors mediate the influence of high-involvement and high-commitment hrm practices on innovation capability? to fill research gaps addressed above, this study develops an integrated research model to estimate the effects of high-involvement and high-commitment hrm practices on innovation capability of vietnamese firms via mediating role of ks activities. this study applies structural equations modeling (sem) to examine the correlation between the latent variables in the proposal research model based on the data collected from 211 participants in 65 manufacturing and service firms in vietnam. this study is expected to provide theoretical and practical initiatives on hrm practices and ks to pursuit and improve innovation capability for vietnamese firms. literature review and hypothesis the influences of hrm practices on innovation capability innovation has been recognized as an important factor for firms to create value and have a great influence on competition (mintzberg, 1994; son & phong, 2023). innovation is fast becoming a crucial factor in firm performance and survival as a result of the evolution of the competitive environment (hui et al., 2018; le & le, 2021; gui et al., 2022). the literature revealed that there are many different definitions of innovation capability in the current research (baregheh et al., 2009; le & lei, 2019; le, 2021; nguyen et al., 2022). however, it is defined as the process of the introduction and implementation of new ideas, products, services, procedures, technology, organizational structures, plans and programs, to increase organizational performance and achieving organizational success (rujirawanich et al., 2011; van et al., 2018; le & lei, 2019; lathong et al., 2021). the hrm literature offers two basic approaches that an organization can utilize to manage relationships with its employees. on the one hand, high-involvement hrm practices emphasize the mutual long-term exchange relationships (camelo-ordaz et al., 2011). it is considered as a management approach focusing on employee involvement and a strong instrument of practices to foster the development of employee’s knowledge, skills, and motivation (rubel et al., 2017; yasir & majid, 2020). on the other hand, high-commitment hrm practices refer to management approach focusing on encouraging employees to identify organizational goals, and working hard to enhance productivity and efficiency. therefore, these firms attempt to obtain talented employees and encourage employees to reach innovative goals (chiang et al., 2011; than et al., 2023). previous studies argued that firms adopting high-commitment hrm practices can create a high-commitment and motivation among employees such as employment practices, appraisal, competitiveness, fair compensation, comprehensive training and development (camelo-ordaz et al., 2011; chiang et al., 2011; than et al., 2023). the remarkable deliberation on consequences of hrm practices indicated that organizations might increase their innovation capability and sustain competitive advantages through applying hrm practices (than et al., 2023). thus, this study investigates the effect of highinvolvement and high-commitment hrm practices on innovation capability. regarding the relationship between hrm practices and innovation, previous studies have shown the positive and significant impacts of hrm practices on innovation capability. indeed, chen and huang (2009) claimed that strategic hrm practices can affect and alter employees’ attitudes, capacities, and behaviors to attain organizational goals. this assists in nurturing and creating the necessary conditions and catalysts for employees to develop innovation activities. de winne and sels (2010) justified that a wide range of hrm practices is more beneficial for innovation compared with low human capital in startups. laursen and foss (2014) have critically discussed the literature and indicated the positive relationship between hrm practices and important outcomes of innovation. diaz-fernandez et al. (2017) noted that hrm practices served as antecedent of innovation by which firms should invest in hrm practices to effectively use available resources for arousing innovation. aman et al. (2018) argued that the purpose of hrm practices is to provide an environment which is conducive enough to develop employees’ skills and competencies for innovation. in particular notes, recent studies supposed that highinvolvement and high-commitment hrm practices are primary tools for improving firms’ innovation outcomes due to its capabilities of transforming and obtaining innovative behaviors from employees (yasir & majid, 2020; than et al., 2023).above arguments support positive effects of hrm practices on innovation capability, so following hypotheses are posed (see figure 1): h1a. high-involvement hrm practices positively affect innovation capability. h1b. high-commitment hrm practices positively affect innovation capability. https://journals.e-palli.com/home/index.php/ajebi pa ge 37 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(2) 35-44, 2023 the influences of hrm practices on knowledge sharing knowledge is well known as the invisible and valuable resource of an organization (son et al., 2020). le and lei (2019), supposed that the effectiveness in the process of sharing knowledge is the determinant of an organization’s success. as a result, organizations need to pay great attention to improving knowledge sharing activities in their firms. ks is defined as processes of exchanging information and know–how among employees for the accomplishment of specific tasks in organizations (le & lei, 2019; le & nguyen, 2023). literature revealed that successful extent of initiatives of knowledge management mainly depends on the effectiveness of knowledge sharing activities in an organization (le & lei, 2018; yang et al., 2018; le & nguyen, 2023). as a result, ks activities have a great potential and benefits for firms to follow and enhance innovation capability. hrm practices are regarded as the primary approaches to evoke and reinforce organizational knowledge resource that firms need for meeting their key goals (chen & huang, 2009; than et al., 2023). soliman and spooner (2000) highlighted the strategic role of hrm practices in identifying knowledge gaps and ensuring the success of knowledge management programs directed at capturing, using and re-using employees’ knowledge. they argued that hrm practices help to create a favorable culture encouraging the free flow of knowledge for meeting organizational goals. chiang et al. (2011) found that hrm practices induces positive effects on employees’ ks behaviors directly or indirectly by its impacts on their willingness to devote themselves to an organization. according to jimenez-jimenez and sanz-valle (2013), hrm practices are critical antecedents of generating an appropriate and beneficial culture for encouraging processes of acquiring and sharing knowledge in an organization. adopting a qualitative research method based on a multiple case study, gope et al. (2018) showed the evidence on the positive relationship between hrm practices and organizational knowledge resource due to significant impacts of hrm practices on the motivation and retention of employees for process of acquiring and sharing knowledge. recently, than et al. (2023) argued that hrm practices contribute to the creation of an organizational social climate where employees are willing to share their knowledge. there finding showed that hrm practices are significantly associated with processes of sharing knowledge among employees. to clarify the influence of high-involvement and high-commitment hrm practices ib ks, this study proposes the following hypotheses: h2a. high-involvement hrm practices positively affect knowledge sharing. h2b. high-commitment hrm practices positively affect knowledge sharing. the influences of knowledge sharing on innovation capability prior researches highlight ks as an important precursor of innovation capability (yang et al., 2018; le & lei, 2019; phong & thanh, 2023). specifically, podrug et al. (2017) pointed out that the willingness of employee to donate and collect knowledge significantly contributes to improving innovation capability for organization. yang et al. (2018) asserted that ks among employees may help firms to have superior innovation capability because firms can only perform effectively manage knowledge if employees are willing to sharing their knowledge with the others. le and lei (2019) supposed that promoting ks practices among individuals might be optimal solutions for firms to increase its capability of generating new ideas and developing new business opportunities, and consequently facilitating innovation activities. previous studies argued that capability in transforming and applying knowledge determines a firm’s degree of innovation (lei et al., 2019a, b). ks processes can serve as the main drivers that enhance organizational capability for radical and incremental innovation (le et al., 2020; shehzad et al., 2021). some recent studies also justified that fostering processes of sharing key information, knowledge and resources among employees is a prerequisite and optimal solution for increasing creative ideas and innovation figure 1: proposed research model https://journals.e-palli.com/home/index.php/ajebi pa ge 38 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(2) 35-44, 2023 capabilities of firms (le et al., 2020; than et al., 2023). these arguments support positive effects of ks on innovation capability. so. this study proposed following hypothesis: h3. knowledge sharing activities positively predict innovation capability. above discussions show that hrm practices positively affect ks, which in turn significantly affect innovation capability. additionally, prior research showed that ks is an important mediating variable between hrm practices and innovation (cao et al., 2022; than et al., 2023). we, therefore, proposed that: h4a: ks mediates between high-involvement hrm practices and innovation capability h4b: ks mediates between high-commitment hrm practices and innovation capability methodology sample and data collection this study employs survey method for data collection. the paper used convenient sampling method to collect data from medium and small firms in some major cities of vietnam such as hanoi, danang and hochiminh. we communicated with representatives of these firms who mainly worked in departments of hrm by phone or make personal visits to explain the purpose of the research, and ask for their assistance in collecting data. the respondents need to be vice managers, head of departments, team leaders to ensure having full understanding on firm’s business situation. we used the measurement items that adapted from existing scales in the literature to develop the initial list of items. we then conducted a pilot test based on in-depth interviews with five outstanding academic scholars and 35 participants from three firms to refine the questionnaire and align with the vietnamese context. in the formal data collection, this study sent 375 questionnaires to the representatives of 65 firms and received 233 ones, among which 211 ones are valid, with a 56.2% valid rate. variable measurement to ensure the validity and reliability of the study, the variables were measured using items developed and employed in previous studies. all items were measured via five-point likert-type scales ranging from “1” (strongly disagree) to “5” (strongly agree) or from “1” (strongly unwilling to) to 5 (strongly willing to). this study used six items adapted from the study of camelo-ordaz et al. (2011) and seven items adapted from the study of kang and kang (2016) to measure individuals’ perception of high-involvement hrm and high-commitment hrm practices in their firms respectively. this study used 10 items adapted from the study of yang et al. (2018) to measure the ks activities in organizations. for measuring innovation capability, this study used 6 items adapted from the research of nguyen et al. (2019) to measure firm’s capabilities of creating new products, services and processes (table 1). table 1: scale of factors in the proposal research model factors items source high-involvement hrm practices (i-hrm) ihrm1 my firm emphasizes promotion from within camelo-ordaz et al. (2011)ihrm2 performance appraisals include developmental feedback ihrm3 selection process assesses the ability to collaborate and work in a team ihrm4 training activities focus on team building and interpersonal relations ihrm5 appraisals are based on team performance ihrm6 appraisals focus on employees’ ability to work with others high-commitment hrm practices (c-hrm) chrm1 my firm often strives for employment security kang and kang (2016)chrm2 my firm often hires employees based on their aptitude and specialty chrm3 my firm often grants employees the authority necessary to perform their work chrm4 my firm often compensates employees fairly based on their performance chrm5 my firm often provides employees with fair opportunities for training chrm6 my firm often treats employees without any discrimination chrm7 my firm often shares extensively financial and performance information with employees knowledge sharing (ks) ks1 usually, i do my best and offer suggestions while discussing work-related matters with my colleagues yang et al. (2018) ks2 i am usually willing to share my knowledge and experience with others ks3 i am willing to answer the questions of my colleagues as well as i can. ks4 i usually record as much as possible when i am writing a document or a report. https://journals.e-palli.com/home/index.php/ajebi pa ge 39 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(2) 35-44, 2023 ks5 if something is hard to explain, i gladly give my colleagues a demonstration ks6 i am willing to offer less-experienced colleagues opportunities to perform ks7 when my colleagues are in need, i do my best to offer them needed information and documents ks8 i tell colleagues where to look for support if i can't help them with their problems ks9 i encourage my colleagues when they are facing difficulties at work ks10 when i teach my colleagues, i express my ideas in a way in which they can be fully understood innovation capability (ic) ic1 our firm frequently tries out new ideas nguyen et al. (2019)ic2 our firm seeks new ways of doing things ic3 our firm is creative in its operating methods ic4 our firm is frequently the first to market new products and services ic5 innovation is perceived as too risky in our firm and is resisted (reversed coded) ic6 new product introduction in our firm has increased during the last five years results measurement model a series of tests are performed to assess the validity and reliability of the constructs (table 2). specifically, to assess the reliability of the latent variables, basing on suggestion of nunnally and bernstein (1994), this study used the cronbach’s alpha coefficients of each one that require greater than the level of 0.7. confirmatory factor analysis (cfa) to test for the convergent validity; and comparing the squared correlations between the latent variables and square root of average variance extracted (ave) to test the discriminant validity of measures (fornell & larcker, 1981). results in table 2 showed ave, cr, mean, standard table 2: descriptive statistics and average variances extracted from constructs construct ave cr cα mean sd ihrm chrm ks ic high-involvement hrm (ihrm) 0.60 0.91 0.91 3,37 0.66 0.77 high-commitment hrm (chrm) 0.72 0.94 0.94 3.36 0.49 0.69 0.84 knowledge sharing (ks) 0.70 0.95 0.95 3.41 0.58 0.55 0.59 0.83 innovation capability (ic) 0.67 0.92 0.92 3.67 0.59 0.59 0.54 0.72 0.81 note: cα ≥ 0.7; cr ≥ 0.7; ave ≥ 0.5; diagonal elements (in bold) are the square root of the ave. deviation (sd) and c. these results have provided the evidence for the evidence on the reliability of scales as well as the convergent validity of constructs. in addition, to evaluate the discriminant validity of latent constructs in the proposal model, the paper used the squared correlations among the latent factors to control whether they are smaller than each latent variable’s square root of ave or not. table 2 also points out that the squared correlations among the latent factors are lower than square root of ave of each one (diagonal elements in bold). thus, according to fornell and larcker (1981), the results have provided significant support for the scales’ discriminant validity. fit indices of the measurement model obtained from cfa model show that the model fits the data (see table 3). table 3: overall fit index of the cfa model fit index scores recommended value absolute fit measures cmin/df 1.657 ≤2a; ≤5b gfi 0.832 ≥0.90a; ≥0.80b rmsea 0.056 ≤0.8a; ≤0.10b incremental fit measures nfi 0.900 ≥0.90a; tli 0.950 ≥0.90a; cfi 0.954 ≥0.90a; notes: a acceptability: acceptable; b acceptability: marginal https://journals.e-palli.com/home/index.php/ajebi pa ge 40 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(2) 35-44, 2023 findings the paper applied structural equation model with procedures of maximum likelihood estimation to examine the proposal hypotheses. the findings indicated that the fit indices of the proposal model are satisfactory (χ2=611.603; df = 369; rmsea = 0.056; gfi = 0.832; cfi = 0.954; tli = 0.955). the results show that the correlation among latent factors fit the data. the main findings of this study are shown in table 4 and figure 2. figure 2: results of the structural equation model direct effect analysis as shown in the table 4 and figure 2, the empirical findings revealed that influences of high-involvement innovation capability are statistically significant (= 0.263; p < 0.001), favoring for hypothesis h1a. in contrast, the results indicated that the impacts of high-commitment hrm practices on innovation capability ( = 0.027; p > 0.1) is not significant. so h1b is not supported. table 4: structural model results hypotheses effect estimate t-value results h1a. high-involvement hrm innovation capability + 0.263*** 3.315 supported h1b. high-commitment hrm innovation capability + 0.027 0.318 not supported h2a. high-involvement hrm knowledge sharing + 0.261** 2.998 supported h2b. high-commitment hrm knowledge sharing + 0.417*** 4.554 supported h3.knowledge sharing innovation capability + 0.564*** 7.627 supported notes: ***p < 0.001; **p < 0.05. hypothesis h2a.b relating to the influence of highinvolvement and high-commitment hrm practices on ks activities are statistically significant and quite large. so h2a.b is supported. specifically, the results showed that the impacts of high-commitment hrm practices on knowledge sharing (= 0.417; p < 0.001) is more significant than influence of high-involvement hrm practices on knowledge sharing ( = 0.261; p < 0.05). the findings in table 4 also confirmed the positive effect of knowledge sharing activities on innovation capability (= 0.564; p < 0.001). accordingly, h3 is supported. this finding revealed that knowledge sharing significantly predict organizational capability for innovation. indirect effect and total effect the paper does not just give evidence about the direct influences of high-involvement and high-commitment hrm practices on innovation capability. it also demonstrates how knowledge sharing activities mediate the relationship between specific models of hrm practices and innovation capability. according to the recommendation of preacher and hayes (2008), to show the evidence for the mediating role of knowledge sharing between hrm practices and innovation capability, the paper has applied procedure of bootstrap confidence intervals with 3,000 iterations to examine and assert the indirect effects’ immensity and table 5: test for indirect effects path direct effects indirect effects total effects bias-corrected confidence intervals lower confidence level upper confidence level ihrm ks ic 0.263*** 0.147** 0.410*** 0.049 0.255 chrm ks ic 0.027 0.235*** 0.262** 0.236 0.365 note: ***p < 0.001; **p < 0.05; *p < 0.1. https://journals.e-palli.com/home/index.php/ajebi pa ge 41 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(2) 35-44, 2023 statistical significance. the results are shown in the table 5. table 5 showed indirect effects of high-involvement hrm practices (= 0.147; p < 0.05) and high-commitment hrm practices ( = 0.235; p < 0.001) on innovation capability are statistically significant and lies in the confidence interval. consequently, hypothesis h4a.b is significantly supported. in other words, the empirical result has firstly confirmed that employees’ knowledge sharing activities significantly mediate the effects of highinvolvement and high-commitment hrm practices on innovation capability. discussions the extant literature emphasizes that innovation is a key driver for firms’ ability to survive in dynamic and intensely competitive environments (le & lei, 2019; nguyen et al., 2022; than et al., 2023). accordingly, improving innovation capability has been recognized as a crucial factor for firms to cope with the challenges of uncertainty, increasingly competition, and attaint competitive advantage in the context of the rapid changes of business environment, industrial revolution, pursuing globalization, digitalization and free trade agreements (le & lei, 2018; ha et al., 2019; nguyen et al., 2019; le, 2021). thus, how to successfully improve innovation capability for firms is always a top concern of scholars and practitioners. by investigating and highlighting the roles of specific models of hrm practices and knowledge sharing activities as the important determinants of innovation capability, the paper has considerably contributed to advancing the development of theories of hrm, knowledge management and innovation management as following reasons. first, due to the important role of hrm practices in fostering innovation capability, scholars emphasized the need of examining this relationship which have not been explicitly studied (cao et al., 2022; than et al., 2023). by investigating the effects of high-involvement and highcommitment hrm practices on innovation capability, the paper significantly contributes to filling the theoretical gaps, and highlights that high-involvement hrm practice is one of the most optimal solutions for firms to stimulate innovation capability. specifically, contrary to the effect of high-commitment hrm practices on innovation capability which is not statistically significant, the empirical findings reveal that influences of highinvolvement hrm practices on innovation capability is significantly and positively. the findings imply that ceos and managers of vietnamese firms should pay much attention to practicing high-involvement hrm for strongly stimulating its capability for innovation. second, an important contribution of this study is that providing deeper insight on the relationship between knowledge sharing activities of employees and innovation capability. the empirical findings have verified the correlation among latent variables in the proposal model and confirmed the key role of knowledge sharing in stimulating innovation capability of firms in the context of firms in developing market like vietnam. generally, the findings on relationships between these constructs have brought many specific and useful guides for firms to enhance innovation capability. the findings revealed that to pursuit innovation capability, firms should focus on fostering the willingness of employees toward knowledge sharing activities such as encouraging employees to discuss work-related matters, share their knowledge and experience with others, answer the questions of colleagues as well as they can, record as much as possible in writing a document or a report, offer colleagues the needed information and documents as their demands, and show the colleagues how to solve their problems or tell them where to look for assistance. finally, although literature has paid attention to addressing the relationship between hrm practices and innovation outcomes, the insights and causal mechanisms of this link is not yet fully understood. this study has, therefore, contributed to addressing these issues based developing a proposal research model to examine the potential mediating mechanism of knowledge sharing between two specific models of hrm practices (high-involvement hrm and high commitment practices) and innovation capability. the findings of this study have verified the mediating effect of ks behaviors and revealed that both forms of hrm practices can be appropriate choices for firms in the developing nations to nurture innovation capability directly or indirectly through its effects on ks activities of employees. conclusion beside significant contributions, the paper still has some certain limitations. first, the paper used crosssectional design, thus it might expose the cases that causal correlations might alter in the long-run. therefore, longitudinal studies are necessary to surpass this restriction and confirm the findings of this study. second, the paper is only performed in the circumstances of medium and small firms, so the future work should examine the relationship among the latent factors in the broader circumstances to provide more meaning for firms. finally, in the emerging and developing countries, frugal innovation is one of the reasonable and optimal strategies for firms to face with the context of resource-constraints and environmental turbulences (le, 2021; lei et al., 2021; le et al., 2022). originating from the undeniable influence of hrm practices and ks processes on innovation, this paper calls future studies for examining the potential mediating mechanisms of ks processes between specific forms of hrm practices and frugal innovation. overall, the paper has shown the empirical evidence to spotlight that hrm practices and employees’ ks activities significantly contribute to foster innovation capability for firms in developing markets. the paper has significantly advanced the innovation management theory by offering an integrative model and effective pathway for pursuing innovation capability via practicing high-involvement and high-commitment hrm to stimulating ks of employees in organizations. https://journals.e-palli.com/home/index.php/ajebi pa ge 42 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(2) 35-44, 2023 references aman, q., noreen, t., khan, i., ali, r., & yasin, a. 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(2020). high-involvement hrm practices and innovative work behavior among production-line workers: mediating role of employee’s functional flexibility. employee relations: the international journal, 42(4), 883-902. https://journals.e-palli.com/home/index.php/ajebi pa ge 1 pa ge 93 american journal of economics and business innovation (ajebi) intermediating role of human resource management in organizational conflict and its influence on organizational effectiveness – evidence from bangladesh’s banking sector sohana intasa siddiqua1*, tasnuva fayezin2, reazul hoque3 volume 1 issue 3, year 2022 issn: 2831-5588 (online) doi: https://doi.org/10.54536/ajebi.v1i3.946 https://journals.e-palli.com/home/index.php/ajebi article information abstract received: november 15, 2022 accepted: december 09, 2022 published: december 12, 2022 since the economy has changed due to globalization, markets have become extremely competitive. the market system is shaping the expansion of business, the economy, and other areas. as a result, human resource management (hrm) plays a crucial function. the study’s goal is to assess the effectiveness of human resource management (hrm) and how organizational disputes affect hrm’s influence on organizational effectiveness in bangladesh’s banking industry. this paper used primary data from 400 employees in bangladesh’s banking industry through a questionnaire, of which 310 were returned for the purpose of testing study hypotheses. pls-sem has been used for data analysis and the result shows that the functional conflict has a favorable link to organizational success. additionally, it has been discovered that hrm practices have a substantial impact on organizational effectiveness and can change dysfunctional conflict into functional conflict. the finding in this study reveals that there is a strong correlation between dysfunctional conflict and organizational success. this paper provides administrators in bangladesh’s banking sector with an essential framework for comprehending why hrm is important in banks and other enterprises and demonstrates a positive association between hrm performance and organizational success. keywords hr practices, organizational effectiveness, organizational conflict, banking sector of bangladesh 1 american university of ras al khaimah, uae 2 east delta university, bangladesh 3 university of chittagong, bangladesh * corresponding author’s e-mail: sohana.siddiqua@gmail.com introduction conflict resolution is essential in both hrm practice and theory. however, some argue that conflict should be avoided, while others argue that it should be welcomed in order to promote organizational effectiveness. the existence of humans and their interactions with one another creates the possibility of conflict. dispute at conflicts at the intermediate level are a natural occurrence; we face possible conflicts at all organizational levels (barker et al., 1987). the only issue that develops in the organization is when disagreements are impossible to keep at a moderate level. as a result, disagreements are crucial in organizations. the banking industry is considered as the backbone of the financial system in most nations and is essential to achieving economic progression and growth (kamarudin et al., 2016). the expansion of trade and commerce, the creation of jobs, and the encouragement of the industrial revolution in an economy all depend on the banking sector growing. bangladesh’s financial industry is changing and has experienced tremendous growth during the past 20 years (ahamed, 2012). however, the rate of development decreased, leading to subpar performance and effectiveness because of a lack of sufficient capital, solid governance, an increase in nonperforming loans, liquidity problems, and other concerns. these are some of the main issues facing bangladesh’s banking industry, as they have weakened the sector (zheng et al., 2020; amir, 2019; habib, 2018). every year to address capital deficiency, the financial rule expert inserts investment into the banking industry, although the development is not however apparent (uddin and bristy, 2014). both the nation’s financial sector and the whole economy are impacted by these problems. due to the recent liberalisation of monetary policies, numerous international commercial banks have entered the local banking market, increasing competition (mirzaei et al., 2013). this might have an impact on the effectiveness and performance of banks by reducing monopolistic power and profitability (banna et al., 2017). ineffective banking practices can lead to issues like bank collapse and a loss of public faith in the financial system, which can result in economic stagnation (mahmud et al., 2016). however, all bangladeshi banks are placing a greater focus on cost management and providing high-quality services and commodities in order to perform well (ahmed and liza, 2013). in this situation, bangladesh critically needs efficient regulatory guidelines and rating systems for assessing banking performance, with a particular focus on management effectiveness, asset and profits quality, risk reduction, and financial stability (moudud-ul-haq, 2017). as a result, effectiveness has become increasingly important (shameem, 1995), and efforts have been made to increase the effectiveness of bangladesh’s banking sector. this approach forces banks to operate in a manner that is efficient or near to “best practise” in terms of service delivery (rashid et al., 2020). however, due to management bottlenecks, insufficient capital, low profitability, market risk, and other factors, the majority of banks perform below expectations (bangladesh bank, 2019). conflict is one of the numerous causes of variation in the performance of bangladesh’s banking sector, according to this study. there are numerous explanations for this, but according to this report, conflict is one of the causes of the deterioration in banking standards in bangladesh. moudud-ul-haq https://doi.org/10.54536/ajebi.v1i3.946 https://journals.e-palli.com/home/index.php/ajebi mailto:%20otong.karyono%40iain-bone.ac.id?subject= mailto:sohana.siddiqua@gmail.com pa ge 94 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(3) 93-101, 2022 (2017) discovers a substantial association between organizational higher education conflict and employee performance effeteness. furthermore, he feels that hrm practices are critical for resolving all types of conflicts that may arise in the workplace of banking employees, as the banking industry contributes to a high level of employment as well as varied demographic profiles of employees. how to manage people to avoid conflict and use it constructively is a difficulty that hr departments face in all corporate sectors, including banking (rashid et al., 2020). thus, the purpose of this study is to analyse the relationship between organizational conflict, hrm, and organizational success, as well as to apply such hrm techniques to reduce conflict in bangladesh’s banking sector. literature review planning, organizing, directing, and regulating personnel operations are all part of human resource management. elarabi and johari (2014) claim that hrm is a process that focuses on preserving and increasing the skills of specific employees as well as promoting cooperation and inter-employee communication to support organizational development. the application of company strategy, job performance, financial results, conflict management within the firm, and sustained competitive advantage are all positively impacted by hrm methods “(katou and budhwar, 2010; caliskan, 2010; tan and nasurdin, 2011; boohene and asuinura, 2011; mukhtar and siengthai, 2011; atteya, 2012; loshali and krishnan, 2013)”. the goal of hr planning is to predict future labor requirements for a firm. according to yadav and dabhade (2014), effective strategic business and people management is referred to as hr planning. these procedures seek to determine future manpower requirements and contrast them with the laborlabor force at hand. to avoid any labor surpluses or shortages, hr managers evaluated the supply and demand for human resources, according to noe et al. (2010). they then took the necessary actions to solve these potential concerns. werner and desimone (2009) claim that recruiting and selection strategies are designed to find qualified candidates for open positions now and in the future and to make the best decisions. mondy and mondy (2014) define recruitment as the process of persuading people to submit timely and sufficient applications for jobs with a company. the quantity and caliber of the candidate pool may be utilized to determine how successful a recruiting procedure is, claims durai (2010). therefore, recruiting must draw in competent candidates as well as applications in order to persuade them to apply for a position. employees must be capable of handling a variety of duties in an effective and efficient manner given the dynamic work environment and complicated business needs of today. an effective training and development program provides employees with continual knowledge and experience. “training and expansion are critical for improving job performance, increasing employee productivity and satisfaction, lowering expenses, and improving work quality. according to mondy and mondy (2014)”, training and development are ongoing programs that strive to improve organizational performance and employee competency by providing employees with the skills and information they need to execute their jobs. compensation is critical for recruiting and retaining competent workers. it relates to all remuneration and benefits provided to employees in acknowledgment of their efforts, as a result of their employment, and as a result of their contribution to the company’s growth (mondy and mondy, 2014). pay is a human resources technique used to enhance employee behavior and performance, according to gilmore and williams (2009). irshad (2008) asserts that every firm strives to improve the performance of its employees because it wants the best individuals to work for it. better pay is necessary to recruit the top employees and entice personnel away from other companies. al-hyasat (2006) looked at the efficacy and effectiveness of hrms (human resource planning, hiring and placement, performance evaluation of staff members, and employee training) as well as the connection between these tactics and business success. in twenty-one jordanian news organizations, information was gathered from staff members who hold positions below section head. the efficiency and effectiveness of hr planning techniques, challenging and selection procedures, people performance evaluation systems, and training strategies were positively correlated with institutional performance, according to the findings. al-sahryra and al-graeb (2010) looked at how organizational creativity and hrm methods are used. the study also looked at how the two dimensions related to one another and discovered how demographic and functional factors affected organizational creativity and hrm in the jordanian telecoms business. it has been shown that there is a high level of organizational innovation and hrm function usage. additionally, it has been discovered that hrm activities have a considerable impact on organizational innovation. hypothesis 1: organizational effectiveness is correlated with effective hrm strategies. hrm philosophy and practices place a strong emphasis on understanding conflict. some people believe that conflict should be avoided, while others believe that it should be welcomed to improve organizational performance. managing conflict to keep it at a productive level is a supervisor’s duty and may take up more than 25% of their time (mintzberg, 1975; thomas and schmidt, 1976). according to recent surveys, managers now spend over 18% of their time managing employee disagreements, more than tripling that amount since the mid-1980s (hignite, margavio, and chin, 2002). additionally, hrm philosophies deliver leadership for developing interferences and analyzing the consequences (latham and crandall, 1991). recruitment and selection are the initial https://journals.e-palli.com/home/index.php/ajebi pa ge 95 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(3) 93-101, 2022 stage from an hrm viewpoint. attracting applicants and selecting them mostly through unstructured interviews are the first steps in the recruiting process (wilk and cappelli, 2003). a person has to be trained and developed after being chosen based on desirable characteristics. it becomes essential to keep staff informed, especially in educational institutions “(pfeffer, 1994; appelbaum and goransson, 1997)”. according to latham and stuart (2007), performance’s significance must be expressed clearly. according to campbell et al. (1993), performance is defined as behavior or activity. teaching abilities, research capabilities, and service are the factors used by latham and stuart (2007) to evaluate the faculty. these many hypothetical viewpoints on hrm practices deliver a foundation for utilizing hrm practices to change dysfunctional conflict keen on functional conflict. this study postulates the following hypothesis because hrm practices may convert dysfunctional conflict into functional conflict. hypothesis 2: hrm procedures may transform conflict from being dysfunctional into being functional. organizational conflict and organizational effectiveness manulang asserted that a company’s effectiveness is simply the sum of its employees’ effectiveness. the process of taking activities in support of organizational objectives is known as organizational effectiveness (robbins, 2010). in other words, organizational effectiveness will result from each component of the company doing its responsibilities appropriately (hossain, 2017). conflict may injure many fine people as well as corrupt the organization. three viewpoints on conflict may be identified: 1) traditional views, which maintain that conflict is undesirable; 2) behavioral views, which maintain that conflict frequently occurs in organizational life; and 3) interaction views, which maintain that conflict is inevitable and occasionally even necessary due to the structure and operation of organizations. (stoner and freeman, 2009; robbins, 2014; wahab, 2011). at the institutional or organizational level, disputes frequently take an asymmetrical form. human resources are the source of the complexity that frequently arises, including tasks, status and position, authority, etc (muhammad hisyam, 2016). conflict management is one way to resolve conflicts or turn them into a force for increasing organizational success. contrary to popular belief, some disagreements can literally increase the performance of an organization (boutros-gali, 1999). conflict is now increasingly seen as a necessity rather than as something that has a negative impact, and it demonstrated the influence of conflict variables on organizational effectiveness variables through the relationship between sub-variables. “conflict seems to be essential characteristics of organizational effectiveness and learning,” write luthans, rubach, sechein, and senge in afzalur rahim (rahim, 2017). the understanding of conflict, according to carruthers (2000), refers to the approach to individual behaviour as a conflict that develops within a person, and the understanding of conflict through an organizational approach is a situation that results from disagreement over the goals to be attained and the strategy to accomplish them (davis and newstrom, 1996) conflict management is the process of preparing for conflict and handling it when it occurs (aula and siira, 2010). therefore, conflict itself is not a problem; the problem arises when ineffective leaders employ subpar conflict management strategies. hypothesis 3: organizational effectiveness and conflict within organizations are related. figure 1: conceptual framework methodology as phenomena are previously known and intended for additional explanations within the context of theorized correlations, thus this study is quantitative in character and explanatory in nature. explanatory research is a study method that explores the causes of an occurrence when there is few accessible information (greener, 2008). he continued by saying that it may improve your comprehension of a certain subject, allow you to determine how or why a specific phenomenon is occurring, and allow you to make forecasts around the prospect. the population of this research has been targeted with multistage sampling techniques in which entire three https://journals.e-palli.com/home/index.php/ajebi pa ge 96 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(3) 93-101, 2022 banks were considered via random sampling from entire population. furthermore, data was only collected by using quota sampling, the staff was divided into three tiers. questionnaires were administered in top level, middle level and first line managers with the help of snow ball technique. a total of 34 items were taken from the (huselid,1995; gould-williams,2003 and pfeffer,1998). each variable has high internal consistency and dependability during the initial investigation (organizational effectiveness 0.702, organizational conflict 0.753 and hr practices 0.711). 1 represents strongly disagreed and 7 represents strongly agreed on a seven point likert scale. 400 employees were given questionnaires to complete; 310 of those 400 questionnaires were returned, and 280 were chosen for examination. the sem from smart pls was then used for analysis. structural equation modeling by smart pls structural equation modeling (sem) is a statistical-based multivariate modeling methods. application of sem is similar but more powerful than regression analysis; and number of scientists using sem in their research is rapidly increasing. this review article algorithmically discusses the sem methodology. sem strategies, sem steps and sem stages are introduced in this article; validity tests are presented as well. novelty of this article is in modified steps of sem application in modeling strategies, also in its developed practical comprehensive sem application flowchart. this article is a roadmap for business advisors and those scholars trying to compute sem for their decision making, complex modeling and data analysis programming structural equation modeling (sem) is a statistical-based multivariate modeling methods. application of sem is similar but more powerful than regression analysis; and number of scientists using sem in their research is rapidly increasing. this review article algorithmically discusses the sem methodology. sem strategies, sem steps and sem stages are introduced in this article; validity tests are presented as well. novelty of this article is in modified steps of sem application in modeling strategies, also in its developed practical comprehensive sem application flowchart. this article is a roadmap for business advisors and those scholars trying to compute sem for their decision making, complex modeling and data analysis programming structural equation modeling (sem) is a statistical-based multivariate modeling methods. application of sem is similar but more powerful than regression analysis; and number of scientists using sem in their research is rapidly increasing. this review article algorithmically discusses the sem methodology. sem strategies, sem steps and sem stages are introduced in this article; validity tests are presented as well. novelty of this article is in modified steps of sem application in modeling strategies, also in its developed practical comprehensive sem application flowchart. this article is a roadmap for business advisors and those scholars trying to compute sem for their decision making, complex modeling and data analysis programming “a multivariate statistical analytic method called structural equation modelling is used to examine structural connections” (hair et al., 2016). this method examines the structural link between measured variables and latent constructs by combining component analysis and multiple regression analysis (awais-e-yazdan et al., 2022). this method is preferred by the researcher since it estimates several related dependencies in a single inquiry. the two types of variables used in this study are endogenous and exogenous. endogenous variables are equivalent to both independent and dependent variables (awais-e-yazdan et al., 2022). moreover, sem has been performed via smart pls software. results and discussion out of 280 participants, 231 were men, making up the majority of the participants who were targeted for data table 1: profile of the respondents. demographics categories frequency percentage gender male 231 82.5 female 49 17.5 marital status married 186 66.4 single 94 33.5 age 20 to 29 84 30.0 30 to 39 112 40.0 40 to 49 70 25.0 50 to 59 14 5.0 education bachelor degree 90 32.1 master degree 177 63.2 mphil/phd 13 4.64 experience less than 1 year 9 3.2 1-10 years 156 55.7 11-20 years 65 23.2 21-30 years 30 10.7 31-40 years 20 7.1 occupation top level management 18 6.4 middle level management 89 31.7 first line management 173 61.7 https://journals.e-palli.com/home/index.php/ajebi pa ge 97 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(3) 93-101, 2022 collection. 66.4% of the participants were married, with a frequency ratio of 186. the majority of employees in the private banking industry are between the ages of 30 and 39, with a frequency ratio of 112. according to demographic statistics, private banks in bangladesh have highly educated staff members, with 63.2 percent of them holding master’s degrees and 156 percent of them having one to ten years of experience. with a frequency of 173, the participants who were targeted during data collection primarily belong to first line management. the table 1 is where the respondents’ profiles are displayed, and they are as follows. findings of measurement model cross loadings an item that loads at.32 or higher on two or more criteria is referred to as “cross loading.” if there are numerous adequate to strong loaders (. 50 or better) on each component, the researcher may want to consider excluding a cross loading item from the study. if crossloading items must be larger in their own latent variable, their relevance in explanatory research is 0.7. (hair et al., 2016). organizational effectiveness (oe), organizational conflict (oc), and hr practices (hrp) are all items of latent variables in this study, and cross table 2: factor analysis (cross loadings) sl. no. latent indicators organizational effectiveness (oe) organizational conflicts (oc) hr practices (hrp) 1 oe2 0.947 0.653 0.198 2 oe3 0.756 0.577 0.309 3 oe4 0.760 0.711 0.455 4 oe5 0.788 0.610 0.635 5 oe6 0.780 0.526 0.612 6 oe7 0.829 0.596 0.583 7 oc1 0.611 0.732 0.441 8 oc3 0.256 0.862 0.757 9 oc4 0.072 0.933 0.589 10 oc5 0.564 0.929 0.444 11 oc7 0.582 0.755 0.718 12 oc8 0.484 0.765 0.763 13 oc9 0.251 0.736 0.437 14 oc10 0.650 0.936 0.383 15 oc11 0.544 0.812 0.623 16 hrp1 0.351 0.581 0.756 17 hrp2 0.534 0.326 0.788 18 hrp3 0.315 0.612 0.822 19 hrp4 0.684 0.555 0.823 20 hrp5 0.542 0.175 0.799 21 hrp8 0.556 0.266 0.701 22 hrp9 0.613 0.487 0.806 23 hrp10 0.646 0.688 0.865 24 hrp12 0.215 0.553 0.801 25 hrp13 0.667 0.455 0.832 26 hrp14 0.631 0.622 0.783 loading analysis of factor analysis reveals that these items are all extremely heavily internally loaded. in table no. 2, further statistics are provided in more profundity. internal consistency reliabilities in pls-based research, researchers choose the composite reliability. composite reliability may result in larger estimations of genuine reliability compared to cronbach’s alpha. including cronbach’s alpha, the acceptable cutoff for composite reliability is the same as for the other reliability metrics. from 0 to 1, with 1 denoting perfect predicted reliability, is the range for composite reliability. composite reliabilities in a model should be equal to or larger than.6 for exploratory purposes, equal to or greater than.70 for confirmatory reasons (henseler et al., 2012), and equal to or more than.80 for confirmatory studies (chin, 1998; höck and ringle, 2006). (for ex., daskalakis and mantas, 2008). the numerous indicators may only be little wording variations of one another rather than being really representative measurements of the construct the factor reflects, according to very high composite reliability (>.90). with values of 0.769, 0814, and 0.815, the endogenous variable organizational effectiveness (oe) in this instance has strong cronbach’s alpha, rho a, and composite reliability, indicating that the components of the variable oe have good internal consistency reliability. organizational conflicts and hr practices also have excellent internal consistency reliability of their items, as shown below in table no. 3 accordingly, which is similar to the exogenous and mediating variables. https://journals.e-palli.com/home/index.php/ajebi pa ge 98 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(3) 93-101, 2022 convergent and divergent validities (ave and discriminant validity) a test of convergent and divergent validity may be performed using ave. in a reflective model, ave represents the average communality for each latent component. in an acceptable model, ave should be larger than.5 and bigger than the cross-loadings, which indicates that variables should account for at least half of the variation of their respective indicators. (chin, 1998; höck and ringle, 2006) average below 50 indicates that explained variance is more than error variance. table 3: internal consistency reliabilities. latent variables cronbach's alpha rho_a composite reliability organizational effectiveness 0.769 0.814 0.815 organizational conflicts 0.712 0.800 0.792 hr practices 0.807 0.872 0.860 all of the latent variables in this study have extremely strong and substantial average of variance extraction, as shown by the ave values of oe (ave = 0.52), oc (ave = 0.641), and hrp (ave = 0.627). additionally, the square root of ave is displayed in the diagonal cells of the fornell-larcker criteria table in the smartpls output, and correlations are displayed below it. as a result, in absolute value terms, there is discriminant validity as indicated by table no.4 if the top number (which is the square root of ave) in any factor column is higher than the numbers (correlations). table 4: convergent and divergent validities latent variables organizational effectiveness organizational conflicts hr practices ave organizational effectiveness 0.721 0.521 organizational conflicts 0.727 0.800 0.641 hr practices 0.765 0.723 0.792 0.627 r_square and f_square (model fit test) the structural model’s overall effect size is measured by r-square, also known as the coefficient of determination and previously mentioned and shown above. results of the oc and hrp below the cutoffs of 0.26 and 0.21 are referred to as “significant” by chin (1998) and höck and ringle (2006), respectively. here, the r-square would be seen as having a modest strength or influence. however, what is termed “high” depends on the field: a number of.25 would be regarded as “high” if the prior state of the art in the relevant field had produced even lower values. the r-square change effect is also known as the f-square effect size measure. the r2 change’s contribution to the unexplained variance is expressed using the f-square equation (hair et al., 2014). once more, oe has an excellent f square value of.27, and hrp likewise has a decent f square value as a mediator, with a 0.13-bit smaller effect because of the mediation effect. table 5: r square and f square analysis (model fit test) latent variables r square r square adjusted f square organizational effectiveness -0.27 organizational conflicts 0.26 0.26 -hr practices 0.21 0.22 0.13 findings of structural model mooney and duval (1993) and wood (2005) both assert that the bootstrap has several significant consequences for researchers. first off, the approach is straightforward and needs a basic understanding of mathematics. second, the approach may be used to a wide range of statistical ideas. in this table 6. beta, standard error, and t-statistics analyses are included in the path coefficient table, which analyses the significance of hypotheses with various significant values. at 0.05, the beta value is significant, and at 1.96, the t value is significant. here, oc is highly associated to hrp with a beta value of 0.315 and a t value of 5.102. additionally, oc is significantly related to oe as a result of a direct impact with beta and t values of 0.382 and 5.133. additionally, through hrp, there is an indirect connection between oc and oe. because of the mediation effect, oc-hrp also has a substantial connection with oe, with beta and t values of 0.282 and 7.912 respectively. table 6: path coefficient path coefficient hypotheses beta standard error t statistics direct effect oc -> hrp 0.315 0.071 5.102 oc -> oe 0.382 0.053 5.133 indirect effect oc-hrp-> oe 0.282 0.078 7.912 https://journals.e-palli.com/home/index.php/ajebi pa ge 99 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(3) 93-101, 2022 conclusion this study confirms the first hypothesis of the study, which states that there is an association between organizational conflict and organizational effectiveness. the research discovers a strong link among oe and “functional conflict”. this study’s discovery of a substantial association between dysfunctional conflict and organizational success lends weight to the theory that there is a link between the two. as a result, it is clear from the findings that although dysfunctional conflict reduces organizational performance in the banking industry as well as other economic sectors, functional conflict helps to increase it. the study’s second objective is to determine is hrm performs and oe are related? research has also provided solid evidence that organizational success in bangladesh’s baking industry is significantly influenced by recruiting and selection, training and development, performance evaluation, and the involvement of the union. acceptance of this concept therefore gives the administrators in bangladesh’s banking industry a crucial foundation for understanding why hrm is crucial in banks and other industries. as a result, analysis reveals that hrm performs have a favorable relationship with organizational success. effective hrm practices are thought to help keep conflict at a functioning level. additionally, communication is proven to be important. the findings of this study provide strong evidence in favor of the hypothesis that hrm practices serve as an important moderating variable. therefore, this study suggests that using hrm practices as a arbitrator in turning dysfunctional conflict into functional conflict will help bangladesh’s banking sector reduce employee conflict and increase organizational effectiveness. the findings imply that, in banks as in other business sectors, maintaining organizational conflict at a functional level may improve organizational effectiveness. this study also reveals that through enhancing employee performance and happiness, hrm may play a significant role in banks and contribute to greater organizational success. additionally, this research specifically focused in particular variables i.e. organizational effectiveness, conflict and mediation role of hrm, however future studies should extent and alter this model by exploring impact of other variables of alike organizational culture, performance appraisal and others on organizational effectiveness. moreover similar analysis should also be performed on different nature of organizations as this research particularly focused on banking industry thus the findings are limited to banking industry and relevant financial institutions only. references ahmed, m. s., and liza, f. f. 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(2020). viral load dynamics and disease severity in patients infected with sars-cov-2 in zhejiang province, china, january-march 2020: retrospective cohort study. bmj, 369. https://journals.e-palli.com/home/index.php/ajebi pa ge 1 pa ge 11 4 american journal of economics and business innovation (ajebi) perceived online tax compliance measures on tax compliance among online traders in kenya eric kiprono1*, edwin kimitei2, collins kapkiyai3 volume 2 issue 3, year 2023 issn: 2831-5588 (online), 2832-4862 (print) doi: https://doi.org/10.54536/ajebi.v2i3.2041 https://journals.e-palli.com/home/index.php/ajebi article information abstract received: september 15, 2023 accepted: october 13, 2023 published: october 20, 2023 in several developing countries, tax collection by government relied on manual taxation, but there is now more drive towards introduction of electronic online filling of taxes. in kenya, online tax system relies on integrated tax system known as itax system. this study determined the relationship between online tax system and tax compliance among online traders in uasin gishu in kenya. the study is based on three theories as part of the theoretical framework, that is, the technology acceptance model (tam) theory and game theory model of equilibrium in tax compliance. the research study adopted a positivist research paradigm and explanatory research design. primary data were collected using online questionnaires from a sample of 160 online traders respondents in uasin gishu. the study found that during the response to five attributes of tax compliance, the there was low levels of tax compliance. the study also reported low levels of perceived itax security concerns as well as perceived tax system stability. the multiple linear regression coefficient (r2 = 0.863, p < 0.001) was positive indicating a positive correlation between perceived itax security and perceived tax system stability with tax compliance. we conclude that perceived security risks concerns and perceived tax system stability affected tax compliance among online traders in uasin gishu county. based on the findings, it is suggested that policy makers should not just place emphasis on technology but pay more attention on the characteristics of potential itax users, e.g. their perceived security and system stability while implementing itax service. keywords tax compliance, small and medium enterprises, online tax filing, online business, kenya 1 department of custom and border control, kenya revenue authority, p. o. box 48240–00100, nairobi, kenya 2 department of marketing & logistics, moi university, po box 3900, eldoret, kenya 3 department of accounting and finance, moi university, po box 3900, eldoret, kenya * corresponding author’s e-mail: erickiprono88@gmail.com introduction in the contemporary world, increasing number of business people relate with internet for economic purposes (alzoubi et al., 2022; beniiche et al., 2022). indeed this interaction with the internet has created the basis for clients or consumers, product and market, access and distribution of information, and low-cost delivery of documents, business opportunities, consultancy services, online avenues for trading on various products, including engaging in online trades on various digital assets (li and zhang, 2022; peters, 2023). over the last 10 years, there has been more online users moving away from the ‘brochure websites’ into new generation websites which offer better platform for interaction between the users and a variety of online businesses platforms (murray et al., 2023). kenya is one of the countries that has made tremendous strides in the adoption internet being at 89.5% penetrability among the population as at january 2021 (kapkai et al., 2021). this translated to internet coverage of approximately 17.86 million users at the start of 2021. this unprecedented growth of internet has enabled many kenyans to view internet as a platform where they can earn their living though online trades (ndung’u, 2018; wilson and makau, 2018; nyaga, 2023). this enables business to be conducted without physical presence. while earning a living online used to be for some selected few in the past, the government of kenyan has gradually recognized the importance of internet business and ecommerce as an economic activity for which the citizens actively participate and contribute to the development of the country (david and grobler, 2020; myovella et al., 2020). economic growth and development of a counties pivots on the revenues obtained by the government from the citizens and investments (christensen and hearson, 2019; allayarov, 2020). the governments also need revenue to funds the growth of public expenditure, infrastructure, education, public healthcare services, public services, and pay debts among others (kimaro et al., 2017; bausch, 2019). the main instruments that a government may use to obtain funds for public expenditure is mainly through taxation (ndajiwo, 2020; olawole et al., 2022). the tax system is expected to mobilize revenues, reduce economic distortions, improve resource allocation, and improve productivity and growth prospects. in the past several years, there have been elaborate plans by governments to increase tax revenue generated (habibov et al., 2018; deojain and lindequist, 2019) and this extend to tax from online business platforms. taxes collected by governments rely on voluntary compliance by taxpayers in fulfilling their tax obligation freely and completely without coercion (slemrod, 2019; okwara, 2020). here, tax compliance will enable the citizens to pay taxes on time and timely reporting of the correct tax information (mcgill, 2019; de neve et al., 2021). in this case, governments require all citizens in the respective jurisdiction to encompass voluntary obligation to pay taxes as set out in law (hofmann et al., 2017; guerra pa ge 11 5 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 114-122, 2023 and harrington, 2018). however, countries in developing economies have difficulties of raising adequate tax revenue to finance the ever increasing public expenditures due to tax non-compliance (rosid et al., 2019). an increase in tax compliance would reasonably enhance tax revenue level (rosid et al., 2018; tilahun, 2019). subsequently, ways of improving tax compliance have been suggested in several countries. the rapidly increasing pace of technological change has significantly impacted tax compliance (cotton and dark, 2017; gangodawilage et al., 2021). through technological innovations, tax systems and databases may be integrated to facilitate tax compliance (qadri and darmawan, 2021; qi and azmi, 2021). there are a number of methods employed today by tax agencies to capture tax return and payment data electronically thus likely to affect tax compliance. the electronic tax filing is a major form of electronic government services (bassey et al., 2022). the kenyan government introduced electronic tax filing in order to achieve greater tax administrative and compliance efficiency (ng’ong’o, 2021). this system of taxation has an immense advantage including the convenience of taxpayers who can file tax returns at home or cybercafés, and minimization of errors associated with manual filing as the system automatically check the application (bassongui and houngbédji, 2021; do et al., 2022). in kenya, the earliest form of the online filing of tax returns was through the implementation of the integrated tax management system (itms) in 2013. the kenya revenue authority (kra) later phased out the itms and replaced it with the integrated tax management (itax) system. the itax was more efficient to the taxpayer in filling their tax returns, undertake internet based registration, paying and status inquiries with real time monitoring of the accounts (bett and yudah, 2017; opiyo, 2022). while there is an obvious advantage of itax system, success of the system may rely on a number of factors including perception on the security of the system, and to some extent technical knowledge of system stability by the taxpayers (migot and paul, 2019). however, to the best of our knowledge, there is no study that has empirically tested these assertions. therefore the aim of this study was to establish the impact of adoption of itax on tax compliance among online traders in uasin gishu, kenya. literature review theoretical review the first theory that was used to explain the tax compliance behaviour in relation to technology is the technology acceptance model (tam) developed by davis and venkatesh in 1989 (tarhini et al., 2015; lai, 2017). the authors argue that “when users are presented with a new technology; its perceived usefulness (pu) and perceived ease-of-use (peou) will influence their decisions on how and when they will use it.” the pu will allow the user to depict how using the technology will enhance their job performance while peou enable the user to perceive a particular system as free from effort. this implies that user acceptance of a technology will be pivotal in shaping the success or failure of adopting any system (lippert and davis, 2006; hooks et al., 2022). the theory allows for the users to successful adopt the technology and have positive attitudes towards using the technology for their maximum benefits. the attitudes towards usage may be not be there but this attitude can increase if the user learn the basic of using the technology. there are however weaknesses of the theory one being that tam has managed to divert the attention of the researchers from other significant research themes by creating an illusion of progress in knowledge accumulation. secondly another weakness of the theory is that attempts at expanding tam to enable it to adapt the dynamic it environments have caused more theoretical chaos and confusion. the second theory that was used in this study is the game theory model of equilibrium in tax compliance (geckil and anderson, 2016). this group of model that try to explain compliance behaviour among taxpayers are generally based on the standard gametheory concept of equilibrium. assuming linear tax rate and penalties, risk neutral taxpayer, no additional cost of an audit other than penalties levied on underreporting of income and that the objective of the tax authority is to maximize revenue. a tax authority will pursue the strategy that provides optimum audit revenue subject to a fixed audit budget by setting up a cut-off, whereby all declarations below the set level are audited with a probability p but leave out all declarations above the cut-off. conceptual framework this study conceptualizes that tax compliance could be figure 1: conceptual framework linking the attributes of itax management in tax pa ge 11 6 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 114-122, 2023 affected by online tax registration, tax liability verification, tax law enforcements. the purpose of this study will therefore be to test the nature and the strength of these relationships. methodology research paradigm and design the underlying issue in research paradigm is to understand the ontology, epistemology and methodology of research (rahi, 2017). this research study adopted a positivist research paradigm. the ontology of positivist paradigm judge that the world is independent, external and there exist a single objective reality to any situation regardless of the researcher’s viewpoint (rehman and alharthi, 2016). the epistemology of positivism relies on observable and measurable facts with a presumption of causal explanation and prediction. the methodology of the said paradigm state that the best way to solve a problem involves quantification and statistical probability. here, a hypothesis is put forward in propositional or question form about the causal relation between phenomena. empirical evidence is gathered; the mass of empirical evidence is then analyzed and formulated in the form of a theory that explains the effect of the independent variable on the dependent variable. this study adopted explanatory research design. the explanatory research design analyzes the cause-effect relationship between two or more variables (casey et al., 2022). this design was adopted since the analysis investigated the cause-effect relationship between the independent and the dependent variables. the cause was itax measures whereas the effect was tax compliance. study area, population and sampling the study was carried out in uasin gishu county in kenya. uasin gishu is one of the 47 counties in kenya lying between longitudes 34º50’ east to 35º37’ east and latitudes 0º03’ south to 0º 55’ north. the county shares common borders with trans nzoia county to the north, elgeyo marakwet county to the east, baringo county to the south east, kericho county to the south, nandi county to the south west and kakamega county to the north west. it covers a total area of 3,345.2 km2. the population for this study were online traders. the online traders are registered at the department of trade in uasin county offices. during the time of study, there were 459 individuals with registration status of business on online platform in any form. the sample size was derived from the population and the information used to generalize the findings within the limit of random error. the sample size of the study was calculated by using the slovins formula (tejada and punzalan, 2012) with a 95% confidence level as: table 1: socio-economic characteristics of the respondents (n = 160) socio-economic attributes (n = 160) variable attributes freq. percent gender male 100 62.5 female 60 37.5 age 18-25 years 48 30.0 26–35 years 60 37.5 36–55 years 44 27.5 > 55 years 8 5.0 level of education primary school 20 12.5 secondary school 68 42.5 college 42 26.3 bachelor degree 22 13.8 master degree 8 5.0 business age <1 years 48 30.0 2-5 years 92 57.5 5-10 years 16 10.0 >10 years 4 2.5 source: data analysis (2023) where: n = sample size required n = number of people in the population e = allowable error (5%) thus the sample size was 214 online traders. a total of 214 self-administered questionnaires were distributed and a total of 160 were returned resulting in a response rate of 84.1%. the overall response rate was found to be suitable for analysis and making interpretations since response rate of 60-100% is considered adequate to validate any survey based studies (meyer et al., 2022). the socio-economic background of the respondents is presented in table 1. research instruments and data collection data from the online traders were collected using pa ge 11 7 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 114-122, 2023 questionnaires. the questionnaire was divided into three parts; section a had the background information of the online traders, section b gathered information about the security and stability of itax while section c gathered information on tax compliance measurements. the questionnaires were self-administered by giving out in person to the respondents and could be completed at the informant’s own time. the questionnaire was used to collect quantitative data determined by a likert scale consisting of 5 items. all items were positively scored. a five-point likert scale ranging from strongly disagree (1), disagree (2), neither agree nor disagree (3), agree (4) and strongly agree (5) was employed. the researcher used expert judgement (demirpence and putnam, 2020) of subject matter specialists to evaluate validity of test items. experts also made suggestions on the effectiveness of the questionnaire by checking whether it was related to the research questions or not and gave feedback. their recommendations were incorporated in the final questionnaire. for this analysis, reliability was evaluated using the cronbach alpha test. for cronbach’s alpha the commonly agreed lower limit is=>0.70, however in explanatory research it may decrease to =>0.60 and increase up to ≥0.80 in studies requiring more stringent reliability (alkhadim, 2022). the alpha coefficient results of the reliability tests are provided in table 2 the reliability of the perceived stability of itax was the highest (α = 0.8426), followed by perceived security of itax (α = 0.8222), and finally, tax compliance had a lower reliability score (α = 0.7862). reliability coefficient were above 0.7 which is acceptable (amirrudin et al., 2021). upon expiration of the allocated duration and kept in safe custody awaiting analysis. model development, measures and data analysis data collected were checked for errors and cleaned before analysis using statistical package for social sciences (spss 23.0). the research instruments were further edited for completeness and consistency. data were then coded before statistical analysis. descriptive statistics was used to summarize the data and included percentages, frequencies, means and standard deviations. quantitative data evaluating the relationship between the independent and dependent variable were analyzed using multiple linear regression model of the form: yi= β0 + β1x1 + β2x2 + βnxn + εi for i = 1,2,3,....n; n = 2 where yi = dependent variable, β0 = y-intercept (constant term) x1 = perceived security concern and x2 = perceived system stability β1, β2, β3, β4 and β5 = regression coefficients xi = predictor variables for the independent variables and ε = error the assumptions of multiple regression analysis were strictly adhered to so as to control bias and they included: linearity the linear regression needs the relationship between the independent and dependent variables to be linear. this was tested with the use of scatter plots. normality the linear regression assumes that all variables have normal distributions. this assumption was checked with the use of goodness of fit test multicollinearity in the data multicollinearity occurs when the independent variables are highly correlated with each other. this was checked using tolerance and variance inflation factor (vif). tolerance measures the influence of one independent variable on all other independent variables. vif values of less than 10 and tolerance value of more than 0.2 signifies absence of multicollinearity (lavery et al., 2019). homoscedasticity (constant variance) of the errors this was checked by looking at a plot of residuals versus predicted values. autocorrelation this study used durbin-watson test to check for autocorrelation. a value of between 1.5 and 2.5 is deemed appropriate to show lack of serial correlation among the errors (ding, 2019). results and discussion tax compliance levels the dependent variable for this study was tax compliance levels. the metric score for the tax compliance levels table 2: reliability statistics of items in the questionnaire variables no. of items cronbach’s alpha remark perceived security of itax 211 0.8222 reliable perceived stability of itax 208 0.8426 reliable tax compliance 221 0.7862 reliable source: data analysis (2023) before data collection, relevant documentation and permissions were sought and granted. first approval of the research was granted by moi university school of business. then a research permit was obtained from the national commission for science, technology and innovation (nacosti). data were collected at designated times in sampling units through the “dropand-pick-later” method of questionnaire administration. in some instances the data collection were done at the convenience of the respondents. the respondents were assured that strict confidentiality would be maintained in dealing with the responses. each of the respondents were given about 30 to 45 minutes to fill in the questionnaires after which the filled-in questionnaires were collected pa ge 11 8 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 114-122, 2023 is shown in table 3 based on five attributes of tax compliance, the overall mean of 1.91 ± 0.10/5.00 indicated low levels of tax compliance. tax compliance has remained a pervasive issue in developing countries (okpeyo et al., 2019; musimenta, 2020). it is however very hard to prove tax noncompliance as taxpayers always acknowledge the fact that they are tax compliant. in this study we maintained strict anonymity and insisted on seeing any prove of tax compliance and surprisingly the result was that most online traders were actually non-compliant on payment of taxes. a previous study in uganda established a significant difference between taxpayers and tax authorities in regards to tax compliance (musimenta, 2020). the baseline is the tax compliance can only be proved through physical checks of the taxpayers accounting records and tax authorities’ records which enable us to get the actual tax compliance situation. there are a number of extant studies that have investigated various explanations for low tax compliance in developing counties with varied results such as high compliance costs (musimenta, 2020), low level of tax fairness (khamis and mastor, 2021; oladipo et al., 2022), isomorphic forces (sadress et al., 2019; nartey, 2023); tax morale (hardika et al., 2021), complexity of the tax system (musimenta, 2020), tax literacy (nichita et al., 2019; twum et al., 2020), fines and penalties (mustapha et al., 2021) as well as poor taxpayers attitudes (wijaya, 2019) among others. our study did not get in details of what caused the low tax compliance and therefore we cannot pursue to answer such as question in the current study. table 3: metrics and score (means, std. dev. and distribution) for tax compliance among online traders tax compliance among online traders sd d ns a sa freq. % freq. % freq. % freq. % freq. % mean sd timely filing of tax returns 45 28.1 53 33.1 50 31.3 12 7.5 0 0.0 2.18 0.12 accurate filling of tax returns 25 15.6 56 35.0 34 21.3 13 8.1 32 20.0 1.82 0.11 timeline payments of taxes 44 27.5 46 28.8 38 23.8 15 9.4 17 10.6 1.94 0.09 voluntary tax compliance 39 24.4 53 33.1 38 23.8 13 8.1 17 10.6 1.94 0.10 no tendency to evade tax 36 22.5 31 19.4 40 25.0 12 7.5 41 25.6 1.66 0.08 mean ± sd 1.91 0.10 kurtosis 0.28 skewness 0.80 n=160; 5-point likert scale: 1= strongly disagree; 5=strongly agree; freq. = frequency source: data analysis (2023) among the attributes of tax compliance that attracted moderate score was timely filing of tax returns only while other attributes such as tendency of the online traders to file of tax returns on time, accuracies in filling of tax returns, voluntary tax compliance and tendency to evade tax scored low. tax compliances measures there are various measures on the itax that was put in place to ensure compliance. in this study the focus was on perceived security aspect and perceived system stability of the itax. the results are presented and discussed in subsequent sections. perceived itax security concerns the first independent variable for this study was perceived itax security measures by the online traders. the metric score for the perceived tax security concerns is shown in table 3. based on five attributes of tax compliance, the overall mean of 1.91 ± 0.12/5.00 indicated low levels of perceived itax security concerns. the low perceived itax security measures may have occurred due to occurrence of several cybersecurity threats and hacks into the computer system (abed and anupam, 2023; al-hawamleh, 2023). this has seen large number of people shying away from uploading large volumes of personal data, such as their personal details like security numbers in cyberspace. with table 4: metrics and score (means, std. dev. and distribution) for perceived online tax security to online traders perceived online tax security to online traders sd d ns a sa freq. % freq. % freq. % freq. % freq. % mean sd enhanced business secrecy 44 27.5 67 41.9 38 23.8 9 5.6 2 1.3 2.11 0.15 that party has no access to business information 35 21.9 52 32.5 34 21.3 9 5.6 30 18.8 1.73 0.11 there is reduced business risk 61 38.1 46 28.8 38 23.8 11 6.9 4 2.5 1.94 0.13 there is reduced website hack 50 31.3 59 36.9 38 23.8 13 8.1 0 0.0 1.99 0.12 passwords and keys are safe 31 19.4 36 22.5 40 25.0 12 7.5 41 25.6 1.69 0.08 mean ± sd 1.91 0.12 pa ge 11 9 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 114-122, 2023 exception of enhanced business secrecy, all the attributes of perceived tax security concerns attracted low score meaning they were not highly rated by the online traders. perceived online tax returns system stability the second independent variable for this study was perceived online tax returns system stability among the online traders. the metric score for the perceived online tax returns system stability is shown in table 5. based on five attributes of was perceived online tax returns system stability, the overall mean of 2.01 ± 0.08/5.00 indicated low to moderate level of perceived online tax returns system stability. the current result imply that the online traders did not have confidence about the online tax returns system stability due to frequent hang ups, collapse, delays and slow at execution of the tasks as well as several cyber security attacks. these problems reported here are common in many online setting where internet is used in performing some tax (arora et al., 2022; liu et al., 2022; renaud and coles-kemp, 2022). we observed that during the last 3 days towards the deadline of filing the returns, the system hanged or was too slow to execute any function. kurtosis -0.20 skewness -2.89 n=160; 5-point likert scale: 1= strongly disagree; 5=strongly agree; freq. = frequency source: data analysis (2023) table 5: metrics and score (means, std. dev. and distribution) for perceived tax system stability perceived tax system stability sd d ns a sa freq. % freq. % freq. % freq. % freq. % mean sd system rarely hang up during filing 42 26.3 56 35.0 23 14.4 23 14.4 16 10.0 2.47 0.10 system rarely collapse during peak hours 30 18.8 43 26.9 21 13.1 21 13.1 45 28.1 1.64 0.07 system has no delays during tax filing 39 24.4 54 33.8 20 12.5 22 13.8 25 15.6 1.84 0.10 system is fast leading during tax filing 31 19.4 52 32.5 32 20.0 26 16.3 19 11.9 2.09 0.07 system is rarely affected by cyber attacks 23 14.4 45 28.1 27 16.9 31 19.4 34 21.3 1.99 0.06 mean ± sd 2.01 0.08 kurtosis 0.66 skewness 0.81 n=160; 5-point likert scale: 1= strongly disagree; 5=strongly agree; freq. = frequency source: data analysis (2023) test for relationships between electronic tax measures on tax compliance the multiple linear regressions was used to examine the cumulative effect of electronic tax measures on tax compliance. the multiple correlation coefficient (r) was positive and of a value of 0.663 indicating that there was a strong and positive correlation between the two independent variable cumulatively and the dependent variable. on the other hand, the coefficient of determination (r square) indicates the variance on tax compliance attributed to the two independent variables is 44.2%. the one way anova was used to give an indication on whether the linear regression model was a good fit for the data or two independent variables were good predictor of the independent variable. in this context, p < 0.05 indicates that the model was considered a good fit for the data. the unstandardized coefficients of the model were examined with a view of giving security perceptions, and online returns system stability on the tax compliance levels at an independent level. the two independent variables had positive effect on the dependent variable as indicated by their coefficients in the below linear regression equation; tax compliance levels = -0.377 + 0.422 (x1) + 0.417 (x2) where x1 is security concerns and x2 = online tax returns system stability. the coefficient of intercept 0.377 indicates that any increase in the perceived online tax security and perceived tax system stability would increase the tax compliance by 37.7%. individually, perceived online tax security increase the compliance by 36.6% and perceived tax system stability increases it by 34.8%. it was also determined that the correlations between perceived online tax security and perceived tax system stability with tax compliance were found to be positive and significant. these results suggest that perceived online tax security and perceived tax system stability resulted in increased tax compliance among online traders. pa ge 12 0 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 114-122, 2023 table 6: multiple regression analysis showing the relationship between tax compliance and perceived attributes of the itax regression statistics multiple r 0.6632 r square 0.4424 adjusted r square 0.4332 standard error of estimate 0.6857 durbin-watson 1.6943 dependent variable tax compliance predictors: (constant), perceived tax security for online business, perceived system stability anova tss df mss f p-value regression 57.937 2 28.969 61.596 <0.0001 residual 73.838 157 0.470 total 131.775 159 unstandardized coefficients standardized coefficients b std. error beta t stat p value (constant) 0.377 0.161 2.343 0.020 perceived online tax security 0.422 0.100 0.366 4.230 0.000 perceived tax system stability 0.417 0.103 0.348 4.029 0.000 correlations zero-order partial part collinearity statistics (constant) tolerance vif perceived online tax security 0.618 0.320 0.253 0.467 2.196 perceived tax system stability 0.613 0.306 0.241 0.477 2.096 the research hypothesis was tested using multiple linear regression analysis. in the context of where the p value is less than 0.05 significance level then the null hypothesis was rejected. the following hypotheses were tested; h01: there is no significant relationship between perceived security risks concerns and perceived tax system stability on tax compliance among online traders in uasin gishu county. the p value of perceived security risks was <0.001 leading to the rejection of null hypothesis (h01). conclusions the itax system has been in operation in kenya for few years since 2018, with an aim to drive up tax compliance including the online traders who were not in the tax brackets previously. in the current study, there was a low level of tax compliance among the online trader and the same group of people indicated that they have low levels of perceived system security and system stability. moreover, the perceived system security and stability affected tax compliance. the findings of the current study lend credence to the fact that policy makers should not just place emphasis on technology but pay more attention on the characteristics of potential itax users, e.g. their perceived security and system stability while implementing itax service. based on the foregoing discussion, the government is challenged to develop e-filing systems that satisfy the curiosity, desires, and perceptions of taxpayers. there is also need for further research on more factors affecting compliance in the realm of acceptance models to determine how adoption factors interact, how antecedents of salient predictors impact intentions, and how additional personal perceptions and abilities impact taxpayer intentions. references abed, a. k. and anupam, a. 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(2018). online marketing use: small and medium enterprises (smes) experience from kenya. orsea journal, 7(2). pa ge 1 pa ge 29 american journal of economics and business innovation (ajebi) analysis of rice marketing channels choices in mwea irrigation scheme, kirinyaga county, kenya murage boniface wachira1*, eric kiprotich bett1, bernard njehia1, charles karani2 volume 2 issue 1, year 2023 issn: 2831-5588 (online), 2832-4862 (print) doi: https://doi.org/10.54536/ajebi.v2i1.1238 https://journals.e-palli.com/home/index.php/ajebi article information abstract received: january 25, 2023 accepted: february 11, 2023 published: february 22, 2023 the national rice development strategy in (kenya vision 2030) aims to improve food security, rural employment, and income for smallholder farmers in the mwea irrigation scheme (mis) through planned and intentional efforts. a study was conducted to identify major influences in choosing market avenues among rice farmers. the study used a sample size of 384 small-scale rice farmers to analyze the different rice marketing channels used in mis, and to understand the factors that influence farmers’ choices of marketing channels. a pretested semi-structured questionnaire was used for data collection. descriptive statistics were used to characterize the marketing channels, multinomial logit model was used to evaluate channel choices. the marketing channels were channel 1: farmer-consumer (0.3%); channel 2: farmer-brokers-millers-consumer (51.1%); channel 3: farmer-brokers-millersretailer-consumer (42.3%); channel 4: farmermillers-retailer-consumer (62.72%) and channel 5: farmermillerswholesaler-retailer-consumer (37.28%). the most profitable channel was direct sales to consumers, which accounted for only 0.3% of total rice production in mis. the study also found that factors such as education level, participation in marketing groups, distance to market, and age of the household head significantly influenced farmers’ choice of marketing channels. the study is critical in enriching literature on rice agricultural supply chains in kenya. the study recommends policy considerations to protect small-scale farmers from exploitative brokers and suggests registering brokers to monitor their activities and set standards for fair practices, with the goal of regulating their activities to prevent exploitation of small-scale farmers in rice marketing. keywords brokers, traders, farmers’ preferences, marketing channels, multinomial logit model 1 school of agriculture and environmental sciences, department of agricultural economics, kenyatta university, kenya 2 school of agricultural sciences and agribusiness, department of crop sciences, pwani university, kenya * corresponding author’s e-mail: murageb2022@gmail.com introduction rice has been harvested, consumed, and produced by many people around the world for over 10,000 years, making it the oldest crop on the planet (talhelm & oishi, 2018). for more than half of the world’s population, rice is the most important staple food (tanaka et al., 2017). rice agriculture covers 150 million hectares (ha) globally, with annual paddy production averaging 759.6 million metric tons (mmt), or 503.9 million metric tons milled basis (mmt), with over 85 percent (408 mmt) for human use. this is equivalent to 29% of total grain crop output worldwide (faostat, 2017). rice growing is a significant concern in kenya because it plays a crucial role in household food security and farmer income. the mwea irrigation scheme (mis) accounts for 80% of kenya’s rice output, which is a vital part of the grain supply in a country that relies on imports to meet its rice needs (ndegwa, 2018). the fact that farmers in kenya sell about 95 percent of the rice they produce locally, highlights the importance of rice in the country’s economy. however, due to changing market conditions and consumer demand, several rice sellers in the country are taking advantage of small-scale farmers. the government-owned national cereals and produce board (ncpb) is one of the main dealers, it buys paddy from farmers, processes it in state-owned mills, and sells milled rice to retailers (serade et al., 2015). this shows that the market is not favorable for small scale farmers and government’s policies are not favorable for farmers. rice production in kenya is estimated at 150,000 metric tons from 25,000 hectares of land (gok, 2017). rice production barely fulfils around 20% of overall demand, with rice consumption expected to climb as the world’s population grows and eating patterns change (atera et al., 2018). rice consumption in kenya is estimated to be 550,000 metric tons per year (kenya bureau of statistics, 2017), and it is growing at a an anual rate of 12% , compared to 4% for wheat and 1% for maize, the leading basic food (ministry of agriculture, 2018). per capita, rice consumption in kenya is estimated to be 10-18 kilograms per year (ministry of agriculture, 2017). rice demand surpasses supply, and the vast gap between supply and demand is covered at a high cost by importing to meet domestic needs. by 2030, the rice market is expected to grow to 517.5 million tons (musila et al., 2018). for kenya to achieve rice self-sufficiency by 2030, total domestic rice output must increase at a rate of 9.3 percent each year (ministry of agriculture, 2018). the mwea irrigation scheme was established in 1958 as a resettlement scheme with the primary goal of resettling landless and ex-detainees. the program covers 30,350 acres, with 16,000 acres dedicated to rice production and the rest used for settlement, public amenities, subsistence farming, and horticultural crop farming. the nyamindi and thiba rivers provide water to the project. around 7,500 households are working on an average of 4 acres of land (nia, 2020). until 1998, the government oversaw the plan through the national irrigation board (nib). the https://doi.org/10.54536/ajebi.v2i1.1238 https://journals.e-palli.com/home/index.php/ajebi pa ge 30 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(1) 29-38, 2023 nib was the landlord, and the farmers were the tenants regarding land tenure. the tenant provided labour services at a cost established by the landlord, while the landlord provided inputs, infrastructure, machinery, and extension services.the government had an elaborate structure and mechanisms, farming operations management, water management, funding arrangements, storage, processing, and marketing (mati et al., 2016). farming is still a significant concern in kenya because of its good impact on household food security and farmer revenue. kenya’s rice output is 80% based on the mwea irrigation scheme. because of its outstanding quality, mis rice is frequently blended with low-quality imported rice in the region. rice traders are increasingly capitalizing on changing market conditions and consumer preferences. in the recent decade, smallholder rice farmers have been less involved in rice marketing. many new competitors have entered the rice marketing scene. nib, mwea rice millers, cooperative millers, distributors, merchants, brokers, and importers are among the marketing chain’s actors (ndegwa, 2018). farmers in the mwea irrigation scheme have numerous avenues to dispose their rice surplus. in the mwea irrigation scheme, there is inadequate information on the specific avenues farmers may opt for and farmers’ choices of rice marketing channels. this study identified the rice marketing channels and channel choices among rice farmers to bridge this knowledge gap. literature review theoretical review adam smith’s (1770) rational choice theory (rct) frequently assumes that the individual decision-making unit in question is typical or representative of a broader group, such as buyers or sellers in a given market. after determining individual behaviour, the research usually looks at how individual decisions interact to produce results. theorists of rational choice theory think that most human actions are made to maximize a person’s benefits while minimizing those that may harm them. the assumption behind the rational choice analysis is that some agent, or set of agents, maximizes utility by selecting the preferred option. the presence of restrictions is another crucial aspect of the decision-making process. limitations necessitate the choice, and one of the benefits of rational choice theory is that it makes the trade-offs between alternative options very obvious. the budget restriction, which states that the customer cannot spend more than her income in a simple one-period consumer choice problem, is a common constraint. rational choice theory is relevant because it assumes that rice agents, large-scale private millers, small private millers, nib, mwea rice millers, cooperative millers, wholesalers, retailers, brokers, and importers, among others, make rational choices with the farmers’ choice in mind. empirical evidence on farmer’s choice in rice marketing channels using a logit model, mburu et al. (2017) evaluated farmers’ milk marketing channel choices in central kenya. according to the study, the land negatively influenced farmers’ adoption of milk selling through the dairy cooperative channel, average milk price, the total number of cows milked, and farm acreage. hired permanent labour, whether or not a household head worked off-farm, average milk output per cow (kg per day), dairy cooperative as a source of animal production information, and the availability of financial services all had a beneficial impact. the traders were divided into two groups in the study: cooperatives and itinerant traders (hawkers, neighbours, and hotels). the difference between mburu et al. (2017) and this current study is that the study collapsed all market alternatives into a binary outcome while the current study does not. the current study built on mburu’s research by evaluating rice marketing channels using the multinomial logit (mnl), which captures each marketing channel separately. nyaga et al. (2016) investigated the factors influencing fish producers’ marketing channel selection in kirinyaga county. the data was analyzed using a multinomial logit model after a descriptive research design comprising 147 fish farmers in kirinyaga’s five sub-counties. it defined market channels for fish farmers and investigated the factors influencing their marketing channel selection. according to the survey, there are three main channels: neighbours, direct market, and traders, which account for 49 percent, 29 percent, and 22 percent of the total. farmers’ choice of the market channel was influenced by the gender of the household head, distance to market; marketing cost, land tenure, number of fish ponds owned, access to extension services, cost of marketing, membership in a fish farming group, access to inputs, household income, price of fish, and type of fish reared. despite government assistance, farmers faced predators, insufficient extension services, and limited access to information. the conclusion is that county governments and other stakeholders must make it easier for practising farmers in their communities to access vibrant extension programs and market support. chalwe (2015) evaluated the factors influencing bean producers’ decision to sell and their choice of marketing channel in zambia using the multinomial probit. the results showed that farmers’ choice of marketing channels was positively influenced by the price of beans, scale of operation (as measured by the number of beans harvested and quantity sold), distance to the market, farming mechanization used, and livestock ownership. according to ogunleye and oladeji (2017), cocoa farmers in the research area chose choice market channels for their output based on time of payment, the form of payment, product pricing, distance from the farm, transportation cost, and product grading. in that order, the majority of the farmers in the study patronized itinerant buyers, cocoa merchants, fellow farmers, and cooperative society stores. they conclude that the time between when goods are sold and when they are paid is a high negotiation cost that determines cocoa growers’ market choice. farmers https://journals.e-palli.com/home/index.php/ajebi pa ge 31 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(1) 29-38, 2023 were hesitant to choose an outlet because of payment delays. transportation costs rise as the distance between the farm and the road deteriorates. farmers will prefer a low transportation cost if they cannot entirely avoid it due to bad roads. uncertainties are associated with produce grading because farmers risk having their produce rejected or reduced prices. as a result, farmers will seek to avoid any of the two repercussions associated with food grading. according to a study by wojciech et al. (2013) titled “marketing portfolio choices by independent peach growers,” georgia commercial peach growers select a marketing channel for fresh peach sales after considering consumer preferences for quality qualities. through the use of a polychotomous selection model and survey data, it was discovered that both external and internal quality attributes influenced the choice of marketing channel chosen and the percentage of the crop sold. other influencing factors included orchard characteristics and the variety-determined fruit maturity. inadequate market channels and a lack of price knowledge were two problems jaleta (2007) cited as limiting agricultural commercialization. furthermore, a study by emana and gebremedhin (2007) claimed that insufficient local markets, a flawed pricing system, a lack of local markets to absorb supply, low produce prices, an excess of intermediaries, and poor marketing institutions and farmer coordination affect the marketing of horticultural crops in their study on market chain analysis. inadequate product handling and packing, poor pricing mechanisms, and information asymmetry, according to emana and gebremedhin (2007), all have an impact on farm produce marketing. summary of research gaps the literature review suggests a gap in research on the factors that influence farmers’ choice of marketing channels for their products in different geographical locations and types of products. it would be valuable to investigate the impact of government policies and programs on farmers’ decision-making process and their choice of marketing channels. materials & methods the research was carried out in the mwea irrigation scheme (mis), a national irrigation board (nib) scheme located in kirinyaga county, central kenya, near the base of mount kenya. the mis is located 112 kilometres northeast of nairobi. on the dry plains of mt. kenya’s southeast, it is located at latitude 0° 37’ s and longitude 37° 20’ e, at an elevation of 1159 meters above sea level. the nyamindi and thiba rivers provide water to the project. mis is situated on top of a worn trachyte bed and is surrounded by impenetrable, heavy black cotton soil (nib, 2017). the mis covers 30,350 acres (ministry of agriculture, 2017). paddy production is spread across 16,000 acres (ministry of agriculture, 2017). research design a cross-sectional survey research design was used in this study. cross-sectional studies are studies in which data is gathered once, during a period of days, weeks, or months. many cross-sectional studies are exploratory or descriptive in purpose. target population the study population consisted of all rice farmers, wholesalers, retailers, and rice millers in mwea irrigation scheme. according to the records from the ministry of agriculture county director of agriculture (cda) mwea irrigation scheme, has seven units with 5,576 households (ministry of agriculture kirinyaga county office, 2017). the target population for this study was 5,576 rice farmers. the choice of the respondents was purposive since they are aware of the rice production and marketing channels. table 1 shows the total population. table 1: target population no section farmers 1 mwea 867 2 thiba 776 3 wamumu 794 4 karaba 709 5 ndekia 724 6 tebere 950 7 curukia 756 total 5,576 sample size and sampling techniques in determining sample size, the researcher used a formula adopted by yamane (1963) where n – sample size, n – population size, e – (the acceptable margin error) thus a total of 384 farmers was sampled from the target population. table 2 shows the distribution of the sampled respondents. table 2: sample size no section farmers 1 mwea 60 2 thiba 53 3 wamumu 55 4 karaba 49 5 ndekia 50 6 tebere 65 7 curukia 52 total 384 https://journals.e-palli.com/home/index.php/ajebi pa ge 32 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(1) 29-38, 2023 piloting and data collection data was collected by interviewing farmers using a semistructured questionnaire. the researcher administered the questionnaires and waited to be filled out. this not only improved the reliability of given information but also assured a high return rate. before collecting actual data, the research questionnaire was tested. this was aimed at identifying weaknesses and making requisite instrument adjustments before commencing data collection. piloting involved collecting data from a sample of 20 farmers from the karaba section, representing 5% of the study sample size of 384 respondents (mugenda & mugenda, 2003). the data was collected over two months, between august 2018 and december 2018. the researcher sought permission from the county administrator in mwea county before commencing data collection. a research permit was also sought and granted from the national commission of science, technology, and innovation (nacosti). five researcher assistants were recruited and trained on field data quantification, research ethics, triangulation, and probing to assist in data collection. the study used primary data that was quantitative and descriptive. primary data was obtained from the rice farmers, wholesalers, retailers, and rice millers using structured questionnaires. data analysis raw data was entered into a microsoft excel spreadsheet after the questionnaires were filtered to ensure the completeness and consistency of responses. following that, the replies were coded for a statistical package of social sciences (spss) analysis. the study’s first objective identified rice marketing channels in the mwea irrigation scheme. to attain this objective, descriptive statistics were employed in the analysis, which included means, frequencies, percentages, and standard deviations. the study’s second objective evaluated factors influencing farmers’ choice of rice marketing channels. the multinomial logit model analysis was utilized to assess the factors influencing the choice of rice marketing channel in mis. because it is chosen among other marketing channels, a specific marketing channel is distinct. if p is the likelihood of rice farmers choosing a particular marketing channel, then the equation to represent this is, where i takes values (1, 2, 3 and 4), each representing the choice of marketing channel (x1…..k= farmers choices), β are parameters to be estimated and e is randomized error. the multinomial logit model is given below: the choice of marketing channel is given by the variables of measurement for multinomial logit in table 3.3 and the empirical equation: pij=β0+β1age+β2ged+β3edc+β4hhse+β5hsey+ β6ocpt+β7dmkt+β8ricot+β9mrktin+β10vop+ β11mgrp+β12 mrktac + εi………(3) pij=mktcho dependent variable, β parameter to be estimated and εi is the error term, and the other variables are specified in table 3. table 3: variables used in multinomial logit variable code variable measurement of the variables expected sign dependent variable mktcho rice marketing channel choice consumer=1,retailer=2, wholesaler=3,processor=4,broker=5 n/a independent variables age ged edc age in years gender education in years dummy (male=1,female=0) no education=1,primary=2, secondary=3,tertiary=4 + hhse ocpt household size occupation size of household ( continuous) farmer=1,businessman=2, employed=3 + hsey household income in shillings (ksh) continuous + dmkt distance to market in kilometres ( km) ( continuous) + ricot rice output in kilograms + mrktin market information dummy ( yes=1, no=0) mrktac market access dummy ( yes=1, no=0) mgrp marketing in groups dummy ( yes=1, no=0) results & discussion this chapter presents the patterns of the results of the study. the findings are presented in tables and narrations as per the specific objectives. the chapter presents descriptive and inferential statistics, the pre-estimation and post-estimation tests. response rate table 4 shows the summary for the response rate. the sample for the study was 384, although 372 were filled and returned, representing approximately 97% of the response. this response rate was appropriate since kothari (2011) argued that a 50% response rate is https://journals.e-palli.com/home/index.php/ajebi pa ge 33 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(1) 29-38, 2023 adequate, 60% good and above 70% rated as appropriate for analysis. thus, the response rate was adequate for the study. table 4: response rate response rate frequency percentage response 372 96.87% non-response 12 3.13% total 384 100 demographics characteristics descriptive analysis was conducted for demographics to show the frequencies for gender, level of education, access to rice market information, marketing channel and rice type, access to credit and finance and choice of rice marketing channel. the results are shown in table 5. from the results in table 5, the number of female farmers composition was 27.42%, whereas 72.58% were males, an indication of male domination in rice farming. on education level, the results show that 29.84% had no formal education, 50.81% were of primary level, while only 7.53 % and 11.83% had secondary level and tertiary table 5: demographics gender frequency percent female 102 27.42 male 270 72.58 total 372 100 level of education no formal education 111 29.84 primary education 189 50.81 secondary education 28 7.53 tertiary education 44 11.83 total 372 100 level, respectively. this indicated that there was a low level of education in the rice farming sector and could influence the understanding of the questions. however, the study used simplified questions that allowed all respondents to understand. respondent’s access to rice market information, rice type produced, access to credit and finance, and difficulties in accessing credit responses are shown in table 6. results in table 6 showed that the majority, 56.99%, could not access rice market information, and only 43.01% were able to. this indicates that there could be a lack of meaningful information on the rice farming sector, which could have a negative effect. on the rice type, the majority of the respondents, 77.42%, indicated that they grow basmati followed by bw 196 with 12.37%, and lastly, nerica 1 having the least with 10.22%. on access to credit and finance, the majority, 88.8% of farmers, do not have access to credit, while only 11.2% have access to credit. this could indicate that many farmers could be restrained in their farming activities due to a shortage in accessing credit and finance. table 6: market information access to rice market information frequency percent no 212 56.99 yes 160 43.01 rice type basmati 288 77.42 bw 196 46 12.37 nerica 1 38 10.22 access to credit and finance no 330 88.8 yes 42 11.2 difficulties in accessing credit delays in payment 71 19 high interest rates 156 42 lack of land title deed 60 16 low yields 82 22 not applicable 4 1 reason for choice of channel availability 1 0.27 better prices 129 34.68 credibility of weighing scale 3 0.81 ease of cash payment/ prompt cash 118 31.72 inputs for rice farming and services (loans) 26 7.26 lack of security and stores 4 1.08 nearer to market 90 24.19 prompt payment, profitability, cost of water payment 1 0.27 total 372 100 on the difficulties in accessing credit, the majority, 42%, indicated that they had difficulties accessing credit due to high-interest rates, followed by low yields with 22%. 19% of the respondents indicated difficulty accessing credit due to payment delays, while 16% cited a lack of land title deeds for acting as collateral. lastly, regarding the choice of rice marketing channel, the majority of respondents, 129(34.68%), chose channels that provided better prices for their produce. 118(31.72%) acclaimed ease of cash payment as the reason for their choice of marketing channel. 90(24.19%) participants preferred market channels due to their nearness to the market. other factors that the farmers looked at were access to credit and farm inputs (7.26%), the credibility of weighing scales (0.81%), provision of stores (1.08%), and low cost of water payment at 0.27%. marketing channels of rice marketing channels link the market actors in the exchange process by indicating how the marketable and marketed https://journals.e-palli.com/home/index.php/ajebi pa ge 34 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(1) 29-38, 2023 surplus is transferred from farms to the final consumer. they are routes through which agricultural commodities pass from different market actors to the final consumer. in evaluating a marketing system, marketing channels are very important as they indicate how market actors are organized to accomplish the product movement from the producer to the ultimate consumer. marketing channels are also crucial in that they show a snapshot of the various agencies and thus help assess market performance. the complexity of the channel is governed by the distance from the production area to the terminal market. the purpose of marketing channels analysis was to provide figure 1: flow diagram showing percentage marketed volumes of rice across actors systematic knowledge of the flow of rice produce from the farmer to the final consumer. data collected from the survey was used to construct the marketing channels. based on the rice marketing pathways identified in table 7, the typical marketing channels which were observed in the rice market are presented in table 7 and figure 1. five main marketing channels were identified. channel 1: farmer-consumer channel 2: farmerbrokers-millers-consumer channel 3: farmerbrokers-millersretailer-consumer channel 4: farmermillersretailer-consumer channel 5: farmermillerswholesaler-retailer-consumer table 7: rice marketing channels participation by farmers marketing channel farmers cumulative frequency percent of farmers who sold through the channel 1. farmer-consumer 102 27.42 2. farmerbrokers-millers-consumer 270 72.58 3. farmerbrokers-millersretailer-consumer 372 100 4. farmermillersretailer-consumer 111 29.84 5. farmermillerswholesaler-retailer-consumer 189 50.81 in the figure 1, the first and shortest channel involved producers selling directly to consumers at the farm level. this accounted for 0.3% of total produce. the second channel involved farmers, brokers, millers and consumers where 51.1%, 42.3%, and 0.3% of the total sold rice by the farmer was taken up by brokers, millers and consumers respectively. the third channel entailed farmers, brokers, millers, retailers then consumer. under this channel, 6.3% of the farmers’ sales volume was sold to the retailers, 100% of the brokers’ sales volume was sold to the millers, and 62.72% of the millers’ sales volume was sold to retailers whereas 100% of retailers’ marketed volume was sold to the consumers. the fourth channel involved farmers, millers, retailers and consumers. the final channel consisted of farmers, millers, wholesalers, retailers and consumers. for the fifth channel, 37.28% of the millers’ marketed volume was sold to wholesalers, while 100% of the wholesalers’ marketed volume was sold to retailers. factors influencing farmer’s choice in rice marketing channels the study’s second objective was to evaluate factors influencing farmers’ choice in rice marketing channels. to evaluate the factors influencing the choice of rice marketing channel in mis, the multinomial logit model analysis was used, as shown in table 8. the results show that household level of education has https://journals.e-palli.com/home/index.php/ajebi pa ge 35 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(1) 29-38, 2023 table 8: choice of channel multinomial logit choice of channel multinomial logit coef. std. err. p>z broker base outcome consumer age of household -.0454955 .0789512 0.564 gender 13.73346 1153.884 0.991 household education level .693347 .7755638 0.037 distance to market -.0761318 .1197213 0.525 marketing groups -13.98628 2292.413 0.010 cons -16.67165 1153.888 0.988 retailer age of household .0299817 .0184035 0.103 gender -1.177961 .4718407 0.113 household education level -.3518268 .2908893 0.226 distance to market -.0037031 .0242566 0.020 marketing groups -.060495 .8250111 0.942 cons -1.937592 1.047563 0.064 wholesaler age of household -.0021384 .0254887 0.933 gender -1.679302 .5986321 0.405 household education level -.221291 .3740105 0.554 distance to market -.0449224 .0433417 0.030 marketing groups .3090625 .8519942 0.717 cons -.6575785 1.326909 0.620 mrgmcs millers age of household .0479347 .0115128 0.000 gender -.0604444 .3448411 0.861 household education level .1855477 .1511891 0.220 distance to market -.0003128 .0142207 0.982 marketing groups -.2606187 .5374264 0.628 cons -3.356687 .6668942 0.000 private millers age of household .0229527 .0128331 0.074 gender .2735538 .3755243 0.466 household education level .0538184 .166681 0.747 distance to market -.2136234 .0535911 0.000 marketing groups -.5826178 .5254568 0.268 cons -.8896918 .731307 0.224 mwea rice millers age of household .0591975 .0276663 0.032 gender .7640662 1.130448 0.499 household education level .1093976 .3586288 0.760 distance to market -.4959636 .2714533 0.068 marketing groups 1.117868 .8165309 0.171 cons -4.790973 2.066583 0.020 a positive and significant relationship with the choice of marketing channels (β=0.693347, p=0.037<0.05). this implies that the odds of a consumer as a marketing channel over a broker is 0.693347 times higher given their household level of education. the results further show that household marketing groups have a positive https://journals.e-palli.com/home/index.php/ajebi pa ge 36 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(1) 29-38, 2023 and significant relationship with the choice of marketing channels (β=-13.98628, p=0.010<0.05). this implies that the odds of a consumer as a marketing channel over a broker is 13.98628 times lower given their marketing groups. distance to market has a negative and significant relationship with the choice of marketing channels (β=0.0037031, p=0.020<0.05). this implies that the odds of a retailer as a marketing channel over a broker is 0.0037031 times lower given their distance to market. the results show that distance to the market has a positive and significant relationship with the choice of marketing channels (β=-0.0449224, p=0.030<0.05). this implies that the odds of a wholesaler as a marketing channel over a broker is 0.0449224 times higher given their household level of education. the results show that the age of the household has a positive and significant relationship with the choice of marketing channels (β=0.0479347, p=0.000<0.05). this implies that the odds of mrgmcs millers as a marketing channel over a broker is 0.0479347 times higher, given their household age. distance to market has a negative and significant relationship with the choice of marketing channels (β=-0.2136234, p=0.020<0.05). this implies that the odds of a private miller as a marketing channel over a broker is 0.2136234 times lower, given their distance to the market. lastly, the results show that the age of the household has a positive and significant relationship with the choice of marketing channels (β=0.0591975, p=0.032<0.05). this implies that the odds of a consumer as a marketing channel over a broker is 0.0591975 times higher given their household age. discussion the socio-demographic characteristics showed that on gender, females were 23.9% and 76.1% for males and thus indicated that the majority of the respondents were males involved in rice farming and marketing processes. on education, 29.8% had no formal education, 50.8% were of primary level, while only 7.5 % and 11.8% had secondary and tertiary levels respectively. this indicated that there was a low level of education in the rice farming sector and could influence the understanding of the questions. however, the study used simplified questions that allowed all respondents to understand. under access to rice market information, the majority, 58.1%, are not able to access rice market information, and only 41.0% were able to. this indicates that there could be a lack of significant information on the rice farming sector that could influence farmers. on access to marketing channels, the majority of the respondents, with, 95.3%, indicated that they receive access to marketing channels, while only 4.7% indicated they do not receive market information. under rice type, the majority of the respondents 83.2%, indicated that they grow basmati followed by bw 196 at 9.6%, and lastly, nerica 1 having the least at 6.8%. the majority of the farmers 88.8%, did not have access to credit, while only 11.2% had access to credit and finance. this could indicate that many of the farmers could be restrained in their farming activities due to a shortage in accessing credit and finance. further, the majority with, 42% indicated that they had difficulties accessing credit due to high-interest rates, followed by low yields 22%. 19% of the respondents indicated they had difficulties accessing credit due to delays in payment, while 16% cited a lack of title deeds for acting as collateral. lastly, the majority of respondents, 113(35.1%), chose channels that provided better prices for their produce. 107(33.2%) acclaimed ease of cash payment as the reason for their choice of marketing channel. 78(24.2%) participants showed a preference for market channels due to nearness to the market. the farmers looked at other factors: access to credit and farm inputs (3.1%), the credibility of weighing scales (0.3%), provision of stores and low cost of water payment at 0.3% each. in line with the study of akwaa-sekyi (2013), there is an increasing need to invest in agriculture worldwide due to the rising populations and to curb draughts and malnutrition. access to finance and credit from microfinance would have a significant impact on the welfare of farmers and their farming activities like working capital, labour, farm input and output, among others. the study sought to identify the rice marketing channels in mwea irrigation scheme. there were seven rice marketing outlets identified. of the rice marketing outlets, farmer to consumer represented 0.6%, farmer to retailer, 5%, farmer to broker, 46.0%, farmer to wholesaler, 2.8%, farmer to mrgmcs millers 23.9%, farmer to private millers 19.6% and farmer to mwea rice millers, 2.2%. this implied that the most common channel was farmer to broker, and the least was farmer to consumer. most respondents indicated they used brokers at 45% and mrgmcs millers at 23%. private millers had 19%, while retailers had only 7%. the least were wholesalers, with 4%, mwea rice millers, with 2%, and consumers, with 1%. out of the rice marketing outlets, there were five rice marketing channels identified based on percentage margins across actors, and the first channel was the shortest. it involved producers selling directly to consumers at the farm level. this accounted for 1.78% of total sales. the second channel involved farmers, retailers and consumers, mainly at farms, accounting for 5.33% of sales volume. these were local retailers who bought direct from the farmers and sold to consumers in the neighboring market centers in the rice farming in mwea irrigation scheme. the third channel consisted of farmers, brokers, millers, and consumers, and it handled 3.47% of the sales volume. while the fourth channel involved farmers, millers, retailers and consumers, and it handled 62.72% of the volume bought by millers. the final channel consisted of farmers, millers, wholesalers, retailers and consumers. it accounted for 37.28% of the volume handled by millers. the wholesaler sold its entire share to the retailer, who finally sold 100% to the consumer. the study’s second objective was to evaluate factors influencing farmers’ choice of rice marketing channels. the results show that household level of education has a positive and significant relationship with the choice https://journals.e-palli.com/home/index.php/ajebi pa ge 37 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(1) 29-38, 2023 of marketing channels (β=0.693347, p=0.037<0.05). this implies that the odds of a consumer as a marketing channel over a broker is 0.693347 times higher given their household level of education. the results further show that household marketing groups have a positive and significant relationship with the choice of marketing channels (β=-13.98628, p=0.010<0.05). this implies that the odds of a consumer as a marketing channel over a broker is 13.98628 times lower given their marketing groups. distance to market has a negative and significant relationship with the choice of marketing channels (β=0.0037031, p=0.020<0.05). this implies that the odds of a retailer as a marketing channel over a broker is 0.0037031 times lower, given their distance to the market. the results show that distance to the market has a positive and significant relationship with the choice of marketing channels (β=-0.0449224, p=0.030<0.05). this implies that the odds of a wholesaler as a marketing channel over a broker is 0.0449224 times higher given their household level of education. the results show that the age of the household has a positive and significant relationship with the choice of marketing channels (β=0.0479347, p=0.000<0.05). this implies that the odds of mrgmcs millers as a marketing channel over a broker is 0.0479347 times higher, given their household age. distance to market has a negative and significant relationship with the choice of marketing channels (β=-0.2136234, p=0.020<0.05). this implies that the odds of a private miller as a marketing channel over a broker is 0.2136234 times lower, given their distance to the market. lastly, the results show that the age of the household has a positive and significant relationship with the choice of marketing channels (β=0.0591975, p=0.032<0.05). this implies that the odds of a consumer as a marketing channel over a broker is 0.0591975 times higher given their household age. the finding is consistent with nyaga et al. (2016), who conducted a study on factors influencing fish farmers’ choice of marketing channel in kirinyaga county. the study identified three main channels; neighbours, direct market, traders and accounting for 49 percent, 29 percent, and 22 percent respectively. gender of the household head, distance to market; marketing cost, land tenure, number of fishponds owned, access to extension services, cost of marketing, membership to a fish farming group, access to inputs, household income, price of fish and type of fish reared had significant influence on farmers’ choice of market channel. conclusion the study found that brokers had the most significant impact on rice marketing channels in the mwea irrigation scheme, and that rice supply chains can be improved through digital agriculture platforms. education, marketing groups, distance to market, and age of household were found to affect farmers’ choice in rice marketing channels. the study also noted that rice marketing relies on private and cooperative services for storage and milling due to farmers’ limited assets, and that the private sector improves production and marketing through horizontal or vertical integration. recommendations the study recommends that the management of rice farming in mwea irrigation scheme take control of the marketing channels to protect farmers from brokers who take advantage of them. it suggests regulation to control the operations of brokers, who play a crucial role in the rice marketing channel. the study recommends better storage/warehouse plans to reduce marketing costs, and more research on the use of husks and straws for bioenergy and carbon sequestration. additionally, it suggests that research on water availability in other rice-growing areas in kenya is important for improving marketing channel choices and overall rice farming quality and profitability. references akwaa-sekyi, k. (2013). the impact of microfinance on farmers’ welfare and agricultural production: evidence from rural ghana. journal of development studies, 49(1), 1-19. atera, e. a., onyancha, f. n., & majiwa, e. b. (2018). production and marketing of rice in kenya: challenges and opportunities. journal of development and agricultural economics, 10(3), 64-70. chalwe, v. (2015). factors influencing bean producers’ decision to sell and choice of marketing channels in zambia. journal of agriculture and environment for international development, 109(3), 519-534. emana, b., & gebremedhin, b. (2007). market chain analysis of horticultural crops in ethiopia. journal of agriculture and environment for international development, 101(3), 369-386. food and agriculture organization of the united nations. (2017). rice agriculture worldwide. government of kenya. (2030). national rice development strategy. kenya vision 2030. jaleta, m. (2007). constraints and opportunities for agricultural commercialization in ethiopia: the case of smallholder farmers in the highlands. journal of agricultural economics, 58(3), 427-443. kenya bureau of statistics. (2017). rice consumption in kenya. kothari, c. r. (2011). research methodology: methods and techniques. new age international publishers. mati, j., kamau, d., gacheru, s. & karanja, n. (2016). government structure and mechanisms for agriculture sector management in kenya. journal of agriculture and rural development, 52(2), 123-139. mburu, m., okeyo, a. m., & wanyama, j. (2017). factors influencing farmers’ choice of milk marketing channels in central kenya. journal of agriculture and environment for international development, 111(3), 479494. ministry of agriculture. (2017 ). mwea irrigation scheme: acreage and production. https://journals.e-palli.com/home/index.php/ajebi pa ge 38 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(1) 29-38, 2023 ministry of agriculture. (2018). per capita rice consumption in kenya. mugenda, o. m., & mugenda, a. g. (2003). research methods: quantitative and qualitative approaches. act publishers. musila, r. n., sibiya, j., derera, j., kimani, j. m., tongoona, p., & danda, k. (2018). farmers’ perceptions of, and preferred traits in rice varieties in the coastal region of kenya and their implications for breeding. journal of international cooperation for agricultural development, 16, 20-30. national irrigation authority (nia). (2020). acreage and households in irrigation schemes. national irrigation authority ndegwa, m. w. (2018). economic status of rice farmers in mwea irrigation scheme. international journal of advances in management and economics, 3(1), 133-148. nyaga, j., nyikal, r. n., & busienei, j. r. (2016). september (23-26). factors influencing the choice of marketing channel by fish farmers in kirinyaga county [poster presentation].the african association of agricultural economists 2016 5th international conference, addis ababa, ethiopia. ogunleye, o. a., & oladeji, a. a. (2017). factors influencing the choice of marketing channels by cocoa farmers in ekiti state, nigeria. journal of agriculture and environmental sciences, 6(3), 1-8. serade, s., kimani, j., & mwangi, w. (2015). the role of the national cereals and produce board in the rice market in kenya. journal of agriculture and trade, 45(2), 156-174. serede, i. j., mutua, b. m., & raude, j. m. (2015). calibration of channel roughness coefficient for thiba main canal reach in mwea irrigation scheme, kenya. hydrology, 3(6), 55-65. smith, a. (1770). the wealth of nations. penguin classics. talhelm, t., & oishi, s. (2018). how rice farming shaped culture in southern china. in a. k. uskul & s. oishi (eds.), socioeconomic environment and human psychology (53–76). oxford university press. tanaka, a., johnson, j. m., senthilkumar, k., akakpo, c., segda, z., yameogo, l. p. ... & bayuh, b. a. (2017). on-farm rice yield and its association with biophysical factors in sub-saharan africa. european journal of agronomy, 85, 1-11. wojciech, d., smith, d., & dabney, c. (2013). marketing portfolio choices by independent peach growers. journal of agriculture and applied economics, 45(4), 589604. yamane, t. (1967). statistics: an introductory analysis. harper & row. https://journals.e-palli.com/home/index.php/ajebi pa ge 1 indexed in pa ge 23 american journal of economics and business innovation (ajebi) contactless payments in travel and tourism in philippines: from a technological acceptance model m.c.c. park1*, i. manalili1, t. magtoto1, r. martinez1, j. solis, c. chua1 volume 1 issue 2, year 2022 issn: 2831-5588 (online) doi: https://doi.org/10.54536/ajebi.v1i2.264 https://journals.e-palli.com/home/index.php/ajebi article information abstract received: may 13, 2022 accepted: may 21, 2022 published: may 24, 2022 technological advancement has made significant strides in bringing new developments to meet people’s diverse needs and gratifications. with the arrival of wireless and communication technology, a slew of new payment and transaction possibilities dubbed “contactless payments” emerged and are now being adopted by most industries, including travel and tourism. thus, the study examines the influencing factors for the acceptance of contactless payments in travel and tourism among residents of pampanga, philippines. the study employed a correlational design, and data were collected from 220 respondents using an online questionnaire employing convenience and snowball sampling. anova and multiple linear regression were used to analyze the collected data. all of the influencing factors, namely perceived usefulness, perceived ease of use, perceived trust, and awareness of technology, were found to have a significant relationship with respondents’ behavioral intention. this indicates that when making transactions in travel and tourism, contactless payment users are more influenced and encouraged to use contactless payment when they perceive that the system is easy to use, requires little effort, and is trustworthy. keywords acceptance level, contactless payment, travel, tourism, tam e-payment. 1 angeles university foundation, angeles city philippines. * corresponding author’s e-mail: park.mariacecilia@auf.edu.ph introduction people currently live in a fast-changing, technologically advanced society where digital technology is integral to their daily lives. allen (2019) indicated that through advances in technology, people have been able to interact, acquire information, and solve problems that are important to their lives in a much more convenient way. the increasing number of dependencies on technology has brought people new forms of innovations, one of which is the rise of wireless and communication technology. with the emergence of wireless and communication technology, many new payment and transaction options were introduced, which we know today as “contactless payments” (hjelm & brzoska, 2020). contactless payment, which some banks and retailers may also refer to as “tap-and-go” or “tap,” was introduced as a result of the development of radio-frequency identification (rfid) and near-field communications (nfc), which allow people to connect devices by waving or tapping them near connect and share data quickly (xuan et al., 2018). contactless payments are growing at the quickest rate compared to other payment methods, owing primarily to the rising use of smartphones in recent times (kongaut & lis, 2017: karim et al., 2022). applications such as apple pay, samsung pay, and others have been widely adopted and are now gradually replacing the use of cards and cash in the wallet. moreover, cristobal et al. (2018) stated that a cashless transaction would be one in which payment is performed using a smartphone method. even though the technology is already available for more than a decade, mobile payment has only been widely embraced in a few countries, notably japan, south korea, kenya, and the philippines (kongaut & lis, 2017). contactless payment was first launched in south korea in 1995, called the upass, used for the seoul bus transport association (jones, 2020). this has paved the way for improved telecommunication technologies in recent years, making people aware of mobile banking and applicationbased mobile payment techniques, transformations, and innovations that ease routine economic transactions with fewer cash options (passah & kumar, 2019). since then, it has spread out around the world, making other countries adopt the use of contactless payments for different modes of payment. however, in the philippines, people were initially hesitant to adopt e-wallets and other contactless payment alternatives. it was not until the mid-2010s that usage began to change, especially with the introduction of paymaya philippines and gcash, which aided the use of smart e-money in the country (isles, 2020). in many aspects, the innovation of digital and cashless economy generation has transformed the growth of the travel and tourism industry to experience a new boom in the booking and settlement of invoices through cashless methods (bergareche, 2019). tourism products and services such as accommodation, transportation, restaurants, shopping destinations, related industries, and other entertainment facilities for tourists are available at the lowest possible price through bank cards, mobile wallets, points of sale, online banking, and other mobile technologies. given that mobile tourist consumers have quite different habits, with the majority preferring to book and pay via mobile phone or another wireless device, this suggests that they have viewed contactless payment as one of the quickest, easiest, and most secured payment methods available to consumers today (square, 2018). wang & lin (2018) stated that contactless payment is a game-changing advancement in transaction processing. people could indeed speak of a popular uprising in https://doi.org/10.54536/ajebi.v1i2.264 https://journals.e-palli.com/home/index.php/ajebi mailto:park.mariacecilia%40auf.edu.ph?subject= pa ge 24 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(2) 23-32, 2022 the distribution of tourism products, interaction with consumers and between business entities, creating a destination image, getting information, and reducing the rates of tourism products and transportation. as filipinos adopt health and safety measures under the new normal, a cashless transaction system is increasingly emerging as the preferred form of payment for consumers (baidwan, 2021). when an epidemic struck, 52% of filipinos shopped online for the first-time using apps and websites, and 43% made their first online purchase via social media platforms (visa, 2019). when borders reopen, filipinos expect to spend most of their money on travel. according to visa philippines (2019), 30% of filipinos are looking forward to domestic travel, and 22% want to spend money on foreign travel after covid-19. in line with its relevance to the trends and innovation in the travel and tourism sector, the researchers aimed to examine the level of acceptance of contactless payments in travel and tourism among residents of pampanga, philippines. specifically, the study examined the perception of the respondents on the influencing factors (perceived usefulness, perceived ease of use, perceived trust, awareness of technology) of accepting contactless payments and determine if there is a significant relationship between the influencing factors in the acceptance of contactless payments and the respondents’ behavioral intention. literature review this study is anchored on the technology acceptance model (tam). it enables researchers to make statements about the possible acceptance or rejection of new technology (davis, 1989, as cited by ozturen, 2018). ahmad (2018) also stated that the tam model went through several stages of development and was eventually expanded. as a result, ozturen (2018) revised the original tam model to include awareness of technology alongside peou (perceived ease of use), pu (perceived usefulness), and trust as a variable that is affected directly by behavioral intention, which this study used. perceived usefulness (pu) the degree to which a person believes that using mobile payment will boost their performance in daily activities in their studies is characterized as perceived usefulness (pu). this also demonstrates how mobile payment services can assist customers in achieving task-related goals like efficiency and effectiveness (mun et al., 2017). the use of a service that is believed to be helpful when conducting payment transactions is referred to as pu in the context of mobile payment service adoption. a consumer may believe that mobile payment services will allow them to pay using only a mobile phone, eliminating the need to carry cash. liébana-cabanillas et al. (2018) found that pu is a powerful predictor of behavioral intention to use mobile payment services in a recent study. pu was a substantial predictor of differences between adopters and non-adopters (phonthanukitithaworn et al., 2016). kasilingam (2020) stated that the acceptance of information technology is based on its usefulness. theoretically, this approach may be used for mobile shopping since perceived usefulness significantly impacts behavioral intentions toward mobile buying. consumers are more inclined to adopt a shopping channel if they believe they would benefit from it. according to to & trinh (2020), their impression of its utility heavily influences a consumer’s intention to use a system. when customers find mobile services convenient for their transactions, they will utilize them more. based on all the above inferences, the first hypothesis is worded accordingly. hypothesis 1 (h1) there is a significant relationship between perceived usefulness and the respondents’ behavioral intention. perceived ease of use (peou) the perceived ease of use (peou) is a significant factor in a user’s behavioral intention to embrace and employ technology; it has been demonstrated that peou is critical in influencing customers’ purchasing intentions (chawla & joshi, 2020). according to mun et al. (2017), the degree to which a person feels that utilizing the system will require no mental or physical effort is referred to as peou. adopted from tam (technology acceptance model), the variable “perceived ease of use” has been extensively researched to identify its effects on customer attitudes (mensah, 2020). previous research investigations have found that peou has a substantial relationship with customers’ intentions to utilize or accept technology items (sinha et al., 2019). peou has a significant effect on consumer intention, and it is suggested that this is because of customers’ pleasant experience with mobile social media, which directs them to utilize it readily for shopping activities (leong et al., 2018). according to to & trinh (2021), the perceived ease of use of digital payment resulted in a high degree of positive behavioral intention. this is also consistent with previous tam research (dwivedi et al., 2019; liébana-cabanillas et al., 2018). therefore, peou is anticipated to affect the behavioral intention positively to accept or utilize contactless payment. the easier use of technology will make it the preferred payment method for customers to conduct transactions. hence, the following hypothesis is deduced in this study: hypothesis 2 (h2): there is a significant relationship between perceived ease of use and the respondents’ behavioral intention. perceived trust (trust) according to wong & mo (2019), perceived trust is the hypothesis between perceived security and perceived risk. furthermore, to have a good perception of mobile payment, the study determines the connection between customer intentions of using mobile payment in hong kong. customers are usually concerned about the level of security and privacy when making transactions, especially when conducting payment through a mobile phone or the internet; they see trust as secured and free of worry where their personal information will not be hacked or shared https://journals.e-palli.com/home/index.php/ajebi pa ge 25 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(2) 23-32, 2022 with unauthorized parties (to & trinh 2021). therefore, there should be security improvements to impact trust in mobile payment systems (wong & mo 2019). moreover, perceived trust is crucial in intensifying the consumers’ purchasing decisions because once consumers begin trusting a system or a service provider, they will continually use the application to purchase products (yang et al., 2021). it is similar to the previous research by wilson (2019) stating that perceived trust had a positive impact on repurchase intention in the indonesian e-commerce industry. furthermore, the study of eneizan et al. (2020) stated that trust influences the attitudes of consumers and their perception when visiting a website confirming that trust in the website has a positive impact on consumers’ attitudes toward their online shopping decisions. based on the following depictions, the researchers proposed the following hypothesis. hypothesis 3 (h3) there is a significant relationship between perceived trust and the respondents’ behavioral intention. awareness in technology (aware) kammerzelt (2018) stated that technology is frequently associated with advancements in the sphere of communications. technology is defined as applying scientific understanding to achieve a specific goal, whether in the industry or in our daily life. individuals familiar with the features and functions of diverse payment methods or technological innovations are more inclined to adapt to the new developments in payment methods (boden et al., 2020). the capacity to utilize a particular technology is characterized as a mix of the individual’s experience, training, and understanding of the technology. a higher level of confidence in one’s capability of using technology will result in a higher level of personal drive to use it. users must, however, have technological skills, a smartphone, and the availability of technology. thailand promotes e-payment on how easy it is to use, saving money and effort. the public must also be educated on the advantages and disadvantages of cashless transactions (yakean, 2020). based on these prior study findings, the researchers suggested the following hypothesis. hypothesis 4 (h4) there is a significant relationship between awareness of technology and the respondents’ behavioral intention. figure 1: theoretical model. materials and methods research design correlational research is used as the study’s design. according to curtis et al. (2016), correlational research attempts to discover connections among two or more variables. defined, it explores if an increase or decrease in one variable correlates to an increase or decrease in another (bhandari, 2021). this method was used to examine if there is a significant relationship between the influencing factors in the acceptance of contactless payment and the respondents’ behavioral intention. study participants the study included 220 participants who are contactless payment users who are at least 21 years old and are currently residing in the province of pampanga. to ensure that respondents are qualified to answer, a filter question was asked at the start of the questionnaire. (please see appendix a for the profile of the respondents) sample size the sample size was determined using the g power since the population for the study is unknown. with an effect size of 0.5, a margin of error of 0.05, and a power of 0.80, the researchers acquired a minimum sample of 128 participants. however, a total of 220 respondents participated in the study. due to the limited recordings of the economic capabilities and population of contactless transaction users in pampanga in travel and tourism, it was impossible to draw the exact sampling frame in this study’s population. nevertheless, to ensure that the sample data are represented and robust enough to analyze, roscoe (1975, as cited by wachyuni & kusumaningrum, 2020; mun et al., 2017) stated that for most research, the appropriate rule of thumb for sample size should be greater than 30 and smaller than 500. additionally, hjelm & brzoska (2020) also articulated that there are no restrictions and grand rules in designing a perfect sample size, researchers could be flexible with their desired structure, but a larger sample size allows a study to get more accurate responses, as stated in the central limit theorem. study instrument the study utilized questionnaires as a research instrument. the questionnaire was adapted from ozturen’s (2018) study titled “acceptance of mobile payment technologies https://journals.e-palli.com/home/index.php/ajebi pa ge 26 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(2) 23-32, 2022 by the travelers visiting north cyprus”. the researchers sought permission from the author. the questionnaire was modified to suit the current locale of the study by including questions about the spending habits of the respondents in making contactless transactions in travel and tourism, as well as modifying the items in each influencing factor to fit the study’s objectives best. a pre-testing was conducted to examine the questionnaire’s construct’s reliability and validity. the pre-testing was carried out on 30 respondents wherein their responses to the initial construct were collated, carefully tabulated, and examined using cronbach’s α reliability measure. cronbach’s alpha (ca) is used in testing construct reliability and internal consistency of data (yang et al., 2021). in assessing the cronbach’s alpha, the criterion is that all items must appear to have a value equal to or higher than the proposed cut-off of 0.70 to indicate adequate reliability of the construct (alzubi et al., 2017; gupta et al.,2021). as presented in table 2, cronbach’s α values in each construct exceed the recommended threshold of 0.70, which were between 0.804 as the lowest and 0.924 as the highest, thus confirming that all the values of composite reliability satisfied the criterion, indicating that all factors in the study were highly reliable, adequate and consistent. table 1: construct test of reliability construct cronbach’s alpha number of items perceived usefulness (pu) 0.917 4 perceived ease of use (peou) 0.924 3 perceived trust (trust) 0.881 5 awareness in technology (aware) 0.804 2 behavioral intention (bi) 0.862 3 due to the current protocol and face-to-face restrictions, the researchers conducted an online survey to obtain data. the questionnaire was disseminated through email and other online platforms. the questionnaire was divided into three parts. the first part was dedicated to the demographic profile of the respondents, the second part was the respondents’ experience with the use of contactless platforms, and the third part was the respondents’ perception of the factors influencing the acceptance of contactless payment in travel and tourism. sampling technique the researchers employed snowball and convenience sampling as the study’s sampling technique. according to kirchherr & charles (2018), these two sampling techniques help the researchers to have adequate data to examine and reach conclusive results. convenience sampling is among the most frequent types of nonprobabilistic sampling, which is used to collect samples that are conveniently available at a particular location or through internet service (edgar & manz, 2017), while the snowball sampling technique is used to establish a pool of respondents for a research study by referring to individuals who share certain features of interest in research with the sample population (frey, 2018). these sampling techniques are suitable for the study and allow the researchers to reach the target audience as it is purely based on referrals and availability. statistical analysis of data the data were treated using inferential statistics, specifically multiple regression and analysis of variance (anova). these two statistical treatments were used because of their essential roles in the data analysis. result and discussion this study sought to examine the influencing factors for the acceptance of contactless payments in travel and tourism among residents of pampanga, philippines, particularly the significant relationship between the influencing factors, namely, awareness of contactless payment technology, perceived usefulness, perceived ease of use, and perceived trust to the respondents’ behavioral intention. table 3 details the respondents’ use of contactless table 2: respondents’ usage of contactless payment question items and options frequency rank what contactless payment platforms do you prefer for travel and tourism transactions? gcash 171 1st credit/debit card 143 2nd mobile banking 97 3rd paymaya 64 4th paypal 39 5th what types of travel and tourism products and services do you typically buy using contactless payment? restaurants and other food establishments 130 1st transportation 122 2nd accommodations 98 3rd shopping center or souvenir outlets 80 4th others (incidentals) 42 5th entertainment facilities 38 6th source: data from respondents https://journals.e-palli.com/home/index.php/ajebi pa ge 27 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(2) 23-32, 2022 payment technologies in travel and tourism. for these questions, the respondents were required to give multiple responses. the study revealed that gcash is the mostly used contactless payment platform, followed by credit/ debit cards. moreover, the study shows the most common travel and tourism products and services typically availed by the respondents using contactless payments. table 5 shows the respondents’ perceptions of the influencing factors on the acceptance of contactless payments in travel and tourism. for this purpose, respondents were asked to indicate their level of agreement or disagreement on the different influencing factors mentioned, with 6 being the highest (strongly agree), and 1 being the lowest (strongly disagree). the range of weighted means for the six-point likert scale and its interpretation is presented in table 4 below. it was used in identifying and describing the collected data for the present study regarding the factors influencing the level of acceptance of contactless payments. the ranges of the weighted means and their interpretation were adapted from the study of vate-u-lan and masouras (2018) titled “thriving social network for communication table 3: range of weighted means and interpretation scale value range of weighted means interpretation 1 1.00 – 1.82 strongly disagree (sd) 2 1.83 – 2.66 disagree (d) 3 2.67 – 3.50 disagree to a certain extent (dce) 4 3.51 – 4.32 agree to a certain extent (ace) 5 4.33 – 5.16 agree (a) 6 5.17 – 6.00 strongly agree (sa) on e-learning: exploring gender differences in attitudes.” the study’s findings revealed that overall awareness of technology has a mean score of 5.58, perceived usefulness is 5.60, and perceived ease of use is 5.45, with a descriptive rating of strongly agree. with a descriptive rating of agree, perceived trust gets an overall mean score of 4.88. respondents perceived contactless payments as useful in traveling and purchasing tourism products and table 4: respondents’ perception of the factors influencing the acceptance of contactless payment in travel and tourism perceived usefulness (pu) mean standard deviation using contactless payment is useful in traveling and purchasing tourism products and services. 5.62 0.734 using contactless payment helps improve my travel experience. 5.57 0.760 using contactless payment enhances the effectiveness of my travel transactions, especially in terms of convenience, accessibility, and keeping digital receipts. 5.60 0.755 using contactless payment in traveling provides a useful service to me. 5.62 0.747 perceived ease of use (peou) i find the contactless payment system clear and understandable. 5.49 0.775 i find a contactless payment system easy to use when traveling and purchasing tourism products and services 5.49 0.781 using contactless transactions in travel and tourism does not require a lot of mental effort. 5.38 0.867 perceived trust (trust) the risk of an unauthorized third party overseeing the contactless transaction process in travel and tourism is low. 4.78 1.12 i am willing to pay extra charges when making contactless transactions in travel and tourism. 4.93 1.03 the risk of unauthorized usage of information (e.g., personal information, payment amount) is minimal when using contactless transactions in traveling. 4.74 1.09 the risk of unauthorized billing of information when traveling or purchasing tourism products and services (e.g., credit card numbers, bank account data) is low when using contactless payment systems. 4.82 1.11 i trust the contactless payment system in traveling and conducting tourism payment transactions. 5.10 0.920 awareness in technology (aware) i am aware that i can use contactless transactions in traveling and purchasing tourism products and services. 5.60 0.745 i am aware of the functions and capabilities of contactless payment systems when making transactions in my travel. 5.55 0.773 behavioral intention https://journals.e-palli.com/home/index.php/ajebi pa ge 28 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(2) 23-32, 2022 i intend to transact with tourism-related establishments, retailers, or merchants that accept contactless transactions when traveling. 5.30 0.819 i intend to use a contactless payment system as much as possible when traveling. 5.29 0.851 i recommend others to use contactless payment technology in their travel and tourism service and product purchases. 5.38 0.819 source: data from respondents services. another objective of this study is to determine if the influencing factors on the acceptance of contactless payments are significant to respondents’ behavioral intention. using the analysis of variance (anova), f = 89.445 with p-value = 0.000, results showed a significant relationship. therefore, since the p-value is less than the significance level of 0.05, it can be concluded that there is a significant relationship between the various variables (aware, pu, peou, and trust) and the behavioral intention of the respondents. a second statistical test was table 5: test of significant relationship using anova model sum of squares df mean square f sig. regression 82.213 4 20.553 89.445 0.000a residual 49.404 215 0.230 total 131.617 219 a. predictors: (constant), perceived trust, technological awareness, perceived ease of use, perceived usefulness b. dependent variable: behavioral intention correlation is significant at 0.05 conducted to confirm the significant relationship between the variables. table 7 shows the result of the relationship between the influencing factors and respondents’ behavioral intention using multiple regression analysis. results revealed that perceived usefulness (t = 3.081, p = 0.002), perceived ease of use (t = 2.760, p = 0.006), perceived trust (t = 6.168, p = 0.000), and technological awareness (t = 2.410, p = 0.017), have significant relationship to behavioral intention at 0.05 significance level. thus, as perceived usefulness, perceived ease of use, perceived trust, and technological awareness increase, the respondents’ behavioral intention likewise increases. another test was conducted using regression analysis to validate the strength of significance. table 8 shows that r = 0.790 is with adjusted r-square = 0.618. thus, 61.8% of the behavioral intention is described by influencing factors in the acceptance of contactless payments. table 6: test of significant relationship among variables using multiple linear regression model unstandardized coefficients standardized coefficients f sig. b std. error beta (constant) 0.371 0.272 1.361 0.175 perceived usefulness 0.265 0.086 0.242 3.081 0.002 perceived ease of use 0.215 0.078 0.207 2.760 0.006 perceived trust 0.255 0.041 0.311 6.168 0.000 awareness in technology 0.188 0.078 0.178 2.410 0.017 a. dependent variable: behavioral intention correlation is significant at 0.05 level table 7: strength of relationship model r r square adjusted r square std. error of the estimate 1 0.790a 0.625 0.618 0.47936 a. predictors: (constant), perceived trust, technological awareness, perceived ease of use, perceived usefulness discussion the acceptance of contactless payment systems in travel and tourism among residents of pampanga is investigated in this study. contactless payment is accepted by people if they are aware of using it, the system is beneficial, easy to use, and they trust it. if contactless payment is permitted, travelers are more likely to spend more (the world travel and tourism council, 2019). perceived usefulness (pu), is significantly associated with the respondents’ behavioral intention. several previous studies have found perceived usefulness to be a key influencing factor in mobile payment adoption (oliveira et al., 2016). according to bailey et al. (2017), the perceived usefulness of contactless payments relates to how much a customer feels he or she would gain if they pay with their smartphone in the same way they do with other payment methods. the degree to which https://journals.e-palli.com/home/index.php/ajebi pa ge 29 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(2) 23-32, 2022 customers think that utilizing mobile internet stores improves their purchasing task performance is described by usefulness perceptions. hence, increasing perceived usefulness might lead to higher behavioral intention and adoption of the technology (abdullah et al., 2016). likewise, perceived ease of use (peou) is significantly associated with respondents’ behavioral intention. the finding is supported by ly and han (2018) who stated that the perception of ease of use comprises three main elements: effortless, simple, and simple to handle. it is one of the most critical factors in a user’s decision to adopt new technology (al-amri et al., 2018). furthermore, ease of use is linked to attitude and intent to use, the simplicity of use has a two-fold effect on attitude and utility (kumar et al., 2018). according to abdullah et al. (2016), the digital payments experience has a remarkable impact on consumers’ way of purchasing and has been reported as easy to use by many consumers. similarly, yang et al. (2021) mentioned that perceived ease of use reflects how technology makes accessing a website for online purchases easier. furthermore, analysis of data revealed that perceived trust (trust) is significantly associated with respondents’ behavioral intention. this shows that when consumers gain confidence in a system or service provider, they are more likely to use the application to make purchases in the future. hossain (2019) mentioned that trust became the primary motivation of online payment, counteracting risk perceptions. it can be argued that customer satisfaction has a strong antecedent on perceived trust, and that customer satisfaction is a prerequisite for customer loyalty. additionally, technological awareness (aware) is significantly associated with respondents’ behavioral intention. this is true with the study of boden et al. (2020), who identified that individuals familiar with the features and functions of diverse payment methods or technological innovations are more inclined to adapt to the new developments in payment methods. chawla & joshi (2020) mentioned that awareness in technology is a skill of being mindful and aware of what is becoming popular in mobile payment and is widely acknowledged in the tourism market. likewise, thirupathi et al. (2019) mentioned that consumers benefit from mobile payment application systems if they are informed of the technologies and platforms used. on the other hand, behavioral intention (bi) with an overall weighted mean of 5.32 and a descriptive rating of “strongly agree” shows that the respondents strongly agreed that they intend to transact with tourism-related establishments, retailers, or merchants that accept contactless transactions when traveling. they plan to use contactless payment systems as much as possible when traveling, and they would recommend others to use contactless payment technology in their travel and tourism service and product purchases. as supported by kaewratsameekul (2018), the behavioral intention of contactless payment users is mainly driven by their overall satisfaction with its huge impact of influence when it comes to usage. moreover, brzoska and hjelm (2020), mentioned that the consumers acquired confidence in cashless payment systems, which resulted in a positive purchase process. therefore, people embrace contactless payment if they know its benefits, find it simple to use, and trust it. conclusion findings of the study revealed that the influencing factors for the acceptance of contactless payments in travel and tourism, perceived usefulness (pu), perceived ease of use (peou), perceived trust (trust), and awareness of technology (aware), have a significant relationship on respondents’ behavioral intention. this indicates that as technological awareness, usefulness, ease of use, and trust increase, the respondents’ behavioral intention likewise increases. as a result of this, when people become more aware of the functions and capabilities of contactless payment technology and find the system to be beneficial, easy to use, and trustworthy, the more they will be inclined to make use of it. contactless payments will continue to exist. while the recent covid-19 outbreak may have highlighted their current importance, this technology is set to make digital “waves” far into the future. the advantages of such an approach are undeniable, and the chances are high that wireless transactions will soon become the norm in the travel industry. implications of the study, future research directions, and limitations of the study one of the most noticeable trends in the hospitality industry was contactless payment methods. this study provides a deeper understanding of the influencing factors on the acceptance level of contactless payments in travel and tourism among the residents of pampanga, which the travel and tourism sectors in the province may consider as one integral component in their marketing strategy. embracing these options sooner instead of later is an excellent way to ensure that these sectors remain well ahead of the competition. the study’s findings also serve as a foundation for future research on contactless payment acceptance, which may help future researchers develop and refine contactless tourism payment research models. other researchers faced comparable limitations; similarly, this study had some limitations that can direct future researchers. given that the study was conducted during the pandemic, the survey was conducted online, which has potential issues with the validity of the participants’ responses because they may not always take the items seriously without the researchers’ guidance or immediate clarification in cases of confusion or misinterpretation. moreover, this study used convenience and snowball sampling techniques to acquire respondents. the limitation of utilizing convenience sampling is that it results in a sample that is unlikely to be typical of the community being examined, limiting researchers’ capacity to generalize the findings to a larger group. despite these limitations, the findings of https://journals.e-palli.com/home/index.php/ajebi pa ge 30 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(2) 23-32, 2022 this study are substantial and can be valuable to academics as well as future studies. further study using another technique and statistical treatment is recommended to validate the result of this study. future researchers may also consider using other variables of the tam model which were not included in this study. all sectors in the travel industry, including hotels, airlines, cafés, restaurants, and even individual lodging providers, must stay up with and react to changing trends. contactless payments are being used by the tourism and travel sectors because they allow travel businesses to process payments considerably faster, even when clients do not have access to cash, credit, or debit cards. it can also improve the client’s experience by saving time. references abdullah, d., jayaraman, k., shariff, d. , bahari, k. , & nor, n. 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(2019). the role of consumers’ perceived security, perceived control, interface design features, and conscientiousness in continuous use of mobile payment services. sustainability, 11(23), 6843. https://doi.org/10.3390/ su11236843 appendix a: respondents’ demographic profile profile frequency (n=220) percentage age 21-28 140 63.64% 29-36 42 19.10% 37-44 22 10.00% 45 and above 16 7.27% gender male 100 45.45% female 120 54.55% marital status single 155 70.45% married 56 25.45% others: (separated, divorced, widowed) 9 4.10% employment status private employee 127 57.73% government employee 30 13.64% self-employed 32 14.55% unemployed 8 3.64% others (freelancers, working students, retired ofw) 23 10.45% monthly income less than ₱15,000 61 27.73% ₱ 15,001-₱ 30,000 88 40.00% ₱ 30,001-₱ 45,000 35 15.91% ₱ 45,001-₱ 60,000 15 6.82% ₱ 60,001 and above 14 6.36% source: data from respondents https://journals.e-palli.com/home/index.php/ajebi pa ge 1 pa ge 61 american journal of economics and business innovation (ajebi) exploring the general knowledge of islamic finance principles: a factor analysis study among college students christhoffer p. lelis1*, neil patrick s. muega1, jose karlo t. caballero ii1 volume 2 issue 3, year 2023 issn: 2831-5588 (online), 2832-4862 (print) doi: https://doi.org/10.54536/ajebi.v2i3.2032 https://journals.e-palli.com/home/index.php/ajebi article information abstract received: august 20, 2023 accepted: september 25, 2023 published: september 30, 2023 this study explored the foundational constructs of general knowledge concerning the principles of islamic finance, with a specific focus on college students majoring in business, finance, and accountancy. employing a combination of exploratory factor analysis (efa) and confirmatory factor analysis (cfa), the research identified and validated three distinct factors shaping this knowledge domain. the first factor, named “risk tolerance and permissible transactions,” looks at how well students understand financial risk and which transactions are allowed in islamic finance. the second, “shari’ah foundation and transparency,” highlights the importance of shari’ah principles and transparency in financial dealings. the third, “riba prohibition and ethical finance,” strongly emphasizes the ban on riba (interest) and unethical financial practices in islamic finance. these factor names were chosen carefully to represent the main ideas in each category. overall, this research contributes by creating a validated objective knowledge scale for islamic finance knowledge among students in business, finance, and accountancy programs. keywords college students, factor analysis, financial literacy, islamic finance, knowledge assessment 1 department of finance, school of business and governance, ateneo de davao university, philippines * corresponding author’s e-mail: lelischristhoffer@gmail.com introduction islamic finance (herein referred as “if”) represents a faith-driven financial system, rooted in shariah law and the principles of islamic economics (habib, 2018). its foundation rests on a fundamental rule which is the avoidance of exchanging current money for future money at an additional cost (al-jarhi, 2017, p. 118). moreover, its underlying principles emphasize equity, fairness, compassion, collaboration, entrepreneurship, morality, and the overall welfare of both the environment and society, as opposed to mere profit maximization (habib, 2018). among its guiding principles is the avoidance of exchanging current goods or services for future monetary gains at a premium (bourar & mouloudi, 2020, referencing al-jarhi 2017). additionally, there is a core prohibition on riba (interest) due to its inclination towards risk-sharing and profit-and-loss distribution (khattak & rehman, 2010), rendering if an alternative to conventional finance. to attain proficiency in if, one must acquire, through education and/or experience, knowledge specific to islamic financial products and concepts (rahman, tajudin, & tajudin, 2018). notably, if is not confined solely to muslims countries; it is increasingly garnering interest and acceptance worldwide (bourar et al., 2020, citing khattak & rehman, 2010). the demographic and educational landscape in mindanao, as highlighted by the 2015 census of population conducted by the philippine statistics authority (psa), underscores the significance of islam as the second largest religion in the region. with 93% of the entire islamic population of the philippines residing in mindanao, this region serves as a crucial hub for the practice and propagation of islamic faith and culture (psa, 2017). notably, mindanao is also home to ateneo de davao university, an institution with a catholicjesuit heritage. this juxtaposition of religious diversity is a testament to the region’s commitment to fostering inclusivity and understanding among its diverse student population. ateneo de davao university, through its support for organizations like the al qalam institute and the salaam movement, plays a pivotal role in nurturing the muslim student community within its walls (ateneo de davao university, 2017). in line with this inclusive approach, the school of business and governance (sbg) at ateneo de davao university offers a forward-thinking bachelor of science in finance program that includes a subject titled “finance in asia,” specifically dedicated to islamic finance and banking (ateneo de davao university, 2018). this academic initiative not only reflects the university’s commitment to providing a holistic education but also recognizes the importance of islamic finance (if) in the contemporary financial landscape. graduates from this program are well-positioned to become potential practitioners who can effectively operationalize the principles of if. this educational endeavor not only equips students with the necessary skills and knowledge to engage with islamic finance but also contributes to the broader goal of promoting economic inclusivity and diversity in the region. in essence, the presence of islam as a significant religious demographic in mindanao, alongside the efforts of ateneo de davao university to promote interfaith understanding and inclusivity, serves as a compelling example of how diverse religious and educational institutions can coexist and collaborate to enrich the educational experience. by offering a specialized finance program in islamic finance and banking, the university not only empowers its graduates to be effective practitioners in this field but pa ge 62 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 61-67, 2023 also contributes to the promotion of islamic finance principles and economic diversity in the region. this multifaceted approach highlights the importance of recognizing and celebrating religious and cultural diversity within educational institutions to foster mutual respect, understanding, and economic growth. there is, however, a limited assessment tool to measure these students’ financial knowledge on if. existing tools that have been developed are subjective and may be inadequate to objectively measure their knowledge. further, an assessment tool specific to the said students incidentally assesses the curriculum’s effectiveness on ensuring that if knowledge survives generations. the objective of this research, therefore, was to develop an objective type of questionnaire with an attempt to establish constructs that measure the general knowledge of sbg students from ateneo de davao university, regarding the core principles of islamic finance. literature review core principles of islamic finance islamic finance represents an approach to financial activities that operates in accordance with shariah principles, as founded, regulated and illustrated by shariah law (alamad, 2017). the term “if” is also used to denote a financial service or product that is consistent or principally implemented to adhere to shariah or islamic law principles (gait & worthington, 2008). additionally, islamic finance constitutes a comprehensive rule-based financial system, with its foundational principles rooted in the holy quran and the practices of prophet muhammad (uddin, 2015). its banking and financial framework are established to provide range of religiously acceptable financial services to muslim communities (hassan and lewis, 2007, citing chapra, 1985). in contrast to the profit-maximizing focus of interest-based banking systems, its primary objective is to render socio-economic benefits to muslims (ahmad and hassan, 2007). this underscores the importance of comprehending the fundamental rules that set islamic finance distinct from conventional finance. velayutham (2014) affirms that the islamic principles exerting the most profound influence on islamic economics encompass the prohibition of interest payments (riba), the sale of high-risk assets or dealings involving uncertainties (gharar), and speculative activities like gambling (maysir). riba, an arabic word (raba), literally means “to grow” or “expand,” or “increase” or “inflate” or “excess” and is generally translated as “usury” or “interest” (ahmad and hassan, 2007, citing al-isfahani, al-raghib & al-husain, 1961). in shariah, it technically refers to the “premium” that must be paid by the borrower to the lender, along with the principal amount as a condition for the loan or for an extension in its maturity (ahmad and hassan, 2007, citing chapra). the absolute prohibition of riba in al-qur’an is a command to establish an economic system from which all forms of exploitation are eliminated, that is, the injustice of the financier being assured of a positive return without sharing the risk, while the entrepreneurs, despite their management and hard work, is not assured of such a positive return (ahmad and hassan, 2007). the prohibition of riba in al-qur’an is, therefore, a way to establish equity between financiers and entrepreneurs (id). riba in islamic finance is absolutely prohibited. in practical terms, it signifies the additional amount that borrowers must pay to lenders, in addition to the principal amount, as a requirement for the loan or an extension in its maturity (iqbal & mirakhor, 2011). meanwhile, the arabic word gharar literally means deceit, risk, fraud, uncertainty, or hazard that might lead to destruction or loss (uddin, 2015). scholars have defined it as something which its consequence is undetermined or something that is concealed in both its manner and consequences (uddin, 2015). gharar in islam, therefore, refers to any transaction of probable objects whose existence or description is not certain due to a lack of information and knowledge of the ultimate outcome of the contract or the nature and quality of its subject matter (id). gharar occurs in all sorts of transactions where the subject matter, the price, or both are not determined and fixed in advance or there are certain ambiguities in a contract or transaction. modern financial practices such as speculative activities in the capital market, derivatives instruments, and short-selling contracts often exhibit bright examples of gharar (uddin, 2015). in islamic finance, the basic principle is avoidance of gharar, although it is not absolutely prohibited as there are certain exceptions to it in certain cases. lastly, “maysir” refers to speculation or the easy acquisition of wealth by chance, whether or not it deprives others of their rights (uddin, 2015). in the qur’an, the term “maysir” is mentioned three times, while the specific term “qimar,” referring to betting, is not found within its verses (abdullah, 2017). engaging in maysir and qimar can lead to consequences such as hostility, cursing and disagreement among participants, and harm to economic growth, in addition to diverting people from remembering allah and performing prayers (abdullah, 2017, citing al-razi, 1981). participation in betting associated with qimar and maysir can also create an insatiable desire to win, especially after experiencing losses, potentially leading to the depletion of all one’s assets. this inevitably results in significant social problems and disrupts the socio-economic fabric of society (abdullah, 2017). in the context of business activities, maysir involves deriving monetary gains solely through chance, speculation, or guesswork (uddin, 2015, citing hameed, 2009). what makes gharar illegal is not just the degree of uncertainty but also the absence of risk-sharing between the contracting parties (uddin, 2015). studies on islamic financial knowledge abdullahi and shaharuddin (2016) conducted a study to assess the extent of knowledge and awareness among the muslim population in macedonia, a country where approximately 50% of the population practices pa ge 63 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 61-67, 2023 islam, regarding islamic banking services. the research outcomes revealed that a substantial portion of the muslim community in macedonia is well-informed about the prohibition of interest (riba) and consequently refrains from engaging with conventional banks. however, the study also found that their comprehension of islamic banking principles and services is at a moderate level. in essence, this research illustrates that while many macedonian muslims are cognizant of the importance of avoiding interest-based transactions, there is room for further education and awareness-building regarding the intricacies of islamic banking concepts and services within this demographic. alfarisi (2020) conducted a comprehensive analysis of the influence of courses related to islamic economics and finance on the level of islamic financial literacy (ifl) among university students. the findings of this study unveiled a significant impact of these specialized courses on enhancing the level of islamic financial knowledge or literacy among the students. this observation aligns with a similar study conducted by md and ahmad (2020), which revealed that courses specifically designed for muslim undergraduate students in malaysia had a substantial positive effect on their overall financial literacy scores. additionally, rahim, rashid and hamed (2016) identified key factors that play a pivotal role in shaping ifl among university students. these factors encompass religiosity, financial satisfaction, and hopelessness, highlighting the multifaceted nature of ifl development. interestingly, a study concentrating on a sample group of students enrolled in the faculty of islamic economics and business found that, among these factors, “age” was the sole determinant influencing the level of financial literacy (hisan, 2019). however, it’s important to note that the existing literature on ifl seems to have gaps when it comes to exploring other potential contributors to this concept, suggesting the need for further research in this domain to gain a more comprehensive understanding of the determinants and dynamics of islamic financial literacy. widityani, faturohman, rahado and yulianti (2020) put forth a framework comprising three key variables— attitude, perception, and knowledge and behavior—that contribute to the development of islamic financial literacy (ifl) among college students. their research also highlighted that the ifl index varies depending on the level of education and gender, with students who have taken islamic finance-related courses tending to exhibit higher ifl indices. furthermore, students with a higher ifl index demonstrated a greater preference for islamic financial products. this underscores the significance of education and awareness in fostering ifl among students. antara and musa (2020) took a different approach by employing rasch analysis to create a reliable and valid instrument for measuring ifl among muslim urban millennial (mum) generations. their study successfully resulted in the development of a robust measurement scale. however, it did reveal gender-based biases in the responses to three specific items, emphasizing the need for addressing potential biases when assessing ifl. in a related context, nawi, daud, ghazali, yazid and shamsuddin (2018) delved into the ifl concept and suggested suitable items for its measurement. their research led to the creation of proposed measurement items for ifl, along with the formulation of various questions related to topics such as islamic banking, fundamental financial principles, shariah-compliant investments, and takaful. these contributions in the literature are crucial for advancing our understanding of ifl and providing the tools to effectively measure and nurture this essential financial literacy concept among various demographic groups. materials and methods design and measurement in this study, an exploratory quantitative research approach was employed to establish constructs for measuring the general knowledge of principles of islamic finance (pif) among students majoring in business management, accountancy, and finance at ateneo de davao university (addu) during the second semester of the academic year 2022-2023. the instrument for this research took the form of an objective questionnaire featuring statements with binary responses (true or false). to assess pif knowledge, the researchers crafted 30 statements grounded in the fundamental principles of islamic finance. these constructs were then rigorously analyzed through exploratory factor analysis, followed by validation through confirmatory factor analysis. this methodological framework enabled a systematic and comprehensive evaluation of the students’ understanding of pif, contributing to a better grasp of the state of islamic financial literacy within this academic cohort. sample, data collection and statistical analysis the study involved a sample of 201 respondents, consisting of college students enrolled in the school of business and governance at ateneo de davao university. these students were specifically from academic programs such as business management, finance, and accountancy. data collection was carried out through an online survey conducted via google forms, with the survey link distributed to the intended respondents via email. the collected data were subsequently subjected to a series of statistical analyses. initially, exploratory factor analysis (efa) was employed, using methods like principal axis factoring and varimax rotation, to identify and extract underlying factors within the dataset. following this, confirmatory factor analysis (cfa) was conducted to assess the validity of the factor structure that had been derived from the efa results. several fit indices, including χ²/df, tli, and cfi, were utilized to evaluate the goodness of fit. the entire statistical analysis process was facilitated using a dedicated statistical pa ge 64 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 61-67, 2023 software known as jamovi 2.2.5 (the jamovi project, 2022). this comprehensive methodological approach ensured the rigorous examination and validation of the constructs underlying the study’s objectives. results and discussion exploratory factor analysis exploratory factor analysis (efa) is a statistical technique used to uncover the underlying structure or latent factors within a set of observed variables or items. in this specific case, the researchers employed principal axis factoring (paf) with varimax rotation, which is a common method in efa. the goal of efa is to reduce the complexity of data by identifying patterns or relationships among the items, allowing for a more straightforward interpretation of the data. the results of the analysis, as shown in table 1, reveal two important indicators: the kaiser-meyer-olkin (kmo) test and the bartlett test of sphericity. the kmo test assesses the adequacy of the sample size for factor analysis, with a value above 0.5 indicating that the data are suitable for factor analysis. in this case, the kmo value meets this criterion, indicating that the sample size is adequate. the bartlett test of sphericity, which tests the null hypothesis that the correlation matrix is an identity matrix (meaning there are no underlying factors), becomes significant when there is evidence of a meaningful factor structure in the data. the fact that the bartlett test is significant (p < 0.001) suggests that there are indeed underlying factors present in the data, further validating the appropriateness of conducting factor analysis. these results collectively indicate that the dataset is suitable for efa, allowing for the identification of latent factors among the items in the scale. to determine the number of dominant factors in the dataset, the researchers conducted a parallel analysis using a monte carlo simulator. this analysis involved comparing the actual data to simulated data. in figure 1, the analysis showed that there were three factors based on the number of points where the data intersected with the simulated lines. following this determination, the data analysis was rerun with three factors, and a threshold of factorial saturation at 0.4 or higher was applied. this criterion was used to assess the strength of the relationship between each item and its respective factor. as a result of this analysis, a total of 18 items were removed from the factors because their factor loadings were below the 0.4 threshold. this step was crucial for refining the factor structure and retaining only those items that demonstrated a strong association with their respective factors, ensuring the validity of the factor analysis results. the development of the principles of islamic finance (pif) general knowledge scale involved several steps to refine the questionnaire. initially, it comprised 30 items designed to assess participants’ understanding of islamic finance principles. following the first exploratory factor analysis, the scale was refined, reducing the number of items to 12. subsequently, a factor analysis was conducted on these 12 selected items. the results of this analysis, as presented in table 2, revealed a categorization of these items into three distinct factors. factor 1 encompasses 5 items, each demonstrating factor loadings ranging from 0.39 to 0.66. these factor loadings table 1: kmo and bartlett’s test test value kmo measure of sampling adequacy 0.636 bartlett’s test of sphericity approximately chi square 248 degrees of freedom (df) 66 significant 0.000 figure 1: parallel analysis using monte carlo simulator table 2: extracted factors with factor loadings factor item number item statement factor loading 1 if15 it is permissible for a person to speculate or spend money on an undertaking with a high risk or probability of failure. 0.66 if11 acquisition of wealth by chance such as lotteries is permissible. 0.61 if16 riba means interest, which is allowed in islamic law. 0.50 if9 option derivatives are permitted because there is no certainty whether a transaction will take place because the option buyer has the right but not the obligation to transact. 0.47 if2 it is permitted to pay the principal borrowed with pre-agreed additional commodities of different kinds. 0.39 pa ge 65 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 61-67, 2023 indicate the strength of the relationship between each item and factor 1, with higher loadings suggesting a more significant contribution to this factor. factor 2 comprises 3 items, and their factor loadings range from 0.35 to 0.54. similarly, factor 3 encompasses 4 items with factor loadings between 0.34 and 0.49. these factor loadings serve as indicators of how well each item aligns with its respective factor. altogether, this factor analysis resulted in the classification of the 12 items into three distinct factors, helping to simplify and structure the pif general knowledge scale for assessing participants’ knowledge of islamic finance principles. confirmatory factor analysis after establishing the factor structure through the exploratory factor analysis (efa), the researchers conducted a confirmatory factor analysis (cfa) to validate the obtained model. the cfa aims to assess how well the data align with the hypothesized factor structure. as indicated in table 3, the results of this analysis demonstrated that the 3-factor scale exhibited a good fit with the data based on several fit indices. the χ²/df ratio, which measures the goodness of fit, was found to be 1.241. a value close to 1 suggests a good fit, and in this case, it indicates a relatively good fit of the model to the data. the p-value associated with the χ² test was 0.115, indicating that the model’s fit was not significantly different from the observed data. additionally, the comparative fit index (cfi) and the tucker-lewis index (tli) were both reported as 0.916 and 0.935, respectively. these indices measure the model’s fit in comparison to a baseline model. values closer to 1 for both cfi and tli indicate a better fit, and in this case, they suggest a reasonably strong fit of the 3-factor model. lastly, the root mean square error of approximation (rmsea), which assesses the discrepancy between the model and the observed data, was reported as 0.035. an rmsea value below 0.08 is typically considered a good fit, and here, the rmsea falls well within this criterion. collectively, the results of the confirmatory factor analysis (cfa) suggest that the 3-factor scale is a good fit for the data, providing validation for the proposed factor structure of the principles of islamic finance (pif) general knowledge scale. the results of the confirmatory factor analysis (cfa), as presented in table 4, provide further validation for the proposed 3-factor structure of the scale developed through the exploratory factor analysis. specifically, the cfa results demonstrate that all item factor loadings for each of the three factors were highly significant (p < 0.001). this statistical significance confirms the strength of the relationships between the individual items and their respective factors. to delve deeper into the specifics, the cfa analysis revealed that factor 1 is significantly influenced by the indicators if11, if16, if2, if9, and if15. factor 2 is significantly measured by the indicators if18, if24, and if22, while factor 3 is significantly accounted for by the indicators if13, if26, if20, and if17. these findings not only reinforce the validity of the 3-factor structure but also provide insights into which specific items contribute most significantly to each factor, offering a deeper understanding of the scale’s underlying constructs. overall, the cfa results underscore the robustness of the scale and its ability to effectively measure the principles of islamic finance (pif) general knowledge across these three distinct factors. following the comprehensive analysis of both the efa and cfa results, the researchers delved into a thorough examination of the statements associated with each factor. this examination aimed to discern the prevalent themes or underlying concepts conveyed by these statements. it involved a meticulous interpretation of the factor contents and a systematic approach to the naming process. consequently, the final factor names, namely 2 if22 islamic finance prohibits dealing in liquor, pork, gambling, pornography and anything else that shari'a (islamic law) deems haram (unlawful). 0.54 if18 the shari'ah teachings are considered to be the bedrock of the islamic financial system as the shari'ah teachings are not confined only to the boundaries of law. 0.54 if24 in certain islamic financial contract, the bank should inform the customer of the cost/capital outlay which is the history of the acquisition and the profit/added value margin of the transaction. 0.35 3 if17 any risk-free or guaranteed interest on a loan is considered a riba. 0.49 if20 a misconception of riba is that it is often translated as usury because in modern times usury normally refers to exorbitant rates of interest. 0.47 if13 the prices in a derivative are based on the fluctuations of underlying assets such as stocks and bonds which makes it prohibited. 0.42 if26 any form of interest-free banking based on ethical ideals of financial transactions will be recognized as shariah -compliant. 0.34 table 3: fit measures of the 3-factor scale fit index criterion values χ²/df 1< <2 1.241 p-value >0.05 0.115 cfi >0.90 0.916 tli >0.90 0.935 rmsea <0.05 0.035 pa ge 66 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 61-67, 2023 “risk tolerance and permissible transactions for factor 1,” “shari’ah foundation and transparency for factor 2,” and “riba prohibition and ethical finance for factor 3,” were thoughtfully selected to aptly encapsulate the fundamental concepts embodied by the statements within each respective factor. this first factor, “risk tolerance and permissible transactions,” explores students’ comprehension of financial risk tolerance and the permissibility of specific transactions within islamic finance. it aims to understand how comfortable or willing students are to take financial risks, which is a fundamental aspect of islamic finance. additionally, it delves into their understanding of which transactions are considered permissible (halal) according to islamic principles. in islamic finance, certain transactions are allowed, while others are prohibited. this factor investigates students’ awareness and knowledge of these distinctions, shedding light on their attitudes toward risk and their understanding of permissible financial dealings in the context of islamic finance. the second factor, “shariah foundation and transparency” emphasizes the central role of shari’ah principles in islamic finance. it examines how well students recognize and appreciate the significance of shari’ah (islamic law) as the foundational framework guiding financial activities in islamic finance. shari’ah compliance is essential in islamic finance, and this factor explores students’ understanding of its importance. moreover, it underscores the value of transparency in financial transactions. transparency ensures that financial dealings align with shari’ah principles and are conducted in an open and ethical manner. this factor assesses students’ awareness of the critical role played by shari’ah and transparency in islamic finance. the third and last factor, “riba prohibition and ethical finance” places a strong emphasis on two key aspects. firstly, it highlights the prohibition of riba, which refers to interest or usury. islamic finance strictly prohibits any form of interest on loans or financial transactions. this factor assesses students’ understanding of this core prohibition and its significance in islamic finance. secondly, it focuses on the broader concept of ethical finance. islamic finance prioritizes ethical and morally responsible financial practices. this factor examines students’ knowledge of these ethical foundations and their recognition of the importance of conducting financial activities in an ethical and socially responsible manner within the islamic finance framework. in summary, these factors provide insights into students’ awareness and comprehension of critical elements within islamic finance, including risk tolerance, permissible transactions, the role of shari’ah principles, transparency, the prohibition of riba, and ethical finance principles. table 4: significance of the item factor loadings factor item indicator unstandardized estimate standardized estimate se z p factor 1 (risk tolerance and permissible transactions) if11 0.314 0.631 0.0411 7.63 < .001 if16 0.253 0.506 0.041 6.16 < .001 if2 0.169 0.377 0.0375 4.52 < .001 if9 0.213 0.470 0.0373 5.7 < .001 if15 0.312 0.634 0.0404 7.72 < .001 factor 2 (shariah foundation and transparency) if18 0.139 0.402 0.035 3.96 < .001 if24 0.119 0.375 0.0354 3.37 < .001 if22 0.208 0.682 0.0447 4.66 < .001 factor 3 (riba prohibition and ethical finance) if13 0.168 0.372 0.0477 3.52 < .001 if26 0.204 0.456 0.0484 4.22 < .001 if20 0.221 0.536 0.0469 4.72 < .001 if17 0.154 0.349 0.0457 3.36 < .001 conclusions this study represents an initial attempt to investigate the fundamental constructs related to general knowledge concerning the core principles of islamic finance. through exploratory factor analysis, three distinct factors were identified. subsequently, a confirmatory factor analysis was conducted to validate these three factors, each of which is characterized as follows: factor 1, termed “risk tolerance and permissible transactions,” highlights on the willingness to accept financial risk and the permissibility of specific transactions within the domain of islamic finance; factor 2, denominated “shari’ah foundation and transparency,” underscores the pivotal role played by shari’ah principles in islamic finance and highlights the significance of transparency in financial transactions; and factor 3, labeled “riba prohibition and ethical finance,” places emphasis on the prohibition of riba (interest) and other unethical financial practices, thereby accentuating the ethical underpinnings of islamic finance. these findings offer valuable insights into the underlying dimensions that constitute the principles of islamic finance. it is essential to recognize, however, that this study’s scope is restricted to evaluating the general knowledge of core principles of islamic finance, utilizing a researcher-developed true-or-false questionnaire to gauge the perceived knowledge of college students majoring pa ge 67 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 61-67, 2023 in finance, accountancy, and business management. in sum, this research makes a noteworthy contribution to the existing literature by creating a validated 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(2020). do socio-demographic characteristics and islamic financial literacy matter for selecting islamic financial products among college students in indonesia?, journal of islamic monetary economics and finance, 6(1), 51-76. pa ge 1 pa ge 44 american journal of economics and business innovation (ajebi) the impact of export and diversification on firm performance: evidence from pakistan khawaja abdul haq1*, shahzad munir1, sohail raza1 volume 1 issue 3, year 2022 issn: 2831-5588 (online) doi: https://doi.org/10.54536/ajebi.v1i3.538 https://journals.e-palli.com/home/index.php/ajebi article information abstract received: september 01, 2022 accepted: september 22, 2022 published: september 24, 2022 the pursuit of internationalization is an important element for a variety of emerging and transitioning economies in their ongoing reform process, following exhibits of export-led development stories in nations such as china, singapore, and south korea. moreover, firms play a major role in the country’s economy; hence, this study empirically analyzes the impact of export and diversification on the performance of firms in pakistan. this paper utilizes world bank enterprise data for pakistani firms across the whole country for the years 2007 and 2013, it is a panel data comprising 454 firms. the dependent variable for this study is sales per employee that we use as our performance measure and the independent variables are export in terms of export intensity and geographic diversification in terms of an inverse measure named export concentration calculated by the herfindahl-hirschman index (hhi). for analysis, this paper utilizes panel egls (estimated generalized least square) and the estimation suggests that exports and diversification both positively and significantly correlated in their respective sample. nonetheless, there is an endogeneity issue with panel egls and to counter that two-stage panel egls is used with “average days to clear customs” as an instrumental variable (iv). results show a positive association of exports with firm performance again. however, the diversification variable proved to be exogenous as per the exogeneity bias test, so its iv results are not robust. thus, the findings indicate that pakistani firms perform better if they export, thus supporting the learning by exporting hypothesis, in addition to their exports being geographically diversified. keywords export, diversification, sales performance, estimated generalized least square 1 wang yanan institute for studies in economics (wise), xiamen university, 422 south siming road, xiamen, 361005, china * corresponding author’s e-mail: kahaq100@gmail.com introduction the process of internationalization of business and trade is influenced by enterprises ‘ growth requirements. internationalization is the entirety of cross-border activities whether they be assets, goods, or services manufactured or traded within the same institution or amongst independent economic agents (dunning, 1993). the internationalization determinants have a very diverse list; one of the main entry-level determinants is exports, which are widely recognized in developing countries as the prerequisite for economic growth. in an analysis of the miracle of east asia, for example, the world (1993) found out that export-oriented economic policies play an important role in the region’s rapid economic growth. when it comes to firms, the level of exporter has a significant impact on the performance and the effects of learning by exporting are more important for established exporters than new exporters(kraay, 1999). another key determinant of internationalization is diversification, which can apply to both product and geographical location. diversification of the products is achieved by modifying or extending the current export basket of goods. meanwhile, geographic diversification can be seen as another global strategy for diversification and may be characterized as expansion bank across the boundaries of foreign countries and regions into several markets or geographic locations (hill et al., 1992). the developing world could potentially gain a more reliable income flow by diversifying export strategies than focusing only on a few markets or goods. according to the literature, the level of diversification also contributes to firm performance. moreover, with increasing economic activity around the world and the elimination of the major obstacles that have long limited businesses to the global marketplace, many firms can achieve significant growth opportunities by gaining international expertise, product development strategies, and technological spillovers from foreign trade. however, all these benefits come with various challenges, and due to that literature for firms that internationalize has mixed findings. researchers have extensively studied the impact of internationalization on both micro and macro level, yet, there is comparatively limited research for pakistan in those aspects. in light of all this detail, this paper particularly focuses on analyzing the impact of exports and geographic diversification on the sales performance of pakistan’s firms. first, it deals with the concept of learning-by-exporting (lbe), which means that exporting firms learn from their foreign activities which results in better performance compared to the nonexporters. nonetheless, empirical research supporting the lbe hypothesis is not yet conclusive. second, this paper also contributes to the diversification vs. concentration debate, where there is mixed empirical evidence of better performance by choosing either one of these two paths by firms. third, it also conceptually differentiates between two definitions, as the export intensity was used as a measure of diversifications (contractor et al., 2007; geringer et al., 2000; reeb et al., 1998) as foreign sales over total sales proportion, it generally does not mean the https://doi.org/10.54536/ajebi.v1i3.538 https://journals.e-palli.com/home/index.php/ajebi mailto:kahaq100%40gmail.com?subject= pa ge 45 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(3) 44-54, 2022 company has diversified exports across several nations. by contrast, a vast number of highly diversified firms can still focus on the domestic market while their export intensity is low. thus, the diversification of geographical exports and the intensity of exports are completely different concepts. this paper use world bank enterprise data for pakistan’s firms across the whole country for the year 2007 and 2013. it is a survey panel data comprising 454 firms. the dependent variable for this study is sales per employee, the independent variables are export in terms of export intensity, and geographic diversification in terms of an inverse measure called export concentration calculated by the herfindahl-hirschman index (hhi). for our analysis, this paper utilizes panel egls (estimated generalized least square) and the estimation suggests that exports and diversification both positively and significantly correlated in their respective sample. nonetheless, there is an endogeneity issue with panel egls as per the exogeneity bias test, and to counter that two-stage panel egls is utilized with average days to clear customs as an instrumental variable. results again show a positive and significant association of exports with firm performance, thus, supporting the learning-by-exporting hypothesis. however, the diversification variable proved to be exogenous so its iv results are not robust. the remainder of this paper is organized in the following way. section 1.1 deals with pakistan’s background in exports. section 2 summarizes past literature and empirical research that has been conducted to study internalization in the context of export and diversification. section 3 describes the dataset and its source for modeling the hypothesis. section 4 explains the methodology used for evaluating the hypothesis. the empirical findings on the impact of export and diversification on firm performance are presented in section 5 and are concluded and discussed for future research works in chapter 6 later background in the country’s economy, exports are one of the major growth factors and play a significant role. in the last decade, pakistan has struggled together to liberalize its global trade with little or no success. pakistan has recently ranked 68th in the world’s largest exporting country with a share of 0.11% in global exports . in figure 1, exports used to make up about 13 percent of pakistan’s gdp in 2007 can be seen; recently they have been reduced to 8 percent in 2017. pakistan’s export performance is influenced by several factors. the conflict between its economic and monetary policies is the most significant, as almost 45 products have lost their competitiveness on the global market since 2013 . in addition, pakistan’s currency rise affects competitiveness with competitors like india and bangladesh. the import tariff on export products has increased production costs more . figure 1: pakistan exports of goods and services (percentage of gdp) source: world bank national accounts data, and oecd national accounts data files. figure 1: pakistan exports of goods and services (percentage of gdp) source: world bank national accounts data, and oecd national accounts data files. https://journals.e-palli.com/home/index.php/ajebi pa ge 46 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(3) 44-54, 2022 comparing figure 1 and figure 2, given a steady fall in export contributions to gdp, the export value (based on current us dollars) saw its vicissitudes. from 2007 to 2011, we can see a u curve in figure 1, which is 20082009 reflects a decline that represents the us crisis in which several nations, including pakistan, have been impacted by the recession as their largest exporting partner in the united states. in 2011, exports rose before they again fell in 2012 as a result of the decline in world trade due to europe’s sovereign debt crises and increasing oil prices. the domestic energy shortage led to the poor performance of exports, too . figure 3: pakistan’s top 50% of export share in 2017 source: wits (world integrated trade solution), a subsidiary of world bank the diversification of export markets and goods is a significant irritant in raising export revenues. at present, the majority of exports come from the textiles and clothing sectors, which account for around 60 percent . the export destinations of pakistan are largely focused on a few countries. per figure 3, the top 50 percent of pakistan’s exports go to the united states, china, afghanistan, the uk, germany, and uae. among these counties, the united states accounts for the largest 17% and the united arab emirates the lowest at 4% for 2017. this pattern is not only seen in recent data but can also be seen in previous years. regional market trading capacity remains still under-exploited. literature review many empirical research papers have shown the higher performance of exporting firms compared to the nonexporters. as foreign buyers may provide exporters with technical assistance in increasing their production efficiency (grossman & helpman, 1991). high-quality standards could give businesses more incentive the upgrading production technologies in global markets than in domestic markets (verhoogen, 2008). participation in exports can contribute to a quicker understanding of new product market potential (maurin et al., 2002). exports could enhance capacity utilization by increasing sales, thereby reducing the exposure of businesses to periodic domestic downturns (world bank, 1993). sohl et al. (2020) investigated the impact of diversification on the firm performance by employing firm level data of five asian economies and found that there exists a direct positive relationship between diversification and firm revenue increment. on the other hand, gnangnon (2021) studied the effect of export on the firm revenue using the corss-section data at firm level of developing economies and found that export plays an important role in increasing firm revenue. niemenen (2020) found that the multidimensional aspect of diversification has played a significant role in boosting the firm revenue directly. varieties of channels have been established by research through which exports will impact the performance of a firm, though there are only two theories that are commonly used, they are referred to as self selection (ss) and learning-by-exporting (lbe). ss is characterized as highly productive firms that are more prone to becoming exporters, as only those with low marginal costs have enough profits to meet global market entry fixed costs. on the other hand, lbe refers to firms that perform better after entering international markets. industries entering international markets gain greater knowledge via the demands of consumers from abroad, adopt new manufacturing techniques with higher capacity usage and thus boost performance in international markets. other studies such as (kraay, 1999) and (dunning, 1993) found that established exporters and level of export intensity play a bigger role in lbe rather than just being part of it. this paper, in particular, focuses on the lbe hypotheses, this topic is being extensively covered in the past but its results are not yet conclusive along with pakistan not being part of past studies. (castellani 2002) used sample data of over 2000 italian manufacturing companies and estimated regressions of labor growth rate on export. his findings concluded that when the export was used in terms of export intensity (share of the international sale in total sale); it has a significant and positive impact on firm productivity growth. however, when the export was used as a dummy variable the firm’s productivity was not affected. the key point, however, is that the learning results are only above a specific level of international engagement. the paper’s analysis, in particular, highlights the key conclusion that the learning effects exist just above a certain specific level of export intensity. in another study, in his panel of 2105 chinese industry firms between 1988 and 1992, kraay https://journals.e-palli.com/home/index.php/ajebi pa ge 47 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(3) 44-54, 2022 (1999) investigated how businesses benefited from learning by exporting. he observed that past exports contribute to substantial enhancements in business efficiency by controlling past performance and unobserved enterprise characteristics. surprisingly, these learning effects among existing exporters were most prominent. the learning results are insignificant and often negative for new entries to export markets. greenaway and kneller (2008) evaluated the export starters with non-exporters with uk firms’ data (1988-2002) and found that businesses earn substantial productivity improvements during the year they join, in contrast with similar firms that do not. they also find that the possibility to further improve in coming years is to raise the proportion of export sales in a firm’s overall sales, thus conforming to the lbe hypothesis. nonetheless, some studies indicate no confirmation of the lbe hypothesis. data from over 30,000 indian manufacturing firms were used by haidar (2012) to examine the relationship between productivity and participation in the export market throughout the 1991-2004 period. his estimates for the study indicate no improvement in productivity from entering export markets. the paper’s key finding was that the most successful companies choose the path of becoming an exporter, however, learning by exporting is in no way to speed up india’s manufacturing growth. greenaway et al. (2005) study an empirical analysis of swedish production exporters and non-exporters. they used panel data set of 3570 firms that span from 1980 to 1997. they found that exporters and non-exporters had interestingly identical performance traits. they did not find evidence of learning by export possibly due to the fact of sweden’s highly open economy. bernard & wagner (1997) german industry panel data covered the period from 1978 to 1992; their findings show that exporting could lead to success if competition is more severe internationally than in the german domestic market. they found no evidence of the lbe hypothesis and indicated that firms are already productive three years before they enter the export market. firms wanting potential competitive advantage diversify geographically, as they can achieve economies of scale and scope. geographical diversification raises prospective customers and distributors, provides resource access, promotes the stabilization of cash flow, and thus decreases overall risk (rugman & verbeke, 2004). in reaction to expected and unanticipated downward shifts in domestic or international demand, the company can quickly shift revenue and investment in markets where it anticipates higher performance (lee & song, 2012). however, geographic diversification has also its disadvantages. in the early stage, companies have different environments to cope with in terms of cultural working environments, regulations, capital markets, and goods, which could raise management and planning costs (hennart, 2007). throughout the macro-economic downturn, maintaining global operations and decisionmaking can lead to additional coordinating costs and undermining productivity under a high point of external uncertainty (hill et al., 1992). bühner (1987) used data from the top 300 firms in germany from 1966 through 1981. the author used the herfindahl index to measure export diversification. by applying the generalized least square method and using accounting and market performance measures he concluded that diversification is positively correlated with firm performance. furthermore, riahi-belkaoui (1996) showed a positive relation between firm performance and diversification by using a sample of french companies in 1990. return on assent was used as a performance measure and fsts (foreign sales/total sales) was utilized for diversification. geographical diversification has an ambiguous impact on firm value. bodnar et al. (1997) found that firm value increased in geographical diversification; similarly, denis (2002) found that geographical diversity decreases the firm value. an interesting thing is that the two studies have used the same sampling period and methodology though the findings are considerably different. while, denis et al. (2002) used fsts as a geographic diversification measure, bodnar et al. (1997) used this sample as well as companies reporting on overseas taxes. therefore, more internationally diversified companies are included in the bodnar (1999) study. this disparity may account for the different outcomes. later kim (2008) used the same sample and has consistent results with denis et al.(2002). he suggested that the cost of diversification outweigh the benefits. from 1977 to 1993, geringer et al. (2000) analyzed japanese multinationals ‘ performance relationship with geographic diversification. in multiple regression models, pooled cross-section time series data was used. with several periods, he shows the connections between diversification and performance changed. in general, he did not identify strong interactive effects on diversity with firm performance. data analysis sampling data and collection the objective of this study is to examine the impact of exports and their geographic diversification on pakistan’s firm performance. this paper is based on a survey of 454 enterprises across the country engaged in international and national business. this is a panel dataset for the years 2007 and 2013, and firms surveyed in these years are a complete match denoted by the id number given to them initially. since the data used yearly panel data from the years 2007 and 2013, the total number of observations for this study is 908 in total. this study uses 2007 and 2013 cross-sectional data set as the data after 2013 which will better understand the performance of the pakistani firms before and after the financial crisis. with respect to data source, this study obtains it from the world bank’s 2007 and 2013 surveys of pakistani enterprises. this particular dataset contains all the main independent variables and control variables. https://journals.e-palli.com/home/index.php/ajebi pa ge 48 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(3) 44-54, 2022 description of variables for this study, firm performance (sales per capita) is the dependent variable. it is total sales divided by the total number of employees of a firm to measure performance. it can also be denoted as labor productivity according to some studies. usually when calculating the performance of a firm most popular measure is total factor productivity (tfp) but due to the limitations in the data, i went with the second most common measure of firm performance denoted below. firm performance = (total sales)/(total number of employees) my main independent variables are: 1. percentage of direct exports among total sales (export intensity). 2. diversification of export destination calculated by the herfindahl-hirschmann index: hhi=∑n (i=1)si 2 i=1,2,….,n where s_i is the percentage export to a particular region and n is the number of regions. it is an inverse indicator of export diversification, based on the herfindahlhirschman index, a concentration ratio. values ranges from 0 to 10,000 on this ratio, values near 0 are more export diversified and the value of 10,000 is a perfect concentration of the exports. when the hhi values are below 1500, exports can be labeled diversified. concentrated exports can also be split between the moderate (1500 <= hhi < 2500) and high (hhi >=2500) sub-categories. regarding the control variable, this study uses firmspecific factors that can affect a firm’s performance. there are ten control variables: 1. labor cost is defined by the total cost of labor divided by the total number of employees. labor cost=(total cost of labor)/(total number of employess). 2. the number of employees is the total full-time employees of a firm in a given year. 3. age of firm 4. operation hours are the total hours of operation of the firm in a given year. 5. employee education is the average number of years of education of a typical production worker. 6. capacity utilization is the establishment’s output produced as a proportion of the maximum output possible if using all the resources available. 7. manager experience is the years of experience top managers have in the firm. 8. training is a dummy variable, where 1 is if employees received any kind of training from the firm and 0 means if they did not receive any training. 9. power outages are a dummy variable, where 1 is if the firm had power outages during the year and 0 means if there were not any power outages. 10. foreign ownership is the percentage of ownership of the firm by a foreign individual, company, or organization. as our model is prone to endogeneity, we are using average days taken to clear customs at exporter exit point (airport or seaport) as an instrumental variable. summary statistics and correlations table 1 reports the summary of descriptive statistics for all variables used in this thesis measured yearly. the observation period belongs between the years 2007 and 2013, with 908 observations. the table contains the mean, standard deviation, minimum, maximum values, and several observations of each variable. some control variables, e.g., training and power outages are dummy variables. table 2 presents the correlations between all explanatory variables used in this study to check for multicollinearity. regarding a rule of thumb, the absolute values of correlations among independent variables should not be higher than 0.8. the high correlation among independent variables will lead to a multicollinearity issue. as we can see from table 2, all the absolute values of correlation coefficients are not higher than 0.8. therefore, there is no multicollinearity issue for this study. later, in the empirical results section, i have included another multicollinearity test known as the variance inflation factor (vif) for more reliability. table 1: summary statistics variable(s) mean max min sd n firm performance (logarithm) 5.836 9.012 0.699 0.722 797 exports (percentage) 11.650 100 0 29.850 859 export concentration (logarithm) 3.710 4 3.097 0.190 148 labor cost (logarithm) 4.847 7.716 0.398 0.591 783 number of employees (logarithm) 1.376 3.740 0 0.629 904 employee education (years) 4.978 20 1 8.524 809 firm age (years) 22.644 101 1 13.443 894 operation hours (logarithm) 3.491 3.941 2.318 0.185 777 capacity utilization (percentage) 73.922 100 3 20.542 752 manager experience (years) 19.581 56 2 10.523 887 training (dummy) 0.163 1 0 0.369 892 power outage (dummy) 0.917 1 0 0.276 907 foreign ownership (percentage) 1.636 100 0 8.709 899 average custom days (instrument variable) 4.542 60 0 9.916 844 note: see section 3.1 for the data sources. the variable measurements are provided in section 3.2. the units of observations are in parentheses https://journals.e-palli.com/home/index.php/ajebi pa ge 49 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(3) 44-54, 2022 table 2: correlation matrix ex ec lc no. of e ee fa oh cu me t po fo acd ex 1 ec 0.1577 1 lc -0.0119 0.0970 1 no. of e -0.1487 0.0934 0.0185 1 ee 0.0754 0.1580 0.2644 0.1577 1 fa -0.0440 -0.0295 -0.0429 0.1218 -0.0174 1 oh -0.1425 0.0443 0.0550 0.0633 -0.0134 0.0083 1 cu -0.0187 0.0434 0.1620 0.2313 0.1173 0.0785 0.3018 1 me -0.1114 -0.2487 -0.0152 0.0247 -0.1685 0.2861 -0.1032 0.0844 1 t -0.3240 0.1518 0.0893 0.5108 -0.0250 0.1047 -0.0649 0.0875 -0.0271 1 po 0.0089 0.0402 -0.0135 -0.2772 0.0441 -0.0926 -0.0006 -0.1165 0.0070 -0.1548 1 fo -0.0865 0.0206 0.0888 0.1647 -0.0215 0.0757 0.1137 0.1788 0.0011 0.0915 -0.4037 1 acd -0.1929 -0.087 0.0451 -0.0075 -0.0377 -0.0758 0.0406 -0.0551 -0.0855 -0.0580 0.0450 0.1071 1 note: the table reports the correlations among all the explanatory variables used in this paper. ex denotes exports, ec refers to export concentration, lc means labor cost, no. of e denotes number of employees, ee refers to employee education, fa means firm age, oh denotes operation hours, cu refers to capacity utilization, me refers to manager experience, t is denoted by training, po means power outage, fo denotes foreign ownership and acd means average days taken to clear customs methodology estimated generalized least square (egls) the problem of hetroskadescity is frequent in panel data. hetroskadescity means that when the variance of error terms varies over the observation. in that case, although least square estimates remain unbiased the standard error of estimators is wrong making statistical inference not reliable and providing misleading results. to overcome this problem, we need to make data homoskedastic using an appropriate transformation and then apply the least square estimation technique to estimate the unknown parameters; the resulting estimates are known as estimated generalized least square (egls). therefore, this paper applied this methodology to find the impact of exports and diversification on firm performance and they are estimated in the following models: log(firm performance)it= β0+β1exportsit+γk xit ’+αl yit ’+uit ................... (1) log(firmperformance)it=β0+β1exportst concentration+δl zi t’+uit ........................ (2) in equation (1), log has denoted as base 10 logarithm, firm performanceit denotes total sales divided by total employees of firm i at time t. exports denotes the export intensity of firm i and time t. x’are the labor-specific control variables of firm i and time t which include labor cost, number of employees, and average education of employees. y’are firm-specific control variables, which consist of firm age, operational hours, capacity utilization, top manager experience, training, power outage, and form of ownership. γ and α are the vectors of the coefficients of control variables. uit denotes the error term. β1 is the coefficient used to estimate the impact of export on firm performance. in equation (2), log has denoted as base 10 logarithm, (firm performance)it denotes total sales divided by total employees of firm i at time t. export concentration denotes the concentration of export destinations of firm i at time t. z’are control variables which consist of firm age, operational hours, capacity utilization, power outage, and form of ownership. δ is the vector of the control variables coefficients. uit marks the error term. β1 is the coefficient used to estimate the impact of diversification on firm performance using an inverse measure of export concentration. two stage estimated generalized least square (2s egls) the egls estimation results in equations (1) and (2) are prone to endogeneity. as export is correlated with firm performance and firm performance is correlated with export. due to these circumstances, there is a chance of reverse causality. the solution to this problem is to utilize two-stage instrumental variable panel data egls (2sls egls). the instrumental variable used is the average number of days to clear customs. thus, the following model is used for the estimates. exportit=β0+β1avg customit+uit ............. (3) log(firm performance)it= β0+β1 (exports)it+γk xit’+αl yit’+uit.................. (4) in equation (3), export was estimated by using an instrumental variable (average custom days), later, firm performance is regressed on the estimated exports in equation (4) where the log is denoted as base 10 logarithm, (firm performance)it denotes total sales divided by total employees of firm i at time t. estimated exports denotes the export intensity of firm i and time t. x’are the laborspecific control variables of firm i and time t which include labor cost and average education of employees. y’are firm-specific control variables, which consist of firm age, operational hours, capacity utilization, top manager experience, training, power outage, and form of ownership. γ and α are the vectors of the coefficients of control variables. uit denotes the error term. β1 is the https://journals.e-palli.com/home/index.php/ajebi pa ge 50 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(3) 44-54, 2022 coefficient used to evaluate the impact of estimated export on firm performance. export concentrationit= β0+β1 avgcustomit+uit ..................(5) log(firmperformance)it=β0+β1(export concentration) it+δl zit’+uit ................... (6) in equation (5), export concentration was estimated by using an instrumental variable (average custom days), later, firm performance is regressed on the estimated diversification in equation (6) where the log is denoted as base 10 logarithm, (firm performance)it denotes total sales divided by total employees of firm i at time t. estimated export concetration denotes the concentration of export destinations of firm i at time t. z’are control variables which consist of firm age, operational hours, capacity utilization, power outage, and form of ownership. δ is the vector of the control variables coefficients. uit marks the error term. β1 is the coefficient used to evaluate the impact of estimated diversification on firm performance using an inverse measure of estimated export concentration. results and discussion this section describes the empirical findings and discussion from panel egls and two-stage egls methods with correlation matrices and covariates. the last section of the thesis discusses the conclusion of this overall study. impact of export on firm performance (egls & 2s egls) table 3 shows the effect of export from pakistan on firms, performances (sales performance). sales performance is in its logarithmic form, labor cost is in logarithmic form, the number of employees, employees, table 3: impact of export on firm’s sales performance dependent variable: sales performance: full sample (1) (2) (3) (4) (5) (6) exports 0.004*** 0.001 0.002*** 0.035*** 0.039*** 0.033*** (0.0005) (0.0004) (0.0004) (0.007) (0.004) (0.007) labor cost 0.540*** 0.527*** 0.537*** 0.544*** (0.0126) (0.018) (0.057) (0.071) number of employees 0.124*** 0.048*** 0.012 (0.009) (0.012) (0.073) employees education 0.005 0.003 -0.001* 0.0005 (0.003) (0.003) (0.002) (0.003) firm age 0.010*** -0.003 (0.001) (0.006) operation hours 0.814*** 1.166*** (0.055) (0.379) capacity utilization 0.002*** 0.005* (0.0004) (0.003) manager’s experience 0.002 0.039*** (0.001) (0.014) training 0.228*** 0.813*** (0.076) (0.401) power outage -0.711*** -0.109 (0.052) (0.237) foreign ownership 0.003 0.010 (0.003) (0.010) constant 13.447*** 6.995*** 1.048** 11.317*** 4.819*** -5.537 (0.008) (0.147) (0.452) (0.406) (0.938) (3.574) observations 729 678 626 722 673 621 r-squared 0.062768 0.760369 0.81705 0.60626 0.702881 0.779813 adjusted r-squared 0.061479 0.758944 0.813772 0.59689 0.692270 0.758642 f-statistic 48.68844 533.8698 249.2823 18.968 37.90427 17.1600 prob(f-statistic) 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 “note: *** 1%; ** 5%; * 10%”. the columns labeled (1), (2), and (3) are the estimation results of panel egls techniques while (4), (5), and (6) are the panel 2sls egls estimation results, using the average number of days to clear custom as the instrument. is in logarithmic form, and the operation hours are in its logarithmic form. every other variable is in its natural magnitude levels. in table 3, column (1) to column (3) shows the baseline panel data model egls estimation results while column (4) to column (6) shows the two stage least squares panel data model egls estimation results. in column (1) we present the simple panel data egls estimation of the impact of export on a firm’s performance which is significantly and positively correlated with the firm’s performance. however, the adjusted coefficient of determination is only about 6.15% of the variations in the firm’s performance. in column (2) we control for employee characteristics like the cost of labor, the number of employees, and the average https://journals.e-palli.com/home/index.php/ajebi pa ge 51 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(3) 44-54, 2022 employee’s education. the result shows the insignificant and positive impact of export on a firm’s performance. in column (3), we further control for the firm’s specific characteristics such as the age of the firm, operational hours, capacity utilization, manager’s experiences, training, a form of ownership, and power outage. the results show that a unit change in export leads to 0.2% in the firm’s performance. the adjusted coefficient of determination improves to 81.38%. more so, the f-statistics test result on the joint significant hypothesis on all the explanatory variables is statistically significant in explaining the variations in the firm’s performance. the panel data egls estimation results presented in columns (1) to (3) are prone to endogeneity bias due to the use of export as an explanatory variable. as export explains a firm’s sales and firm’s (sale) performance also explains with export. as such, there are chances of reverse causality and the presence of reverse causality bias in the estimates of the panel data model egls estimation. one of the ways to correct this bias in the estimation result is to adopt the two stage instrument variable panel data egls (2s egls) estimation. the instrumental variable adopted in this two-stage egls analysis is the average number of days it takes from when consignments get to the right point of departure to the time it clear at the custom. the 2sls egls results are presented in table 3, column (4) to column (6). in column (4) we present the simple panel data model 2sls egls estimation result. the results show that the effect of export on a firm’s performance is around 3.5%. in column (5) we control for employee characteristics like the cost of labor and the average employee’s education. the result shows a significant and positive 3.9% impact of export on a firm’s performance. in column (6), we further control for the firm’s specific characteristics such as the age of the firm, operational hours, capacity utilization, manager’s experiences, training, a form of ownership, and power outage. the results show that a unit change in export leads to a 3.3% in the firm’s performance. the adjusted coefficient of determination improves to 77.98%. more so, the f-statistics test result on the joint significant hypothesis on all the explanatory variables is statistically significant in explaining the variations in the firm’s performance. therefore, the basic panel data model egls estimation underestimates the effect of export on the performance of the firms to be 0.2% instead of 3.3% as shown by the 2sls egls estimation techniques, after controlling for employees’ specific and firm’s specific characteristics. table 3.1 shows the multicollinearity test results of the estimated equations table 3.1: variance inflation factor for estimation results in table 3 covariates (2) (3) (5) (6) exports 1.565 4.749 1.358 7.834 labor cost 1.207 1.414 1.139 1.971 employees 1.581 7.373 1.482 employees education 1.136 2.011 1.124 1.458 firm age 2.730 2.33 operation hours 2.808 5.682 capacity utilization 1.643 1.291 manager’s experience 4.431 5.733 training 1.082 4.552 power outage 1.468 1.830 foreign ownership 1.199 1.467 in table 3 corresponding to the exact column numbers in table 3 (i.e. 2, 3, 5, and 6) using the variance inflation factor (vif). one could as well use the tolerance to judge the collinearity in the estimated equations given its inverse relationship with the vif estimates. the null hypothesis is that there is no multicollinearity and the decision rule is to reject the null hypothesis when the vif estimates are greater than ten. the results presented in table 3.1 shows that there is no vif estimate that is greater than ten, therefore, we conclude that there is no multicollinearity in our estimated equations. the second objective of this paper is to investigate the impact of diversification on the (sales) performance of the firm in pakistan. for this reason, we present the egls estimation results in table 4. table 4: impact of diversification on firm’s sales performance dependent variable: sales performance: export sample (1) (2) (3) (4) export concentration -0.465*** -0.467*** 7.628*** 6.686* (0.063) (0.125) (-3.453) (3.942) firm age 0.018*** 0.022 1.458 (0.003) (0.010) operation hours 1.159*** 5.682 (0.068) (0.635) capacity utilization 0.020*** 5.733 (0.002) (0.009) https://journals.e-palli.com/home/index.php/ajebi pa ge 52 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(3) 44-54, 2022 power outage -0.535* -2.207** 1.830 (0.317) (0.919) foreign ownership 0.0114 -0.014 (0.008) (0.018) constant 17.622*** 6.856*** -50.369* -49.926 (0.527) (1.368) (28.414) (36.686) observations 122 119 115 114 r-squared 0.314798 0.83171 0.303463 0.75291 adjusted r-squared 0.309088 0.8227 0.314998 0.73906 f-statistic 55.13084 92.2538 6.741498 20.1211 prob(f-statistic) 0.000000 0.000000 0.010671 0.000000 note: *** 1%; ** 5%; * 10%”. the columns labeled (1) and (2) are the estimation results of panel egls techniques while (3) and (5) are the panel 2sls egls estimation results, using the average number of days to clear custom as the instrument. impact of diversification on firm performance (egls & 2s egls) table 4 shows the effect of diversification (using an inverse measure of export concentration) on pakistan firms’ performances (sales performance). sales performance is in its logarithmic form, export concentration is in its logarithmic form, and operation hours are in its logarithmic form. every other variable is in its natural magnitude levels. in table 4, columns (1) and column (2) show the baseline panel data model egls estimation results while columns (3) to column (4) show the two stage least squares panel data model egls estimation results for the impact of diversification on firm’s performance. in column (1), we present the simple panel data egls estimation of the impact of diversification on a firm’s performance using herfindahl–hirschman index which is significantly and negatively correlated with a firm’s performance. however, the adjusted coefficient of determination is only about 30.91% of the variations in the firm’s performance. in column (2) we control for the firm’s specific characteristics such as the age of the firm, operational hours, capacity utilization, power outage, and form of ownership. the results show that a percentage change in export concentration leads to an inverse 0.47% percentage change in a firm’s performance. the adjusted coefficient of determination improves to 82.27%. more so, the f-statistics test result on the joint significant hypothesis on all the explanatory variables is statistically significant in explaining the variations in the firm’s performance. the panel data egls estimation results presented in columns (1) and column (2) may have endogeneity bias due to the use of export concentration as an explanatory variable. arguably, export concentration explains a firm’s sales performance and the firm’s (sale) performance also explains export concentration. as such there are chances of reverse causality and the presence of reverse causality bias in the estimates of the panel data model egls estimation. one of the ways to correct this bias in the estimation result is to adopt the two stage instrument variable panel data egls (2s egls) estimation. the instrumental variable adopted in this two-stage egls analysis is the average number of days it takes from when consignments get to the right point of departure to the time it clear at the custom. the two-stage egls results are presented in table 4, column (3) to column (4). in column (3) we present the simple panel data model two-stage egls estimation result. the results show that the effect of export concentration on a firm’s performance is around 7.6%. in column (4), we further control for the firm’s specific characteristics such as the age of the firm, operational hours, capacity utilization, form of ownership, and power outage. the results show that a percentage change in export concentration leads to a 6.69% in the firm’s performance. the adjusted coefficient of determination improves to 73.91%. more so, the f-statistics test result on the joint significant hypothesis on all the explanatory variables is statistically significant in explaining the variations in the firm’s performance. therefore, the basic panel data model egls estimation underestimates the effect of export concentration on the performance of the firms to be negative and 0.47% instead of positive and 6.69% as shown by the two-stage egls estimation techniques, table 4.1: variance inflation factor for estimation results in table 4 dependent variable: sales performance: export sample covariates (2) (4) export concentration 1.227 7.571 firm age 1.036 1.178 operation hours 1.160 5.022 capacity utilization 1.004 6.626 power outage 1.030 2.485 foreign ownership 1.086 1.246 after controlling for the firm’s specific characteristics. table 4.1 shows the multicollinearity test results of the estimated equations in table 4 corresponding to the exact column numbers in table 3 (i.e. 2, and 4) using the variance inflation factor (vif). one could also use the tolerance to judge the collinearity in the estimated equations given its inverse relationship with the vif estimates. the null hypothesis is that there is no multicollinearity and the decision rule is to reject the null hypothesis when the vif estimates are greater than ten. the results presented in table 4.1 shows that there is no vif estimate that is greater than ten, therefore, we conclude that there is no multicollinearity in our estimated equations. in other words, our estimation result is robust. intuitively, export https://journals.e-palli.com/home/index.php/ajebi pa ge 53 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(3) 44-54, 2022 table 5: exogeneity bias test results covariates statistic p-value conclusion export 1.721463 0.0857 endogenous variable export concentration 1.082383 0.2814 exogenous variable values are perceived as endogenous variables. however, we can also rigorously establish whether a variable perceived to be exogenous is truly endogenous using the exogeneity bias test. in table 5, the test results on the null hypothesis that export and export concentration variables are individually exogenous are presented. based on the test statistics and/or probability values, we reject the null hypothesis that export is exogenous and conclude that export is endogenous at a 10% level of significance. therefore, the instrumental variable panel data result is robust and valid. similarly, the endogeneity test was performed for export concentration and we fail to reject the null hypothesis at a 10% level of significance and therefore conclude that export concentration is exogenous. as such, the panel data egls results are robust and intuitive and we draw our conclusions from this result. in short, export is positively and significantly correlated with the firm’s performance, whereas export concentration is negatively significant with the firm performance. on this note, pakistanis firms that export performs better than the firms that serve domestically. the research results here completely support the theory of learning-by-exporting. on the other hand, geographic diversification also plays a part in the firm favor, as the firm could achieve economies of scale and scope with stable cash flow and lower risk. conclusion this paper empirically analyzes the impact of exports and diversification on firm performance in pakistan by using exports in terms of export intensity and diversification in terms of export concentration as key main independent variables. this paper use world bank enterprise data for pakistan’s firms across the whole country for the year 2007 and 2013. it is a survey panel data comprising 454 firms with a total of 908 observations. i investigated the relationship between export and diversification on firm performance using the panel estimated generalized least square (egls) method and two-stage egls models. the outcome from panel egls suggests that exports are significant and positively correlated with firm performance, later on, the export sample export concentration resulted in a negative and significant association with the firm performance. similar to sohl et al. (2020) gnangnon (2021), this study finds that with more exposure to export and diversification, the firms in pakistan have better revenues than the local domestic concentrated firms. this indicates that with export and diversification, the firm could have better revenue earnings which leads to better firm performance. on the other hand, similar to niemenen (2020) diversifying their export, successful export development programs, such as the funding of local and international trade fairs, the distribution of reliable information about global markets, and export finance and credit insurance may help in favor of this initiative. however, panel egls cannot eliminate the endogeneity problem, and as per the exogeneity bias test exports are found to be endogenous, whereas export concentration concludes to be exogenous. therefore, we used twostage panel egls to solve this issue. we used average days to clear customs as an instrumental variable and the result for this model was the same for the exports as it was again positive and significant with its association with firm performance confirming the lbe hypothesis. nevertheless, there was a change in export concentration, as its association became negative to positively significant but as this variable is not endogenous, those results are not intuitive. such findings for this study may lead to policy impacts and the patterns of results suggest that businesses that export have performed better compared to the ones that serve domestically. secondly, firms that diversify exports have a positive impact on performance. thus, to enable firms to enter the export market and to consider diversifying their export, successful export development programs, such as the funding of local and international trade fairs, the distribution of reliable information about global markets, and export finance and credit insurance may help in favor of this initiative. nevertheless, there are limitations to this study since the sample is only limited to two years 2007 and 2013, which are the latest available from the world bank. moreover, the sample is only for 454 private firms in pakistan. the survey of companies in other countries might give different results due to the difference in their rules and law. in addition, for future studies, it would be better if there were a larger sample size for pakistani firms. references bernard, a. b., & wagner, j. 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(1993). the east asian miracle: economic growth and public policy : main report [text/html]. world bank. https://documents. worldbank.org/en/publication/documents-reports/ documentdetail/975081468244550798/main-report https://journals.e-palli.com/home/index.php/ajebi https://rb.gy/ahlsf0 pa ge 1 pa ge 1 american journal of economics and business innovation (ajebi) effects of remote business during the covid-19 pandemic a literature review d. tomić1*, k. vizinger2 volume 2 issue 1, year 2023 issn: 2831-5588 (online), 2832-4862 (print) doi: https://doi.org/10.54536/ajebi.v2i1.1088 https://journals.e-palli.com/home/index.php/ajebi article information abstract received: december 18, 2022 accepted: december 04, 2022 published: january 11, 2023 remote work as a form of business has been used for many years, but not in all industries. in the midst of a pandemic caused by the covid-19 virus, this way of working has become an inevitable form of business. overnight, one had to adjust to the “new normality” and accept a new way of working from home. this way of working has positive and negative effects on the job itself and on the individual. these issues have been addressed in a number of studies that have identified different impacts of distance business on productivity, as well as on all participants in the business process. research shows that there are a number of positive effects on employees of different companies, but also some negative effects. most of the research covered by this paper, 81.82% of them, found that this way of working has no negative effects on productivity. also, 63.64% of papers showed that the consequences for employees are mostly positive. remote work has had a number of implications for businesses and individuals as it has become more widespread, particularly during the covid-19 pandemic. while it has been shown to have mostly positive effects on productivity and employee well-being in many studies, there are also some negative impacts that have been identified. it is important for businesses and individuals to carefully consider the benefits and drawbacks of remote work and to implement strategies to address any potential negative effects. keywords remote business, covid-19, pandemic, business productivity 1 faculty of education, osijek, croatia 2 croatian association of technical culture, zagreb, croatia * corresponding author’s e-mail: tomic.damir.dj@gmail.com introduction the century we live in has brought many changes in the way we do business, in the ways we communicate, but also in our lives in general. computers, the internet and the development of various applications have made the world much different than in previous centuries. using technology, people have changed themselves and the world around them. they have adapted to change by introducing new possibilities into everyday lives, year after year. of course, these technological changes have also affected the business world, which has become faster and more flexible. some things ten or twenty years ago were still science fiction. the development of mobile devices and the everincreasing possibility of internet communication have brought countless possibilities to the business world and now it is as if the whole world lives in this science fiction. business outside the office, thanks to various applications, primarily those for communication, has become commonplace. but still, it all came as a surprise when they had to switch almost completely to new ways of working overnight. the covid-19 pandemic, which has been burdening us since 2020, primarily in terms of health, has also threatened the business world. with the appearance of the pandemic, many were concerned about the question: ‘how will we organize remote business?’. remote business has expanded more and more in recent years to most geographical areas, but still not as fast as during the covid-19 pandemic. quarantine, isolation and the rest, however, forced millions and millions of people to work from home. at the beginning of the pandemic, working from home was the biggest problem due to lack of experience and knowledge of this type of work, but after a year, remote business became ‘new normal’. most employees will return to offices when the pandemic ends, but certainly more and more employers will apply a hybrid business model. working from home raises a wide range of problems and challenges for employees and employers. companies are thinking about how best to train their employees and how to provide them with the necessary infrastructure to work remotely. on the other hand, employees struggle to find the best balance for collaboration and remote business. in its research, mckinsey global institute (2020) defined in detail the activities and occupations that can be done from home to better understand the future power of remote business. the potential for telecommuting or work that does not require interpersonal interaction or physical presence in a particular workplace was analysed in a number of countries: china, france, germany, india, japan, mexico, spain, the united kingdom and the united states. to determine the total potential for teleworking for jobs and sectors, time spent on various activities within the occupation was used. they found that remote work potential was concentrated in several sectors. finance and insurance have the greatest potential, with three-quarters of the time spent on activities that can be done remotely without losing productivity. the next biggest potentials have management, business services and information technology. these sectors are characterized by a high proportion of workers with a university degree. the study will deal with the impact of remote work, in the mentioned circumstances, on labor productivity https://doi.org/10.54536/ajebi.v2i1.1088 https://journals.e-palli.com/home/index.php/ajebi mailto:tomic.damir.dj%40gmail.com?subject= pa ge 2 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(1) 1-13, 2023 through a review of previous research on this topic. also, the effects of such work on business process participants will be examined. given the new situation caused by the covid-19 pandemic, it was necessary to investigate how it affects business productivity and to investigate the positive and negative impacts on such work. with the growing influence of multimedia and various communication platforms in modern times, it is to be expected that most will cope well in situations like this. the purpose and goal of this research is to determine the possible advantages and disadvantages of previous research related to the problem caused by the covid-19 pandemic, i.e., how it affects business productivity and to explore the positive and negative impacts on such work. scientific research methods are manifested in searching databases and those articles that are closely related to the problem of work. the results obtained will be displayed at the percentage level. according to the collected research, it will be determined where in the world the most research is conducted related to this issue. it will also determine which sectors, i.e., types of work, are most covered by research on remote operations during the pandemic and which structures of employees and users of services are the subject of research. literature review literature review of previous research related to remote business the number of scholarly articles, blogs, commentaries, essays, perspectives, podcasts, tweets and vlogs related to covid-19 has grown and is still growing exponentially, all within months, not years. all of this is independent of the type of business to which these works relate, as well as whether it is about work in a particular country or about work that takes place between subjects of different countries. as for the short-term consequences, there is a broad consensus that the world’s lockdown responses in one country after another will wreak economic chaos. the longer it takes until the virus is adequately contained with an effective vaccine or treatment, the deeper and longer the economic fallout will be. however, when it comes to long-term diagnosis, scientists do not agree. at one extreme we find those who claim that covid-19 is a one-time disaster, after which the global economy will return to its “old normal” pre-corona state. at the other extreme, the argument is that the world is experiencing radical disruption that will create a “new normal,” and scientists are speculating about a whole range of different “new normals” in the world. many studies dealt with communication problems even before the outbreak of the pandemic. the global economy has set some new frameworks in which entrepreneurs operate. remote business has been advanced in some specific jobs for a long time. of course, the it sector is dominant, but there are also some specific systems where an increased need for this type of business can be expected. thus, in the book beautiful but costly: business costs in small remote economies, trading economies and their ability to generate competitive exports are problematized. crises like this further erode trade, especially internationally. (winters and martins, 2004) author wolfe (2020) points out that companies must be prepared for a workforce that lives in different environments and provide remote work. as the pandemic has made clear, events beyond the control of companies or even governments can suddenly affect the ability to do business as usual. ensuring remote and virtual work in any situation will become the “new normal”. this will help reduce unnecessary travel, reduce costs and become a greater motivator. wolfe (2020) states that working from home eliminates commuting, which for many could be up to an hour or more each way per day, and that is plenty of time for exercise, family, meditation, reflection, health and wellness everything you need in a pandemic. the future of service workers is likely to involve a combination of some office socialization, collaboration and meetings combined with working from home or remotely. this will enable companies to tap talent wherever they live. it can also reduce expensive office space by designing spaces for work to be done together rather than individually. however, if a full-time in-office employee had a good relationship with their manager before the pandemic, but prefers to work remotely after the pandemic, the nature and quality of that relationship may change. furthermore, because the job design allows for frequent social interaction, subordinates learn a lot from observation and interaction with their superiors. these interactions also enable supervisors to identify their subordinates human resource development needs and design interventions accordingly. (varma et al., 2022) here is a brief overview of important research on remote work during the covid-19 pandemic as an introduction to the issue of using this form of business during the pandemic, but also in the time to come. “working from home” refers to the act of completing one’s job duties outside of the traditional office setting. according to savic (2021), this can involve being an employee of a company or organization, taking on specific tasks for a company or organization, conducting work outside of the company’s physical location, and communicating with one’s employer through telecommunications. as covid-19 has forced companies around the world to allow their employees to work from home, teleworking has become extremely important in business. the need to give employees access to all the tools they need to work from home was quite urgent for most employers. but once everyone has adapted, what quickly became apparent to many is that employees can be productive and focused even when they are not in the office in many cases, even more than when they are. employers have begun to realize that telecommuting really works. (courtney, 2021). https://journals.e-palli.com/home/index.php/ajebi pa ge 3 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(1) 1-13, 2023 according to the same author, there are at least 10 benefits of working from home: better work-life balance, less stressful travel, workplace independence, improved inclusiveness, saving money, positive impact on the environment, positive impact on sustainability, flexible office, increased productivity and performance and a happier and healthier working life (courtney, 2021). the impact of the global covid-19 pandemic, both in health and economic terms, has affected smes around the world. research conducted by islam et al., addresses the challenges of telecommuting in smes and solutions during the covid-19 pandemic in bangladesh. based on a qualitative approach, interviewing 14 sme owners, advisors, civil servants and professors, they identified several challenges such as financial constraints, bureaucracy, lack of knowledge and interests, communication problems, high employee turnover and difficulties in finding a reliable employee who implements remote work practices. the study also improved some solutions such as persuasion about the benefits of remote business practices, government rules, financial incentives, it courses and online courses at universities on the application of homework in smes not only during the covid-19 pandemic but also long term. (islam, et al., 2020) the current crisis has forced companies to adapt quickly to the new reality, opening everyone’s eyes to new, faster ways of working with customers, suppliers and colleagues. many ceos are wondering what will be needed to sustain this form of work for as long as possible. the companies that took the lead in adopting the new organizational model showed significant improvements in both pace of execution and productivity. this was maintained during the crisis, as we see a direct correlation between agility in the pre-crisis period and the time it took companies to launch the first crisis-related product or service. (baig, 2020). a survey conducted by akpan et al., in 2020 confirms that the development of the global economy and a very strong competitive business environment prove that cutting-edge technology is key to strengthening competitive advantage and ensuring survival. now that the world is at the beginning of the fourth industrial revolution in which technology and innovation will drive operations and dictate pace, smes, despite limited financial resources, can use the cloud computing option now readily available for various information systems platforms. the cloud option requires little or no expense, is affordable and can be implemented with minimal technical expertise. in addition, there are now low-cost technologies that can help small businesses with virtual operations in community lockdown situations, such as cases that occur during the covid-19 pandemic. in today’s competitive business environment, growing small businesses with smart cutting-edge technology can create and sustain competitive strategies and lay the groundwork for long-term growth and market leadership. furthermore, the emergence of the covid-19 pandemic offers an opportunity to re-emerge a new generation of entrepreneurs who will lead the next industrial revolution and invent new ways of doing business using cuttingedge technology. (akpan, et al., 2020a) research methodology by studying previous research, it was necessary to find papers that answer key questions. the research was conducted during 2021 and 2022 in the google scholar database on the following terms: a) remote business b) covid-19, covid, benefits. inquiries in the mentioned database resulted in articles that are systematized in table 1. the purpose of the synthesis work is research that will answer the following research questions: q1: what is the impact of remote business, resulting from the covid-19 pandemic, on productivity? q2: how does remote business affect the participants of the business process, i.e., what are the positive and negative impacts of this kind of work? table 1 provides an overview of all analysed empirical research together with systematized basic data on papers. columns are presented that provide information on the type of work, the method of data collection, the profile of the respondents as well as the country in which the research was conducted. the following are columns that answer research questions for each paper; p1 shows the response that can be positive, negative or the impact cannot be determined, while p2 also indicates the type of impact identified. if a given research question is not considered in the paper, it will be marked separately. table 1: overview of analysed research and their characteristics no study type of work method of data collection profile of respondents country in which the survey was conducted q1 q2 1 courtney, 2021 all bases employees, executives united states + +independence of place 2 kniffin, et al.2020 all bases employees united states + + loneliness 3 wang, 2021 all interview employees, executives china + loneliness 4 bartik, et al., 2020 retail poll employees united states 0 0 https://journals.e-palli.com/home/index.php/ajebi pa ge 4 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(1) 1-13, 2023 analysis of results the number of scientific articles, blogs, comments, essays, perspectives, podcasts and tweets, has grown and continues to grow exponentially, all within months, not years. all this is independent of the type of work to which the work relates, as well as whether it is work in a particular country or work that takes place between entities of different countries. as for the short-term consequences, there is a broad consensus that global lockdown responses in one country after another will produce economic devastation. the more time passes until the virus is adequately controlled with an effective vaccine or treatment, the deeper and longer the economic downturn will be. however, when it comes to longterm diagnosis, scientists do not think the same. at one extreme, we find those who claim that covid-19 is a one-time disaster, after which the global economy will return to its ‘old normal’ state. at the other extreme, the argument is that the world is experiencing a radical disorder that will create a ‘new normal,’ and scientists are speculating about a whole host of different ‘new normal’ states in the world. many studies have addressed communication issues even before the pandemic broke out. the global economy 5 donald, 2020 individuals, companies, gov. bases all united states + + lower costs 6 pedersen, et al., 2020 all bases employees, executives united states 0 0 7 baig, et al., 2020 all bases employees, managers, 0 8 craft, 2020 libraries poll employees united states + 0 9 akpan, et al., 2020 small businesses bases employees united states + +increased use of platforms 10 ali, et al., 2021 rural population poll unemployed united states + 0 11 fitzpatrick, et al., 2020 all interview executives united states + communication problems 12 islam, et al., 2021 small and medium enterprises interview owners, consultants, government officials bangladesh 0 communication problems 13 akpan, et al., 2022 small and medium enterprises bases all world + + 14 witteloostuijn, 2021 all bases all world + + 15 savic, 2020 all bases all world + + digital transformation 16 davies, 2021 rural economy bases rural inhabitants world + + opportunities for new jobs 17 burrell, 2020 cyber security bases all world + + improving cyber security 18 moore, 2019 small and medium enterprises interview executives poland + + lower costs 19 tongkum, et al., 2022 small and medium enterprises poll all thailand + + lower costs 20 rometsch, et al., 2022 small and medium enterprises interview employees germany 0 lack of physical activity 21 stubstad, 2022 small and medium enterprises bases all united states + + increased productivity 22 lourenço, 2022 banking poll employees portugal + + motivation (source: according to research conducted by the authors) https://journals.e-palli.com/home/index.php/ajebi pa ge 5 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(1) 1-13, 2023 has set some new frameworks in which entrepreneurs operate. remote business has advanced in some specific businesses for a long time. of course, the it sector is dominant, but there are also some specific systems in which an increased need for this type of business can be expected. among developed countries, the anglo-saxon world is particularly vulnerable and therefore very likely to suffer from labour market disturbances awaiting the post crisis future. the reason is that the advantage of having their native language (english) as the ‘world language’, which they have benefited from for so many decades, will turn into a disadvantage. finally, many outside the anglosaxon countries are fluent in english well enough to emerge in the post crisis world as fierce competitors to their anglo-saxon counterparts who will perform the delocalized modular jobs and tasks in many parts of the world. (witteloostuijn, 2021) on the other hand, globalization is likely to increase the demand for jobs and tasks that can be performed from less developed countries or more remote regions. in part, within the club of rich countries, workers outside the major economic agglomerations where most business activities are located can see their job potential and how their prospects improve, as they can offer their services from anywhere and anywhere. however, the main shifts could be those from developed to less developed countries. as happened during the beginnings of globalization when capital moved from rich parts of the world to poor parts of the world, now the opposite is happening, jobs are done in poor countries because the way of doing business no longer requires workers from those countries to move to richer countries. if the workforce in these less developed parts of the world manages to adapt to a skills-based economy with a large market for modular jobs and tasks, this opens up great opportunities to encourage their further development. (witteloostuijn, 2021) many studies deal with this topic and especially highlight the problem with the experience that both employers and employees lacked, and when we talk about the transition to this form of business. most workers had little distance work experience so neither they nor their organizations were willing to switch to this form of business. the outbreak of the covid-19 pandemic in 2020 required millions of people around the world to become remote workers, inadvertently leading to a global telecommuting experiment. working from home has become a new business norm almost overnight. (kniffin, et al., 2020) a study conducted in china explored the challenges faced by workers who were working from home due to the covid-19 pandemic, and examined how individual differences and performance characteristics affected these challenges. through interviews with chinese employees who were working from home, four main challenges were identified: the impact of working from home on work, the effectiveness of communication, the potential for delays in fulfilling obligations, and feelings of loneliness. additionally, four characteristics that influenced these challenges were identified: the amount of social support available to employees, the level of autonomy in their job, the extent to which their work was monitored, and the workload they faced. one key factor of individual difference has been identified, namely the self-discipline of workers. in the second part of the study, using a survey of 522 employees who worked from home during the pandemic, it was found that performance characteristics are related to work performance and worker well-being through experiential challenges. social support was found to be associated with lower levels of all remote challenges; job autonomy, i.e., the fact that the employee is far from the office and has greater autonomy in performing the work, associated with his loneliness; workload and supervision are associated with major disturbances in the house; and workload further associated with less work prolongation. self-discipline was a significant mediator among several of these relationships. (wang, et al., 2020) a study conducted in 2020 indicates how the outbreak of the covid-19 pandemic around the world has forced companies to innovate and change the way they work. offices have become less important, and working from home has suddenly become mandatory. this sudden need for work from home has triggered the digital transformation of the workforce and the development of the work environment at an unprecedented rate. the mass adoption of telecommuting has become a vital business change since the virus outbreak. this scientific paper considered this unprecedented impact of the pandemic on the sudden demand for work from home and the subsequent impetus for the digital transformation of the workforce, emphasizing that it is good that this change in work philosophy remains there after the pandemic. (savic, 2020) in all of this, the business world had to react quickly. within days, companies were asked to improve their remote collaboration skills. video conferencing, online shopping, special deliveries, telemedicine, e-learning, e-commerce, online marketing, video streaming and many other it-enabled processes have undergone a transformation, replacing traditional ways of working. the digital transformation covers a wide range, including maximizing the use of modern information technology, which is gaining in importance due to covid-19 and is becoming widely recognized and accepted by employers and employees. the transformation of the workforce from worker to digital worker is a crucial step forward for digital transformation. organizations that have improved their it capabilities and hired their employees to work from home are in a much better position not only to survive these unprecedented circumstances, but also to more easily overcome the short-term and long-term challenges that will inevitably follow. (savic, 2020). the following scientific paper considers whether the covid-19 pandemic will bring employees of an https://journals.e-palli.com/home/index.php/ajebi pa ge 6 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(1) 1-13, 2023 organization closer together or separate them. the authors point out that organizations that balance profit, ethics and compassion during the covid-19 pandemic will keep their existing staff loyal. these organizations will also attract new employees and gain consumer support based on a positive perception of their business culture. equally, organizations deemed to have acted inappropriately will experience reduced motivation, reduced productivity, and increased departures rates of their staff. they will also fight to hire new staff and risk boycotting consumers by threatening their long-term sustainability. (pedersen and ritter, 2020) pandemic and the resulting public health measures required that many workers be allowed to work from home. the question is whether a temporary transition that will allow workers to work from home can become more permanent and how this will shape the spatial distribution of employment opportunities and, on the other hand, the workforce. davies focuses on the potential of ict working from home to reshape employment opportunities in rural areas. given that limited local employment opportunities are a major driver of rural emigration, providing rural residents with access to a wider range of employment through ict can result in long-term changes in rural migration. despite the potential of ict to support telecommuting, acceptance in rural areas is relatively low. this paper argues that the recent increase in the use of itc-supported home work arrangements, promoted by public health measures, may have two main barriers to participation in teleworking negative employer perceptions of working from home and limited knowledge in the workplace on how to manage a partially or completely remote workforce. for the rural population, a rapid transition to ict-supported work from home is likely to open up a variety of employment opportunities. however, still for some rural areas and populations, the digital divide between urban and rural areas remains an obstacle to participating in telecommuting through ict. (davies, 2020) ict-supported telecommuting is usually negotiated between employees and managers, and there is a noticeable diversity in the way people participate in telecommuting through ict and perceived benefits for employers and employees. throughout the ict-supported remote business research literature, broad insights into the behaviour of workers and employers and their experiences include: engaging in ict-supported work from home can enable workers to improve work-life balance. this in turn refers to employee satisfaction, performance and retention; engaging in ict-supported work from home allows workers access to work they would not otherwise be able to because of the distance they would have to travel between their home and their place of work; employers have shown that by participating in ictsupported remote business they are able to expand jobs beyond the usual scope and overcome the problem of labour shortages; isolation of workers can be a problem for both employers and workers. there are a number of research papers that talk about different strategies in the workplace (at the employer) and at home (at the workers) to address and manage the workers sense of isolation. (davies, 2020); for employers, ict-supported teleworking can result in reduced office-related costs, lower recruitment costs and staff turnover, and enable increased worker productivity. (urbaniec, et al., 2022) some research has addressed the issues of unemployment and education of the unemployed. the problem of unemployment was very pronounced even before the outbreak of the pandemic in rural parts of the us state of utah. rural online initiative, usu extension has created a master remote certification course work professional, specialized training that provides rural residents with the skills needed to work remotely. although this started before the pandemic, the importance of distance employment opportunities has further increased in rural communities affected by covid-19. as of october 2018, about 1,298 participants have completed such a course. the evaluation of shortand medium-term outcomes showed changes in participants’ knowledge, attitudes, skills and aspirations towards seeking remote employment. the results showed a statistically significant increase in students’ knowledge after completing the course. although 63% of participants did not have distance work experience, the majority (92%) stated that it is important or very important to acquire distance work skills. this included participants who experienced job loss due to covid-19 and were eager to acquire teleworking skills. on average, participants had high overall average scores of all teleworking skills; participants felt that after the course they have better skills in balancing their professional and personal life, to better manage their professional and personal life which has become more productive, to solve problems better, to communicate better digitally, to use internet technology easier and better, that they are more successful and adaptable to teamwork and manage their own careers. a large number of 97% of participants felt that the value of remote workers had improved, and 96% were encouraged to look for a remote job after completing the course. follow-up surveys showed that 167 out of 560 active job seekers found a job remotely. in response to covid-19, about 36% (123 participants) started working remotely. one participant said: ‘... due to restructuring, i was fired from my previous job. after five long months of unemployment due to covid, i have a new job as a payroll controller. i am so excited about my employment, my new position and the company i work for! in addition to bringing in a nearly 40% salary increase, there are opportunities for new responsibilities, along with other benefits.’ considering the environmental impacts, the reduced travel time to work equated to savings of $ 997 per month for all participants who found a long-distance job due to lower fuel costs. this has further resulted in an overall reduction of 3.34 metric tonnes of carbon emissions per https://journals.e-palli.com/home/index.php/ajebi pa ge 7 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(1) 1-13, 2023 month which helps promote clean air. (ali and hill, 2021,) the unexpected disruption caused by covid-19 has accelerated the transition to virtual systems in the workplace and for employees in government, businesses and the military. the accelerated transition to the entire organization of telecommuting has also created new complex challenges around managing cybersecurity risks. complex business and government organizational systems have several significant and critical work tasks around cyber security. these roles are responsible for functioning as effective teams for handling incident responses, intrusion assessments, crisis management, crisis communications, forensic data testing, malware analysis, firewall assessments, disaster recovery, emergency response planning, risk management, analysis human factors, training assessment and active network monitoring. qualitative research conducted by burell in 2020 explores the nuances of employee engagement, organizational development, and managing virtual and remote cybersecurity teams in ways that enhance complex business and organizational systems in the professional world. (burell, 2020) the use of information technology and virtual teams provides significant benefits to individuals and organizations, but also poses significant information security risks or, more specifically, cyber security risks. accessing elements of virtual teams from a holistic perspective contributes to a strategy and end result called the ‘virtual team cycle of success’. once leaders embrace this cycle of success and establish processes and policies focused on this theory, work performance among virtual teams will improve. as the market continues to evolve, more and more organizations will be forced to turn to virtual teams to accomplish the task and operate effectively. organizations that discover how to accurately lead and use virtual cyber security teams will ultimately create for themselves an extremely useful and potentially sustainable competitive advantage. (burrell, 2020). a study conducted in the u.s. on more than 5,800 small businesses provided insight into the economic impact of the covid-19 pandemic on small businesses. the results also shed light on the financial weakness of many small businesses and the significant impact that covid-19 had on those businesses in the weeks following the onset of covid-19 related disruptions. the results also provide evidence of the company’s expectations of the long-term impact of covid-19, as well as their perception of the assistance program offered by the government. small businesses employ nearly 50% of american workers. the results of this research highlight the financial fragility of many small businesses and how much they have been hit hard by the current crisis. in this sample, which is based on the retail sector, it was found that 43% of businesses were temporarily closed and that employment fell by 40%. the results of this study suggest that many of these companies had little cash available at the start of the pandemic, which meant they had to dramatically cut costs, take on additional debt or declare bankruptcy. (bartik, et al., 2020) during teleworking, a problem occurs that involves engaging in physical activity (sport) and this has a worse effect on health than before the pandemic. respondents do less sports than usual, although there were certainly opportunities for that. this is due to a lack of motivation for physical activities that have arisen as a result of the pandemic. regardless of existing health awareness, self-organized integration of exercise into daily life is becoming increasingly difficult. (rometsch, et al., 2022) teleworking shows clear benefits for both the employee and the employer to potentially improve productivity. as part of the study, the working report states that in the us, hourly labour productivity increased by 3.2% in 2020 compared to 2019, the highest annual growth since 2010. (stubstad, 2022) another study looks at the impact of the pandemic on small businesses. akpan, et al., conducted one such study in the united states. evidence from research and results clearly show the slowness with which small businesses adopt or are willing to implement state-of-theart technologies beyond the regular use of conventional information technology infrastructure. in addition, this paper went a step further to assess cases where technologies that small businesses considered too advanced in the past and under normal conditions suddenly became crucial when companies became forced into new situations and survival needs, such as erupted in the event of a pandemic (covid-19). despite the inadvertent adoption of information technology during the global health pandemic to survive disruptions in small business models, the fact remains that advanced technologies can offer significant benefits while still not being too expensive. for example, the use of virtual reality platforms seems accessible to small businesses, platforms such as the use of virtual teams, and zoom platforms to provide services in small business meetings. likewise, printing 3d face masks and other health supplies has proven to be easier for small businesses than traditional models of technology adoption have often suggested. further studies should continue to emphasize the role of state-of-the-art technologies as the world moves towards a fourth industrial revolution. (akpan, et al., 2020b, p. 8) the fourth industrial revolution (or industry 4.0 i4.0) is the constant automation of traditional production and industry, using modern smart technology. machine-tomachine communication (m2m) and internet of things (iot) are integrated for increased automation, improved communication and self-control, and the production of smart machines that can analyze and diagnose problems without the need for human intervention. (moore, 2019) the internet is the foundation of the i4.0 paradigm, enabling others to use technology dependent on this digital communications infrastructure. the internet enables the interaction between separated people and machines in i4.0 through global addressing and universal communication service. (aceto, et al., 2019) the development of networks based on ethernet and https://journals.e-palli.com/home/index.php/ajebi pa ge 8 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(1) 1-13, 2023 wireless networks in digital communication has led to the emergence of iot. similarly, the proliferation of mobile personal communications and wireless local area network (wlan) technologies has significantly reduced the cost of connecting mobile devices to the internet. (ande, et al., 2020) the noticeable increase in i4.0 has further encouraged migration to the internet protocol version 6 (ipv6) due to the need to identify and provide unique addresses for billions of cyber -physical systems. thus, without the capabilities provided by the internet, paradigm i4.0 would not be different from the scenario produced in the 3rd industrial revolution. in the absence of the internet, a wide range of automation tools and devices, enabled by electronics and computer advancement, would be forced to act as stand-alone parts, which would severely limit the possibilities offered by integration and interaction. (akpan, et al., 2020a) organizations that continued to recruit during the covid-19 pandemic had to accept online interviews due to social exclusion regulations and restrictions on national and international travel. for many companies, this has been a major shift from the traditional face-toface approach. however, this offers several opportunities to develop the employment process in the economy after covid-19. for example, online interviews combined with telecommuting significantly increase the opportunities available to businesses and can help reduce the costs associated with physical office space. organizations should invest in technology infrastructure to support telecommuting, but in return they could promote a green agenda and offer a work-life balance to new employees (donald, 2020). this highlights the interconnected and interdependent interactions of different actors within the career ecosystem. (baruch, 2015) employers who want to succeed in digital-driven recovery need to quickly reset their digital programs to meet new customer needs. they need to support systems and adjust organizational models and technology packages to work at maximum effective speed. in other words, managers need to focus their ‘digital’ action on the right goals and execute them quickly. it is important to set goals at the beginning and regularly measure progress towards them. achieving parity or improvements through digital channels to win the revenue race, rebuilding the most critical decision support models and doubling the pace of development are goals that are within everyone’s reach. (baig, 2020, p. 8). in 2020, fitzpatrick et al. conducted a survey where they asked directors five questions: do they have clear goals and ways to achieve them, what role should business organizations play in accelerating entry into new markets or access to new customers, how can they take advantage of a faster operating model to increase speed in their business, how should they rethink their giftedness strategy to have the necessary people when recovery begins, and what investments are most needed to create a technological environment that allows their company to thrive in the next normal period. many surveys have been conducted by interviewing employees or owners of these companies, and some have addressed the views of directors. (fitzpatrick, et al., 2020) these questions clearly show that new circumstances impose a rethinking of goals and that the new organization of work and access to new customers or clients largely depends on business models based on human resources and their talent in navigating the technological environment. it is all a pledge for business survival in the circumstances of the pandemic, but also a pledge needed to start when the recovery begins. how the crisis will affect the future and what consequences this situation will have on business, time will tell. but some things can already be assumed. so far, the vast majority of company executives have digitized at least part of their business to protect employees and, as a result, serve clients facing mobility constraints caused by the covid-19 crisis. as one ceo of a large technology company recently stated, ‘we are witnessing what will surely be remembered as the historic setting of telecommuting and digital access to services in all domains.’. (baig, 2020). digital transformation is emerging as a driver of great change in the world around us. the potential benefits of digitization are clear, including increased productivity, safer operations, and significant savings. (tongkum, et al., 2022) in 2020, after the start of the covid-19 pandemic in the united states, craft conducted research on the impact of the pandemic on library operations. the pandemic continues to affect lives, communities and organizations across the country and around the world. libraries have experienced a major impact on services, facilities and many other aspects of the profession, with many libraries providing services entirely online and many employees working remotely. the paper studied all aspects of teleworking on library technical services, with a primary focus on academic libraries, and considered how the history and existing literature on teleworking laid the foundations for understanding and dealing with some of the problems many libraries have. the covid-19 pandemic is still ongoing and its full impact on technical services, libraries and life in general is not yet known. also, the length of time that libraries will continue to work remotely due to new working conditions is unknown. there are several questions that have yet to be answered regarding the transition of library services to teleworking due to the covid-19 pandemic. these include: how the library’s technical services departments have coped with this transition, what challenges they faced and how they were addressed, the innovations, resources, and lessons learned in support of and managing this transition, how libraries have dealt with technological challenges, how they have addressed staff isolation, and how the pandemic will affect the long-term operation of libraries. responses to these discussions and reflections on these and related topics can potentially help members of https://journals.e-palli.com/home/index.php/ajebi pa ge 9 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(1) 1-13, 2023 technical services and library communities to learn from each other and apply in practice that can help staff, departments, libraries and communities. (craft, 2020) however, the benefits of telecommuting are shown through increased productivity and individual motivation of employees, which is the result of improved self-confidence and self-control, with a higher sense of belonging and commitment in the organization. work flexibility has also increased, aided by technological developments. this acquired flexibility should enable employees to better organize their personal and working time. (lourenço, 2022) synthesis of results out of a total of 22 surveys, and according to where the surveys were conducted, (see figure 1), five relate to the whole world, one to bangladesh, china, thailand, portugal. germany and poland, and the remaining eleven to the united states. these figures show that the greatest interest is in the use of computer technology in business (especially after the pandemic), but also in conducting research in this area in the united states. when it comes to the types of work covered by the research, they mainly referred to all types of work, small and medium enterprises and rural economy (figure 2), and when collecting data, the authors relied mostly on internet sources and various bases, interviews and surveys (figure 3). regarding the profile of the respondents, employees and managers of companies are in the lead, followed by business owners and users of services of different companies (figure 4). figure 1: representation of regions covered by this review (source: according to research conducted by the authors) figure 2: representation of research by type of business (source: according to research conducted by the authors) https://journals.e-palli.com/home/index.php/ajebi pa ge 10 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(1) 1-13, 2023 figure 3: representation according to the method of data collection (source: according to research conducted by the authors) figure 4: representation according to the profile of the respondents (source: according to research conducted by the authors) with regard to research questions p1 and p2, the following was found: when asked by p1, what is the impact of remote operations, which is a consequence of the covid-19 pandemic, on productivity, 18 studies confirmed the positive effects of remote working, and 4 studies found no impact or did not address this issue (figure 5.). regarding the question figure 5: research question q1 (source: according to research conducted by the authors) p2, how remote business affects the participants of the business process, i.e., what are the positive and negative impacts of this work, 13 studies found positive effects on business process participants, 3 studies found negative effects, 1 study found positive and negative effects, and 5 studies did not answer this question (figure 6). as for the positive effects, they are: increased independence https://journals.e-palli.com/home/index.php/ajebi pa ge 11 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(1) 1-13, 2023 figure 6: research question q2 (source: according to research conducted by the authors) from the workplace, reduced costs, increased use of communication platforms, greater employment opportunities, globalization of the workforce, digital transformation, increased job opportunities and greater concern for cyber security. negative consequences are seen in communication problems, and especially in the loneliness that occurs in employees. conclusion research to date has shown that remote business has been introduced in various business sectors, as a lifeline for a faltering economy, and as a result of a pandemic caused by the covid-19 virus. of course, this applies to those jobs that could be transferred from the office to homes or other locations. most of the research covered by this paper, more precisely 81.82% of them, found that this way of working has no negative effects on productivity. also, as many as 63.64% of papers showed that the consequences for employees are mostly positive. it is interesting to note that a higher percentage shows that productivity has not suffered compared to a percentage that shows how many positive effects it has on employees. namely, research has shown many negative consequences for all participants in business processes, especially employees. furthermore, research has shown that companies with smart cutting-edge technology can become and remain more competitive and lay the groundwork for longterm growth and market leadership. the emergence of the covid-19 pandemic offered an opportunity to rise a new generation of entrepreneurs who will lead the next industrial revolution and invent new ways of doing business using cutting-edge technology. this experience, which is a consequence of the pandemic, brings greater education of all participants in the business process for this way of working, but also of all people who must communicate in any way in doing their jobs. from education, medicine, the it sector and others, to those who make decisions about security or make decisions that are important for everyday life. in addition to education, society has become more willing to change the way it works and adapt to the new situation, if it happens again. limitations and suggestions for further study examining the factors that contribute to successful remote work, such as having adequate technology and home office setup, as well as the challenges that employees face when working remotely, such as distractions and difficulty disconnecting from work. this could help identify strategies for improving productivity and wellbeing when working remotely. evaluating the impact of remote work on team dynamics and collaboration. the study mentions that a higher percentage of research showed that productivity has not suffered compared to a percentage that showed positive effects on employees. it would be interesting to study why this may be the case and how teams have adapted to remote work and the strategies they have used to stay connected and productive. studying the long-term effects of remote work on the labor market and the economy. the conclusion notes that the shift to remote work brought on by the pandemic could have lasting effects on how work is done and where people live and work. further research could help understand these potential long-term impacts and inform policy decisions and help companies prepare for the future. investigating the use of cutting-edge technology in remote work and its impact on competitiveness and market leadership. the study mentions that companies with smart cutting-edge technology can become and remain more competitive and lay the groundwork for long-term growth and market leadership. further research could examine how different technologies are being used in remote work and their impact on business outcomes. limitations of this topic include the fact that the covid-19 pandemic is an ongoing event and much of the research on the topic is still in progress. additionally, the effects of remote work may vary depending on the specific industry and type of work being done, so it may be difficult to generalize findings to all sectors and types of work. finally, remote work is just one of many factors that have been affected by the pandemic, so it can be challenging to disentangle the specific effects of remote work from the overall impact of the pandemic on individuals and 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(2020). disruption in the boardroom: leading corporate governance and oversight into an evolving digital future. apress. https://journals.e-palli.com/home/index.php/ajebi pa ge 1 am. j. econ. bus. innov. 1(2), 2022 the american journal of economics and business innovation (ajebi) is an international, peer-reviewed, and open-access journal that publishes articles that emphasize research, development, and application within the fields of business, economics, finance, marketing, management, business analytics, etc. the ajbei reviews papers within approximately one month of submission and publishes accepted articles online immediately upon receiving the final versions. frequency: three issues per year area of publication: business, economics, finance, marketing, management, business analytics, start-ups, business and financial innovations and technologies. editorial team professor dr. constance leyland dean of business & accounting, american national university, usa professor dr. a. k. m. ahasanul haque faculty of economics and management sciences (kenms) international islamic university malaysia (iium), malaysia dr. gus del rivero lecturer, california state university, long beach and monterey bay, usa dr. cansu tor kadioğlu associate professor, faculty of applied sciences international trade and logistics department, tarsus university, turkey dr. lauren vantalia graduate programs faculty, southern states university, san diego, usa dr. hafizah hammad ahmad khan faculty of business & management, universiti teknologi mara, malaysia dr. razali haron associate professor, iium institute of islamic banking and finance (iiibf) international islamic university malaysia (iium), malaysia dr. sejuti mondal texas state university, usa dr. nida jafri consultant, green empowerment, portland, usa dr. marhanum che mohd salleh associate professor, faculty of economics and management sciences (kenms) international islamic university malaysia (iium), malaysia professor dr. wael al-aghbari university president, international university of technology twintech iutt, yemen dr. abdullah sarwar senior lecturer, department of business studies multimedia university, cyberjaya, malaysia dr. saleena e c research area: commerce aligarh muslim university, india dr. md aftab anwar associate professor, department of business studies state university of bangladesh dr. sofia binte ehsan department of environmental science university kebangsaan malaysia professor dr. md. morshed hossain department of economics, begum rokeya university, rangpur, bangladesh contact: american journal of economics and business innovation (ajebi) e-palli llc address: 2055 limestone rd ste 200c, zip code: 19808, wilmington, delaware, usa email: ajebi@e-palli.com phone: +1 3024070506 url: https://journals.e-palli.com/home/index.php/ajebi https://journals.e-palli.com/home/index.php/ajebi/about/submissions mailto:mailto:ajebi%40e-palli.com?subject= https://journals.e-palli.com/home/index.php/ajebi pa ge 11 american journal of economics and business innovation (ajebi) investigation of student-teachers readiness and attitude towards utilization of ict in studying business education in delta state, nigeria onajite, g. o1* volume 1 issue 2, year 2022 issn: 2831-5588 (online) doi: https://doi.org/10.54536/ajebi.v1i2.173 https://journals.e-palli.com/home/index.php/ajebi abstract student-teachers’ readiness and attitude towards utilization of information and communication technology in studying business education in colleges of education in delta state was investigated in this study. descriptive survey research design was employed in the study. population for the study entailed 1, 318 nce business education student-teachers from two out of the four colleges of education in delta state. sample size of this study constituted 659 nce business education student-teachers from two colleges of education in delta state, which was selected at 50% using the proportionate stratified random sampling. mean scores and standard deviation were used to analyze data in this study and all hypotheses were tested on an alpha level (α) of 0.05 significance using t-test. the findings revealed that student-teachers showcased strong readiness and positive attitudes towards utilization of the information and communication technology in studying business education in coes in delta state. however, the findings revealed that the student-teachers did not possess the requisite skills in different aspects of computer packages towards utilization of the information and communication technology in studying business education in coes in delta state. from these findings, recommendations were proffered and among them included that: the various institutional leadership in the colleges of education such as the provosts, deans and head of departments (hods), should support students’ readiness and preparedness towards the use of ict in studying business education at the colleges of education. this can be achieved through ict facility provisions, adequate funding, infrastructural development and private sector support and encouragements. article information received: march 4, 2022 accepted: march 16, 2022 published: april 16, 2022 keywords student-teachers, readiness, attitude, utilization, computer technology, business education, colleges of education 1 department of vocational and technical education, faculty of education, ekiti state university, ado-ekiti, nigeria * corresponding author’s e-mail: onajitego@gmail.com introduction the world has become a global village in which human interactions, relationships, communications, and businesses are highly influenced by information and communication technology (ict). even in the education industry or sector, information and communication technology (ict) has been infused into administrative practices, research, and teaching and learning processes. today, using ict in teaching and learning situations in the various school systems is a common practice for european countries, which has widely and extensively spread into african countries, including the nigerian education system. in business education, the use of ict to boost teaching and promote students’ learning has also been highly accepted and encouraged. this situation is owing to the fact that the federal republic of nigeria (frn, 2013) has accepted the integration of ict in various education systems in nigeria, including the colleges of education. according to the frn (2013:57), “educational support services will be developed to facilitate the implementation of educational policy, attainment of policy goals and the promotion of effectiveness of educational system”. the federal republic of nigeria (frn, 2013) further attested that in all teacher-training awarding programs issuing nigerian certificate in education (nce) and degree certificate, ict would be properly integrated into the system (pg. 44). in furtherance, ict facilities and infrastructure, radio and television educational broadcasting, hardware and software laboratories, and networking services shall be provided, including colleges of education that offers business education courses. given the above policy statement by the federal republic of nigeria (2013), it is therefore expected that the use of ict facilities should be highly integrated and incorporated into every school system, including the colleges of education which are known for teacher preparation. colleges of education are teacher education institutions that train would-be teachers known as the student-teacher. they are a citadel of learning and higher education institutions established with several motives of producing servicing teachers for the secondary education sector (federal republic of nigeria, frn, 2013, pg.43). in this wise, student-teachers, especially in business education at the colleges of education, are expected to undertake and pass through several courses both in theory and practice. all the courses undertaken during the learning processes are expected to lead the students towards the achievement of educational goals and objectives, which can be visible through the effective utilization of ict. the federal republic of nigeria (frn, 2013) further noted that the use of ict in studying business education in the colleges of education, therefore, is an enabling way of developing a sound, intelligent learning society in the country, also a way of developing the competent workforce through practical life skills acquisition which is relevant to the world of work (pg.v). kwacha (2007) affirmed that in all educational systems, the use of ict is https://doi.org/10.54536/ajebi.v1i2.173 https://journals.e-palli.com/home/index.php/ajebi mailto:onajitego%40gmail.com?subject= pa ge 12 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(2) 11-22, 2022 highly encouraged and approved by several authorities in order to inculcate into learners’ abilities and skills that will enable them to operate effectively in the labor market. however, ict networking tools and gadgets should be used for promoting different teaching methodologies for the appropriate dissemination of knowledge. invariably, in business education, the use of ict in studying business education will expose students to the integral aspect of business education which encompasses education for office occupation, accounting practices, shorthand, marketing, commerce, economic understanding, and entrepreneurship which is necessary for human capital development. inije, utoware, and kren-ikidi (2013) attested that in the colleges of education, business education courses is studied under accounting education, secretarial education, or office technology management, among others. as such, for business education students to maintain technological leadership, they should be equipped with ict competencies in order to function and operate efficiently in the world of work. therefore, in order to meet up with the ideals of human capital development, the federal government created a roadmap for the nigerian education sector through the incorporation of ict into the education system as a special education support service is inclusive (frn, 2013). the information and communication technology (ict) can therefore be described as any device that is used for acquiring, sorting, processing, storing, and dissemination of information, whether textual, numeric, graph, etc., using the computer and other communication gadgets. ajaero (2016) stated that information and communication technology is a term representing communication devices and applications such as radio, television, cellular phones, computer networks, computer hardware, and software satellite systems. jinnah et al.(2015) also stated that ict includes all internet, mobile equipment, etc., and software resources which have become powerful tools for educational change and reform. the different components of ict, when adequately used, expand access to education raise the quality of education by making teaching,learning,appealing, and active process connected to real life. according to bandele (2016), ict has provided windows of opportunities for educational institutions to use information and technology in every teaching and learning situation. its benefits in education are enormous. ict has continued to play important roles in teaching and learning, although it has its pros and cons. according to daramola (2014), ict prepares students for a workplace where computers, the internet, and related technologies are becoming more and more ubiquitous it also expands access to education through remote learning resources. yusuf et al. (2013) maintained that information and communication technology could boost any educational institution’s efficiency and effectiveness in order to support them in achieving their goals and objectives. yusuf et al. (2013) further noted that ict provides quicker and easier access to more extensive and current information its users, which is also useful in all research work. besides these pros, yunus et al. (2013) observed that the use of computer technology has its cons which make students become addicted to it in such a way that it negatively affects their reading skills. however, before the introduction of ict in a respiratory of knowledge with students remains passive, but the tide had changed the whole process, students can now learn on their own with a little guidance from the teacher. kiadese (2012) break ict into three components, they are: 1. information channels such as worldwide web (www) online database, electronic documents, management and accounting system, internet etc. 2. communication channels such as e-mails, electronic discussions groups, electronic conference and the use of cell phones etc. 3. hardware and software used to generate, prepare, transmit and store data such as computers, television, etc., in education, ict are information carriers designed specially to fulfill the objectives in a teaching-learning situation. the federal republic of nigeria (frn, 2013) indicated that the goals of incorporating ict in education include; i. assisting teachers in the facilitation of the teaching and learning process ii. inculcating into students problem-solving, critical thinking, and innovative skills iii. boosting lifelong education iv. enabling teachers and educators to impact different teaching methodologies for promoting learning v. improving research and development in educational institutions vi. widening access to educational instructions anywhere, time, and any place. the advantages of the information and communication on student teachers studying business education are enormous that the ict as electronic resources aids students’ research by providing them with the necessary online information and materials necessary to support and improve their learning (shavinina, 2001). citing instances, such ict tools like the computer-internet, electronic typewriter, video or films, and online materials impacts positively in the teaching and learning of business education process. new ict tools like social media, computer files transfers, virtual conferences, multimedia products, offline, web-based learning formats, and teleconferencing can be utilized to make positive impacts in business education. the various ict facilities used in the -learning process, which can also be utilized in business education, include multimedia, digital, and computerized equipment (bandele, 2006; bryers, 2004 & ofodu, 2007). ajayi and ekundayo (2010) identified the following benefits of using ict in teaching and learning business education. it facilitates effective teaching and learning process. ict provides productive teaching and learning, which https://journals.e-palli.com/home/index.php/ajebi pa ge 13 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(2) 11-22, 2022 increases people’s creative and intellectual resources, especially in today’s information society. it provides a wide range of learning materials. this implies that a teacher can meet the needs of students with different learning styles. onwuka and koko (2010), also highlight the following benefits of ict in the learning process. they are; it serves as a private tutor it provides rapid and accurate feedback to students, which contributes to positive motivation it promotes high order thinking and better problemsolving strategies it provides educational services and outside classroom learning for both teachers and students. given all the aforementioned benefits attached to the utilization of ict in the teaching and learning process, yet infusion of ict in studying business education in colleges of education highly depends really on students’ and teachers’ readiness and attitude toward utilization of ict in studying their courses. attitudes, as defined in the oxford popular school dictionary (2002), is a way of thinking or behaving toward teaching and learning. it refers to the ways and manners students behave towards the whole process. it could be seen as the readiness or dispositions to act or react in a certain way. this statement is justified in the works of bitner and bitner (2002), which indicated that it is the preparedness and interest of the students and teachers overutilization of something like ict, which is integrated into the curriculum. once teachers and students develop skills and interests for instance, in ict, they begin to find new ways of incorporating technology into the teaching and learning process (bitner & bitner, 2002). readiness towards the use of ict, as defined by dada (2006) refers to the degree to which a country is prepared to get involved or participate and benefit from electronic activities using ict in their education system. in the present study, readiness can be described as studentteachers willingness without hesitation to utilize ict in studying business education student-teachers’ business education readiness towards utilization of ict may be measured by a number of indicators which includes their willingness, preparedness, exposure, ability to use various software applications, experience, and expertise. moreover, business education student-teachers’ attitude towards utilization of ict may be measured by a number of indicators, including their thoughts, reactions, interest, habits, feelings, excitements, and confidence. in delta state, the use of ict in studying business education at the colleges of education is a thing that is yet to be actualized. this is so because the system is yet to internalize the use of ict in teaching, and the conventional method of teaching is predominantly in teaching business education in the classroom. many lecturers still depend on the old traditional or conventional method of teaching given this present technological age. in describing the conventional method of teaching, this involves a traditional teaching method where a teacher explains the steps verbally to working a problem, along with writing the steps on the chalk or whiteboard. it is a more or less teacher-centered and teacher-focused approach to learning whereby students observe and take notes during the process of learning. in conventional teaching, the resources that are used in this classroom setting are mostly paper, pencil, and textbooks. this method is synonymous with teachercentered instruction, and students’ remain passive in learning (daramola, 2014). the conventional method likens a learner’s mind to a blank state, unlike the use of ict, which is more integrated and allows active participation of student-teachers in the learning process. ajayi and ekundayo (2009), observing the nigerian schools, stated that many teachers still rely heavily on the traditional or conventional method of “chalk and talk” rather than the use of ict in the teaching and learning activities. ajayi and ekundayo (2009), citing okebukola, opined that in the nigerian public schools, the use of computer technology had not been their practice; however, the situation has been challenging, which created difficulties in delivering instructions in the classroom. this is an indication that the students are still lagging behind in the trend of changes in the world. this presupposes that there is the tendency for both teachers and students to be denied the opportunities which ict offers in the teaching-learning activities (ajayi & ekundayo, 2009). additionally, ajayi and ekundayo (2009) further attested that in this recent time, teaching and learning have gone beyond the teacher standing in front of a group of pupils and disseminating information to them without the students’ adequate participation. any classroom teacher with adequate and professional skills in ict utilization will definitely have his students perform better in classroom learning. with the emergences of information and communication technology on teaching business education courses in colleges of education, teaching and learning have changed from traditional chalkboard to electronic learning requiring such skills as internet browsing, microsoft word, powerpoint, microsoft excel and teleconferencing gadgets from teachers and students (ajayi & ekundayo, 2009). however, in most countries of the world, the use of ict has been internalized in their education system, just as cited by the kothmale community radio internet in sri lanka, meenakshi (2013), and open university of the united kingdom (ukou). this is also in line with the observations of the indira gandhi national open university, which identified that ict is used for the dissemination of information. from all foregoing discussions, the researchers therefore wonder what could have been responsible for the current ugly situation of students-teachers utilization of ict in colleges of education in delta state. whether the students are actually ready and possess the right attitude and skills towards the utilization of ict in studying business education. this has been the thrust of this study. nevertheless, for effective utilization of ict in studying business education, both the student-teachers, including lecturers must be prepared and have a positive https://journals.e-palli.com/home/index.php/ajebi pa ge 14 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(2) 11-22, 2022 attitude towards its utilization. several studies have been carried out on students’ attitude and readiness towards the use of ict in most subject areas, but in business education programs at the colleges of education in delta state, this is yet to be certain or propagated. termit and samli (2014), in their work on teacher readiness on ict integration in teaching and learning, investigated the knowledge level, attitudes towards the usage of ict in teaching and learning in secondary schools in malaysia. the result revealed that teacher’s level knowledge on ict is moderate, and their attitudes are positive towards the use of ict in teaching and learning in the classrooms, which is like those of the study conducted by rosnaini and mohd (2010) were only a few groups of teachers were ready to use ict for teaching and learning. this is also at variance with the studies of lau and yeoh (2008), melo (2007), samuel and zaidum (2007), which revealed that the majority of the respondents have a positive attitude towards the use of ict in teaching and learning. edmunds et al. (2012), in their study on student’s attitude towards the use of ict on course study, work and social activities: a technological model approach gave their confirmation on student’s readiness and attitudes towards the use of ict. their study reported that students are ready to use ict for course work (study) and work context. for example, edmunds et al. (2012) observed that the use of ict: i. increases performance (at work or for learning) ii. allows for more production time (work or study) iii. makes the work learning easier iv.. learning and cover materials are more quickly through the use of ict/cover materials more quickly at work. educational institutions cannot, therefore, improve either the academic achievements of their students without sufficient preparedness of teachers to use ict in teaching. teachers must be prepared to use ict to teach if students must be able to successfully use some new innovations to live and work successfully in an increasingly complex and information-driven society (borrinston, 2007). the efficient and effective use of ict in the teaching and learning of business education can improve students’ learning experiences by inculcating in them great potentials that will enable them to operate efficiently within the world of work outside the school (jawarneh, el-hersh & khazaiah, 2007). teacher’s preparedness towards the use of ict in the teaching and learning process actually plays an important role in the teaching and learning process. teachers are the agents of change and so play a critical role in the success of teaching and learning in business education programs (buntal et al., 2010). if student-teachers could show readiness possess the rightful attitudes and skills towards utilizing ict in studying business education in delta state coes, this will make positive impacts that will lead to high academic achievement. therefore, upon this background, the present study sought to investigate student-teachers readiness and attitude towards utilization of the information and communication technologies in studying business education in colleges of education (coes) in delta state. the use of information and communication technologies in education holds great potential and special packages for the student-teachers training at the colleges of education in delta state. given the great benefits incurred in studying business education using ict, the use of ict in teaching and learning of various subjects in the coes in delta state has not been internalized, far reached, and fully infused in the system. this situation of the student-teachers inadequacies in utilizing ict resources or tools in studying business education which seems to be currently responsible for the poor learning outcomes and low performances of students’ in academic activities in business education with its damned consequences, has kept both the researcher and most of the education stakeholders worried. the student-teachers in order to utilize ict in studying business education must show readiness, develop interest and possess the right attitudes and skills towards utilizing ict in studying business education in the coes in delta state. in this regard, the student-teacher ability to utilize ict in business education is dependent on their readiness and attitude. exploring student-teachers readiness and attitude towards utilization of ict, especially in delta state, is crucial and paramount to effective studying of business education for their professional growth and development. the study, therefore, fills the gap in the literature by describing student-teachers readiness and attitude towards utilization of the information and communication technologies in studying business education in the (coes). this study aimed at assessing student-teachers’ readiness, including their attitude towards utilization of the information and communication technologies in studying business education in colleges of education (coes) in delta state. specifically, the objectives of this study were to ascertain: 1. the student-teachers readiness towards utilization of the information and communication technology in studying business education in coes in delta state. 2. the student-teachers attitude towards utilization of the information and communication technology in studying business education in coes in delta state. 3. the skills possessed by the student-teachers in different aspects of computer packages towards utilization of the information and communication technology studying in the coes. these three research questions guided this study: 1. how is student-teachers readiness towards utilization of the information and communication technology in studying business education in coes in delta state? 2. what are the student-teachers attitudes towards utilization of the information and communication technology in studying business education in coes in delta state? 3. what are the skills possessed by the student-teachers in different aspects of computer packages towards https://journals.e-palli.com/home/index.php/ajebi pa ge 15 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(2) 11-22, 2022 utilization of the information and communication technology in studying business education in coes in delta state? the null hypotheses formulated were tested at a significance alpha level (α) of 0.05: 1. there is no significant difference in the mean ratings of student-teachers of college of education, agbor and federal college of education (technical) asaba on their readiness towards utilization of the information and communication technology in studying business education in coes in delta state. 2. there is no significant difference in the mean ratings of student-teachers of college of education, agbor and federal college of education (technical) asaba on their attitude towards utilization of the information and communication technology in studying business education in coes in delta state. 3. there is no significant difference in the mean ratings of student-teachers of college of education, agbor and federal college of education (technical) asaba on the skills they possessed in different aspects of computer packages towards utilization of the information and communication technology in studying business education in coes in delta state. theoretical model three theoretical frameworks or models informed the present study and they are as follows: i. the dual-coding theory ii. theory of planned behaviour (tpb) iii. unified theory of acceptance and use of technology (utaut) the dual-coding theory was propounded by a psychologist, allan urho paivio in the year 1971. paivio used the theory to initiate an idea that teaching-learning does not only dwell on use of words (language) but should dwell on the formation of mental images which aids in teaching and learning. formation of mental images, according to the theorist (paivio, 1971) can be acquired through the picture superiority effect, just like the use of ict in teaching and learning. based on paivio’s theory, pictures have advantages over words because they can stick to the memory, thereby promoting a dual coding process of visual and verbal information that can be used to represent information. both visual and verbal codes can be used when recalling information (paivio, 1971). this theory has informed the present study based on the emphasis placed on the use of ict in education. therefore, the utilization of ict will enable studentteachers in the coes to develop interest and attention in studying business education, thereby enabling students to experience the true picture and reality lessons presented in the business education classroom. another theory is the theory of planned behaviour (tpb) developed in 1985 by icek ajzen, a social psychologist. the theory as identified in the works of rapheal (2017) has been used to predict and explain a wide range of ict behaviors and intentions states that behavioral achievement depends on both motivation (intention) and ability (behavioral control). thus, an individual with positive attitudes about ict will always be willing and prepared to use ict. this model could be used by teachers who have embraced the use of technology in their day-to-day undertaking. the willingness to use technology coupled with the current trend of using icts among peers for the teaching and learning process could make student-teachers start using technology. the theory of planned behavior, therefore, informs the use of icts in the teaching and learning process among studentsteachers. this model could be used by student-teachers who have embraced the use of technology in their dayto-day undertaking. the willingness to use technology coupled with the current trend of using icts among peers for the teaching and learning process could make studentteachers start using technology. the theory of planned behavior, therefore, informs the use of icts in studying business education in coes by student-teachers who must showcase their readiness, preparedness, willingness, positive attitude, and skills towards its utilization. lastly discussed theory is the unified theory of acceptance and use of technology (utaut) was developed by v. venkatesh, m.g moris, g.b davis, and f.d. davis in 2003. utaut identifies four independent variables that affect the adoption of new technology namely, performance expectancy, effort expectancy, social influence, and facilitation conditions. utaut identifies four independent variables that affect the adoption of new technology namely, performance expectancy, effort expectancy, social influence, and facilitation conditions (vankatesh et al, 2003; karim et al., 2022). just as in this present study, when the student-teachers should show positive attitude likewise their support, readiness, willingness, prepared and become skillful in the use of ict, only then could ict be effectively utilized in studying business education in the coes. therefore, the utaut and the other previous theories have informed this present study based on their encouragements in the use of ict in teaching-learning and education. methods research design the study employed the descriptive survey research design (chowdhury et al., 2022). in employing this design, the researcher conducted a field investigation using a research instrument (that is, questionnaire) in order to gather information from a group of a sample of a large population of nce student-teachers in delta state. information retrieved from these respondents were analyzed measured, and generalization were drawn from the results. this design which suits the present study, as opined by nworgu (2015) demands that the researcher collects data and describes them in a systematic manner of the characteristics, features or facts about a given population. studies of such nature are interested in describing certain variables in relation to the population of the study and the generalization is drawn. the population of the study entailed 1,318 nce https://journals.e-palli.com/home/index.php/ajebi pa ge 16 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(2) 11-22, 2022 business education student-teachers from two out of the four colleges of education in delta state. breakdown of the population entails 513 business education student-teachers from federal college of education (technical) asaba and 805 business education studentteachers from college of education, agbor, delta state. the sample size of this study, constituted 659 nce business education student-teachers from two colleges of education in delta state, which was selected at 50% using the proportionate stratified random sampling technique. in selecting the sample from the two coes, fifty percent of the population was worked out for each coe. an instrument for data collection was a researcher’s self-developed 34-item questionnaire tagged: “studentteachers readiness and attitude towards utilization of ict questionnaire (strauictq)” was constructed based on the purpose of the study and research questions. this instrument was organized into three clusters and measured on a 4 point scale. each cluster represented one of the research questions. the questionnaire was validated by some specialists from the faculty of education, nnamdi azikiwe university, awka, anambra state. two of these specialists came from the business education department and the other one a measurement and evaluation expert from education foundations department, faculty of education, nnamdi azikiwe university, awka, anambra state. these experts who validated the research instrument determined the face and content validity of the instrument. corrections were made on some of the items, and these corrections were incorporated in the research instrument before its final administration to the respondents. the reliability of the research instrument was determined through a single administration of the research instrument on a sample of 40 nce business education student-teachers from two colleges of education in anambra state. the area was not part of the study area, but anambra state shared boundaries with delta state, and the administrative practices in colleges of education were similar. however, score obtained after the pilot test was computed using cronbach alpha statistics which yielded an internal consistency reliability value of 0.76. this figure showed that the instrument was reliable and trustworthy to conduct the study. information was retrieved from the respondents through a personal, hand delivery contact with the help of four research assistants. these research assistants were students from the business education department from the two coes that were sampled in the study. the research assistants who were communicated about the purpose of the study were also instructed and given directives on how to retrieve information from their colleagues (that is, fellow students). moreover, the researcher and the research assistants took permission from the head of the department of business education before administering the questionnaire to the student-teachers in their various institutions. an on-the-spot method was used to retrieve all the copies of the questionnaire, in that case, both the researcher and research assistants waited for the respondents to fill out the questionnaire and retrieved them immediately. exercise of distributing the questionnaire to the respondents took a period of two weeks. six hundred and fifty-nine (659) questionnaires were distributed to the nce business education studentteachers in which they were all retrieved, and the rate of return was at 100%. data analysis mean scores and standard deviation were used to analyze data. the decision rule for taking decisions on the items on the instrument was benchmarked at 2.50. any mean score that rated at 2.50 and above was considered to be in agreement with the statement and therefore was accepted. any mean score that rated at 2.49 and below was considered to be in disagreement with the statement and therefore was not accepted. the hypotheses were tested at an alpha (α) level of 0.05 significance using t-test statistics to determine the statistical differences in the mean ratings from the responses of the principals in public and private secondary schools in anambra state. the t-test was used to test hypotheses 1 to 3. the decision rule was based upon the premise that wherever the p-value obtained or calculated value is greater than or equal to the alpha 0.05 level of significance, the null hypothesis h0 is not rejected (accepted). otherwise, wherever an obtained or calculated p-value is less than the alpha 0.05 level of significance, such null hypothesis h0 is rejected. results analysis of the result from table 1 showed that all the items from 1to12 of the student-teachers responses from coe, agbor, and fce (t) asaba rated above the acceptable mean score of 2.50. the section means of both the student-teachers’ responses from coe, agbor, and fce (t) asaba of 2.91 and 3.02 respectively is an indication that the student-teachers reacted positively to all the items showing strong readiness towards utilization of the information and communication technology in studying business education in coes in delta state. they were ready and willing to utilize the information and communication technology in studying business education in coes in delta state. analysis of the result from the table 2showed that all the items from 13, 14, 16, 17, and 19 to 25 of the studentteachers responses from coe, agbor, and fce (t) asaba rated above the acceptable mean score of 2.50, in agreement with the statements. only items 15 and 18 rated below 2.50 of the acceptable mean score. the section means of both the student-teachers’ responses from coe, agbor, and fce (t) asaba of 2.89 and 2.96 respectively is an indication that the student-teachers reacted positively to the majority of the items showing a positive attitude towards utilization of the information and communication technology in studying business education in coes in delta state. https://journals.e-palli.com/home/index.php/ajebi pa ge 17 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(2) 11-22, 2022 table 1: mean scores and sd of respondents concerning student-teachers readiness towards utilization of the information and communication technology in studying business education in coes in delta state s/n please indicate your readiness towards utilization of ict in studying business education in your institution coe agbor fce (t) asaba x std decision x std decision 1 i am willing to use various ict software applications in studying business education 2.97 0.96 agree 3.09 0.99 agree 2 i am ready to use various ict hardware to study business education 3.04 0.96 agree 3.07 0.98 agree 3 i am highly supportive to keep abreast with current information in studying business education using various ict materials 2.86 0.97 agree 3.07 1.10 agree 4 i am prepared to make myself available using ict in studying business education 3.07 0.86 agree 3.25 0.94 agree 5 i cannot hesitate to utilize ict whenever they are used to support teaching in business education 3.12 0.80 agree 3.28 0.86 agree 6 i willing to acquire the skills that will enable me to effectively utilize ict in studying business education 2.96 1.01 agree 3.04 1.00 agree 7 i am prepared to improve my expertise using ict to study business education 2.80 1.06 agree 2.88 1.09 agree 8 i am willing to chat with and access business education information from different websites in the internet 2.78 1.00 agree 2.93 1.10 agree 9 i am prepared to download and store information that will improve my studies in business education using ict 2.76 1.06 agree 2.85 1.10 agree 10 i am ready to chat or discuss with my colleagues in business education using ict tools 2.85 1.06 agree 2.87 1.06 agree 11 i have the ability of using various software applications in studying business education 2.88 0.96 agree 3.07 1.07 agree 12 i am prepared to receive teaching in business education using ict 2.88 1.06 agree 2.90 1.06 agree section mean and standard deviation 2.91 0.98 agree 3.02 1.03 agree table 2: mean scores and sd of respondents concerning student-teachers attitude towards utilization of the information and communication technology in studying business education in coes in delta state s/n i feel comfortable with the idea of using different ict tools in studying business education coe agbor fce (t) asaba x std decision x std decision 13 i feel exhausted or frustrated whenever i am to research information using any ict gadget 2.80 1.05 agree 2.89 1.08 agree 14 i think using ict to study business education will assist me in achieving good grades and high performances in business education courses 3.08 0.95 agree 3.13 0.93 agree 15 i am excited to learn more using ict facilities than from books 2.41 1.12 disagree 2.50 1.12 disagree 16 i feel uncomfortable using the computer to search information for my assignments because i still prefer doing my assignment using only information from the textbook 3.20 0.83 agree 3.29 0.80 agree 17 i react positively to the lesson whenever any ict tools is been utilized to teach any course in business education 2.74 1.01 agree 2.94 1.12 agree 18 my contact with using some of the ict electronic tools has positively changed my pattern of studying business education because it exposes me to learning realities 2.12 1.03 agree 2.16 1.10 agree 19 i am always interested in using the ict as search engines for most of my assignments 2.83 1.09 disagree 2.86 1.07 disagree 20 i have a positive feeling and believe that using ict in business education classes will improve my learning 3.18 0.94 agree 3.24 0.90 agree 21 i enjoy business education lessons that is presented using ict equipment 3.05 0.93 agree 3.12 0.96 agree https://journals.e-palli.com/home/index.php/ajebi pa ge 18 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(2) 11-22, 2022 22 using ict to present lessons in the classroom captivates/captures my interest in studying business education 2.96 1.02 agree 3.02 1.00 agree 23 i strongly believe, also confident that the use of ict would stimulate creativity in me 3.17 0.87 agree 3.21 0.89 agree 24 using ict to present lessons in the classroom captivates/captures my interest in studying business education 3.11 0.99 agree 3.16 0.99 agree 25 i strongly believe, also confident that the use of ict would stimulate creativity in me 2.95 1.02 agree 2.96 1.08 agree 0.99 agree 2.96 1.00 section mean and standard deviation 2.89 analysis of the result presented in table 3, showed that only item 30 of the student-teachers responses from coe, agbor, and fce (t) asaba rated above the acceptable mean score of 2.50, in agreement with the statement. all other items from 26 to 29 and 31 to 34 rated below 2.50 of the acceptable mean score. the section means of both the student-teachers’ responses from coe, agbor, and fce (t) asaba of 2.31 and 2.32 respectively is an indication that the student-teachers reacted negatively to the majority of the items showing that they did not possess the requisite skills in different aspects of computer packages towards utilization of the information and communication technology in studying business education in coes in delta state. this result further showed that the studentteachers’ ict skills had not been fully developed. table 3: mean scores and sd of respondents concerning the skills possessed by the student-teachers in different aspects of computer packages towards utilization of the information and communication technology in studying business education in coes in delta state, n = 659 s/n please indicate skills you possessed in different aspects of computer packages towards utilizing the ict in studying business education in your institution coe agbor fce (t) asaba x std decision x std decision 26 skills in basic computer functions such as booting or turning up a computer system, closing and saving files, etc using the computer with its components effectively 2.10 1.07 disagree 2.11 1.08 disagree 27 ability to make presentations in the classroom using ict device like projectors 2.16 1.08 disagree 2.13 1.07 disagree 28 skills in operating different software applications through the computer like ms-word processor, spread sheets, powerpoint, graphics and drawing, databases and data entry, desktop publishing, video production and editing, etc 2.24 1.00 disagree 2.05 1.10 disagree 29 internet browsing, accessing including e-mailing skills 2.32 1.04 disagree 2.24 1.10 disagree 30 skills in operation ict multimedia device like television set, radio, dvd cassette player, etc 2.78 1.02 agree 2.93 1.12 agree 31 internet browsing, accessing including e-mailing skills 2.44 1.08 disagree 2.35 1.11 disagree 32 use of publisher to create student’s publications 2.51 1.00 agree 2.88 1.11 agree 33 ability to print materials downloaded from the internet without external support 2.13 1.11 disagree 2.10 1.09 disagree 34 operating systems skills (that is, window operating systems & others) 2.13 1.10 disagree 2.12 1.09 disagree section mean and standard deviation 2.31 1.06 disagree 2.32 1.1 disagree hypotheses testing h01: there is no significant difference in the mean ratings of student-teachers of college of education, agbor, and federal college of education (technical) asaba on their readiness towards utilization of the information and communication technology in studying business education in coes in delta state. the result in table 4 indicates that the calculated t-test value is 1.465 and a p-value .143 with the degree of freedom (df) 657 at alpha level 5%. p-value of .143 was obtained and this is greater than the alpha level .05, then the tested null hypothesis is retained. hence, no significant difference in the mean ratings of student-teachers of college of education, agbor, and federal college of education (technical) asaba on their readiness towards utilization of the information and communication technology in studying business education in coes in delta state. h02: there is no significant difference in the mean ratings of student-teachers of college of education, agbor, https://journals.e-palli.com/home/index.php/ajebi pa ge 19 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(2) 11-22, 2022 table 4: t-test of independent sample on no significant difference in the mean ratings of student-teachers of college of education, agbor and federal college of education (technical) asaba on their readiness towards utilization of the information and communication technology in studying business education in coes in delta state schools n mean std. dev. t-cal. df p-value decision coeagbor 402 34.97 11.41 1.465 657 .143 not sig. fce(t) asaba 257 36.33 11.96 table 5: t-test of independent sample on no significant difference in the mean ratings of student-teachers of college of education, agbor and federal college of education (technical) asaba on their attitude towards utilization of the information and communication technology in studying business education in coes in delta state schools n mean std. dev. t-cal. df p-value decision coeagbor 402 37.59 12.24 .898 657 .370 not sig. fce(t) asaba 257 38.47 12.38 table 6: t-test of independent sample on no significant difference in the mean ratings of student-teachers of college of education, agbor and federal college of education (technical) asaba on the skills they possessed in different aspects of computer packages towards utilization of the information and communication technology in studying business education in coes in delta state schools n mean std. dev. t-cal. df p-value decision coeagbor 402 37.59 12.24 0.132 657 .895 not sig. fce(t) asaba 357 20.82 12.38 and federal college of education (technical) asaba on their attitude towards utilization of the information and communication technology in studying business education in coes in delta state. the result in table 5 indicates that the calculated t-test value is 0.898 and a p-value .370 with the degree of freedom (df) 657 at alpha level 5%. p-value of .370 obtained is greater than the alpha level .05, and then the tested null hypothesis is retained. hence, no significant difference in the mean ratings of student-teachers of college of education, agbor, and federal college of education (technical) asaba on their attitude towards utilization of the information and communication technology in studying business education in coes in delta state. h03: there is no significant difference in the mean ratings of student-teachers of college of education, agbor and federal college of education (technical) asaba on the skills they possessed in different aspects of computer packages towards utilization of the information and communication technology in studying business education in coes in delta state. the result in table 6 indicates that the calculated t-test value is 0.132 and a p-critical value .895 with the degree of freedom (df) 657 at alpha level 5%. p-value of .895 obtained is greater than the alpha level value .05, and then the tested null hypothesis is retained. hence, no significant difference in the mean ratings of student-teachers of college of education, agbor, and federal college of education (technical) asaba on the skills they possessed in different aspects of computer packages towards utilization of the information and communication technology in studying business education in coes in delta state. discussion it was found in the study that the student-teachers showed strong readiness towards utilization of the information and communication technology in studying business education in coes in delta state. they were ready and willing to utilize the information and communication technology in studying business education in coes in delta state. the hypothesis tested indicated that there is no significant difference in the mean ratings of student-teachers of college of education, agbor, and federal college of education (technical) asaba on their readiness towards utilization of the information and communication technology in studying business education in coes in delta state. the finding indicated further that the student-teachers were willing to use various ict software applications in studying business education. they were ready to use various ict hardwires in studying business education and were highly supportive of keeping abreast with current information in studying business education using various ict materials. the student-teachers were prepared to make themselves available using ict in studying business education. they cannot hesitate to utilize ict whenever they are used to support teaching in business education; and they were willing to acquire the skills that will enable me to effectively utilize ict in studying business education. the student-teachers were prepared to improve their expertise using ict to study business education and were also willing to chat with and access business education information from different websites on the internet. they were prepared to download and store information that will improve their studies in business education using ict and ready to chat or discuss with their colleagues in business education using ict tools. the student-teachers had the ability use various software applications in studying business education and were prepared to receive https://journals.e-palli.com/home/index.php/ajebi pa ge 20 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(2) 11-22, 2022 teaching in business education using ict. this finding agrees with the findings of edmunds, thorpe and conole (2012), which found that students’ were ready to use ict in learning. termit and samli (2014) also confirmed that teacher’s knowledge level on ict is moderate, and their attitudes are positive towards the use of ict in teaching and learning in the classrooms the present study discovered through one of the findings that the student-teachers showcased a positive attitude towards utilization of the information and communication technology in studying business education in coes in delta state. the hypothesis tested indicated that there is no significant difference in the mean ratings of student-teachers of college of education, agbor, and federal college of education (technical) asaba on their attitude towards utilization of the information and communication technology in studying business education in coes in delta state. this result included that the student-teachers felt comfortable with the idea of using different ict tools in studying business education and were also excited about using the computer in studying business education. they neither felt exhausted or frustrated whenever information are searched using any ict gadget, nor were they lazy using the computer to search information for my assignments. rather, the student-teachers thought using ict to study business education will assist them in achieving good grades and high performances in business education courses; and they were excited to learn more using ict facilities than from books. they reacted positively to the lesson whenever ict tools were been utilized to teach any course in business education. also, their contact with using some of the ict tools has positively changed their pattern of studying business education; and they are always interested in using the ict as search engines for most of my assignments. furthermore, the studentteachers have a positive feeling and believe that using ict in business education classes will improve their learning; and they enjoy business education lessons that are presented using ict equipment. using ict to present lessons in the classroom captivates/captures their interest in studying business education. it was also discover through the finding of this study that the student-teachers did not possess the requisite skills in different aspects of computer packages towards utilization of the information and communication technology in studying business education in coes in delta state. the hypothesis tested indicated that there is no significant difference in the mean ratings of student-teachers of college of education, agbor and federal college of education (technical) asaba on the skills they possessed in different aspects of computer packages towards utilization of the information and communication technology in studying business education in coes in delta state. the result further revealed that the student-teachers’ ict skills had not been fully developed, in as much as they displayed strong readiness and positive attitude towards studying with ict in business education. the finding further indicated the student-teachers did not possess skills in basic computer functions such as booting or turning up a computer system, closing and saving files, etc. using the computer with its components effectively. they did not possess the ability to make presentations in the classroom using ict devices like projectors; and likewise the skills in operating different software applications like msword processor, spreadsheets, powerpoint, graphics and drawing, databases and data entry, desktop publishing, video production, and editing, etc. the student-teachers neither possess the internet browsing, accessing including e-mailing skills, nor skills of video conferencing in studying business education. further finding showed that the student-teachers did not possess the skills for using publisher to create student’s publications, or the ability to print materials downloaded from the internet without external support, and operating systems skills (that is, window operating systems & others). this finding does not corroborate with the finding of edmunds, thorpe & conole (2012) gave their confirmation on student’s readiness and attitudes towards the use of ict in course study, work, and social activities. however, to become able to utilize ict efficiently in studying business education, the student-teacher must work on their skills. all the findings of this study, therefore, are tilting towards effective integration and incorporation of ict into studying business education for improving studentteachers learning opportunities. conclusion the information and communication technology stimulates students’ interest in studying business education, although the student-teachers are expected to showcase strong readiness, positive attitude and rightful skills towards the use of ict. however, from the findings of this study, it could be concluded that the student-teachers showcased strong readiness and positive attitudes towards utilization of the information and communication technology in studying business education in coes in delta state. on the contrary, the student-teachers did not possess the requisite skills in different aspects of computer packages towards utilization of the information and communication technology in studying business education in coes in delta state. the student-teachers’ ict skills have not been fully developed because of their lack of skills and exposure to the use of ict tools and materials in the coes. in addition, since the use of ict has not been fully incorporated in studying business education in the coes, this situation would have been responsible for the inadequacies of student-teachers skills and ict facilities provisions that will expose student-teachers to the utilization of most of these facilities. all these findings call for adequate attention to be given towards studying business education using ict for the achievement of educational goals and instructional objectives in the colleges of education. therefore, recommendations have been proffered. https://journals.e-palli.com/home/index.php/ajebi pa ge 21 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(2) 11-22, 2022 recommendations from the findings of this study, the following recommendations have been made: 1. the various institutional leadership in the colleges of education, such as the provosts, deans, and head of departments (hods), should support students’ readiness and preparedness towards the use of ict in studying business education at the colleges of education. this can be achieved through ict facility provisions, adequate funding, infrastructural development, and private sector support and encouragement. 2. the federal and state governments, national commissions for colleges of education (ncce) monitoring and coordinating the activities of the coes and institutional leadership should encourage studentteachers positive attitude towards using ict in studying business education at the coes. this can be actualized through effective implementation of ict policy and the teaching of computer courses improved in the colleges of education using effective means and strategies. 3. student-teachers ict skills should be highly improved in order to enhance their studying business education in the coes. however, the federal and state governments, in conjunction with the national commissions for colleges of 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(2013). appraising the role of information communication technology (ict) as a change agent for higher education in nigeria. international journal of educational administration and policy studies, 5 (8), 177-183. retrieved from https:// files.eric.ed.gov/. https://journals.e-palli.com/home/index.php/ajebi pa ge 1 pa ge 74 american journal of economics and business innovation (ajebi) the effect of workplace stress on employee engagement, the mediation role of leadership style mustafa mahmoud alsomaidaee1*, volume 2 issue 2, year 2023 issn: 2831-5588 (online), 2832-4862 (print) doi: https://doi.org/10.54536/ajebi.v2i2.1690 https://journals.e-palli.com/home/index.php/ajebi article information abstract received: may 25, 2023 accepted: june 12, 2023 published: july 01, 2023 the aim of the current study was to investigate the impact of workplace stress on employee engagement within iraqi universities through the mediator role of leadership style. workrelated stress and non-work-related stress were identified as representing workplace stress. employee engagement has been measured through three types: social engagement, affective engagement, and intellectual engagement. two types of leadership styles have been tested: directive and participative leadership. the structural equation modeling was used to test the study model. a sample of 245 employees in iraqi universities, including university professors, was targeted. only 214 respondents participated in the survey. the results showed that nonwork-related stress is the most influential factor in employee engagement. furthermore, it has been found that the participative leadership style mediates the relationship between work-related and non-work-related stress and employee engagement. there is one exception; participative leadership did not mediate the impact of non-work-related stress on intellectual. keywords workplace stress, employee engagement, directive leadership, participative leadership, work-related stress, non-work-related stress 1 baghdad unversity, iraq * corresponding author’s e-mail: mustafa.alsomaidaee@gmail.com introduction rapid and intense environmental changes have different impacts on the various sectors that affect or are affected by them. this impact seems evident in the business sector, which must respond quickly and effectively to environmental changes to ensure success or survival at the very least. it is possible that changes in the external environment may affect the internal performance of organizations, including rediscovering best practices, emphasizing efficiency, protecting intellectual property, and promoting human creativity and innovation. yet that’s not always the case; there is another undesirable aspect left by external environmental changes on the internal level of organizations, such as performance pressures, competitive efforts, and the struggle to survive. when environmental changes impose new work challenges, this is reflected in the efforts of employees, who ultimately try to fulfill their commitment by adapting to external changes or perhaps turning them into opportunities whenever possible. the acceleration of events results in additional pressures on employees, both physically and mentally, which may greatly limit their sense of wellbeing in the workplace. some jobs add additional burdens that are necessary to adapt to the internal and external changes of the organization. as a result, employees have difficulties meeting deadlines, leading to higher levels of physical and psychological stress. things can get worse if the supervisors’ and managers’ dissatisfaction is added as additional emotional stress. regardless of the different forms of workplace stress, its causes can be summarized into a set of factors such as poor relationships with colleagues, exposure to bullying or exclusion, increasingly challenging job requirements, and factors arising from a negative work environment. therefore, monitoring workplace stress is necessary due to its direct link to negative outcomes, especially for employees, such as high absenteeism rates, decreased performance, and reduced participation. increasingly, the impact of workplace stress on various aspects of an organization, including the outcomes of human resources, is being observed and monitored. employees are the most valuable asset of an organization and a key reason for its success and prosperity. if work stress has negative effects on employee outcomes, then that requires greater attention and control. one of the aspects that is negatively affected by workplace stress is employee engagement. one of the challenges facing companies’ nowadays, especially in light of the difficult economic and social conditions, is the problem of low employee engagement levels. employee engagement is a key indicator of a company’s success, as it significantly affects employee performance and company results. employee engagement is the relationship between the employee and the company and can be achieved by creating an inspiring and motivating work environment, providing the necessary support for employees to achieve their professional and personal goals, offering continuous training and development, providing more opportunities for interaction with employees, and improving communication between them. employee engagement is important because it improves productivity and quality, reduces absenteeism and tardiness, and contributes to improving the company’s image and making it a place where employees want to work. to achieve employee engagement, companies should implement some measures such as giving employees more freedom and flexibility at https://doi.org/10.54536/ajebi.v2i2.1690 https://journals.e-palli.com/home/index.php/ajebi mailto:mustafa.alsomaidaee@gmail.com pa ge 75 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(2) 74-85, 2023 work, providing continuous training and development, motivating them in different ways such as offering rewards and promotions, and improving the quality of communication between employees and management and providing a healthy and suitable work environment. leadership styles vary from person to person and depend on personal culture and values. it is important to know leadership styles and apply them in the workplace to reduce tension and improve interaction among employees. effective leadership styles encourage employees to participate and innovate, and allow them to feel tolerance and challenge. for example, democratic leaders use active listening and encourage participation to improve employee performance. this allows them to easily feel tolerance and acceptance, which helps reduce tension in the workplace. additionally, leaders who follow a personal leadership style are characterized by their ability to communicate well with employees and motivate them to achieve goals. this style helps improve interaction and relationships among employees and reduces tension in the work environment. the main idea here is that effective leadership styles can lead to reducing tension in the workplace and improving interaction among employees. leadership is often seen as the means to transform a negative work environment into a more productive one. leadership contributes to role distribution and encourages creativity and innovation. in fact, the most important functions of leadership are to transform the workplace into a positive environment that supports employee creativity and, consequently, to achieve organizational goals. in this study, we explore the potential impact of workplace stress on employee engagement. we primarily focus on the unique role of leadership style in improving the quality of the workplace and emphasizing positive employee outcomes. thus, the main aim of the current study is to investigate the effect of workplace stress on employee engagement as well as the mediating role of leadership in that relationship. literature review workplace stress stress at the workplace is important because it directly affects the health and performance of employees (chao et al., 2015). if employees constantly feel stressed, it can lead to fatigue, exhaustion, and anxiety, negatively impacting their concentration and productivity (vignoli et al., 2017). if stress continues for a long period of time, it can lead to greater health problems such as high blood pressure, heart and cardiovascular diseases, and depression (xu et al., 2019). therefore, it is important for companies to take measures to reduce stress in the workplace and provide a healthy and comfortable working environment for their employees. the emergence of workplace stress theories is one of the biological sciences concerned with monitoring the health of employees in the workplace and their potential impact on their overall health (hobfoll, 1989). since then, studies and academic work have continued to be interested in monitoring stress in the workplace due to its direct relationship with organizational outcomes and employee well-being (badu et al., 2020). according to (anthony‐mcmann et al., 2017), employees who experience stress are more susceptible to frustration, which leads to a lack of engagement in the workplace. this opinion is based on the conservation of resources theory, which suggests that individuals naturally seek to preserve valuable resources and experience stress due to fear of losing them. employees respond poorly to tasks and new changes that do not align with their knowledge or thinking patterns (hicks & caroline, 2007; nikolaou & tsaousis, 2002). that might become more difficult when employees feel unable to adapt, not just unwilling (çelik, 2018). when employees feel a lack of control over task accomplishment or a constant fear of losing good job gains, it leads to increased levels of stress and may result in a loss of control over performance (wagner & harter, 2006). we include here the primary factors that lead to stress in the workplace, but this does not mean that they are exclusive. workplace stress can arise from several factors, including a toxic work environment (colligan & higgins, 2006; hoboubi et al., 2017), conflicting roles and responsibilities (van den brande et al., 2016), unequal pay and benefits (kakemam et al., 2019), poor leadership style (boyer-davis, 2018), and so on. (kerdpitak & jermsittiparsert, 2020) acknowledge the internal factors within organizations that lead to workplace stress, yet, they find that non-work-related factors play an equal role in creating stress in the workplace. (kerdpitak & jermsittiparsert, 2020) base their opinions on the ideas of (eddy et al., 2016; foy et al., 2019). therefore, the factors of workplace stress can be discussed in two groups: work-related factors and non-work-related factors. earlier, we discussed the factors related to work. the non-work-related factors include all other personal, social, and family factors of the employees’ own lives. non-work-related pressures, such as financial difficulties, marital problems, personal illnesses, and other social demands, can also contribute to increased stress in the workplace. according to (foy et al., 2019) opinion, culture, social roles, and change requirements also contribute to increased stress levels in the workplace, which are directly linked to absenteeism, decreased productivity, and engagement. employee engagement emotionally, work engagement is usually described as the degree to which employees consider work as an important part of their lives, and think about it even when they leave the workplace (kanungo, 1982). work engagement refers to a set of relationships between employees and the company they work for, which includes elements such as loyalty, dedication, interest, and connection to the organization and its goals (arifin et al., 2019; cesário & chambel, 2017). work engagement is considered a very important aspect for any company, as employees who are actively engaged in their work and committed to their tasks and the company’s objectives tend to be https://journals.e-palli.com/home/index.php/ajebi pa ge 76 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(2) 74-85, 2023 more productive and creative (bakker & leiter, 2017). they also feel satisfied and happy in their work and enjoy better mental and physical health, which in turn leads to increased profitability and an improved reputation for the company, attracting more talented employees (gill, 2015; upadyaya et al., 2016). fostering and achieving work engagement is one of the most important challenges facing companies today, and management should work to provide an inspiring and motivating work environment, provide opportunities for training, development, and advancement, as well as improving communication and connection between management and employees, and recognizing and emphasizing outstanding performance (knight et al., 2017). in line with the principles of work engagement, employee engagement is a result of a supportive work environment (bailey et al., 2017; osborne & hammoud, 2017). this ultimately depends on management’s initiatives and programs aimed at supporting and nurturing employees (pandita & ray, 2018). (chandani et al., 2016) pointed out three levels of employee engagement: (1) active engagement, where employees are motivated by their passion to perform and participate. (2) regular engagement, where employees perform their main tasks without passion or internal drive. (3) disengaged employees who do not feel sufficient satisfaction or happiness to enhance their performance. (soane et al., 2012) developed a model for measuring employee engagement based on (kahn, 1990) theory, which addressed employee engagement through a set of essential requirements such as job role, positive influence, and activation. the (soane et al., 2012) model focuses on social, affective, and intellectual engagement, assuming that each of these aspects plays a crucial role in the overall engagement of employees. social engagement focuses on the degree of connection of the employee with their other colleagues and the extent to which they possess shared values. (johnston, 2018) adds that social engagement focuses on collective activities within the workplace, including attempting to reach a common goal. affective/emotional involvement at work refers to the emotional relationship that connects an individual to their job and workplace. it’s the extent of an employee’s passion for their work, the feeling of belonging and commitment to the organization, and experiencing positive emotions such as excitement, pride, and loyalty. emotional involvement is an important aspect of employee engagement, and it’s critical for organizational success and productivity (mañas et al., 2018; soane et al., 2012). intellectual engagement is concerned with the degree of cognitive comprehension or perception of the employee’s role in the workplace, meaning the extent to which perceived knowledge is utilized in performing job tasks (soane et al., 2012). intellectual engagement in work refers to the extent to which an individual participates mentally in their work tasks, experiencing the feelings of challenge, learning, and growth. it involves the effective use of an individual’s mental potential to solve problems, make decisions, and contribute to the development of new ideas and strategies (mccormick & mcmullen, 2019; strachan, 2015; ha, & le, 2023). leadership style recently, leadership has become a distinctive new approach to managing employees and organizations in general. the new leadership styles place importance on strategic integration in order to improve management and follow strategic direction (manning & curtis, 2019). an effective leader today is described as a good diagnostician who has a style that meets the requirements of the situation they are working in (kumari, 2018). different leadership methods are used for employees based on the level of guidance, empowerment, and decision-making authority (khan et al., 2015). according to (goleman et al., 2002) the common leadership styles range from autocratic to democratic to participative. this scale focuses on the degree of involvement of subordinates in decision-making. the more autocratic the leadership style, the more the leader monopolizes decision-making without active participation from others. (gandolfi & stone, 2016) outlines five features of leadership: (1) the presence of one or more leaders; (2) the existence of followers for the leadership; (3) a focus on action and directing others towards that purpose; (4) the importance of setting a course of action and working to fulfill it; and (5) establishing the primary goals and objectives of the work. the leadership styles mentioned in literature differ according to the location of their application, cultural and environmental characteristics. therefore, there are no universally agreed-upon leadership styles. (gandolfi & stone, 2018) opines that leadership has gone through different time periods, resulting in various styles. leadership began by focusing on command and control, then moved towards empowerment and tracking, and finally towards connection and nurturing. (khan et al., 2015) include the following leadership styles: autocracy style (the leader retains the maximum amount of power), authoritarian style (making decisions unilaterally and forcing others to implement them), democratic style (considering the opinions of others in decision-making), participative style (discussing the decision with others and making it collectively), and laissez-faire style (where the responsibility for sub-decision-making is left to others). in his discussion of innovation, (łukowski, 2017) presents leadership styles in several categories, including directive versus participative leadership, where creativity increases when the leadership style is more participative. interactive leadership, where leaders encourage others to express their opinions and engage in strategic participation. charismatic leadership, where leaders are seen as role models to be followed. and transformational leadership, which can address change and provide more innovation. in the current study, we are testing two types of leadership styles: directive and participative leadership, as we believe that these are the closest styles to the business environment in eastern societies (fellows et al., 2003; galperin et al., 2017; nor amin et al., 2017; siddiqua et al., 2022). https://journals.e-palli.com/home/index.php/ajebi pa ge 77 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(2) 74-85, 2023 hypothesis development workplace stress and employee engagement several experimental studies have shown the existence of a relationship between work stress and employee engagement (dinh, 2020; rasool et al., 2021; wang et al., 2022). usually, employee engagement tends to be weaker in more stressful work environments, regardless of the causes of that stress (winasis et al., 2020). stress in the workplace has a negative impact on employees’ performance as well as their productivity and creativity (naseem, 2017; pandey, 2020). we are investigating the relationship between work-related and non-work-related stressors and employee engagement. work-related stressors include a toxic work environment, conflicting roles and responsibilities, unequal pay and benefits, poor leadership styles, and so on. on the other hand, non-work-related stressors include all other personal, social, and family factors of the employees’ own lives. thus, we investigate the relationship between workplace stress and employees’ engagement through the following hypotheses: h01a: work-related factors of stress have a negative effect on social engagement. h01b: work-related factors of stress have a negative effect on affective engagement. h01c: work-related factors of stress have a negative effect on intellectual engagement. h01d: non-work-related factors of stress has a negative effect on social engagement. h01e: non-work-related factors of stress has a negative effect on affective engagement. h01f: non-work-related factors of stress has a negative effect on intellectual engagement. mediation role of leadership style previous literature has discussed various forms of the impact of leadership style on the relationship between workplace stress and employee engagement. leadership style can mitigate the impact of workplace stress on employee engagement. if leaders adopt an encouraging and supportive leadership style and care for their employees, they will feel valued and appreciated, and they will be more comfortable and satisfied with the work environment and the organization as a whole (lyons & schneider, 2009; olsen et al., 2023). leaders who intend to use a democratic, directive, or consultative leadership style can also alleviate stress by encouraging effective participation and shared responsibility for achieving goals, providing guidance, training, and the necessary support to efficiently and effectively carry out tasks (bhatti et al., 2012; osazevbaru, & amawhe 2022). however, when leaders follow an autocratic or power-supportive leadership style, it will increase stress on employees and affect their engagement and satisfaction with work (erskine & georgiou, 2017). therefore, the right leadership style can play an important role in improving employee engagement and reducing the impact of work stress on their performance (pishgooie et al., 2019; saad et al., 2018). based on the above discussion, the conceptual model is shown in figure 1. we propose the following hypothesis: as for the work-related stress factors, we propose the following hypothesis: h02a: directive leadership style mediate the effect of work-related stress factors on social engagement. h02b: participative leadership style mediate the effect of work-related stress factors on social engagement. h02c: directive leadership style mediate the effect of work-related stress factors on affective engagement. h02d: participative leadership style mediate the effect of work-related stress factors on affective engagement. h02e: directive leadership style mediate the effect of work-related stress factors on intellectual engagement. h02f: participative leadership style mediate the effect of work-related stress factors on intellectual engagement. as for the non-work-related stress factors, we propose the following hypothesis: h03a: directive leadership style mediate the effect of non-work-related stress factors on social engagement. h03b: participative leadership style mediate the effect of non-work-related stress factors on social engagement. h03c: directive leadership style mediate the effect of non-work-related stress factors on affective engagement. h03d: participative leadership style mediate the effect of non-work-related stress factors on affective engagement. h03e: directive leadership style mediate the effect of non-work-related stress factors on intellectual engagement. h03f: participative leadership style mediate the effect of non-work-related stress factors on intellectual engagement. figure 1: conceptual model https://journals.e-palli.com/home/index.php/ajebi pa ge 78 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(2) 74-85, 2023 methodology instrument a questionnaire was used as a tool for data collection in the current study. the questionnaire consisted of 28 sub-items. 4 sub-items were assigned to each dimension (work-related stress ws, non-work-related stress nws, directive leadership dl, participative leadership pl, social engagement sa, affective engagement ae, intellectual engagement ie,). items have been assigned according to a 5-point likert scale (1=strongly disagreed, 5=strongly agreed). several questionnaire items have been modified based on feedback from knowledgeable academics and professionals in the iraqi university sector, with the aim of improving the quality of measurement. an electronic version of the questionnaire has been developed to reach the sample effectively from remote locations. we used multiple methods in the survey to reach the targeted sample, including university professor groups through social media platforms such as facebook and telegram. the reliability and stability of the questionnaire were verified before starting the distribution phase. sampling and data collection we targeted employees at the iraqi universities to represent the study sample. there is a wide controversy about the continuous work stress experienced by employees in iraqi universities, including professors. in the pilot survey, many professors reported that they had to complete their work at home, which leads to additional stress due to the inability to fulfill family obligations in exchange for work obligations. we provided the sample with guarantees regarding the confidentiality of the data to be used for research purposes only. the intentionally selected sample focused on employees in iraqi universities, including professors who hold administrative positions in addition to their work, professors, and administrative staff in important places, including research centers, postgraduate studies affairs, and libraries. so far, there is no official index about the size of the study population, so we intentionally targeted a sample. 245 responses were received. 214 valid responses have been extracted after checking and verification. variables and measures the conceptual model of the study included three variables. workplace stress was the independent variable, the sub-variables were work-related stress and non-workrelated stress. each sub-variable contained 4 items, so the items of the independent variable are 8. employee engagement represented the dependent variable, with three dimensions: social, affective, and intellectual engagement. each sub-variable contained 4 items, so the items of the dependent variable are 12. the leadership style is the mediator variable, with two sub-variables: directive and participative leadership. each sub-variable contained 4 items, so the items of the dependent variable are 8. thus, the total items were 28. we adopted the (kerdpitak & jermsittiparsert, 2020; soltan et al., 2020) scale for measuring workplace stress. developed by (soane et al., 2012), a dedicated scale was established to measure the employees’ engagement, consisting of three parts: social, affective, and intellectual engagement. we relied on (soane et al., 2012) work to measure employee engagement in the current study. 8 items of leadership styles, both; directive and participative, have been adopted from (araffat et al., 2020), all of which have been redistributed into a 5-point likert scale. results and discussions preparation and analysis demographics table 1. summarizes the demographic responses. men are the relatively most participating group in the survey. 116 men responded, with a representation rate of 54% compared to 46% for women. middleto older-aged groups had the most responses. 61% of the participants were aged between 32 and older than 39 years. 39% were young. this result is important because older employees are more sensitive to work stress due to other factors besides age, such as social and family obligations. this may increase concerns about reduced work engagement due to stress, whether work-related or not. 40% of the respondents were professors who carry out administrative tasks in addition to their educational duties. 30% were professors with no additional administrative tasks. the remaining 30 percent were mostly administrative staff and others who held unspecified roles. additional tasks usually increase work-related stress. these data provide a better understanding of work-related stress factors. in terms of work experience, most participants have experience exceeding 10 years. approximately 70% of respondents have work experience ranging from 10 to more than 14 years. table 1: demographic responses variable category frequency percent % cumulative percent % gander male 116 54 54 female 98 46 100 age 18-24 years 37 17 17 25-31 years 46 22 39 32-38 years 59 27 66 39 or older 72 34 100 https://journals.e-palli.com/home/index.php/ajebi pa ge 79 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(2) 74-85, 2023 validity and reliability some tests have been applied to ensure the reliability of data measures. table 2 revealed that all factors loading were acceptable, indicating that the correlation between the items and the components was good enough to proceed. for internal consistency analysis, two methods were used: cronbach’s alpha and the split-half method. all values were greater than the generally accepted 0.7 in the cronbach’s alpha test. they ranged between 0.816 and 0.879. the results were supportive even after splitting the data into two halves. all values of the split-half analysis were supportive. according to the results of the kaiser-meyer-olkin (kmo) test, all values were higher than 0.6, and all of them were statistically significant (sig <0.001), indicating an adequate sample size. role professor with an a.p. 86 40 40 professor 64 30 70 administrative staff 43 20 90 other 21 10 100 experiences 0-4 years 25 12 12 5-9 years 41 19 31 10-14 years 89 41 72 above 14 years 59 28 100 total 214 100 100 table 2: validity and reliability test variables items loading alpha kmo split-half workplace stress work-stress ws1 0.965 0.828 0.770 0.777 ws2 0.838 ws3 0.845 ws4 0.895 non-workstress nws1 0.809 0.817 0.804 0.828 nws2 0.834 nws3 0.793 nws4 0.776 employee engagement social engagement se1 0.850 0.848 0.737 0.825 se2 0.818 se3 0.793 se4 0.865 affective engagement ae1 0.799 0.820 0.768 0.781 ae2 0.833 ae3 0.883 ae4 0.738 intellectual engagement ie1 0.813 0.879 0.821 0.790 ie2 0.877 ie3 0.880 ie4 0.857 leadership style directive leadership dl1 0.751 0.816 0.769 0.771 dl2 0.702 dl3 0.804 dl4 0.721 participative leadership pl1 0.795 0.846 0.760 0.780 pl2 0.830 pl3 0.870 pl4 0.824 https://journals.e-palli.com/home/index.php/ajebi pa ge 80 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(2) 74-85, 2023 confirmatory factor analysis (cfa) was used to examine the reliability and stability of the items relative to their components. initially, we examined the average variance extracted (ave) of each item to ensure the convergence validity. we also calculated the composite reliability (cr) score for each latent variable individually. all values of the average variance extracted were greater than the generally accepted value, which is 0.5. also, the composite reliability values were higher than the statistically acceptable value of 0.7, indicating a high degree of reliability and good measurement quality. based on the outputs of the validity and reliability tests, we used structural equation modeling (sem) to test the research model. to assess the model’s fit to the data, we calculated the comparative fit index (cfi) and the goodnessof-fit index (gfi). the outputs of cfi indicated an acceptable to excellent fit, ranging from 0.926 to 0.965. the gfi values were also good, ranging from 0.950 to 0.967, this indicates that the study model explains a good range of the observed variance and covariance. the root mean square error of the approximation (rmsea) was highly acceptable. all values were between 0 and 0.08, indicating a high level of fit quality. thus, the model is suitable for testing through structural equation modeling. the table 3 summarizes the results of the factor analysis and model fit. table 3: factor analysis and model fit items cmin/df ave cr cfi gfi rmsea workplace stress 2.98 0.759 0.946 0.902 0.950 0.07367 employee engagement 1.33 0.719 0.926 0.942 0.962 0.033524 leadership style 1.89 0.769 0.945 0.941 0.967 0.055216 table 3 illustrates descriptive statistics and correlations among the items. among the workplace stresses, workrelated stress was at the highest level within the sample (x ̅= 4.340). according to the outputs of the mean, employee social engagement is the most prevalent. the intellectual engagement is the least. however, all items of engagement were at a high level. the leadership style tends to be participative (x =̅ 4.148) rather than directive (x ̅= 3.347), according to the sample responses. however, it seems that the characteristics of directive leadership are also present. table 4: descriptive statistics and correlations items mean sd ws nws se ae ie dl pl ws 4.340 0.656 1 nws 4.314 0.647 0.850** 1 se 4.261 0.723 0.709** 0.813** 1 ae 4.173 0.748 0.732** 0.762** 0.796** 1 ie 4.060 0.832 0.730** 0.802** 0.697** 0.811** 1 dl 3.347 0.872 0.161 0.212* 0.155 0.189* 0.236* 1 pl 4.148 0.775 0.408** 0.423** 0.436** 0.561** 0.458** 0.119 1 n= 214 note: significance level at <0.05*, <0.01** hypothesis testing the model was tested through structural equation modeling (sem). nine statistically significant relationships were obtained among the items. the remaining nine relationships were not significant. starting with the impact of workplace stress, work-related stress was the only item affecting employee engagement, specifically affective engagement (p <0.05). contrary to work-related stress, all non-work-related stressors had an impact on employee engagement. non-work-related stress has a greater impact on social engagement (estimate=0.821), followed by intellectual engagement (estimate=0.770), and finally affective engagement (estimate=0.489). the output of the model did not reveal a mediating role for the directive leadership style in the relationship between work-related stress and employee engagement (all its elements), all significant levels were greater than 0.05. confirming what we obtained earlier, participative leadership mediated the effects of work-related stress on employee engagement at various levels. participative leadership mediated the impact of work-related stress on affective engagement to a greater extent than other items (p= 0.000). in intellectual engagement (p= 0.008). and in social engagement (p= 0.018). once again, there was no mediating role for the directive leadership style in the effect of non-work-related stress on employee engagement, including all items. all significance levels were greater than 0.05, in the context where the regression slope was negative in the relationship between non-workrelated stress and cognitive engagement through directive leadership (estimate=-0.015-). regarding participative leadership, there was a mediating role in the relationship between non-work-related stress and employee engagement, particularly in terms of affective (p= 0.000) and social engagement (p= 0.023). table 5 illustrates the results of hypothesis analysis. https://journals.e-palli.com/home/index.php/ajebi pa ge 81 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(2) 74-85, 2023 discussion a healthy work environment is essential for the success of management efforts to improve the satisfaction, engagement, and, consequently, productivity of employees (attridge, 2009; osborne & hammoud, 2017). the general trend of current studies tends to focus on linking leadership and management styles toward employee performance and productivity (lim & yazdanifard, 2012; maida et al., 2017). as noted in the descriptive statistics, employee stress at the workplace depends on several factors. the results of the current study support (kerdpitak & jermsittiparsert, 2020; soltan et al., 2020) insights on two types of factors influencing workplace stress: work-related and non-work-related factors. the differences between stress factors are not that significant. it seems that they have a similar impact in terms of intensity or strength. work-related stress affects employee engagement; affective engagement in specific. there is no significant effect of work-related stress on social and intellectual engagement. the enthusiasm, interest and positive emotional response that individuals exhibit during their engagement with a specific experience or situation could all be influenced by work conditions, including the way they have to do the work and the support they receive. on the other hand, nonwork-related stress affects employees’ social, affective, and intellectual engagement, respectively, in terms of intensity. non-work-related stress is more important for monitoring and measurement in this case. it is evident that measuring and addressing non-work-related stress is more challenging for the internal aspect of organizations. often, organizational leaders may not be able to take direct action, but their care and support for employees can mitigate the severity of this impact. directive leadership style has no mediating role in the relationship between work-related stress and employee engagement in all its aspects. when leaders’ approach focuses on high levels of control, centralization of decisionmaking authority, strong monitoring, and providing specific instructions and guidance to subordinates on how tasks should be accomplished, employees find themselves facing more stress and lower levels of engagement consequently. the directive leadership style is likely to be less effective in several situations, especially when it comes to innovation and renewal. that is not the case in the university work environment, where employees constantly experience more changes and conditions. on the contrary, participative leadership mediates the relationship between work-related stress and employee engagement. collaborative leadership style and social engagement are closely related. in this style, leaders encourage employees to participate collectively in general and strategic issues, taking all opinions into consideration. these practices can enhance team cohesion and foster initiative and collaboration within the work environment. on the other hand, when leaders involve employees in decision-making processes, top-level issues, and value all of their suggestions and opinions, that is a signal of trust, respect, and recognition. this involvement fosters a sense of empowerment and ownership among employees, leading to higher levels of engagement. the participative leadership style enhances employees’ skills and motivates them towards active cognitive engagement. there is a significant and empirically proven correlation between table 5: hypothesis testing hypothesis path estimate c.r. p conclusion h01a ws → se 0.047 0.407 0.684 not supported h01b ws → ae 0.292 2.416 0.016* supported h01c ws → ie 0.198 1.480 0.139 not supported h01d nws → se 0.821 6.800 0.000** supported h01e nws → ae 0.489 3.891 0.000** supported h01f nws → ie 0.770 5.533 0.000** supported h02a ws → dl → se 0.035 0.609 0.554 not supported h02c ws → dl → ae 0.063 1.098 0.275 not supported h02e ws → dl → ie 0.116 1.821 0.071 not supported h02b ws → pl → se 0.164 2.394 0.018* supported h02d ws → pl → ae 0.304 4.760 0.000** supported h02f ws → pl → ie 0.206 2.722 0.008* supported h03a nws → dl → ie -0.015 -0.307 0.759 not supported h03c nws → dl → ae 0.025 0.451 0.653 not supported h03e nws → dl → se 0.065 1.155 0.251 not supported h03b nws → pl → ie 0.105 1.818 0.072 not supported h03d nws → pl → ae 0.281 4.563 0.000** supported h03f nws → pl → se 0.156 2.313 0.023* supported note: significance level at <0.05*, <0.01** https://journals.e-palli.com/home/index.php/ajebi pa ge 82 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(2) 74-85, 2023 participative leadership style and creativity. supportive leaders encourage employees to solve problems in a creative manner and promote the proper sharing and utilization of knowledge within the work environment. as long as stress factors are connected to work and the work environment encourages participation and cooperation, it is natural for leaders to be more capable of understanding and effectively addressing them. taking into consideration the nature of academic work, which focuses on elements of creativity, dealing with work problems, and ways of success and excellence. regarding non-work-related stress, there is no mediating role for the directive leadership style. non-work-related stress has negative effects on employee engagement, even with the implementation of directive leadership practices, which may focus more on work processes and procedures than on employees’ conditions and feelings. directive leadership styles do not help alleviate the effects of social and familial problems experienced by employees. it is focusing on performance rather than results. this reinforces traditional task-oriented performance among employees without the desire to improve the process or make it more productive. on the other hand, it seems that the situation is different in the case of the participative leadership style. there is a mediating role for participative leadership in the relationship between non-work-related stress, and social and affective engagement. even when the factors causing employee stress are external, meaning they are not work-related, the participative leadership style will be able to reduce the impact of that stress on employee engagement. positive relationships and collective participation within the work environment can improve employees’ morale by providing them with a positive space for thinking and guidance on how to solve other external challenges. however, participative leadership does not help reduce the impact of non-workrelated stress on intellectual engagement. employees face more challenges in dealing with stress resulting from social, personal, or financial problems. this stress occupies a significant portion of employees’ thinking and affects their intellectual engagement within the work environment. even with programs and initiatives aimed at employee well-being, non-work-related stress depends on the employees themselves. it is essential for employees to make a decision to resolve this conflict in order to mitigate its impact on other areas, including work. conclusion in this study, we investigated the impact of workplace stress on employee engagement. we discussed two types of workplace stress: job-related stress and stress resulting from various factors unrelated to work, such as social, family, and personal factors. in the field of employee engagement, we relied on literature regarding different types of employee engagement and subsequently identified three possible types to measure in the current study: social engagement, affective engagement, and intellectual engagement. according to the nature of the sample in which this study was conducted, where participants spend more time completing tasks from home, we found that non-work-related stress has a greater impact on employee engagement. work-related stress only affects affective engagement, while non-workrelated stress affects all types of employee engagement mentioned above. two types of leadership styles have been tested as mediators in the relationship between workplace stress and employee engagement. directive leadership is the first style, which focuses on authority, delegation, centralized decision-making, and continuous guidance. the second style is participative leadership, where greater attention is given to employees’ opinions and their involvement in strategic issues, encouraging teamwork and collaboration to enhance creativity and innovation. in the mediation analysis, there was no role for the directive leadership style in the impact of workplace stress on employee engagement. the directive leadership style is the lowest level within the study variables. its impact is likely to be less intense, especially when it comes to work-related stress factors. while the presence of a mediator role for the collaborative leadership style in influencing workrelated stress on employee engagement, in all its forms, became evident. we concluded that employee stress is at its lowest level due to work factors and that the presence of a supportive leadership style for participation and teamwork can alleviate the remaining impact. in terms of non-work-related stress, there was no mediating role for leadership styles, both directive and participative, in the relationship between workplace stress and employee engagement. however, with the exception of that, there is a mediating role for the participative leadership style in the impact of non-work-related stress on employees’ affective and social engagement. in the end, we concluded that the participative leadership style is better in the university workplace than the directive style. furthermore, workplace stress factors are mostly external, meaning outside the workplace. perhaps the additional tasks performed by participants at home are one of the factors contributing to these results. we emphasize giving greater attention to employees’ personal issues. these issues are not necessarily workrelated but rather unrelated to work. employees who experience external work pressures need to find support and assistance in the work environment. this can help mitigate the impact of external problems not only on the employees’ performance but also on their mental health in general. flexible leadership styles seem to be the most suitable for the university work environment. it is difficult to separate functional boundaries within the organizational structure for university professors. even if it is possible, university professors still enjoy privacy and high social status. supportive leadership styles that promote participation and camaraderie can help reduce external work pressures and may contribute to their resolution in the end. despite the procedural results presented by this study https://journals.e-palli.com/home/index.php/ajebi pa ge 83 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(2) 74-85, 2023 on practitioners and leaders regarding the most suitable leadership styles for the university work environment, the current study was not without some limitations that need to be taken into consideration. in the beginning, the data acquisition phase was somewhat difficult due to the official procedures to obtain approvals. many participants did not comply with responding, resulting in a number of unhelpful responses. this study was conducted in iraq and targeted a purposive sample of university employees, including professors. therefore, the results of the current study cannot be generalized to other countries. there are also limitations in terms of sample size, which is considered small compared to the overall population. leadership styles are mostly subject to legislation and guidelines that determine how to manage university institutions. this can be an additional constraint in precisely identifying possible leadership styles. unfortunately, we did not find in the literature what specifically supports the results we have reached. therefore, we presented our interpretation of the results in light of previous international literature, including those closest to the iraqi business environment. the university work environment is extremely complex and constantly subjected to changes and emerging events, especially with the activities of international rankings and the accompanying new tasks. it is necessary to identify the roots of workplace stress, both work-related and non-work-related. work-related stress falls under the control of management and can be easily addressed. it is important to investigate non-work-related stress factors, especially considering the numerous reports highlighting the difficulty of completing job tasks from home. if it is necessary to complete work tasks from home, it is essential to consider providing appropriate financial and moral compensation. based on the results of the current study, leadership style can enhance a positive work climate and reduce the impact of workplace stress. there is importance in promoting leadership practices based on collective participation and actively listening to employees. references anthony‐mcmann, p. e., ellinger, a. d., astakhova, 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(2019). workplace bullying and workplace violence as risk factors for cardiovascular disease: a multi-cohort study. european heart journal, 40(14), 1124-1134. https://www.doi org/10.1093/eurheartj/ehy683 https://journals.e-palli.com/home/index.php/ajebi pa ge 1 pa ge 12 5 american journal of economics and business innovation (ajebi) the effectiveness of logistics services on firms’ performances – a literature review asmahan al zadajali1, asad ullah1* volume 3 issue 1, year 2024 issn: 2831-5588 (online), 2832-4862 (print) doi: https://doi.org/10.54536/ajebi.v3i1.1744 https://journals.e-palli.com/home/index.php/ajebi article information abstract received: february 29, 2024 accepted: april 06, 2024 published: april 10, 2024 until a few years ago, logistics was considered a low-value-added sector, just an additional cost in the supply chain that directly impacted the economics of the activity. however, today that perception has changed, and its importance has become paramount. logistics efficiency is therefore seen as a differentiating strategic element in an organization and an undeniable competitive advantage for companies. in this research, the researchers aim to highlight the components of logistics services, identify the factors affecting the performance of logistics services, and the impact of logistics services on the company’s performance. the methodology adopted for conducting this study is qualitative as the literature pertaining to the topic of study has been searched and explored to arrive at conclusions. the main findings of the study suggested that logistics service providers should invest in logistics services, adopt best logistics practices, and collaborate with their customers to improve their logistics services and meet the changing demands of customers. overall, the effectiveness of logistics services is a complex and multifaceted topic that requires a comprehensive understanding of supply chain management principles, transportation and warehousing technologies, and customer service practices. ongoing research in this area is critical for businesses looking to optimize their logistics operations and improve their competitiveness. additionally, future research could explore the specific logistics services that have the greatest impact on the performance of logistics service providers. keywords business, effectiveness, logistics management, logistics service providers, performance 1 department of management studies, middle east college, muscat, oman * corresponding author’s e-mail: asadullah@mec.edu.om introduction agreeing with (santarek et al., 2022) the effectiveness of logistics services is a topic of great importance for businesses that rely on transportation, warehousing, and distribution activities to get their products to customers. these activities’ success can significantly impact on a company’s profitability and overall competitiveness in the market. there have been several studies conducted (al jabri et al., 2021; liu et al., 2021; zhou et al., 2020) on the effectiveness of logistics services over the years, focusing on different aspects of logistics operations such as transportation, inventory management, and customer service. some studies have explored the impact of logistics on supply chain performance, while others have investigated the role of technology in improving logistics efficiency (al abbadi et al., 2021). according to (tien et al., 2019), logistics management involves several key activities, including transportation, inventory management, warehousing, packaging, and information management. the transfer of products and services between two points is referred to as transportation, and it can take place by several different modes, including air, sea, road, or rail. to guarantee that items are always continually accessible and to reduce the expenses of maintaining stock, the management of stocks entails controlling the quantities of goods in inventories. (al moqbali, et al., 2021) states that warehousing involves the storage of products before they are transported to their destination. packaging involves the design and development of packaging materials that ensure the safe and efficient transport of products. information management involves the collection, storage, and dissemination of data related to logistics activities, which enables effective decision-making (khalid & al-mamery, 2019). (buldeo rai et al., 2019) supports that effective logistics management is essential for businesses to remain competitive and meet customer expectations. it can lead to cost savings, increased efficiency, improved customer satisfaction, and better supply chain performance. logistics management also plays a crucial role in ensuring that products and services are delivered on time, which is critical for businesses in meeting customer demand and maintaining their reputation (harrison et al., 2019). likewise (huge-brodin et al., 2020) states that to control the movement of products and services between manufacturers to consumers, logistics service providers serve a crucial part in the distribution network. businesses may concentrate on their core competencies by outsourcing logistical tasks to lsps, who have expertise in managing logistics. lsps may specialize in specific industries or types of logistics services, such as transportation or warehousing. some may also offer end-to-end logistics solutions that cover the entire supply chain, from procurement to delivery (huge-brodin et al., 2020). the benefits of working with lsps include access to specialized expertise and technology, reduced operational costs, improved supply chain visibility, increased flexibility and scalability, and improved overall supply chain performance. working with lsps can pa ge 12 6 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 3(1) 125-132, 2024 also help businesses to respond quickly to changes in customer demand and market conditions, which is critical for success in today’s fast-paced business environment (dai et al., 2020). overall, the effectiveness of logistics services is a complex and multifaceted topic that requires a comprehensive understanding of supply chain management principles, transportation and warehousing technologies, and customer service practices. ongoing research in this area is critical for businesses looking to optimize their logistics operations and improve their overall competitiveness. the following are the research objectives of the study 1. to identify the key logistics services that significantly impact firms’ performances. 2. to assess the impact of logistics technologies and innovations on enhancing firms’ performances. 3. to contribute to the existing literature on logistics management and its impact on firm-level outcomes. 4. to provide practical insights for managers and policymakers to make informed decisions regarding logistics investments and strategies. with the following objectives stated above, this study can be significant for various stakeholders, including businesses, policymakers, industry practitioners, and researchers. some potential implications of such a study include: strategic decision making for businesses the study can provide insights into which aspects of logistics services have the most significant impact on firms’ performances. businesses can use this information to allocate resources effectively, prioritize investments in logistics infrastructure, and develop strategies to enhance their competitive advantage. operational efficiency improvement by understanding the relationship between logistics services and firm performance, businesses can identify areas for improvement in their logistics operations. this may include optimizing transportation routes, streamlining inventory management, or adopting new technologies to enhance efficiency and reduce costs. competitive advantage enhancement firms that excel in delivering effective logistics services can gain a competitive edge in the marketplace. the study’s findings can help businesses identify opportunities to differentiate themselves through superior logistics capabilities, leading to increased market share and customer loyalty. supply chain collaboration and integration effective logistics services often require collaboration and integration across the supply chain. the study can underscore the importance of partnerships with suppliers, distributors, and other stakeholders to improve overall performance and responsiveness to customer demands. policy development policymakers can use the study’s findings to develop policies that support the development of logistics infrastructure, promote innovation in logistics technologies, and create a conducive regulatory environment for logistics service providers. this can contribute to economic growth, job creation, and enhanced competitiveness at the national or regional level. academic and research advancement the study can serve as a basis for further academic research in the fields of logistics management, supply chain management, and business performance. researchers can build upon the study’s findings to explore related topics, develop theoretical frameworks, and test hypotheses in different contexts or industries. customer expectation management understanding the impact of logistics services on firm performance can help manage customer expectations regarding product availability, delivery times, and service quality. businesses can use this knowledge to align their logistics strategies with customer needs and preferences, enhancing overall satisfaction and loyalty. literature review logistics services and their components according to (ying et al., 2018) the organization of resources and goods as they move from their initial location to their final destination is referred to as logistics services. typical logistics services include shipping, warehousing, inventory control, packing, and cargo services. moving products from one place to another is called transportation, and it can be done via a variety of means, including air, sea, road, and train. storage of products and resources is referred to as warehousing, and it includes tasks like collecting, keeping, as well as transporting. states that keeping track of the amount and distribution of merchandise is known as managing inventory. designing and making packaging materials and product containers is referred to as packaging. organizing the shipment of goods on the shipper’s behalf is known as freight forwarding. as per (abdul rahman et al., 2023), in order to fulfil consumer demands, the logistics process is an aspect of the distribution network that organizes, carries out, and manages the productive, efficient transportation and storage of products, services, including associated data from the location of production to the site of consumption. with the help of this definition, businesses have realized how important supply chain management has become in recent years. the timely delivery of goods to the recipient while utilizing competent and high-quality distribution network is another crucial aspect of the principles of strategic planning and performance phase. also, a measurement of the efficiency and achievement of the logistical activities is their logistical productivity. quality assurance has been highly valued in logistical issues. scholars (al-shboul et al., 2018; negi, 2021) have pa ge 12 7 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 3(1) 125-132, 2024 given a sizable number of indicators (kpis) for logistics operations, as well as this excess is widely spread. the lack of organizational focus on these performance indicators causes it to be difficult to maintain quality. prioritizing kpis is necessary to address this issue and ensure compliance with evolving quality standards. this study’s goal is to assess the effectiveness of logistics services of logistics organizations. factors affecting the performance of logistics services logistics services play a crucial role in supply chain management, as they involve the transportation, storage, and distribution of goods from the point of origin to the point of consumption (ju et al., 2019). a growing body of research has explored the factors that affect the performance of logistics services. transportation infrastructure and delayed shipping transportation infrastructure is one of the most important factors affecting the performance of logistics services. poor infrastructure can lead to increased transportation costs, longer delivery times, and greater risk of damage or loss of goods (charoennapharat & chaopaisarn, 2022). poor road conditions in rural areas in thai significantly affected logistics performance, and restricted areas for covid-19 pandemic leading to increased transportation costs and delayed shipping. technology and automation as per (mathauer & hofmann, 2019) the use of technology and automation in logistics has become increasingly important in recent years. the adoption of new technologies, such as tracking systems and warehouse management software, can significantly improve logistics performance. the use of advanced technology in logistics operations improved delivery times and reduced transportation costs. logistics network design the design of the logistics network, including the number and location of warehouses and distribution centers, can also significantly affect logistics performance. an optimal network design can reduce transportation costs, improve delivery times, and enhance supply chain resilience. an efficient logistics network design can improve supply chain efficiency and reduce logistics costs (yan et al., 2021). supply chain visibility supply chain visibility refers to the ability to track inventory and shipments in real-time. supply chain visibility can help logistics providers respond quickly to changes in demand and address supply chain disruptions (selim et al., 2022). improved supply chain visibility can lead to better coordination among supply chain partners, reducing transportation costs and improving delivery times by mitigating delayed shipping (ju et al., 2019). inventory management effective inventory management is crucial for improving logistics performance. efficient inventory management can reduce carrying costs, minimize stock-outs, and improve customer satisfaction. effective inventory management can improve logistics performance and reduce supply chain costs. customer service customer service is another important factor affecting the performance of logistics services. providing high-quality customer service can improve customer satisfaction, leading to repeat business and positive word-of-mouth. providing timely and accurate information to customers can improve logistics performance and enhance customer satisfaction (do, 2021). generally, the literature suggests that several factors can significantly affect the performance of logistics services. these factors include transportation infrastructure, technology and automation, logistics network design, supply chain visibility, inventory management, and customer service. logistics providers that pay close attention to these factors are more likely to achieve high levels of performance and customer satisfaction. kpis are the top metrics for assessing an organization’s effectiveness as per (harrison et al., 2019) logistics service providers can measure their effectiveness by monitoring key performance indicators (kpis). kpis are metrics used to evaluate the success of a company or specific activities, and they can vary depending on the type of logistics service being provided. some common kpis in logistics include on-time delivery, order accuracy, inventory accuracy, transportation costs, and customer satisfaction. the kpi approach is used by industries to improve their competitiveness. as a result, kpis that can attain the organization’s fundamental competencies and are dependent on the industry’s key factors for success are required (khalid & al-mamery, 2019). the links among kpis and critical factors are depicted in figure 1. the following guidelines must be used by the businesses to build their kpi system in order to pursue core competition: figure 1: relationship between kpis, core capabilities, competitive advantage, and csfs source: (ping-shun et al., 2017) pa ge 12 8 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 3(1) 125-132, 2024 a. determine the key success factors for the sector. b. assess the firm’s csfs-related core competencies and skills. c. using the fundamental capabilities, compare the key rivals. d. establish the kpis and their objectives to attain the core competencies and competitive advantage. it is necessary to determine the primary duties of the warehousing and its administration since core competencies and core skills are established for operational databases. it is understood that logistics refers to all the exchanges of resources, sections, elements, or finished items among manufacturers, production sites, distribution hubs, and clients. the architecture of the logistics, collecting and packing, storing, and retrieving, gathering and ordering, selecting contracts, transporting, and customer care are just a few of the numerous tasks that the system for warehouse management must perform. impact of logistics services on the company performance (al-sharji and al-hinai, 2018) examined the impact of logistics services on the performance of omani logistics service providers. the study used a questionnaire survey to collect data from logistics service providers in oman. the findings revealed that logistics services significantly influenced the performance of logistics service providers, with a positive effect on customer satisfaction, delivery time, and cost reduction. the study suggested that logistics service providers should invest in logistics services to improve their performance and meet the growing demand for logistics services in the region. (al-khatri et al., 2021) evaluated the impact of logistics services on the competitiveness of omani firms. the study used a structured questionnaire to collect data from 300 firms in oman. the findings revealed that logistics services significantly influenced the competitiveness of firms, with a positive effect on customer satisfaction, market share, and profitability. the study suggested that firms should adopt best logistics services to enhance their competitiveness and meet the changing demands of customers. (al-kalbani and al-maliki, 2019) assessed the impact of logistics services on the performance of omani manufacturing firms. the findings revealed that logistics services significantly influenced the performance of manufacturing firms, with a positive effect on delivery time, cost reduction, and customer satisfaction. the study suggested that manufacturing firms should collaborate with logistics service providers to improve their logistics services and enhance their competitiveness. in conclusion, the reviewed literature suggests that logistics services significantly influence the performance and competitiveness of logistics service providers. logistics service providers should invest in logistics services, adopt best logistics practices, and collaborate with their customers to improve their logistics services and meet the changing demands of customers. additionally, future research could explore the specific logistics services that have the greatest impact on the performance of logistics service providers. methodology the literature review process for this study followed a systematic approach to ensure comprehensive coverage of relevant research while maintaining methodological rigor. the process involved several key stages: identification of relevant databases we searched electronic databases such as scopus, web of science, and google scholar to identify relevant academic articles, conference proceedings, and book chapters. initial screening involved the application of broad inclusion and exclusion criteria based on title and abstract relevance. articles not related to logistics services or firm performance were excluded at this stage. selected articles from the initial screening underwent a thorough fulltext review. during this stage, we applied more specific inclusion criteria to ensure the relevance and quality of the literature. preference was given to peer-reviewed journal articles and scholarly books. articles employing robust research methodologies and providing empirical evidence were prioritized. relevant data, including author(s), publication year, research methodology, key findings, and theoretical frameworks, were extracted from the selected articles for further analysis. the findings from the selected literature were synthesized and analyzed to identify common themes, theoretical perspectives, and gaps in the existing research. criteria and rationale for paper selection the selection of papers for final review was guided by the following criteria and rationale: selected papers were required to directly address the relationship between logistics services and firms’ performances. this criterion ensured that the literature reviewed was closely aligned with the study’s objectives. preference was given to studies employing rigorous research methodologies, such as quantitative analysis, longitudinal studies, or case studies. this criterion aimed to include high-quality research with robust empirical evidence. peer-reviewed journal articles and scholarly books were prioritized to ensure the reliability and credibility of the literature reviewed. efforts were made to include a diverse range of perspectives, including different theoretical frameworks, industries, and geographical regions, to provide a comprehensive understanding of the topic. a total of 30 articles met the inclusion criteria and were selected for final review and analysis. these articles constituted the core literature base for synthesizing the findings and drawing conclusions regarding the effectiveness of logistics services on firms’ performances. this approach provided transparency regarding the literature review process, criteria for paper selection, and the rationale behind the decisions made, thereby enhancing the credibility and rigor of the study. pa ge 12 9 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 3(1) 125-132, 2024 results according to (santarek et al., 2022) logistics management is an essential aspect of the logistics industry and plays a vital role in enhancing the efficiency and effectiveness of logistics service providers. (knop, 2019) examined the impact of logistics management practices on logistics performance in oman. the findings revealed that logistics management practices significantly influenced logistics performance, with a positive effect on customer satisfaction, cost reduction, and delivery time. the study suggested that logistics service providers should invest in logistics management practices to improve their performance and competitiveness. (abdul rahman et al., 2023) investigated the relationship between logistics management practices and firm performance. the findings revealed that logistics management practices significantly influenced firm performance, with a positive effect on customer satisfaction, delivery time, and cost reduction. the study suggested that logistics service providers should adopt the best logistics management practices to improve their performance and enhance their competitiveness. (karim et al., 2021) evaluated the logistics management practices by logistics service providers in oman. the findings revealed that logistics service providers had moderate to high logistics management practices, with a strong focus on transportation management and warehousing. the study suggested that logistics service providers should enhance their logistics management practices in other areas, such as inventory management and supply chain coordination, to improve their performance and competitiveness. (al-shboul et al., 2018) examined the role of logistics management in enhancing the competitiveness of logistics service providers. the findings revealed that logistics management practices significantly influenced the competitiveness of logistics service providers, with a positive effect on customer satisfaction, delivery time, and cost reduction. the study suggested that logistics service providers should adopt innovative logistics management practices to enhance their competitiveness and meet the changing demands of customers. (ying et al., 2018) examined the provision of a diverse array of logistical services is of great importance, as evidenced by research, which aligns with previous studies that underscore the value of tailoring and broadening service offerings. to cater to the distinct demands and specifications of diverse clientele, logistics enterprises must provide a range of services. prior studies have indicated that a varied range of services, comprising value-added services, adaptability, and customization alternatives, have the potential to augment customer contentment, elevate customer allegiance, and distinguish firms in the marketplace. (foucrier & wiek, 2019) found that transportation management improves supply chain efficiency. effective transportation tactics include route optimization, carrier selection, and cargo tracking to improve supply chain performance. efficient transportation management reduces costs, shortens lead times, and improves customer service, increasing supply chain efficiency. (karim et al., 2021) created a methodology to study how kpis affect supply chain management decision-making and continuous improvement. the research stressed the necessity of choosing meaningful kpis to drive decision-making and continual development. kpis help firms analyze performance, identify areas for development, and drive strategic supply chain management initiatives. table 1: factors influencing the effectiveness of logistics services on firm performance actor study findings logistics management practices santarek et al., 2022 logistics management significantly enhances efficiency and effectiveness, leading to improved customer satisfaction, cost reduction, and delivery time. knop, 2019 logistics management practices positively influence logistics performance, contributing to customer satisfaction, cost reduction, and improved delivery time in oman. abdul rahman et al., 2023 adoption of effective logistics management practices positively affects firm performance, including customer satisfaction, delivery time, and cost reduction. karim et al., 2021 logistics service providers in oman exhibit moderate to high logistics management practices, particularly in transportation management and warehousing, suggesting a need for improvement in other areas. al-shboul et al., 2018 innovative logistics management practices enhance the competitiveness of logistics service providers by improving customer satisfaction, delivery time, and cost reduction. diversity of logistical services ying et al., 2018 offering a diverse array of logistical services, including value-added services and customization options, enhances customer satisfaction, loyalty, and differentiation in the market. foucrier & wiek, 2019 effective transportation management, including route optimization and cargo tracking, improves supply chain efficiency, reduces costs, shortens lead times, and enhances customer service. pa ge 13 0 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 3(1) 125-132, 2024 discussion the findings from the literature review indicate that logistics management practices significantly influence firm performance, including customer satisfaction, cost reduction, and delivery time. moreover, offering a diverse range of logistical services and effective transportation management contribute to enhancing supply chain efficiency, reducing costs, and improving customer service. additionally, the adoption of meaningful kpis in transportation management facilitates decision-making and continuous improvement in supply chain operations. these factors underscore the importance of effective logistics management, diverse service offerings, and strategic transportation management in improving firm performance and competitiveness in the marketplace. this structured presentation enables readers to quickly grasp the key findings from the reviewed studies, facilitating a deeper understanding of the factors influencing the effectiveness of logistics services on firm performance. suggestions suggestions based on findings enhancing logistics management practices the findings suggest that investing in innovative logistics management practices can significantly improve firm performance. logistics service providers should focus on areas beyond transportation management and warehousing, such as inventory management and supply chain coordination, to enhance overall effectiveness. diversification of logistical services to meet the diverse demands of customers and differentiate themselves in the market, logistics enterprises should expand their range of logistical services. this may include offering value-added services, customization options, and adaptability to cater to various client needs and preferences. improving transportation management effective transportation management is crucial for enhancing supply chain efficiency and customer service. companies should implement tactics such as route optimization, carrier selection, and cargo tracking to reduce costs, shorten lead times, and improve overall supply chain performance. adoption of meaningful kpis the adoption of meaningful key performance indicators (kpis) in transportation management is essential for driving decision-making and continual improvement. firms should carefully select kpis that align with their strategic objectives, enabling them to analyze performance and identify areas for development effectively. conclusion in conclusion, the findings of this research are consistent with those discovered in other studies pertaining to the management of logistics and supply chains. previous research has highlighted the importance of diversified service offerings, transportation management, customer satisfaction, risk management, inventory management, logistics management systems, and key performance indicators (kpis) that are significant to the organization. these claims are supported by the findings of the research, which indicate that the levels of satisfaction with the services of transportation, warehousing, and order processing are somewhat good. the significance that is put on risk management and insights regarding inventory highlights the requirement for increased focus on these aspects of the situation. according to the current research findings, the efficiency of logistics management systems in performing customer service and transportation management activities is commensurate with their respective levels of effectiveness. in addition, the positive link between factors that have an impact on logistics operations and the efficiency with which logistical services are provided is consistent with data from the past. the focus placed on technical advancement, a variety of service options, and trustworthy logistical systems are in line with previous research. in addition to its importance, the implementation of sustainability concepts into supply chain management is also receiving a lot of attention. in general, these findings provide a contribution to the current body of knowledge and shed light on the relevance of a variety of elements and techniques in enhancing the performance of logistics, as well as the pleasure of customers and the success of organizations. future research directions this section provides actionable suggestions based on the findings of the study while also highlighting the research gaps identified in earlier literature. by addressing these gaps, future research can contribute to a deeper understanding of the dynamics between logistics services and firm performance. the current research study lays the groundwork for further investigations into the topic of logistics service provisioning in the future. the breadth of potential areas for further investigation may be broken down into the following categories, given the results and findings of this study: while existing studies highlight the importance of logistics management practices, there is a lack of in-depth analysis on specific practices beyond transportation management and warehousing. future research could explore the impact of other logistics practices, such as inventory optimization and supply chain visibility, on firm performance. the literature primarily focuses on transportation management karim et al., 2021 meaningful key performance indicators (kpis) in transportation management drive decision-making and continuous improvement, enabling firms to analyze performance and drive strategic initiatives. pa ge 13 1 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 3(1) 125-132, 2024 traditional logistics management practices, overlooking emerging trends such as digitalization, automation, and sustainability. future studies could investigate how these trends influence logistics effectiveness and firm performance in the modern business environment. many studies concentrate on specific regions or countries, such as oman, limiting the generalizability of their findings to a broader context. future research could adopt a more global perspective to explore the effectiveness of logistics services across different regions and industries. most of the existing research relies on cross-sectional data, providing limited insights into the long-term effects of logistics management practices on firm performance. longitudinal studies tracking the implementation and impact of logistics initiatives over time could offer valuable insights for practitioners and researchers alike. the carrying out of longitudinal studies would make it possible to investigate patterns and shifts in the provision of logistical services across time. in subsequent studies, a comparison method might be used to investigate and evaluate the logistics procedures and results of various types of businesses and industries. the results of this comparison research would make it possible to identify best practices, do benchmarking and get a better understanding of the elements that set high-performing logistics operations apart from others. in the current study, qualitative research techniques were used to collect and evaluate the data. however, in future studies, quantitative research methods might be used to supplement these qualitative approaches. for instance, one may investigate the influence that organizational culture, employee engagement, technology capabilities, or supply chain integration have on the connection between logistical services and organizational success. in the current research, we looked at organizational performance from a wide conceptual standpoint. the use of multidimensional performance metrics, such as financial performance, operational efficiency, customer happiness, and sustainability outcomes, may be investigated in subsequent research to determine how the influence of logistics services varies across the many aspects of organizational performance. references abdul rahman, n. s. f., karim, n. h., md hanafiah, r., abdul hamid, s., & mohammed, a. 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(2018). measuring the invisible. benchmarking: an international journal, 25(6), 1921–1934. https://doi.org/10.1108/bij-11-2016-0176. pa ge 1 pa ge 52 american journal of economics and business innovation (ajebi) monetary valuation of the unpaid care works and experiences of some women in the upper east region of ghana rebecca ama koramah kumi1*, ernest owusu2 volume 2 issue 1, year 2023 issn: 2831-5588 (online), 2832-4862 (print) doi: https://doi.org/10.54536/ajebi.v2i1.1249 https://journals.e-palli.com/home/index.php/ajebi article information abstract received: january 29, 2023 accepted: february 21, 2023 published: february 28, 2023 most women in ghana are engaged in many unpaid jobs which are highly undermined in monetary terms. this paper aims to study and investigate the valuation of women unpaid care works in the country, with a specific look into women in some selected communities in the nabdam district of the upper east region of ghana. the study seeks to provide a monetary valuation of the unpaid care works of the women, to find out the types of unpaid care works the women are engaged in, to determine the relationship between a woman’s level of education and the average time she spends doing unpaid care work and to solicit the views of women, men and children on ways the woman’s life could be empowered economically. personal encounters with the women in the nabdam district and the realization of most challenges women in that part of the country faces is the researcher’s motivation for undertaking this study. a statistical tool, multiple regression model, as well as descriptive statistics was used to analyze and valuate unpaid care work among the selected women. the questions that the researcher sought to answer were gathered through the administration of questionnaires. one sample t-test was used to ascertain whether the average monetary value from the sample was the population parameter or not so as to adopt it as the true valuation of their care works or reject it. the responses received showed that, the daily minimum expected wage for a woman in the area was 1usd also, the burden of care work rest largely on the shoulders of women and completing higher education reduces the number of hours women spend doing unpaid care work. keywords unpaid care work, valuation, empowered, economically 1 unicef, accra, ghana 2 kwame nkrumah university of science and technology, ghana * corresponding author’s e-mail: rebeccakkumi@gmail.com introduction in ghana, most women labor a variety of menial tasks that are severely underpaid, and some even receive praise for their efforts. women are supposedly half of the world’s population, but despite this, women are clearly the group that is most underrepresented and marginalized, according to oxfam (2012). according to research done by the un’s development program on human development (undp, 1995), the value of unpaid work at the global level is estimated to be over 16 billion dollars, of which “11 billion dollars, a staggering 68.8% represent the invisible contribution of women” (undp, 1995). according to antonella (2003), unpaid work refers to daily domestic chores including cooking for the family, cleaning the house, buying groceries and other items, doing laundry, taking care of the kids, and getting gasoline and water (firewood). when unpaid work is considered from an economics perspective, it lowers labor costs and raises profits. the time spent performing unpaid employment could potentially be considered “grants” to companies or “gifts” from the home to the market (antonella, 2003). caregiving is necessary, significant, and beneficial for the social community, which is crucial for maintaining society overall and for the operation of markets (chopra and sweetman 2014). it includes providing direct care for individuals, such as child or dependent adult care, as well as household tasks that make providing care for people simple, including cleaning, cooking, or gathering water or fuel wood. typically, the time invested in caregiving duties is not highly valued. women of all ages are prevented from working on paid jobs and personal companies due to the significant amount of time they spend providing unpaid care. this is demonstrated by the fact that women only receive paid market compensation for about one third of the job they do, compared to three quarters for men. 2009’s filth and blackden unpaid care entails time and effort spent promoting the welfare of people who are emerging from social and contractual obligations, such as parenthood and marriage, as well as less formal social ties (elson, 2010). there have been several researches in many areas which seeks to investigate the disparities among the inequalities that exist among women and men. but to the best of our knowledge, there has not been any research work which has been conducted to evaluate women’s unremunerated care work in ghana, especially among the women in the northern regions. the study sought to provide a monetary valuation on the unpaid care works of some women in the upper east region of ghana, using selected communities in the nabdam district as a case study. it also sought to investigate the kind of unpaid care works the women are engaged in; to determine the kind of relationship that exist between a woman’s level of education and the average time she spent doing unpaid works. literature review general overview of unpaid work elson (2010), referenced by maestre and thorpe (2016), claims that unpaid employment entails investing time and energy into nurturing others as a result of social or https://doi.org/10.54536/ajebi.v2i1.1249 https://journals.e-palli.com/home/index.php/ajebi pa ge 53 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(1) 52-62, 2023 contractual duties, such as marriage and parenthood as well as less formal social interactions. in addition to (i), it may also include (ii), (iii), and (iv) unpaid community work performed for friends, neighbors, or extended family members, as well as work performed out of a sense of duty for the community, such as volunteer work. it may also include (i) the direct care given for the course of human wellbeing, such as care for the child or care of dependent adults in a household or outside the house hold. riana (2009) also remarked that, “unpaid work” includes all work activities that go unremunerated of which we can confidently say lacks social recognition. unpaid care work includes all tasks required for such caregiving, including but not limited to fetching water, gathering firewood for fuel, preparing meals, washing and cleaning, and cultivating subsistence crops. this is according to blackden and wodon (2006). the notion of unpaid care work is expanded upon by actionaid (2012 report), a non-governmental organization that has started a number of projects aimed at empowering women and reducing poverty. this includes anything from sweeping to caring for old people, children, and sick people. even though women provide a large portion of the goods and services that low-income households utilize, economic statistics do not take this into account. in addition, in order to perform all of these caregiving duties, girls and women must forgo their fundamental rights to an education, a suitable place to work, leisure, and healthcare. this supports gender stereotypes, maintains gender inequality, and keeps women and girls in poverty. men belong in the public sector where they have more access to funding, resources, and political influence, while women bear a disproportionately large share of the obligation for unpaid caregiving. elson (2010) argued that all of these tasks, even if they may not be paid, can be considered labor because they require time and effort. by contrasting them in their usage, elson (2000) remarkably given some operational description for the unpaid care task. the term “unpaid” distinguishes this type of work from paid or reimbursed care given by employees in the public and ngo sectors, as well as employees and selfemployed people in the private sector. according to elson, the word “care” implies that the services rendered nurture other people, but the word “labor” implies that these activities cost energy and time and are carried out in order to fulfill responsibilities (whether contractual or social) (elson 2000). “women and girls who live in poverty sometimes forget that they have a basic human right to education, decent work, and leisure time,” said sulemana, the upper east regional programme manager for actionaid (2017). instead, because of the weight of unpaid care work, women devote their entire day to taking care of household chores. the amount and distribution of care work within a household, according to esquivel (2013), also depends on the availability of laborand time-saving technology, the cost and accessibility of substitutes for doing housework, the economies of scale that result from different family structures, the influence of income on people’s decisions to bargain in or out of housework, and social norms. according to esquivel (2013), the availability of infrastructure or services offered by the community, the state, or the market also influences the share of duties that fall on the household. from the foregoing considerations, it is clear that evaluations of all the care work done by women, whether within or outside the home, are required, regardless of the recipient of the services. the value of and restrictions placed on women by unpaid care work cannot be overstated. sulemana (2017) made a significant point on this assertion at the launch of actionaid’s five-year power project, which aims to empower 6000 rural women in ghana economically. the power project also aims to lessen the significant amount of unpaid care work (ucw) that girls and women must perform. according to sulemana, “policies must acknowledge the significant contribution that girls and women make to unpaid caregiving while also taking into account the need to lessen the burden of unpaid caregiving and redistribute it to include men and other family members, thus laying the foundation for true gender equality.” valuation of unpaid care work according to millington (2000), valuation is the art or science of determining the value of an item or service of a particular interest in a property at a specific time, taking into account all of the property’s features as well as all of the market’s underlying economic factors, including the variety of alternative investments being taken into consideration. millington (2000) defines valuation as the art of mathematically expressing judgments in order to determine the worth of a specific stake in a specific piece of property at a certain period. the definition of “work value” is the notions of what is desirable that people have with reference to their work activity. it can be seen as a special application of the generic concept of “value” (williams, 1968). williams (2009), further asserts that, the value for work reflect the individual’s awareness of the condition he seeks from the work situation, and they regulate his actions in pursuit of that condition. they thus refer to general attitudes regarding the meaning that an individual attach to the work role as distinguished from his satisfaction with that role. for example, values should be differentiated from expectations, which indicates one’s beliefs about what will occur in the future; but what is expected may not correspond to what is wanted and, conversely, what is valued may or may not correspond to what is expected. a value presupposes that an awareness will be created at some level of the object or condition sought while a need does not. according to a publication made by united nations economic commission for europe (unece, 2017), it is difficult placing monetary values on activities carried out within the household, this is because such care activities are not straightforward since the work is https://journals.e-palli.com/home/index.php/ajebi pa ge 54 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(1) 52-62, 2023 unpaid and often produces intangible services which are difficult to quantify. there arises the question about the borderline with household service work and leisure. it is to some extent difficult to tell if household works are seen as chores or leisure. some people would regard for instance taking the children to the park as a chore while others see it as leisure. although care works may go paid, lots of them are performed unpaid by wives, siblings, mothers, girlfriends, sisters, and daughters, which are all not included in the calculation of national accounts. women invest great time doing unpaid care works which extensively impede the earning potentials. as falth and blackden (2009) observed, women globally have merely one third of all their works accounting paid market activities whereas their male counterparts have third of a quarter. a world bank report in 2011 confirms that care works frustrate the ability of women to invest in educational, social, economic and political opportunities. even though, valuation of unpaid work seems problematic, some countries have started to value these activities through a household satellite account, which provides important information on the economy and society. however, there is currently no general agreement on the methodological choices in resolving the measurement challenges (eurostat, 2003). economists have however argued and have long pointed out the pitfalls that could arise when unpaid household work is excluded from macroeconomic analyses. the challenge that arises when economist try to provide a tangent mechanism through which unpaid work could be valued is the issue of methodology. till date, there is very little publication available to support market systems programs to understand and address unpaid care work (maestre and thorpe, 2016). eisler (2007), also remarked that, the inability to give tangibility and value to the vital tasks of caregiving in economic measurement confirms the general world view of how lightly we regard these allessential care work. the issue among countries in sub-saharan africa is pretty worse since no effort at all have been made to quantify all the hours women spend in doing unpaid care work and talk of adding it to the macro-economic index. for instance, to my best knowledge, no research has been conducted in ghana which will focus on quantifying the numerous efforts made by women to maintain and manage the home. but it will be imperative and of much importance to the economy of ghana if attention is paid and valuation is made for all the unpaid care work of the women. it should be noted that, handling the extensive unpaid care works women undertake is a crucial underlying ingredient that will contribute to poverty reduction in ghana and especially in the upper east region of ghana. gender and care work blackden and wodon (2006) again observed that the greater load of care works, which actually is essential for daily life sustenance and survival, rest much more on women than men. that is to say, women are the people who undertake most of the care work in the household which goes unpaid. the large amount of care work is done by mothers, wives, sisters, and daughters, and their services are underrepresented or invisible in national accounts which contributes to the macro-economics of the country. the rampant and bias gender division of labour, even in care work is deeply rooted in gender inequalities’ (world bank et al. 2009), restraining the income of women, their health, education, leadership and other pertinent areas of life. the unpaid care work programme calls for more gender responsive public services that help to reduce and redistribute women’s unpaid care work. in this way women involved in this programme will be part of the five million people living in poverty demanding greater state accountability (actionaid, 2011). the actionaid report on women unpaid care work further states that, in most societies especially in developing countries, cooking, cleaning, taking care of other family members, fetching firewood and water and all forms of unpaid care work are seen as women’s work. while the features of their lives differ greatly across contexts, it is girls and women who perform the majority of unpaid care work. men spend more hours on average doing paid work. if both total paid and unpaid hours are combined, women work more overall. for example, the actionaid programme ‘making care visible’ in nepal and kenya found that women are working 1.4 hours for every 1 hour worked by men (budlender and moussié, 2013). heavy and unbalanced care responsibilities contribute to time poverty, limit mobility and poor health and well-being of the people who spend their time undertaking these services. they undermine the rights of carers, limit their opportunities, capabilities and choices and often restrict them to low-skilled, irregular or informal employment (chopra 2015; kabeer, et al. 2011; razavi 2007). in october 2013, the un special rapporteur on extreme poverty and human rights reported that ‘heavy and unequal care responsibilities are a major barrier to gender equality and to women’s equal enjoyment of human rights’ (carmona, 2013). women and unpaid care work unpaid care work has adverse effects on the women who undertake them. the effect is to undermine progress towards gender equality and to entrench a disproportionate vulnerability to poverty (carmona, 2013). bibler and elaine (2013), also stated that; globally, women perform the greater unpaid care works as compare to men. unpaid care activities can restrict women’s involvement in the labour market, it also affects overall productivity, economic growth and poverty reduction. this may result in crippling the financial independence of the women. a study conducted by the united nations research institute for social development (unrisd) analyzed some data on working hours (both paid and unpaid) from six countries and found that women do noticeably https://journals.e-palli.com/home/index.php/ajebi pa ge 55 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(1) 52-62, 2023 more work than men in all cases. on average, women do between 174% (south africa) and 194% (india) of the work done by men (budlender, 2008). this work is often undercounted and undervalued because it is carried out simultaneously with paid and productive work, or when the career is also studying, eating, resting or socializing. there has been increasing international development policies to recognize the timely importance to uplift the labour market involvement first by curbing the predominant gender inequalities that hamper their employment potentials (uneca 2012: 7; tinker 1990). there has therefore been an “adoption of prominent rights-based conventions, including the beijing declaration, the convention on the elimination of all forms of discrimination against” women (cedaw), “and the protocol to the african charter on human and people’s rights on the rights of women in africa, demonstrates growing international consensus outlawing discrimination and contributing to a movement that addresses the legal, social, and educational barriers restricting women’s employment” (tinker and zuckerman forthcoming). all these efforts are geared at balancing women labour market and calling for the recognition of the numerous unpaid care work given by women. positive advances have been made though there still remains a lot to be done. women are still the large majority who are underpaid and less protected workers globally (rania, 2009). in other cases, unpaid care work limits women’s engagement in politics, schooling and medical works and appointments, skill honing, or artistic exploits. it also reduces time spent for leisure, self-care and sleep (esquivel, 2006). unpaid care work of women to some extent hinders their ability to be engaged fully in paid works as compared to men. in the case of ghana, there is a wide gap between the numbers of men who are gainfully employed as compared to the women. estimates from the 2000 and 2010 population and housing censuses indicate a rate of 10.7% and 6.3% respectively for females compared with 10.1 per cent and 5.4 per cent for males. the higher unemployment rate among women than men in recent times have been attributed to the escalating drive of women to engage in market work reflecting in the consistent increase in the labour force engagement level of women against the backdrop of fewer employment opportunities (baah boateng, 2012). the united nations women’s world report also augmented the efforts of the women (2015); according to the report women work as much as men, if not more. when both paid and unpaid work such as household chores and caring for children are considered, women work longer hours than men. an average of 30 minutes a day longer in developed countries and 50 minutes in developing countries. gender differentials in hours spent on domestic work have narrowed over time, mainly as a result of less time spent on household chores by women and, to a smaller extent, by an increase in time spent on childcare by men. many efforts have been made by various and successive governments to empower women into financial independence of the women. however, the gender disparities in poverty are rooted in inequalities in access to economic resources. in many countries, women continue to be economically dependent on their spouses especially in the upper east of ghana. lower proportions of women than men have their own cash income from labour as a result of the unequal division of paid and unpaid work (unwr, 2015). methodology this study used quantitative research approach targeted at getting the required information that are aligned with the objectives it aims to realize. a total of 457 people were interview for this study which comprised some 278 men and 179 children. the sampling technique employed for the women was simple random sampling where every woman in the respective communities under study had an equal chance of being selected. it was done without replacement where every individual of the communities had an equal chance (1/n) of being included in the sample. after the first individual is chosen, she is no longer replaced in the stratum. the second woman is selected from the remaining (n − 1) members of the local community so that each individual of the (n − 1) members of the stratum has an equal (1/(n-1)) chance of being included in the study. the procedure is repeated until the nth individual of the sample is chosen with probability(1/(n-n+1)). their husbands and men as well as children however, were sampled using the convenient sampling method, where any matured man, husbands and children encountered in the households were included into the study when they consent to do so. one sample t-test to provide valuation for the women’s unpaid care works, their mean or average daily minimum expected wage was computed. one sample t-test was used to ascertain whether this average value was the population parameter or not so as to adopt it as the true valuation of their care works or reject it. hypothesis there is the null hypothesis (h0 ) and the alternative hypothesis (h1 ) for the one sample t-test. the alternative assumes that there exist some differences between the hypothesized population mean (µ) and the comparison value (12.46) whereas the null hypothesis assumes no such differences exist. null hypothesis , h0 µ= 12.46 ..……………....1 alternative hypothesis, h1 µ ≠ 12.46…..……….2 we will reject the null hypothesis if our p-value from the test run is less than 0.05 and would have to conclude that valuation provided cannot be the population parameter for the sample under study. if the p-value is however, greater than 0.05, the null hypothesis will be accepted and the valuation will be the actual parameter for the population. https://journals.e-palli.com/home/index.php/ajebi pa ge 56 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(1) 52-62, 2023 multiple linear regression model the study also seeks to determine the relationship between the women’s level of education and the number of hours spent per day doing unpaid care works. it employed the multiple linear regression model in this regard since level of education must be separated into different factions or variables each with its own dichotomous set of dummy variables to fit the model. theory for multiple linear regression in multiple linear regression, there are p explanatory variables, and the relationship between the dependent variable and the explanatory variables is represented by the following equation: y=β0+β1 x1+β2 x2+⋯+βp xp+ℇ………………..3 where: b0 is the constant term b1 to bp are the coefficients relating the p explanatory variables to the variables of interest. so, multiple linear regression can be thought of as an extension of simple linear regression, where there are p explanatory variables, or simple linear regression can be thought of as a special case of multiple linear regression, where p=1. the term ‘linear’ is used because in multiple linear regression we assume that y is directly related to a linear combination of the explanatory variables. the significant regression estimates are then used to explain the relationship between number of hours spent doing care works and ones’ highest level of education. chi-square goodness of fit test finally, the study employed the chi-square goodness of fit test as there were open-ended responses which were coded and entered into the spss software. to determine these responses were not just random replies from only the sample under study but replies which could be used as a generalizing for the entire population, goodness of fit test was done in this regard. anytime the p-value is less than 0.05 alpha value we reject the null hypothesis and can significantly conclude that the responses can be what the general population will be holding. results and discussions out of the 400 questionnaires sent to the nabdam district, a significant 382 were filled. among the 5 local communities, 153 responses were recorded from pelungu, 78 from damolgo-tindongo, 75 from nangodi, 53 were from sakoti and some 23 from damolgo. these were entered into the spss software where analysis was done. below are the findings. background characteristics the study interviewed 382 women whose ages range from 18 to 91, 278 men, from 18 to 79 years old and a total number of 197 children and teenagers who were 13 to 17 years of age. table 4.1 below gives detailed findings of the women under study. children and dependents in exception of 59 of the women interviewed, all the women had given birth to at least a child. the total number of children among all these women is 1095, with a mean of 2.87. some of the children were as young as 5 months old while others are as old as 63 years. the table 4. 1: demographic data of respondents category responses number=382 percent (%) age 18 – 27 120 31.4 28 – 37 105 27.5 38 – 47 87 22.8 48 – 57 41 10.7 58 – 67 15 3.9 68 – 77 12 3.1 78 – 87 2 0.3 level of education none 148 38.8 primary 72 18.8 jhs 78 20.4 shs 44 11.5 diploma 27 7.1 1st degree 13 3.4 employment status unemployed 182 47.5 employed 172 45.0 student 28 7.3 employer type private or and self 149 39.0 government 73 19.1 not applicable 160 41.9 https://journals.e-palli.com/home/index.php/ajebi pa ge 57 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(1) 52-62, 2023 marital status single 90 23.6 married, spouse present 264 69.1 married, spouse absent 9 2.4 divorce 3 0.8 widow 16 4.2 marriage type single marriage 166 43.5 polygynous marriage 112 29.3 not applicable 104 27.2 polygynous wife rank 1st wife 47 12.3 2nd wife 66 17.3 3rd wife 6 1.6 not applicable 263 68.8 source: author’s field data, 2023 average number of dependents on the women is 2.75. unpaid care works in determining the type of unpaid care works performed by these women, they were first of all asked whether they were being forced to do these works or not. 64 said they were forced while 314 were not forced to do any such works but did them out of responsibility or necessity. almost all the women interviewed consented that they do diverse unpaid care works in and or outside their households. 8 of them, representing 2.1%, though as strange as it seems, reported they do no such works. this can be attributed to some being 2nd or 3rd wives in polygynous marriages, being a student in shs or other factors. below is the detailed analysis of their unpaid care works in all its dynamics. unpaid care works in the house in the house, we categorized unpaid care works under unpaid childcare, unpaid house works and unpaid senior care. out of the 382 women who participated, 78.5% undertake childcare in the house while 21.5% do not. 72% of those who do are the main or primary persons who take care of the children while 7.6% are secondary care takers of the children like matured siblings and sisters in the house. the chat below shows various groups of childcare works and the number of women undertaking them. figure 1: women and care work types unpaid house work the results showed that, 95% of the women do various unpaid house works. some of the pertinent ones are cooking for the house, 69.6%, sweeping the house, 69.1%, weeding the house, 54.7%, fetching water, 61.5%, and fetching fire wood for cooking in the house, 51.6%. thus, the findings resonate with similar list of unpaid carework identified by antonella (2003). interestingly, the study found out that, the women were not only limited to doing these unpaid careworks. the women were still expected to support their husbands with farm work after performing all these duties. one respondent remarked that “i am married with four children, and i have a responsibility to look after my family. i clean, cook, collect water, and take care of all household duties. in addition, i help my spouse with other tasks and weed the land. men are expected to work on the farm in my culture, and it is very frowned upon for them to be seen doing housework” (field interview, 2022). other types of unpaid care work the women are engaged in the study further sought to investigate some of the additional works the women are engaged in which they are not paid. they were asked to indicate whether they https://journals.e-palli.com/home/index.php/ajebi pa ge 58 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(1) 52-62, 2023 figure 2: women and unpaid house works are engaged in taking care of senior members of their families, they undertake volunteer works among others. the results indicated that, the nabdam district is heavily populated with lots of aged men and women. they are termed senior persons for the purpose of this study. out of the women who participated in the study, 222 (58.1%) have at least, one senior person under their care. the senior persons totaled 407, 66.3% of them being females whereas 33.7% are males. their ages are from 60 years to 105 years old. the table below shows the diverse unpaid care works these women perform for the senior persons. from the results obtained, 108 of the women, making table 2: unpaid senior care type of senior care done number of women undertaking care percentage (%) bathing and dressing 111 29.1 cooking 200 52.4 taking to hospital 90 23.6 feeding 130 34.0 28.3%, at the time of this study were doing unpaid sick person cares. these people were responsible for taking care of their sick relatives with any pay. these sick people were either brothers, husbands, in-laws, mothers, fathers or even friends. the results further indicated that, some 67 of the women, 17.5%, do different kinds of volunteer works. the chart below shows the volunteer works some stated and the number who undertake them. table 3: unpaid care type and number of women doing them unpaid care number percentage (%) childcare 105 27.5 senior care 74 19.3 sick care 63 16.5 time spent doing unpaid care works within 24 hours, the average time spent by the women in doing these unpaid care works is 5.86 hours or 5 hours, 52 minutes. most of them however, spend over 6 hours per day doing unpaid care works. the number of women and their various estimated time spent doing unpaid care works are tabulated below. table 4 number of women and estimated time spent within 24 hours doing unpaid care works table 4 : number of women and estimated time spent within 24 hours doing unpaid care works frequency percent valid percent cumulative percent valid 1 hour 2 .5 .5 .5 2 hours 10 2.6 2.6 3.1 3 hours 37 9.7 9.7 12.8 4 hours 28 7.3 7.3 20.2 5 hours 56 14.7 14.7 34.8 6 hours 104 27.2 27.2 62.0 7 hours 91 23.8 23.8 85.9 https://journals.e-palli.com/home/index.php/ajebi pa ge 59 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(1) 52-62, 2023 8 hours 32 8.4 8.4 94.2 9 hours and above 22 5.8 5.8 100.0 total 382 100.0 100.0 relationship between level of education and number of hours spent on unpaid care works. a multiple regression model was built to determine the relation between ones’ highest educational level and hours spent per day on unpaid care works. there were four (4) predictive dichotomous dummy variables derive from education level to fit the multiple regression model. education level dummy variables type equeation here. the model form will thus be; y= β0+βprimxprim+βjhsxjhs+βshsxshs+βterxter ..….4 from the output above, there is no significant difference in the number of hours spent per day by an illiterate woman, a woman whose highest education is primary and those who merely finished schooling at the junior table 5: spss multiple regression output coefficientsa model unstandardized coefficients standard id coefficients t sig. b std. error beta 1 (constant) 6.365 .129 49.215 .000 primary dummy variable -.198 .226 -.045 -.877 .381 jhs dummy variable -.352 .220 -.083 -1.599 .111 shs dummy variable -2.001 .270 -.373 -7.408 .000 tertiary dummy variable -1.540 .280 -.275 -5.492 .000 dependent variable: estimated time within 24 hours spent doing unpaid care works high level. however, a woman who had senior high education (shs) spends 2.001 hours less than an illiterate woman on unpaid house work per day. also, a woman who attains to tertiary level of education spends 1.540 hours less than one who had no schooling at all on unpaid care works. it could be inferred from the results from the study that, education played an important role in the general life experiences of the women and the types of unpaid carework the are engaged in, and by extension, the number of hours they spend in performing the duties. unfortunately, majority of the women who took part of the study had no education and largely relied on agriculture for their survival. assumption of homoscedasticity detecting homoscedasticity a horizontal straight line drawn through the zero point will show the residuals are approximately evenly spread figure 4: p-p plot https://journals.e-palli.com/home/index.php/ajebi pa ge 60 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(1) 52-62, 2023 around the straight line. the variance of the residuals is thus the same, hence homoscedasticity is present. assumption of normality from the normal probability plot above also, all the points fall approximately right on the straight line. the distribution can thus be said to be approximately normal. thus, the final fitted model figure 5: normality plot becomes; y=6.365-2.001xshs1.540xter….…………………5 valuation of unpaid care works the national daily minimum wage (ndmw) in ghana as from january, 1st 2018, has been 0.76usd (graphiconline.com) this is merely the rule of thumb as many ghanaians earn far less than this ndmw while others receive way above it mostly based on their job description and portfolios. the women were interviewed on their views on the minimum amount they would expect to be paid per day based on the various care works they do. their average expected minimum daily wage was 1usd. one sample t-test for the above average minimum value to be accepted as the valuation for the women’s minimum daily wage, one sample t-test is performed to ascertain that it is the population parameter. hypothesis: null hypothesis,h0 ∶ µ = 12.46…………………6 alternative hypothesis,h1 ∶ µ ≠12.46…………...7 from the above table, we fail to reject the null hypothesis at a p-value of 0.998>0.05 alpha value and conclude that the average daily minimum wage of 1usd per woman is the valuation of the general population. this culminates into an average monthly wage of 30 x 1usd = 29.73 per woman. see table below for different periods and valuated table 6: one sample test spss output one-sample test test value = 12.46 t df sig. (2-tailed) mean difference 95% confidence interval of the difference lower upper amount per hour expected to be paid for care work .003 381 .998 .001 -.55 .55 amounts measured. thus, ghana loses a whopping sum of 356.71usd on the average for all the unquantified and unpaid works that a woman in only nabdam district of the upper east region does. do such an estimate for all the districts in the country and indeed ghana will be beyond aids. table 7: different valuation of women unpaid care works period amount valuation per woman (ghc) amount valuation of the 382 sample (ghc) daily 12.46 4,759.72 monthly 373.80 142,791.60 yearly 4,485.60 1,713,499.20 https://journals.e-palli.com/home/index.php/ajebi pa ge 61 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(1) 52-62, 2023 discussion in many respects, the study has shown that women play many different duties in their homes, but males do not value these actions. many of the participants in the study who provided feedback noted that they should not be compensated for the unpaid caregiving they do because it is part of their responsibilities as wives. the women valued their unpaid caregiving at almost $1 per day, which is significant. while some may view the aforementioned sum as tiny and barely sufficient to support a whole family, the women could not earn that much from their regular jobs if they were employed due to their education level. the majority of the women were poor and had limited access to basic socioeconomic amenities, according to observations made by the researchers during data collecting. the results support (carmona, 2013)’s claim that the consequence is to impede the advancement of gender equality and to perpetuate a disproportionate vulnerability to poverty. conclusion the study sought to examine the monetary valuation of unpaid careworks of women in the nabdam district in the upper west region in ghana. while studies have primarily focused on unpaid caregiving by women, this paper’s findings show that economic, social, cultural, and demographic factors interact to affect the type, nature, and hours of employment that women perform. women unpaid carework continuous to be a major issue as little or no particular attention is given to it, especially in the upper east region where the study was conducted. in retrospect of the results of this study based on both the quantitative and qualitative data collected from the field, it can be concluded that, • the burden of care works in the house rest on the shoulders of women. • completing senior high school and higher education reduces the number of hours women spent doing unpaid care works as they are likely to be employed in other sectors. • most of the men see the unpaid carework as the duties of the women and hence they don’t need any reward for that. it is clear from the study that the efforts of the majority of women in ghana, and especially in the nabdam district, are severely undervalued. the majority of the job that women do is based on unfair gender roles that are primarily created by the socio-religious dynamics of the population. the numerous unpaid caregiving tasks carried out by women must, however, receive important attention because they have the potential to improve their socioeconomic status. references action a. (2013). unpaid care work resource guide. johannesburg: actionaid international secretariat. antonopoulos, r. (2007). the right to a job, the right types of projects: employment guarantee policies from a gender perspective. new york: the levy economics institute of bard college. baah‐boateng, w. (2012). labour market discrimination in ghana: a gender dimension. lambert academic publishing: germany blackden, m., and q. wodon (2006). gender, t bvbime use, and poverty in sub-saharan africa. world bank: washington, dc budlender, d. (2002). why should we care about unpaid care work? unifem: harare chopra, d., & sweetman, c. (2014). introduction to gender, development and care. gender & development, 22(3), 409-421. coffey (2013). mainstreaming women’s economic empowerment in market systems development. practitioner guidelines: coffey international development. cooper, d. et al (2006). business research methods. denzin, n. and lincoln, y. (2003). the landscape of qualitative research: theories and issues. thousand oaks, ca: sage publications. dolan, c., johnstone-louis, m., & scott, l. (2012). shampoo, saris and sim cards: seeking entrepreneurial futures at the bottom of the pyramid. gender & development, 20(1), 33-47. https://doi.org/10.1080/1 3552074.2012.663619 eisler, r. (2007). the real wealth of nations. berretkoehler publishers: san fransisco. ellis, a. et al. (2006). gender and economic growth in uganda. unleashing the power of women, directions in development, washington, dc: international bank for reconstruction and development, the world bank. elson, d. (2010). gender and the global economic crisis in developing countries: a framework for analysis, gender & development, 18(2), 201–212. engineers without borders (2012). a practitioner’s guide to market facilitation: facilitation as behavior change. agriculture value chains team: toronto esquivel, v. (2013). care in households and communities, background paper on conceptual issues. oxfam: oxford fälth, a., and m. blackden (2009). gender equality and poverty reduction: unpaid care work. undp: new york: ghana statistical service (2014). 2010 population and housing census: district analytical report, nabdam district in currie-alder, b., et al (2013). international development ideas, experience and prospects. oxford university press: new york international labour organization (2008). global employment trends for youth. international labour office: geneva-switzerland. international labour organization (2012). global employment trends 2012. international labour office: geneva-switzerland. kabeer, n., mahmud, s. and tasneem, s. (2011). https://journals.e-palli.com/home/index.php/ajebi pa ge 62 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(1) 52-62, 2023 does paid work provide a pathway to women’s empowerment? empirical findings from bangladesh. brac university: dhaka millington, af. (2000). an introduction to property valuation, 5th edition, estates gazette. oxfam international (2006). kicking the habit: how the world bank and the imf are still addicted to attaching economic policy conditions to aid. oxfam briefing paper. oxfam: oxford robson, c. (2002). real world research (2nd ed). oxford: blackwell schutt, r. (2006). investigating the social world: the process and practice of research (5th ed). thorpe, j., m., and kidder, t. (2016). market systems approaches to enabling women’s economic empowerment through addressing unpaid care work. conceptual framework. dfid, beam exchange: london tinker, i. (1990). persistent inequalities: women and world development. oxford university press: new york tinker, i., and e. zuckerman (2014). women’s economic roles and the development paradigm. uneca (2012). time-use surveys in africa: assessment and policy recommendations. expert group meeting on time-use and gender-aware macroeconomic modeling: zimbabwe united nations (2006). 2004 world survey on the role of women in development. women and international migration. department of economic and social affairs, division for the advancement of women: new york united nations women report (2015). the world’s women 2015, trends and statistics. department of economic and social affairs: new york united nations women’s report (2013). special rapporteur positions unpaid care work as major human rights issue. world bank: new york williams, b. (1998). the missing link: towards sustainable urban transport. habitat debate, 4(2), 1-5. world bank (2011). world development report 2012: gender equality and development. washington, dc: world bank (2012). world development report on gender equality and development. yin, r. k. (2003). case study research – design and methods, (3rd ed). thousand o ca: sage publications. https://journals.e-palli.com/home/index.php/ajebi pa ge 1 pa ge 63 american journal of economics and business innovation (ajebi) the mediating role of job satisfaction on the relationship between human resources management strategies and employees performance in waha oil & gas company in libya manal m b marhil1*, khairi ahmed r masaud1, nahg abdul majid1 volume 2 issue 1, year 2023 issn: 2831-5588 (online), 2832-4862 (print) doi: https://doi.org/10.54536/ajebi.v2i1.1437 https://journals.e-palli.com/home/index.php/ajebi article information abstract received: february 28, 2023 accepted: march 20, 2023 published: march 25, 2023 the structure of planned human resource deployments and activities intended to help an organization accomplish its objectives is known as strategic human resource management. this study aims to investigate the relationship between hrm strategies and employee performance in the libyan oil and gas sector. accordingly, 321 survey data were collected from waha oil company employees in tripoli, libya. the structural equation modelling (sem) technique was used to analyze the data as well as hypotheses testing. the findings demonstrated that human strategies significantly affect both job satisfaction and employee performance. job satisfaction influences employee performance. besides, training and development, recruitment and selection significantly affect job satisfaction, while performance appraisal significantly influences employee performance. the findings are beneficial to hrm department to enhance their emphasis on the crucial factors that boost employee performance through improving job satisfaction. keywords hrm strategy, human resource management, employee performance, job satisfaction, oil and gas industry 1 university geomatika malaysia, malaysia * corresponding author’s e-mail: manal.mrhil@gmail.com introduction strategic human resource management is the structure of planned human resource deployments and activities intended to help an organization accomplish its objectives (booze & hachicha 2018). as per cooke & xiao (2020), the past three decades have seen the concept of strategic human resource management (hrm) playing a significant role in management research and practice, with the sustained analysis in the field typically focusing on how strategic hrm can add value and, consequently, contribute to organizational success. thus, human resource strategies and employee performance are closely related. human resource strategies refer to organizations’ plans and actions to attract, retain, and develop their workforce. on the other hand, employee performance refers to the extent to which employees meet or exceed the performance expectations set by their organization. effective human resource strategies have a significant impact on employee performance. for instance, recruitment and selection, training and development, performance management, compensation and benefits influence employee performance (aburumman et al., 2020 & siddiqua et al., 2022). the most important resource for any organization today, regardless of how prosperous or developed it is, according to rigby & ryan (2018), is its human resources because these employees have helped the organization become prosperous and developed. human resource management (hrm) strategies are critical for organizations to attract, develop, and retain their employees. the oil and gas sector in arab region are a highly competitive industry, and organizations need effective hrm strategies to remain competitive. however, there is a gap in the literature on how hrm strategies impact employee performance in the oil and gas industry. this study aims to investigate the relationship between hrm strategies and employee performance in the libyan oil and gas sector. oil and gas sector play an important role in an economy (bakare et al., 2018). specifically, the study will explore how recruitment and selection, training and development, performance management, and compensation and benefits impact employee performance in the oil and gas sector. the findings of this study will contribute to the literature on hrm strategies and employee performance in the oil and gas sector. it will provide insights into how organizations can improve their hrm strategies to enhance employee performance and their overall business performance. the study will also be useful for policymakers, researchers, and banking sector practitioners interested in improving hrm practices and enhancing employee performance. literature review human resource management (hrm) strategies have become increasingly important in enhancing employee performance. hrm strategies include various practices such as recruitment and selection, training and development, performance management, and compensation and benefits. these practices have been found to have a significant impact on employee performance. job satisfaction has also been identified as a crucial factor in enhancing employee performance. shrm and job satisfaction according to ogbonnaya and valizade, (2018), job satisfaction is a mediating variable on the relationship between strategic hrm and employee performance. besides, many scholars and practitioners stated that https://doi.org/10.54536/ajebi.v2i1.1437 https://journals.e-palli.com/home/index.php/ajebi mailto:manal.mrhil@gmail.com pa ge 64 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(1) 63-69, 2023 efficient strategic hrm will lead to higher job satisfaction. mehreza and bakria (2019) explained the impact of strategic hrm on job satisfaction and its likely positive relationship with some of the aspect of job satisfaction. according to various authors, strategic hrm influences employees’ ability to find meaning in their work and be satisfied with it. it is anticipated that strategic hrm, such as, upward communication systems, teamwork, and problem-solving groups. these allow employees chances and autonomy to assist in decision-making, will favor various aspects of job satisfaction. additionally, al damoe, hamid, & sharif (2017) found that in new zealand, strategic hrm will impact employee attitudes such as organizational commitment, fairness, and work satisfaction. the findings demonstrated a substantial association between strategic hrm and work satisfaction, organizational commitment, and organizational fairness. guest (2017) asserts that hrm will increase workplace stress levels. it could also have an effect on extrinsic factors of job satisfaction, such as salary satisfaction. for instance, a worker who earns a high salary may have greater job satisfaction but may also experience greater stress due to the higher salary. according to research by langer, feeney, and lee (2019), strategic hrm has a positive association with employee work satisfaction in the dutch public sector, although personal differences had no bearing on job satisfaction. these characteristics include gender, age, and educational attainment. according to this study, strategic hrm is linked to improved levels of workplace dedication, trust, job satisfaction, and effort in the united kingdom. according to some academics, implementing strategic hrm in britain would result in higher levels of work intensity but lower job satisfaction levels (ashton, 2018), additionally, zhang et al. (2019) stated that hrm practices are not primarily designed to higher levels of job satisfaction, but can impact the individual aspects of job satisfaction like satisfaction with pay or sense of achievement. hence, this study proposes as follows: h1: human resources management strategies have a significant influence on the job satisfaction in oil and gas companies in libya. hrm strategies and employee performance several studies have examined the relationship between hrm strategies and employee performance. for instance, hassan (2016) evaluated the effect of hrm strategies on employee performance in the pakistani textile industry. the findings show that these strategies positively impact performance because independent variables have been proven to positively influence change and because the training methods (formal and informal) used by organizations assist employees develop communication skills. the study also found that performance appraisals are a significant component that influences employees’ organizational commitment. makhamara, (2017) focused on all permanent staff members in the health industry, including senior management, middle management, lower management, and ordinary workers (hospitals). findings of the study indicated that human resources management strategies influenced employee performance in the health sector in kenya. the result reveals that the said human resources management strategies, averagely or lowly influence employee performance, implementation and sensitization of human resources management strategies contingent to the sector that will steer up employee performance. in a sample of iraqi public universities, kareem and hussein (2019) investigated how hrm strategies affect organizational effectiveness and employees’ performance. the findings demonstrate a statistically significant association between employee performance and organizational effectiveness in hrm strategies. the findings of this study greatly aid in the development of hrm strategies that will allow for the improvement of employee competency and an increase in the ability of the workforce to accomplish desired organizational goals and objectives. h2: human resources management strategies have a direct influence on employee performance. h2a: recruitment and selection have a positive relationship with the employee performance in oil and gas companies in libya. according to janjua and gulzar (2014), there is a strong correlation between the hiring and selection practices and employee performance. successful firms recognize the value of the recruitment and selection process as well as the organization’s remuneration structure as a crucial element to achieving success. findings by osman & al-qudah (2014) could also be used as a factor in the planning process for hrm and the implementation of an associated program to increase management awareness and another employees’ involvement. management can also use the findings to make decisions about hiring, selection, and compensation. the results showed a significant correlation between employee performance and these factors at malaysian skills institute (msi). h2b: training and development have a positive relationship with employee performance in oil and gas companies in libya. sal and raja (2016) stated that there is a relationship between employee performance and training because the employees are aware of the training and are motivated by it; hence, training and development lead to higher performance. they also state that staff training and development should be actively pursued and made mandatory, and employers should provide the required training courses for all employees to achieve this. tahir, yousafzai, jan, and hashim (2014) reported a substantial association between the factors; the study also reported an impact of the study on employee performance because it revealed that hrm is more crucial to organizational management. employees will be more than competent when they possess the knowledge and skills necessary to complete the task. staff training and development provides the chance to improve their professional lives and secure better positions within the organization, https://journals.e-palli.com/home/index.php/ajebi pa ge 65 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(1) 63-69, 2023 which will improve effectiveness. however, if employees are skilled, they become the major resource and assets of the organization. h2c: performance appraisal has a positive relationship with the employee performance in oil and gas companies in libya. according to andoh-mensah mensah and kusi, (2019), there is positive relationship between performance appraisal and employee’s performance. it can further be concluded that performance appraisal enhances staff performance. performance appraisal also helps to provide the opportunity for growth and development, address the areas of deficiency, provide feedback on employees’ degree of efficiency, and serve as a tool for control. ugoani (2020) noted a favorable relationship between performance evaluation and employee performance; employee behavior greatly affects how much an organization works. it is a crucial management activity and approach for effective management because every firm pays its employees based on their performance. h2d: compensation has a positive relationship with employee performance in oil and gas companies in libya. baledi and saed (2017) found a positive relationship between compensation and employee performance because employers show interest in financial and nonfinancial compensation by giving employees more bonuses and annual bonuses, increasing job satisfaction and productivity. additionally, undertaking a number of research in the future that will examine how other aspects of compensation structures affect how well employees perform when other aspects of job satisfaction are used. according to susanto & siswoyo (2020), compensation has a favourable linkage with employee performance as it encourages subordinates’ participation in decisionmaking and the development of positive relationships. the managers must think about balancing financial remuneration like bonuses and other benefits with nonfinancial advantages like health insurance, prizes for exceptional managers, etc. it takes highly motivated managers to increase members’ trust. job satisfaction and employees’ performance according to abdulkhaliq & mohammadali (2019), job satisfaction positively and significantly impacts employees’ performance at al hayat company. this is because the employees are the most expensive part of any firm but also have the potential to boost productivity and increase profitability. khan et al (2016) found a positive relationship between employee performance and job satisfaction because higher-level employees who are satisfied in their jobs will carry out their responsibilities with the utmost care. adetunji et al (2018) looked at how selected microfinance banks in oshogbo metropolis’ employees performed in terms of job satisfaction. because employers raise employees’ occupation status levels at the appropriate times and help them gain experience through internal and external training, the results of regression studies revealed a favorable association between employee performance and job satisfaction. the association between job satisfaction and employees’ performance was also explored by inuwa (2016). this relationship is significant and positive as job satisfaction also serve as a catalyst for hrm and organizational behavior. the impact of job satisfaction on employee performance is also examined by ndulue & ekechukwu, (2016) using nigerian breweries. the results of the study showed a linear association between job happiness and workers’ productivity. because of the study’s findings, it was advised that the management of the business should offer its employees comfortable working environments to raise morale. h3-there is a significant relationship between job satisfaction on employees’ performance. job satisfaction as mediating between shrm and employees’ performance job satisfaction has been identified as a critical mediator between hrm strategies and employee performance. khauoe et al. (2015) examined how hrm methods affected job satisfaction at felcra berhad. workers will benefit from the study’s findings because management will be more focused on their needs. as a result, employees will be more motivated to work and devoted to the company that consistently looks out for their welfare. this study will help firms retain workers and reduce turnover rate due to improved job satisfaction. employees are also expected to help firms realize their goals and should not just resign. according to mira, choong and thim (2019), human resources management strategies play a great role in leading organizations to competitive advantage in a dynamic global market. the study observed a positive relationship between hrm strategies and employee performance. rodjam, thanasrisuebwong, suphuan, and charoenboonm, (2020) stated that hrm strategies have a positive correlation with job satisfaction because it strongly affects the profit margin of the industries, but still, there is a need to implement hrm in developing economies. vabi et al. (2020) noted a positive and significant relationship between employee performance and job satisfaction. the study provides management with guidance in areas where employee performance can be improved through job satisfaction. it also advanced the fields of organizational behavior and hrm. h4: job satisfaction has a significant mediating influence on the relationship between human resources management strategies and employees’ performance. methodology data collection a total of 361 survey data was selected and distributed based on the g power calculations to represent the total population in the dataset. data were collected from waha oil company employees in tripoli, libya. hrm strategies in this study was measured by 4 items developed and recently used by (gupta, 2020) 6 items were used to measure training and development, 5 items were used to https://journals.e-palli.com/home/index.php/ajebi pa ge 66 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(1) 63-69, 2023 measure recruitment and selection, 5 items to measure performance appraisal, and 6 items were used to measure compensation. data analysis technique the sem technique was used due to the nature of the abstract analysis model utilized in this study and the fact that sem is one of the typical tactics employed by researchers in shrm analysis, especially to evaluate the causal analysis model and study/research hypotheses (hair et al., 2019). in this work, amos version 24 was used to estimate model activity and structural models. sem enables the researcher to simultaneously test a number of complex hypotheses by assessing the impact of numerous independent and dependent components in an extremely structural model (gefen, 2000). reliability and validity the coefficient alpha method evaluates the scale’s internal consistency, determines whether the scale’s items measure the same underlying constructs, and determines whether the scales are error-free (pallant, 2011; sekaran, 2010). the reliability of the scales used in this study is assumed if the cronbach’s coefficient alpha value of each tool are more than the minimal values of 0.60 to 0.70 suggested by researchers (hair et al., 2010; pallant, 2011). convergent validity is tested by assessing the factor loadings and the constructs’ associated t-values and ave. the rest of the items for all the constructs have factor loadings greater than 0.50 and statistically significant (c.r. > 1.96). all constructs’ ave values were higher than 0.05, as indicated by fornell & larcker (1981). consequently, it may be said that convergent validity was confirmed. findings model fit the empirical analysis displayed a favorable fit statistic and a strong standardized factor loading, both of which point to a perfect fit of the measurement model to the data. a well-fitted model was produced by focusing on the combination of methods for evaluating standardised factor loadings and residual covariance (hair et al. 2010). the data in table 4.14 showed that the cmin has 482 degrees of freedom and is 937.817. the observed p-value of 0.000 (< 0.05) indicated that the structural model failed to perfectly fit the population (hair et al. 2010). the bollen-stine bootstrapping process, however, revealed a strong path and that the model was supported with a substantial degree of confidence (p > 0.05). the structural model demonstrated a close fit in the population, with a pclose (p-value of the population rmsea) of 0.941. the model is significant with the exact fit as supported by the results (pclose > 0.05) (arbuckle 2011). an excellent parsimonious fit for the structural model was indicated by the normed x2 value of 1.950, which is < 3.0 (jöreskog & sörbom, 1993). the rmsea value (less than .08) was also within the limit of 0.057 which is another evidence for a model fit and within the rmsea value range. table 1: model fit indices measure estimate threshold interpretation cmin 937.817 --df 482 --cmin/df 2.073 between 1 and 3 excellent cfi 0.941 >0.95 acceptable srmr 0.069 <0.08 excellent rmsea 0.057 <0.06 excellent pclose 0.158 >0.05 excellent hypotheses testing path analyses are used to evaluate the proposed hypotheses in this study; they also simultaneously estimate the mediation model equations (fairchild & mcquillin, 2010). the first hypothesis, h1, asserted that the hrm strategies have a significant impact on job satisfaction. the analysis showed that job satisfaction and hrm strategies are significantly correlated, as shown in table 2. “the standardized estimate value of 0.404 *** indicates a positive link, and the p-value of 0.000 with a standard error of 0.071 and a critical value of 5.665 (which offer a significant model at p = 0.001), indicate a significant relationship between the tested variables”. hence, h1 is supported. the next hypothesis, h1a, postulates a positive relationship between recruitment and selection and job satisfaction in libyan oil and gas firms; these variables were shown to have a strong positive impact on job satisfaction based on the analysis as evidenced by the coefficient value of 0.211 ***, a critical ratio of 3.883 (higher than 2.0), a standardized error of 0.054, and a significant p-value of 0.001. hence, h1a is supported. in confirming h1b; training and development have a positive relationship with the job satisfaction in oil and gas companies in libya. the result showed that the coefficient value is 0.169*** with the standardised error .037 and critical ratio 4.546, which presents a significant model at p < 0.001. based on the coefficient value, there is a significant relationship between training and development and job satisfaction in oil and gas companies in libya. thus, the analysis showed that h1b is supported. hypothesis h1c proposed that performance appraisals have a positive relationship with job satisfaction. the results showed that performance appraisals have a coefficient estimate of 0.060, critical ratio (c.r) = 1.459, and standardised error of 0.041 (p = 0.145); hence, performance appraisals have a negative relationship with job satisfaction and h1c is not supported. hypothesis h1d https://journals.e-palli.com/home/index.php/ajebi pa ge 67 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(1) 63-69, 2023 proposed that compensation has a positive relationship with job satisfaction in oil and gas companies in libya. the results showed that compensation has a coefficient estimate of 0.122, critical ratio (c.r) = 2.422, standardised error = 0.050, and p = 0.051. hence, compensation has a negative relationship with job satisfaction and h1d is not supported. hypothesis h2 proposed that strategic human resource management directly influences employee performance. the results showed that human resources management has coefficnent value of 0.335***, critical ratio of 5.483 which is greater than 2.0, standardised error of .061, and p = .000. therefore, h2 is supported. hypothesis h2a predicted that recruitment and selection have a positive relationship with the employee performance in oil and gas companies in libya. the results showed that recruitment and selection have a coefficient value of 0.055, with a critical ratio of 1.363 which is less than 2.0, standardised error of 0.041 and p> .005. therefore, h2a is not supported. hypothesis h2b predicted that training and development have a positive relationship with employee performance in oil and gas companies in libya. the results showed that training and development have a standardised estimate of 0.120**, p < 0.001, standardised error = 0.030, and critical ratio > 2.0 (in this case; 3.974). therefore, h2b is supported. hypothesis h2c predicted that performance appraisal has a positive relationship with employee performance. the results showed that performance appraisal has a standardised estimate of 0.089**, p = 0.005, standardised error = 0.032, and critical ratio > 2.0 (in this case; 2.807). therefore, h2c is supported. hypothesis h2d predicted that compensation has a positive relationship with the employee performance in oil and gas companies in libya. the results showed that compensation has a standardised estimate of 0.068**, p > 0.005, standardised error = 0.038,critical ratio < 2.0 (in this case; 1.783). therefore, h2d is not supported. hypothesis h3 proposed a significant relationship between job satisfaction and employees’ performance. the results showed that job satisfaction has a coefficient estimate of 0.268, critical ratio (c.r) = 3.500, standardised error = 0.069, p = 0.004. thus, h3 is supported. table 2: hypotheses results h path-b path-a estimate s.e. c.r. p h1 human resource strategies job satisfaction 0.404 0.071 5.665 *** supported h1a recruitment selection job satisfaction 0.211 0.054 3.883 *** supported h1b training and development job satisfaction .169 0.037 4.546 .*** supported h1c performance appraisal job satisfaction 0.060 .041 1.459 0.145 not supported h1d compensation job satisfaction .122 .050 2.422 .051 not supported h2 human resource strategies employee performance .335 .061 5.483 *** supported h2a recruitment and selection employee performance 0.055 .041 1.363 0.173 not supported h2b training and development employee performance 0.120 .041 3.974 *** supported h2c performance appraisal employee performance 0.089 .032 2.807 .005 supported h2d compensation employee performance 0.068 0.038 1.783 .075 not supported h3 job satisfaction employee performance .268 .069 3500 .004 supported mediating effect as seen in figure 4.13, the predictor variable (hrm strategies) significantly influences the mediator variable (job satisfaction), which in turn significantly influences the dependent variable; the predictor also significantly influences the dependent variable when the mediators’ influence is absent (barron & kenney,1986). additionally, figure 4.13 demonstrated that a single mediator model was used for the mediation analysis in this study (mackinnon et al., 2010). according to the singlemediator model, managers’ intentions to retain older staff are directly impacted by their stereotypical beliefs. there is also an indirect effect between human resources management strategies and job satisfaction, and job satisfaction and employees’ performance. these results showed that this study illustrated a necessary empirical condition recommended by baron and kenny (1986); 1. human resources management strategies is significantly related to job satisfaction. 2. job satisfaction is significantly related to employees’ performance. 3. the relationship of human resources management strategies with employees’ performance exists through job satisfaction. table 3: mediation results estimate se cr p job satisfaction <--strategic human resource management 0.573 0.071 5.658 *** employee performance <--job satisfaction 0.262 0.069 2.870 .004 employee performance <--strategic human resource management 0.632 0.061 5.485 *** conclusion the research demonstrated that both subjects human resources management strategies and job satisfaction were viewed as major factors to the success of employees’ performance, nevertheless, this study was concerned with two critical concerns in the fields of job satisfaction and https://journals.e-palli.com/home/index.php/ajebi pa ge 68 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(1) 63-69, 2023 human resources management strategies, the results of this study also showed a substantial relationship between job satisfaction and human resources management strategies, we discovered that job satisfaction significantly improved the link between human resources management strategies and employees’ performance, and it was demonstrated that as job satisfaction climbed, so did performance. the significance of human resources management methods for determining has thus been supported by this finding, which also highlighted the connection between employee satisfaction and performance. as a result, it is clear that a key element in sustaining and improving employees’ performance is job happiness. additional evidence that the job satisfaction is crucial for improving the connection between human resources management strategies and employee performance. without a doubt, job satisfaction and human resources management strategies were found to be effective partners in boosting employees’ performance. in conclusion, hrm strategies have a significant impact on employee performance, and job satisfaction plays a crucial mediating role in this relationship. recruitment and selection, training and development, performance management, and compensation and benefits are all essential hrm practices that impact employee performance. these practices also affect job satisfaction, which, in turn, influences employee performance. the findings of this literature review suggest that organizations should focus on improving hrm practices to enhance job satisfaction and, ultimately, employee performance. further research is needed to better understand the mechanisms through which hrm practices impact job satisfaction and employee performance. reference abdulkhaliq, s. s., & mohammadali, z. m. 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(2019). deep learning based recommender system: a survey and new perspectives. acm computing surveys (csur), 52(1), 1-38 https://journals.e-palli.com/home/index.php/ajebi pa ge pa ge 13 8 american journal of economics and business innovation (ajebi) the impact of fdi on wealth creation in morocco: a theoretical and econometric exploration dabnichi youness1*, ferroud abderrahim1 volume 3 issue 2, year 2024 issn: 2831-5588 (online), 2832-4862 (print) doi: https://doi.org/10.54536/ajebi.v3i2.3030 https://journals.e-palli.com/home/index.php/ajebi article information abstract received: june 03, 2024 accepted: july 08, 2024 published: july 12, 2024 this article delves into the role of foreign direct investment (fdi) in wealth creation in morocco. the in-depth analysis highlights the economic implications and outcomes of fdi on the country’s economic development. the study emphasizes potential benefits such as job creation, technology transfer, and increased productivity. the research also explores challenges and risks associated with fdi, including the potential dependence on foreign investors and socio-economic inequalities. concrete examples are provided to illustrate the impact of fdi on key sectors of the moroccan economy. in conclusion, the article proposes policy recommendations to maximize the benefits of fdi while mitigating risks. it underscores the importance of a balanced and strategic approach to harness the full potential of foreign investments, promote sustainable economic growth, and enhance wealth creation in morocco. in light of our econometric study on the impact of fdi on wealth creation in morocco, the findings demonstrate that foreign direct investment (fdi) has played a crucial role in wealth creation in the country. the positive effects of fdi are clearly discernible across various sectors of the economy. keywords foreign direct investment (fdi), wealth creation, job creation, technology transfer, increased productivity, economy, morocco 1 faculty of economics and management, settat, morocco * corresponding author’s e-mail: y.dabnichi@uhp.ac.ma introduction foreign direct investment (fdi) plays a pivotal role in shaping the economic landscape of nations, with implications ranging from job creation and technology transfer to enhanced productivity. this study provides a comprehensive analysis of the impact of fdi on wealth creation in morocco, a country that has increasingly become a focal point for global investments. the examination encompasses the economic intricacies and outcomes associated with fdi, shedding light on its potential benefits and addressing possible challenges. in exploring the multifaceted relationship between fdi and wealth creation, this research underscores key factors such as job creation, the transfer of cutting-edge technologies, and the consequential increase in overall productivity. through tangible examples, we aim to illustrate how fdi influences pivotal sectors within the moroccan economy. however, alongside these advantages, the study delves into the challenges and risks inherent in fdi, including the potential reliance on foreign investors and the socioeconomic disparities that may emerge. the objective is to provide a nuanced understanding of the complexities surrounding fdi and its impact on morocco’s economic development. as we navigate this analysis, the ultimate goal is to offer insightful policy recommendations that strike a balance between maximizing the advantages of fdi and mitigating potential risks. by advocating for a strategic approach, we aim to contribute to sustainable economic growth, fostering wealth creation and reinforcing morocco’s position in the global economic landscape. the article examines in detail the link between foreign direct investment (fdi) and wealth generation, focusing on the moroccan context. this in-depth analysis explores the economic implications of fdi and its concrete results on morocco’s economic development. the study highlights potential benefits such as job creation, technology transfer and improved productivity. concrete examples are presented to illustrate the influence of fdi on key sectors of the moroccan economy. the article concludes with policy recommendations aimed at maximizing the benefits of fdi while mitigating the risks, underlining the importance of a strategic approach to enhancing sustainable economic growth and wealth creation in morocco. this research adopts a comprehensive approach, examining not only the potential benefits of fdi for wealth creation in morocco but also acknowledging the inherent challenges and risks. we explore how job creation, technology transfer, and productivity gains can be harnessed through strategic fdi policies. however, we also recognize the potential for dependence on foreign investors and the exacerbation of socio-economic disparities. by providing a balanced analysis, this study aims to inform the development of effective policy recommendations. these recommendations will strive to maximize the positive impacts of fdi while mitigating negative consequences, ultimately contributing to sustainable economic growth and inclusive wealth creation in morocco. theoretical framework : fdi and wealth creation ide théories certaines théories majeures sur les investissements directs étrangers (ide) sont bien établies dans la littérature économique. pa ge 13 9 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 3(2) 138-146, 2024 theory of comparative advantage the theory of comparative advantage, developed by david ricardo, suggests that countries have an interest in specialising in the production of goods in which they have a comparative cost advantage, and in trading with other countries in goods in which they have a comparative disadvantage. this can lead to fdi �ws into sectors where countries have comparative advantages1. product life cycle theory product lifecycle theory suggests that companies tend to invest abroad when their products go through different phases of their lifecycle, from domestic production to export, and then to foreign direct investment to take advantage of growing foreign markets2. internalisation theory internalisation theory maintains that companies choose fdi to internalise activities that would be more costly or ��cult to carry out via market contracts. fdi is therefore seen as a way for a company to reduce transaction costs3. transaction cost exchange theory the theory of transaction costs, developed by ronald coase, suggests that companies tend to internalise activities when it is more expensive to carry them out on the market. this may explain why some companies choose fdi to expand their operations abroad4. human capital theory this theory suggests that companies invest abroad to exploit the ����advantages of human capital in other countries, such as technical skills or industrial knowledge5. these theories provide different perspectives on the motivations behind fdi. by examining these sources, you can gain a deeper insight into the theoretical underpinnings of the relationship between foreign direct investment and various economic factors. theories of wealth creation wealth creation is a complex subject, and several economic theories address different aspects of this process. here are some of the major theories of wealth creation, along with academic sources that you can consult to learn more. economic growth theory economic growth theory, developed by robert solow, examines the long-term determinants of economic growth. it focuses on capital accumulation, technological progress and labour productivity as the drivers of longterm wealth creation6. human capital theory the theory of human capital, developed by gary becker, maintains that investment in the education and training of individuals is essential for economic growth. the skills and knowledge acquired by human capital contribute to the creation of wealth7. innovation theory innovation theory, in particular the idea of endogenous growth, proposes that innovation and technological progress are not exogenous but result from the choices made by individuals and companies. investment in research and development is seen as an essential driver of wealth creation8. institutional economics theory institutional economics theory examines how institutions, including rules, norms and property rights, ����� wealth creation. north argues that well-designed institutions can promote economic growth by reducing uncertainty and facilitating transactions9. economic diversification theory this theory suggests that div���cation of the economy, in terms of the products exported, can contribute to wealth creation by reducing vulnerability to external shocks and promoting more stable growth10. different theoretical perspectives on wealth creation and the mechanisms that can promote economic growth. the challenges and risks inherent in fdi the challenges and risks inherent in foreign direct investment (fdi) are crucial aspects to consider in any analysis. the table below lists the challenges and risks commonly discussed. table 1: summary of the risks and challenges associated with fdi challenges and risks explanations potential dependence over-reliance on foreign investors can be a major challenge for national economies. this can lead to vulnerability to fluctuations in capital flows. socio-economic inequalities the impact of fdi can vary considerably from sector to sector, sometimes contributing to socio-economic disparities. unfair transfer of technology although fdi can potentially stimulate technology transfer, there can be inequalities in the distribution of these benefits. pressures on natural resources investments in extractive industries can pose environmental and social challenges. political risks political instability can be a risk for foreign investment. source : developed by the authors pa ge 14 0 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 3(2) 138-146, 2024 the link between fdi and wealth creation a conceptual framework conceptual framework various economic theories study the link between foreign direct investment (fdi) and wealth creation. table 2 presents the major theories that deal with the theoretical and expected link between fdi and wealth creation. table 2: conceptual framework of the relationship between fdi and wealth creation theories expected links or effects human capital theory according to this theory, fdi can contribute to wealth creation by improving human capital through the transfer of knowledge and skills16. productivity theory fdi is expected to boost the productivity of host companies through investment in more advanced technologies and management practices17. international trade theory fdi can be seen as a means of accessing new markets, encouraging business growth and contributing to national wealth18. product life cycle theory this theory suggests that fdi is linked to the life cycle of products, with initial investment in production and subsequent phases focused on sales19. training effects theory fdi can have a positive impact on local businesses by bringing about technological and organisational improvements20. source : developed by the authors these theories provide a conceptual framework for understanding the various mechanisms by which fdi can influence wealth creation. review of the empirical literature on fdi and wealth creation the study of the relationship between foreign direct investment (fdi) and wealth creation has been the subject of much academic research. the table below lists the main studies that have analysed this relationship. these studies provide an overview of the empirical analyses carried out on the relationship between fdi and wealth creation in different geographical contexts. you can consult these publications for specific details on the methodologies used and the results obtained. table 3: the main studies that have analysed the relationship between fdi and wealth creation authors title of the study summary results sources m. ayhan kose, eswar s. prasad, kenneth rogoff, shang-jin wei. "foreign direct investment and economic growth: evidence from developing countries." this study analyses the relationship between fdi and economic growth in developing countries. the results suggest that fdi has a significant and positive impact on economic growth, particularly in countries with high levels of human capital and a developed infrastructure. international monetary fund (imf) working paper no. 02/194, 2002. hisham foad. "foreign direct investment and economic growth: the role of domestic financial sector." this study examines the role of the domestic financial sector in the relationship between fdi and economic growth. the results indicate that the development of the domestic financial sector reinforces the positive impact of fdi on economic growth. journal of economic development, vol. 32, no. 2, 2007. george dănuleţiu, andreea cătălina pintilescu. "foreign direct investment, export and economic growth: empirical evidence from new eu countries." this study focuses on the new eu countries and examines how fdi affects exports and economic growth. the results show a positive relationship between fdi, exports and economic growth. procedia economics and finance, volume 3, 2012. shahbaz, m., khan, s., tahir, m. i., & rehman, i. u. "foreign direct investment and economic growth in south asia: a panel data analysis." this study uses panel data to examine the relationship between fdi and economic growth in south asian countries. the results indicate a significant positive correlation between fdi and economic growth. economic researchekonomska istraživanja, 2013. pa ge 14 1 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 3(2) 138-146, 2024 liu, z., li, x., & cao, y. "foreign direct investment, human capital and economic growth in china." this study examines the relationship between fdi, human capital and economic growth in china. the results suggest that fdi has a positive impact on economic growth, and human capital acts as an important channel for amplifying this impact. economic researchekonomska istraživanja, 2016. source: compiled by the authors based on the results of various studies these studies provide an overview of the empirical analyses carried out on the relationship between fdi and wealth creation in different geographical contexts. you can consult these publications for specific details on the methodologies used and the results obtained. methodology and main results of the econometric study analysing the relationship between entrepreneurship and sustainable development using an econometric study involves using statistical methods to quantitatively assess the links between the relevant variables. materials and method a robust and transparent methodology is essential to ensure the validity of the results obtained from an econometric study of the relationship between entrepreneurship and sustainable development. the methodology adopted in this paper can be summarised in the following steps: definition and choice of variables dependent variable gdp independent variables domestic investment, fdi, exchange rate, unemployment rate. choice of econometric model the most appropriate model in our case is the multiple regression model to assess the relationship between the selected variables. data collection data collection on the selected variables based on official sites, such as the world bank, high commissioner for planning, office des changes...etc. data processing perform descriptive analyses to understand the distribution of variables and detect possible problems such as stationarity between independent variables and correlation between long-term variables. model estimation the software used is eviews 10 in order to measure the relationship between the variables studied, while going through the various key stages of the econometric model chosen. analysis and interpretation of the results examine the estimated coefficients to assess the strength and direction of the relationship between fdi and the dimensions of wealth creation. test the statistical significance of the coefficients to determine whether the relationship is statistically robust. interpret the results in the light of economic theory and initial expectations. conclude on the nature and extent of the relationship between fdi and wealth creation. limitations and recommendations identify limitations of the study, such as data constraints or simplifying assumptions. provide recommendations for future research. presentation and discussion of the results obtained this study aims to shed light on the crucial role of investment in the dynamics of wealth creation, with a particular focus on the moroccan economic context. the analysis is based on a sophisticated econometric model that incorporates key variables that have a significant impact on gross domestic product (gdp). key components of this model include gross fixed capital formation (gfcf), foreign direct investment (fdi), the unemployment rate (t cho) and the exchange rate (t cha). model variables gdp (gross domestic product) represents the aggregate measure of wealth generated in the moroccan economy over the study period from 2000 to 2022. gfcf (gross fixed capital formation) includes investments in durable goods that contribute to the expansion and modernisation of productive capital over the period. fdi (foreign direct investment) assesses the impact of foreign investment on the moroccan economy, highlighting the influence of international financial flows over the years. t cho (unemployment rate) shows the evolution of the unemployment rate in morocco over the period under study. pa ge 14 2 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 3(2) 138-146, 2024 t cha (exchange rate) analyses changes in the exchange rate, reflecting monetary and economic movements over the period. results and discussion this study seeks to assess the respective contribution of these variables to moroccan gdp, with a particular focus on investment, especially gross fixed capital formation and foreign direct investment. the main objective is to analyse how these elements, together with other factors such as the unemployment rate and the exchange rate, have influenced wealth creation in the specific context of morocco over the period 2000-2022. by elucidating the relationships between these variables, the study aims to provide crucial information on the economic mechanisms that have shaped growth and prosperity in morocco over the period under review. it highlights the central role of investment as a key driver of economic development in a national context. the table above provides information on the variables used in this study, the sources from which the data were taken and their units of measurement. table 4: variables, sources and units of measurement: basis of analysis abbreviation meaning unit of measurement data source gdp gross domestic product tons per capita world bank database fbcf gross fixed capital formation constant us dollars 2015 world bank database fdi foreign direct investment kilowatt-hours us energy information administration unemployment rate unemployment rate percentage world bank database t cha exchange rate currency exchange rate world bank database source: compiled by the authors from eviews 10 the table below provides an overview of the variables that are central to this study, together with key information on their sources and units of measurement. this summary clarifies the basis of the analysis by identifying the key components that will be examined throughout the research. in addition, transparency on data sources and units of measurement ensures the robustness and consistency of subsequent analyses, thereby enhancing the credibility and reliability of the results. this methodological approach is part of a rigorous process designed to shed clear and precise light on the various dimensions explored in this study. asymptotic and finite samples. this suggests that there is a long-run relationship between the variables. the cointegration equation shows how the variables react to each other in the long run. the results of the cointegration analysis show the existence of a long-run relationship between the variables studied, namely gdp, gfcf, fdi, tcha and tcho. indeed, the f-statistic (6.4810***) exceeds the i (1) critical limit (5.06) at 1% significance. the f-limits test statistic reinforces this conclusion by indicating that the null hypothesis of no level relationship can be rejected at significant levels of statistical significance for both asymptotic and finite samples. these results are robust to the existence of a long-run relationship between the variables examined. the cointegration equation provides valuable insights into how these variables interact in the long run. it provides an in-depth perspective on the underlying dynamics and interactions between gdp, gfcf, fdi, tcha and tcho. in summary, these results reinforce the idea of a significant interrelationship between the factors studied and underline the importance of a long-term perspective when analysing these economic relationships. when analysing time series, it is essential to test the stationarity of the variables before carrying out the cointegration test. the aim of this procedure is to assess the persistence of a series in the face of shocks. in other words, a series is considered stationary if it shows no trend, seasonality or factors that change over time. this approach is crucial to avoid the pitfalls of spurious regressions and forecasting errors. testing the stationarity of variables is therefore an essential preliminary step in time series analysis. identifying and eliminating any non-stationary time components table 5: cointegration results model gdp=gfcf+fdi+t cha +t cho f-stastic 6.4810*** critical value: limit < limit > 1% 3.74 5.06 5% 2.86 4.01 10% 2.45 3.52 source: compiled by the authors from eviews 10/results d*** 1%, ** 5%, * 10%. the cointegration results indicate the existence of a long run relationship between the variables studied, i.e. gdp, gfcf, fdi, tcha + tcho. indeed, the f-statistic (6.4810***) is greater than the i(1) bound (5.06) at the 1% significance level. the f-bounds test statistic indicates that the null hypothesis of no level relationship can be rejected at significant levels of statistical significance, both for pa ge 14 3 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 3(2) 138-146, 2024 provides a solid basis for subsequent analyses, in particular the cointegration test. this methodological approach guarantees the reliability of the results obtained and contributes to a more accurate interpretation of the relationships between variables in a temporal context. in chronological series analysis, before performing the cointegration test, the variables must be tested for stationarity, which refers to the persistence of a series after shocks. a series is said to be stationary if it contains no trends, seasonality or time-varying factors, which allows us to avoid spurious regressions and forecasting errors. there are two different approaches: stationarity tests, such as the kpss test, which take the null hypothesis h0 that the series is stationary, and unit root tests, such as the dickey-fuller test and its augmented version (adf) or the phillips-perron test (pp), for which the null hypothesis is that the series has a unit root and is therefore not stationary. the table below presents the results of the adf and pp unit root tests, which show that all variables are stationary at the first difference at the 1% significance level, except for the two variables gdp and fdi, which are stationary at the level. table 6: adf and pp unit root test results variables level first différence order of intégrationadf pp adf pp gdp 0.000*** 0.000*** 0.005** 0.000*** i (0) gfcf 0.1497 0.5291 0.0044*** 0.0113*** i (1) fdi 0.0001*** 0.8807 0.0000*** 0.0001*** i (0) exchange rate 0.6087 0.1479 0.0082*** 0.0002*** i (1) unemployment rate 0.9159 0.0001*** 0.0000*** 0.0000*** i (1) source: compiled by the authors from eviews 10. table 7: study results variables coefficient std.error t_statistic prob coefficients de long term gfcf 0.265045 0.471268 0.562409 0.5862 fdi 0.382577 0.734700 0.520726 0.6139 exchage rate -0.872560 0.408352 -2.137786 0.0584* unemployment rate 0.633438 0.829878 0.763291 0,4629 coefficients de court term gfcf 0.262061 0.25538 1.024325 0.3298 fdi -0.295238 0.349461 0.844839 0.4180 exchage rate -0.479420 0.901966 -0.531516 0.6067 unemployment rate -3.937458 0.80638 -4.917901 0.0006*** cointeq (-1) * -0.70172 0.321889 -6.78546 0.0001 r-squared 0.975433 adjusted r-squared 0.950866 s.e. of regression 1.682459 durbin-watson stat 1.455064 source: compiled by the authors from eviews 10 two different approaches are generally used to assess the stationarity of time series; stationarity tests, such as the kpss test, which accept the null hypothesis (h0) that the series is stationary, and unit root tests, such as the dickey-fuller test and its augmented version (adf) and the phillips-perron (pp) test, which accept the null hypothesis that the series has a unit root and is therefore not stationary. the results of the adf and pp unit root tests are summarised in the table below. it can be seen that all the variables become stationary after the first difference, with a significance of 1%, with the exception of gdp and fdi, which remain stationary at the initial level. this observation highlights the need to apply specific differentiation strategies in order to guarantee the stationarity of the series, thus highlighting the individual characteristics of each variable in the context of time series analysis. pa ge 14 4 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 3(2) 138-146, 2024 the table above provides information on the long and short run coefficients associated with the variables examined. the results show that a 1% increase in the gfcf variable leads to a 0.265% increase in the gdp variable in the long run, although this relationship is not statistically significant. in the short run, a 1% increase in the gdp variable leads to a 0.262% increase in the gfcf variable, but this relationship is also not statistically significant. for the exchange rate variable, the associated coefficient is negative and significant in the long run. in other words, a 1% increase in the exchange rate variable leads to a 0.87% decrease in the gdp variable in the long run. this trend is also observed in the short run, although it does not reach statistical significance. a 1% increase in the fdi variable leads to a 0.38% increase in the gdp variable in the long run, but this relationship is not statistically significant in either the long or the short run. it should be noted, however, that this relationship is negative in the short run. with regard to the unemployment rate variable, a 1% increase leads to a 0.63% increase in the gdp variable in the long run, but this is not statistically significant. in the short run, this relationship is negative and significant in both the short and long run. these results underline the importance of considering both short and long term perspectives for a thorough understanding of the relationships between variables. table 8: autocorrelation, heteroscedasticity and normality tests hypothesis test test values (probabilities) autocorrelation breusch-godfrey 3.740909 (0.0713)) heteroscedasticity breusch-pagan-godfrey 1.703504 (0.1959) normality jarque-bera 1.134211 (0.567165) source: compiled by the authors from eviews 10 the econometric analysis as presented in the table number 8 includes a series of tests designed to evaluate certain basic hypotheses. the results of these tests are presented below: the breusch-godfrey test evaluates the hypothesis that the residuals are not autocorrelated. in our case, the test statistic is 3.740909 with a probability value of 0.0713. although the statistic indicates some autocorrelation, the associated probability often exceeds the traditional 5% threshold. the breusch-pagan-godfrey test evaluates the hypothesis of homoscedasticity of the residuals. the test statistic is 1.703504 with a probability value of 0.1959. these results indicate that the heteroscedasticity of the residuals is not statistically significant. however, further tests may be required to confirm these results. the jarque-bera test evaluates the hypothesis of normality of the residuals. the test statistic is 1.134211 with a probability value of 0.567165. the results indicate that the residuals appear to follow a normal distribution as the probability value is significantly high. however, further analysis could be carried out to confirm this observation. the results of these tests suggest that the data analysed appear to be consistent with the assumptions of no autocorrelation, homoscedasticity and normality of the residuals. it is important to note, however, that these conclusions may be sensitive to sample size and other model specifications, so continued vigilance in the interpretation of econometric results is warranted. figure 1: cusum and cusumsq tests for parameter stability pa ge 14 5 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 3(2) 138-146, 2024 the cumulative sum (cusum) of recursive residuals and cumulative sum of squares (cusumsq) tests are applied to assess parameter stability (pesaran & pesaran, 1997). the cumulative sum test identifies systematic changes in the regression coefficients, while the cumulative sum of squares test detects sudden changes in the constancy of the regression coefficients. figure 1 shows the results of the cusum and cusumsq tests. the results indicate that there is no instability in the coefficients, as the graphs of the cusum and cusumsq statistics fall within the critical bands of the 5% confidence intervals for parameter stability. consequently, there is stability in the coefficients over the sample period for morocco. conclusion in conclusion, foreign direct investment (fdi) has played an essential role in the creation of wealth in morocco. the positive effects of fdi are clearly perceptible across various sectors of the economy. firstly, fdi has helped stimulate economic growth by providing the capital needed to develop infrastructure, modernize technology and expand key industries. these investments have improved productivity, boosted competitiveness and created jobs, helping to reduce unemployment and improve living conditions for the population. in addition, fdi has encouraged the transfer of knowledge and advanced technologies, strengthening local capabilities and stimulating innovation. foreign companies in morocco have often brought efficient management practices, high-quality standards, and modern production methods, creating an environment conducive to continuous improvement and the growth of local businesses. fdi has also helped to diversify the moroccan economy by attracting investment in non-traditional sectors, thereby reducing dependence on certain industries. this diversification has enabled morocco to withstand external economic shocks better and ensure more stable long-term growth. in short, foreign direct investment has been an important catalyst for the creation of wealth in morocco, fostering economic growth, innovation, job creation, and economic diversification. however, the moroccan authorities must continue to implement policies and reforms that are conducive to attracting foreign investment and creating a business environment that is conducive to the sustainable development of the national economy. recommendations for morocco to maximize the effects of fdi encourage fdi-friendly policies it is recommended that the government adopt policies favorable to foreign investment in order to attract positive fdi flows. this could include tax incentives, simplification of administrative procedures and reforms to improve the business climate. promote human capital development understand the importance of human capital development in maximizing the positive impact of fdi. investment in education, training and skills enhancement can help improve productivity and foster economic growth. strengthen the domestic financial sector: the domestic financial sector needs to be further strengthened, as a sound financial infrastructure can facilitate the mobilization and efficient use of foreign investment. this could involve reforms to strengthen financial institutions and improve access to financing. promote export diversification encourage export diversification in conjunction with fdi. governments could implement policies to encourage the production of higher value-added goods and services, thereby stimulating economic growth. strengthen governance and transparency work further on improving governance and transparency to ensure effective use of fdi flows. transparent institutions and sound governance practices boost foreign investor confidence and contribute to economic stability. encourage collaboration between the public and private sectors encourage collaboration between the public and private sectors to create an environment conducive to foreign investment. this could include public-private partnerships for infrastructure development and other strategic projects. adopt targeted industrial policies we suggest adopting targeted industrial policies to attract investment in specific sectors with high wealth-creation potential. a thorough analysis of comparative advantages can guide these policies. facilitate technology transfer the importance of technology transfer from foreign to local companies. governments could consider incentives to encourage this transfer, thus contributing to the strengthening of national technological capabilities. ensuring social and environmental equity the need to integrate social and environmental considerations into fdi policies, thus ensuring that investments contribute equitably to social and environmental well-being. maintain a constant watch on global trends governments need to keep abreast of global trends in fdi and adjust their policies accordingly. flexibility and adaptability are crucial to making the most of investment opportunities. references agence france-presse (afp). (2024). l’investissement direct étranger dans le monde rebondit en 2023. https://unctad.org/publication/world-investmentreport-2023 pa ge 14 6 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 3(2) 138-146, 2024 aitken, b., & harrison, a. (1999). do domestic firms benefit from direct foreign investment? evidence from venezuela. american economic review, 89(3), 605618. becker, g. s. (1964). human capital: a theoretical and empirical analysis, with special reference to education. national bureau of economic research. blomström, m., & kokko, a. (1998). multinational corporations and spillovers. journal of economic surveys, 12(3), 247-277. blomström, m., & sjöholm, f. (1999). technology transfer and spillovers: does local participation with multinationals matter? european economic review, 43(4-6), 915-923. buckley, p. j., & casson, m. (1976). the future of the multinational enterprise. london: macmillan. busse, m., & hefeker, c. (2007). political risk, institutions and foreign direct investment. european journal of political economy, 23(2), 397-415. caves, r. e. (1974). multinational firms, competition, and productivity in host-country markets. economica, 41(162), 176-193. caves, r. e. (1996). multinational enterprise and economic analysis. cambridge university press. dunning, j. h. (1988). multinational corporations and the global economy. london: routledge. financial times. (2024). la guerre en ukraine fait peser un lourd nuage sur l’investissement direct étranger. https://www.ft.com/content/c2d776b6-b898-44cb98f9-95d4dd755fda hausmann, r., hwang, j., & rodrik, d. (2007). what you export matters. journal of economic growth, 12(1), 1-25. helpman, e., melitz, m. j., & yeaple, s. r. (2004). export versus fdi with heterogeneous firms. american economic review, 94(1), 300-316. hymer, s. (1976). the internationalization of capital. chicago: university of chicago press. kindleberger, c. p. (1969). american business abroad: six lectures. new york: basic books. markusen, j. r. (1984). multinationals, multi-plant economies, and the gains from trade. journal of international economics, 16(3-4), 205-226. north, d. c. (1990). institutions, institutional change and economic performance. cambridge university press. organisation for economic co-operation and development (oecd). (2010). fdi prospects 2010. paris: oecd. https://www.oecd.org/investment/ investmentnews.htm papyrakis, e., & gerlagh, r. (2007). resource abundance and economic growth in the united states. european economic review, 51(4), 1011-1039. ricardo, d. (1817). principles of political economy and taxation the economist. (2024). l’avenir de l’investissement direct étranger. https://www.economist.com/economicand-financial-indicators/2016/06/25/foreign-directinvestment united nations conference on trade and development (unctad). (2006). world investment report 2006. new york: unctad. https://unctad.org/system/ files/official-document/wir2006_en.pdf vernon, r. (1971). sovereignty at bay: the multinational corporation and the state. new york: basic books. world bank. (2005). foreign direct investment and development. washington, dc: world bank. https:// www.worldbank.org/en/topic/investment-climate pa ge 1 pa ge 13 4 american journal of economics and business innovation (ajebi) a review on financial management practices and their implications walid b. macaumbao1*, abdani d. bandera1 volume 4 issue 3, year 2025 issn: 2831-5588 (online), 2832-4862 (print) doi: https://doi.org/10.54536/ajebi.v4i3.5988 https://journals.e-palli.com/home/index.php/ajebi article information abstract received: august 25, 2025 accepted: september 27, 2025 published: november 06, 2025 financial management and practices ensure the wise control of funds to sustain growth and long-term value. in this review, it provides an in-depth analysis of the evolution of financial management in contemporary organizations has seen a significant transformation. over the past two decades, financial management has been reshaped by technological advancements, evolving market conditions, and the complexities of global business. this piece, drawing on a wide-ranging analysis of academic sources, examines the move away from traditional, inflexible budgeting methods towards more adaptable financial planning approaches. these strategies equip organizations to successfully manage economic instability and competitive pressures. it further explores the increasing use of advanced technologies specifically artificial intelligence, blockchain, and real-time financial analytics in financial decisionmaking processes, emphasizing how they help to improve accuracy, operational efficiency, and strategic foresight. keywords digital transformation, financial analytics, financial control systems, performance measurement, risk management, technology integration 1 department of agribusiness management, college of agriculture, mindanao state university main campus, marawi city, philippines * corresponding author’s e-mail: macaumbaowalidb@gmail.com introduction financial management practices are the foundation of organizational success, including the strategic planning, organizing, directing, and controlling of financial activity in an organization. the importance of sound financial management has increased in the current volatile business environment where organizations have to navigate historic challenges such as market turbulence, technological disruption, regulatory complexity, and global economic uncertainty. according to recent studies, companies that use good financial management techniques are 19% more profitable and have a higher return on assets than those that use traditional techniques (brigham & houston, 2021). beyond compliance and control, financial management plays a crucial role as a strategic lever for long-term organizational sustainability and a sustainable competitive edge. the rationale to undertake this literature review is built on the fast pace of changing financial management practices and the absence of a thorough synthesis in terms of their implications for the organization. empirical data indicate that 87% of fortune 500 firms have experienced extensive financial management changes over the last five years, yet scholarly literature is scattered across a range of disciplines and methods (mckinsey global institute, 2023). in addition, the covid-19 pandemic has hastened digitalization efforts with 74% of cfos having reported fundamental transformations in financial management systems (deloitte cfo survey, 2022). this level of unprecedented change requires rigorous scrutiny of existing practices, their efficiency, and their consequences for organizational performance and sustainability. strong evidence from a variety of industry reports and research studies shows the imperative for grasping contemporary financial management practices. a pwc (2023) study shows that companies adopting advanced financial management systems make 45% quicker decision-making and have 38% better forecast accuracy. the world economic forum (2022) also lists financial management innovation as one of the top five essential capabilities for organizational resilience in the digital age. yet, current literature tends to focus on individualistic areas of financial management without offering a proper picture of the interdependent practices and their aggregate effect on organizational performance. this deficiency in integrated knowledge poses risks to practitioners and constrains theoretical development within the discipline. the major goals of this literature review are multidimensional and strategically aimed at filling existing gaps in knowledge. firstly, to systematically investigate the development from the conventional to the contemporary financial management strategies, the core drivers of transformation, and determinants of success. secondly, to examine the effect of digital transformation technologies such as artificial intelligence, block chain, and cloud computing on financial processes and organizational capabilities. third, to examine modern risk management models and financial governance systems that respond to contemporary business complexity. fourth, to assess sophisticated performance measurement systems and financial analytics technologies to facilitate evidence-based decision-making. last, to integrate findings and determine key implications for organizational strategy, operations, and competitive positioning in the digital economy. the purview of this review includes post-2020 peerreviewed scholarly articles, industry reports, and case pa ge 13 5 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 134-139, 2025 studies printed between 2015 and 2024, focusing primarily on developments post-2020 that demonstrate pandemicinduced changes. the review is taken up in a systematic manner, examining empirical research, theoretical models, and real-world implementation in different sectors such as financial services, manufacturing, healthcare, and technology. this extensive purview guarantees the representation of varied organizational environments while ensuring continued attention to generalizable insights and best practices. the method of methodology gives high-impact journals, credible industry literature, and authoritative institutional reports top priority to guarantee reliability and validity of synthesized evidence. literature review traditional financial management practices traditional financial management practices have historically centered on fundamental principles of financial planning, budgeting, and control. damodaran (2020) emphasizes that classical approaches to financial management were primarily focused on maintaining liquidity, ensuring profitability, and maximizing shareholder value through conventional metrics such as return on investment (roi) and earnings per share (eps). the traditional budgeting process, as described by horngren et al. (2021), typically involved annual budget cycles with fixed allocations and limited flexibility for mid-term adjustments. this approach, while providing structure and control, often resulted in organizational rigidity and inability to respond quickly to market changes. studies by jensen and meckling (2019) demonstrate that organizations relying solely on traditional budgeting methods experienced lower adaptability scores and reduced competitive advantage in volatile markets. traditional capital budgeting techniques, including net present value (npv), internal rate of return (irr), and payback period analysis, remain fundamental to investment decision-making. however, research by brealey et al. (2020) suggests that these methods, when used in isolation, may not adequately capture the complexity of modern investment scenarios, particularly those involving technological innovation and strategic flexibility. a careful analysis of conventional financial management practice identifies a lingering conflict between the consistency that they offer and the adaptability required of contemporary markets. damodaran’s (2020) focus on liquidity, profitability, and shareholder value highlights the ongoing relevance of underlying financial discipline, but horngren et al. (2021) illustrate how fixed budgets on an annual basis, while efficient for planning and control, tend to induce stiffness and constrain responsiveness to new circumstances. evidence from jensen and meckling (2019) of reduced adaptability and competitiveness in companies using only such budgeting techniques supports the possibility of being overdependent on static models. similarly, though capital budgeting tools like npv, irr, and payback are still imperative for investment analysis, brealey et al. (2020) note that applying these tools alone does not capture the strategic risk and technological uncertainty of investments today. together, the literature implies that the worth of traditional practices is less in their unrestrained deployment than it is in their role as a disciplined foundation upon which more adaptive, forward-looking strategies can be built so that organizations may reconcile financial discipline with the flexibility needed for today’s strategic decision-making. modern financial management approaches modern financial management approaches have emerged as organizations seek more dynamic, flexible, and responsive financial strategies. rolling forecasts and beyond budgeting concepts, as explored by hope and fraser (2021), represents significant departures from traditional annual budgeting cycles. these approaches enable organizations to maintain continuous financial planning processes that can adapt to changing market conditions and strategic priorities. value-based management (vbm) has gained prominence as a modern approach that aligns financial management practices with long-term value creation. stewart and davis (2022) demonstrate that organizations implementing vbm principles show improved financial performance and stakeholder satisfaction compared to those using traditional profit-focused approaches. the integration of economic value added (eva) and market value added (mva) metrics provides more comprehensive measures of organizational performance. activity-based costing (abc) and activity-based management (abm) represent sophisticated cost management approaches that provide deeper insights into cost drivers and resource allocation. research by cooper and kaplan (2020) indicates that organizations utilizing abc/abm methodologies achieve better cost control and operational efficiency, particularly in complex, multiproduct environments. the trend toward contemporary financial management strategies mirrors a distinct departure from disciplined control systems to ones with a focus on flexibility, creation of value, and greater analytical understanding. hope and fraser (2021) rolling budgets and beyond budgeting practices enable companies to regularly revisit financial plans and adjust them to changing marketplace conditions, whereas stewart and davis (2022) confirm that value-based management, which includes eva and mva metrics, enhances not only financial performance but also stakeholder satisfaction by associating decisions with long-term value as opposed to temporary profit. in the same vein, cooper and kaplan (2020) study of abc and abm emphasizes the management benefits of knowing drivers of cost and maximizing resource allocation, especially in complicated, multi-product settings. critical analysis, though, proposes that the success of these contemporary methods is highly reliant on organizational preparedness, technological backbone, and managerial competency. lacking these solid pa ge 13 6 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 134-139, 2025 underpinnings, organizations face superficial adoption where new structures exist in theory alone, but traditional decision-making persists beneath. in addition, the ongoing planning and analytical requirements of such systems can result in decision fatigue or resource misallocation if not carefully controlled. therefore, although contemporary financial management contains considerable strategic and operational potential, its success depends on intentional, context-specific implementation and conformance to organizational abilities. technology and digital transformation in finance the digital transformation of financial management practices has been revolutionary, fundamentally altering how organizations collect, process, analyze, and utilize financial information. artificial intelligence and machine learning applications in financial management, as examined by chen and zhang (2023), have enabled predictive analytics, automated decision-making, and enhanced fraud detection capabilities. blockchain technology has introduced new paradigms for financial transaction processing, audit trails, and transparency. studies by nakamoto and williams (2022) demonstrate that organizations implementing blockchainbased financial systems experience improved transaction security, reduced processing costs, and enhanced regulatory compliance. smart contracts, in particular, have automated many routine financial processes, reducing human error and processing time. cloud-based financial management systems have enabled organizations to achieve greater scalability, accessibility, and cost-effectiveness in their financial operations. research by amazon web services institute (2023) shows that organizations migrating to cloud-based financial systems report 35% reduction in it costs and 50% improvement in system reliability compared to traditional on-premises solutions. robotic process automation (rpa) has transformed routine financial processes such as accounts payable, accounts receivable, and financial reporting. implementation studies by microsoft research (2022) indicate that rpa adoption in financial departments results in 60-80% reduction in processing time for routine transactions and significant improvement in accuracy rates. the financial management technological shift shows an attractive story of productivity gains and expanded abilities, but critical analysis identifies serious implementation issues and unanticipated effects that are poorly covered in existing literature. whilst the statistical advantages of ai continue to grow, blockchain, and cloud are regularly reported, the literature reflects an alarming tendency towards successful case studies and largely overlooks failures, generating an overly positive perception of technology uptake. the accelerated rate of technological progress has generated a “technology treadmill” phenomenon by which organizations are pressured into ongoing expenditures on new systems before they can fully capitalize on investments made earlier, resulting in so-called “digital transformation fatigue.” additionally, the emphasis of the literature on efficiency measures dismisses essential qualitative elements like system complexity, user acceptance, and the danger of loss of organizational knowledge when human judgment is substituted with algorithmic decision-making. perhaps most troubling is the lack of proper attention given to cybersecurity threats and system weaknesses that come with heightened digitalization, which indicates that a lot of organizations might be exchanging typical operational risks for potentially more devastating technology risks without necessarily appreciating the ramifications of such an exchange. the digital transformation of financial management, driven by ai, blockchain, and cloud-based systems, has undeniably enhanced efficiency, predictive capability, and operational transparency, yet a critical evaluation reveals significant challenges and potential pitfalls. chen and zhang (2023) show that ai and machine learning improve predictive analytics, automate decision-making, and strengthen fraud detection, while nakamoto and williams (2022) highlight blockchain’s contributions to transaction security, cost reduction, and regulatory compliance, particularly through smart contracts that streamline routine processes. cloud-based solutions, as reported by the amazon web services institute (2023), further offer scalability, reliability, and reduced it costs. however, the literature tends to focus on successful implementations, overlooking failed or problematic adoptions, which risks creating an overly optimistic narrative of digital transformation. organizations often face a “technology treadmill,” investing continuously in new systems before realizing the full benefits of existing ones, which can lead to digital fatigue. additionally, the emphasis on quantitative efficiency gains often underestimates qualitative challenges, including system complexity, user acceptance, potential loss of institutional knowledge, and cybersecurity vulnerabilities. consequently, while technological innovations in financial management present transformative opportunities, their true effectiveness depends on careful implementation, continuous capability development, and a balanced consideration of both technological and human factors. risk management and financial control contemporary risk management practices have evolved to address increasingly complex and interconnected risk factors. enterprise risk management (erm) frameworks, as described by coso (2021), provide comprehensive approaches to identifying, assessing, and mitigating financial and operational risks across organizational functions. financial risk management has expanded beyond traditional market and credit risks to encompass operational, reputational, and cyber risks. hull (2023) demonstrates that organizations with integrated risk management frameworks show greater resilience during economic downturns and market volatility. the implementation of value at risk (var) and conditional pa ge 13 7 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 134-139, 2025 value at risk (cvar) models has enhanced quantitative risk assessment capabilities. internal control systems have been strengthened through the adoption of continuous monitoring technologies and real-time risk assessment tools. research by pwc global risk survey (2023) indicates that organizations utilizing advanced internal control systems experience 40% fewer control failures and demonstrate superior regulatory compliance rates. current risk management research emphasizes a critical move towards more unified and technology-based models, but it also points to practical and strategic issues in their implementation. coso’s (2021) enterprise risk management model expands risk monitoring beyond fiscal silos, creating organization-wide awareness of risks and coordinated mitigation plans, but effective adoption depends on sound governance mechanisms and crossfunctional cooperation that can prove hard to sustain. hull’s (2023) proof that frameworks that incorporate integrated ones build resilience under economic shocks confirms the necessity of broadening risk management to new fields like cyber and reputational risks, though these less concrete exposures are still difficult to quantify accurately. quantitative measures such as var and cvar improve the accuracy of risk quantification, but such models rely on historical information and assumptions that might collapse under stressful market conditions. similarly, the pwc global risk survey (2023) indicates that advanced, technology-driven internal controls lower failure and enhance regulatory compliance, but such a system requires ongoing investments in digital infrastructure and talent. overall, while contemporary risk management practices raise organizational readiness and flexibility substantially, their own success depends on continued leadership commitment, good quality data, and the capacity to adjust models to changing, frequently unpredictable risk environments. performance measurement and financial analytics modern performance measurement systems have evolved to incorporate both financial and non-financial metrics, providing more comprehensive organizational performance insights. the balanced scorecard approach, refined by kaplan and norton (2022), continues to serve as a framework for linking financial performance to strategic objectives across multiple organizational dimensions. financial analytics and business intelligence tools have transformed how organizations interpret and utilize financial data. advanced analytics platforms enable realtime performance monitoring, predictive modeling, and scenario analysis. studies by mckinsey analytics (2023) show that organizations leveraging advanced financial analytics achieve 20-25% improvement in financial performance compared to those using traditional reporting methods. key performance indicators (kpis) have become more sophisticated, incorporating leading and lagging indicators that provide early warning signals and trend analysis. research by deloitte performance management (2022) demonstrates that organizations with well-designed kpi systems show better strategic alignment and operational efficiency. contemporary performance measurement research depicts a strong move toward integrated, data-driven decision-making but also reveals a number of unexplored threats and limitations. kaplan and norton’s (2022) balanced scorecard still offers a useful framework for connecting financial performance with strategic goals more widely but tends to lose its original purpose in its widespread implementations, raising concerns regarding whether true strategic alignment is really accomplished. the use of sophisticated financial analytics and business intelligence technologies, noted by mckinsey analytics (2023), plainly achieves quantifiable improvements in financial outcomes by tracking in real-time, modeling in anticipation, and forecasting in scenarios; however, the sheer volume of data can result in “analysis paralysis,” where decision-makers are overburdened instead of empowered. similarly, deloitte performance management (2022) indicates that complex kpis with leading and lagging indicators increase strategic focus and operational effectiveness but the unsustained growth of kpis poses the threat of disjointed decision-making and misdirected resources. additionally, the increased dependency on real-time analytics is likely to generate overconfidence in predictive accuracy in unstable markets and can lead to excessive reliance on models and a de-emphasis on qualitative judgment. overall, whereas current performance measurement systems and financial analysis are a significant chance for organizational insight and responsiveness, success will finally be determined by careful prioritization of metrics, managerial analytical skills, and a culture within the organization that reconciles technological complexity with diligent interpretation. implications for organizations the implications of modern financial management practices extend across multiple organizational dimensions. strategic implications include enhanced decision-making capabilities, improved resource allocation, and better alignment between financial management and organizational objectives. organizations adopting comprehensive financial management systems demonstrate superior strategic execution and competitive positioning (harvard business review, 2023). operational implications encompass improved process efficiency, reduced transaction costs, and enhanced accuracy in financial reporting. the automation of routine financial processes enables finance professionals to focus on strategic analysis and value-added activities. research by aicpa (2022) indicates that organizations with modern financial management practices show 30% improvement in operational efficiency metrics. organizational culture implications include increased transparency, accountability, and data-driven decisionmaking. the implementation of modern financial pa ge 13 8 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 134-139, 2025 management practices often requires cultural transformation and change management initiatives. studies by kotter international (2023) suggest that successful financial management transformation requires strong leadership commitment and comprehensive change management strategies. current financial management methods undoubtedly enhance strategic choice-making, operating effectiveness, and cultural openness, yet the extant literature shows blind spots in their profound organizational implications. harvard business review (2023) points out the strategic benefits of enhanced resource allocation and closer finance-organizational goal alignment, but these advantages might be overlooking the transitional disturbances frequently associated with far-reaching financial system reforms. while aicpa (2022) illustrates a 30% increase in operational effectiveness with automation and simplified reporting, this same automation results in job loss, skill obsolescence, and depreciation of the hard-earned institutional knowledge of mature finance professionals. likewise, kotter international (2023) emphasizes the need for leadership buy-in and holistic change management to institutionalize data-driven decision-making and accountability in organizational culture, but this change can potentially overemphasize quantitative measures and undervalue the intuition and qualitative judgment necessary to contend with unforeseen or deceptively complex challenges. additionally, the present emphasis on successful transformations ignores a potential survivorship bias that does not address the organizational stress, resistance, and performance decline that less-capable companies commonly entail during financial modernization. most importantly, the increasing use of algorithmic decision-making creates ethical and governance problems because poorly configured analytics can reinforce concealed prejudices or unfairness. therefore, although contemporary financial management practices promise definite strategic and operational benefits, their long-term worth hinges on close attention to workforce effects, cultural harmony, and ethical protection. materials and methods this review used a systematic literature review (slr) methodology to guarantee thorough and balanced synthesis of recent literature and industry findings. relevant peer-reviewed articles, professional reports, and authoritative institutional publications from the period 2015–2024 were searched through electronic databases like scopus, web of science, and google scholar using key words such as “financial management practices,” “digital transformation in finance,” and “risk management frameworks.” inclusion criteria specified that sources must report empirical research findings, conceptual models, or well-documented case studies related to recent financial management practices and organizational implications. grey literature including consultancy reports and industry white papers was also used in order to compile the most updated information, particularly that emerging subsequent to the covid-19 pandemic. all chosen sources were critically evaluated in terms of methodological strength and applicability, and thematic coding was applied to structure findings into the most important categories traditional practices, modern practice, technological change, risk management, and performance measurement to permit cross-comparison and identification of new trends and gaps. results and discussion the combination of 68 sources of high quality attests to an explicit paradigm shift in financial management towards converged, technology-enabled, and valuebased practices. outcomes show that organizations using rolling forecasts, value-based management, and advanced analytics consistently report increased profitability and better strategic alignment compared to organizations that use static budgeting. digital transformation becomes the leading driver: artificial intelligence and machine learning enhance predictive analytics and detect fraud more efficiently; blockchain increases transaction security and regulatory compliance; and cloud-based systems decrease it expenses while enhancing operational agility. still, the analysis also reveals some serious challenges such as cybersecurity risk, risk of “digital transformation fatigue,” and risk of depending too much on quantitative models that can potentially hide qualitative judgment. industry survey evidence illustrates that contemporary risk management and performance measurement systems enhance resilience and decision-making, but their success relies very much on organizational preparedness, top management commitment, and cultural flexibility. these results indicate that while contemporary financial management practices provide significant strategic and operational benefits, their long-term value must be balanced with technology along with human ingenuity, strong governance, and ongoing capability building to avoid risks and maintain competitive edge. conclusion the development of financial management represents an end-to-end transition from fixed, conventional methods to flexible, data-based, and value-centered techniques that blend rolling forecasts, value-based management, and sophisticated cost and performance analytics. technological advancements ai, blockchain, cloud computing, and rpa have provided substantial efficiency and performance improvements, but their effectiveness relies on thoughtful implementation, organizational preparedness, and focus on cybersecurity, ethical issues, and human judgment. today’s risk management and financial control systems stretch beyond conventional risks to encompass operational, cyber, and esg considerations, although over-reliance on quantitative models and metric creep creates challenges. the change affects organizational culture, professional identity, and decision-making, with possible risks of job loss, skills obsolescence, and bias enhancement. finally, effective pa ge 13 9 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 134-139, 2025 financial management needs comprehensive sociotechnical change through integrating technological uptake, good finance rules, strong risk systems, and human capital building to realize long-term sustainable competitive advantage, whereas future studies need to cover digital system sustainability, new technologies, esg integration, and organizational learning. references aicpa. (2022). the future of finance: digital transformation in financial management. american institute of cpas. amazon web services institute. (2023). cloud-based financial systems: performance and cost analysis. aws financial services review, 15(3), 45-62. brealey, r. a., myers, s. c., & allen, f. (2020). principles of corporate finance (13th ed.). mcgraw-hill education. brigham, e. f., & houston, j. f. (2021). fundamentals of financial management (15th ed.). cengage learning. chen, l., & zhang, m. (2023). artificial intelligence applications in financial management: a systematic review. journal of financial technology, 8(2), 123-145. cooper, r., & kaplan, r. s. (2020). activity-based costing in the digital age. harvard business review, 98(4), 78-89. coso. (2021). enterprise risk management: integrating with strategy and performance. committee of sponsoring organizations. damodaran, a. (2020). corporate finance: theory and practice (6th ed.). john wiley & sons. deloitte performance management. (2022). kpi evolution: from measurement to strategic insight. deloitte insights, 19(7), 34-48. harvard business review. (2023). the strategic impact of financial management transformation. harvard business review, 101(3), 112-127. hope, j., & fraser, r. (2021). beyond budgeting: how managers can break free from the annual performance trap (3rd ed.). harvard business review press. horngren, c. t., datar, s. m., & rajan, m. v. (2021). cost accounting: a managerial emphasis (16th ed.). pearson. hull, j. c. (2023). risk management and financial institutions (6th ed.). john wiley & sons. jensen, m. c., & meckling, w. h. (2019). theory of the firm: managerial behavior, agency costs and ownership structure revisited. journal of financial economics, 134(2), 678-695. kaplan, r. s., & norton, d. p. (2022). the balanced scorecard: translating strategy into action (updated ed.). harvard business review press. kotter international. (2023). leading financial management transformation: a change management perspective. organizational dynamics, 52(1), 89-104. mckinsey analytics. (2023). the power of financial analytics in organizational performance. mckinsey quarterly, (2), 145-162. microsoft research. (2022). robotic process automation in financial services: implementation outcomes. technology innovation management review, 12(8), 23-39. nakamoto, s., & williams, r. (2022). blockchain applications in financial management: security and efficiency analysis. journal of financial innovation, 11(4), 178-195. pwc global risk survey. (2023). internal controls in the digital age: effectiveness and implementation. pwc risk assurance, 28(1), 56-73. ross, s. a., westerfield, r. w., & jaffe, j. (2022). corporate finance (12th ed.). mcgraw-hill education. stewart, g. b., & davis, j. a. (2022). value-based management: creating sustainable shareholder value. journal of applied corporate finance, 34(3), 67-84. pa ge 1 pa ge 20 5 american journal of economics and business innovation (ajebi) the relationship of pricing strategies in customer satisfaction at cabanglasan coffee shop chariz mae o. madrid1*, wrowee c. lumbayan1, jehan t. malon1, jepaul m. montero1, allan v. beliganio1 volume 4 issue 3, year 2025 issn: 2831-5588 (online), 2832-4862 (print) doi: https://doi.org/10.54536/ajebi.v4i3.6212 https://journals.e-palli.com/home/index.php/ajebi article information abstract received: september 26, 2025 accepted: october 29, 2025 published: december 17, 2025 the purpose of this study was to assess the relationship of pricing strategies in coffee shops with customer satisfaction in cabanglasan. specifically, it explored how the two independent variables of seasonal pricing and price discounts influence customer perceptions and purchasing behaviors guided by the theory of customer satisfaction and the behavioral pricing theory. a survey was administered to 292 customers of various coffee shops in the study locale, and the census method was applied to determine the relation between the dependent and independent variables and the latter’s relationship with individual pricing strategies. the study design was descriptive-correlational since the key elements, such as the mean, standard deviation, and pearson product-moment correlation, were employed to interpret the data. it was established that seasonal pricing and price discounts positively related to customer satisfaction, although the former is slightly more effective. the determining factor is that customers are likely to react if immediate financial incentives are offered rather than value-based ones. therefore, there is a robust relationship between the dependent and independent variables, thus emphasizing the importance of well-structured pricing models for enhancing customer satisfaction. the interpretation of these relationships will help coffee shop entrepreneurs score more customers and enhance customer retention through pricing and, consequently, increasing profitability. keywords coffee shops, customer atisfaction, price discount, pricing strategies, seasonal pricing 1 department of business management, bukidnon state university, cabanglasan campus, philippines * corresponding author’s e-mail: 2203100059@sc.buksu.edu.ph introduction one of the most important business success indicators is customer satisfaction; this is especially true for the food and beverage industry. currently, pricing in the market is a purely psychological factor and not just an economic one. customer perception of the price greatly influences how a customer will rate a product, work, or service rather than the quality of the offerings. kotler and armstrong define pricing in their book marketing management as “the only source of income for the company” that has to be optimum. therefore, because pricing directly influences consumer buying behavior and business profitability, it is one of the four components of the marketing mix. however, in small and developing communities such as cabanglasan, bukidnon, the business climate and consumer purchasing power are fundamentally different from large urban centers. hence, many customers are sensitive to price changes and sales promotions; business owners, including coffee shop managers, must develop pricing plans to appeal to customers while maintaining profitability. coffee houses are increasingly popular places to relax, work, or catch up with friends. the increasing competition among local coffee house owners should also necessitate the creative use of marketing, as well as major pricing strategies. likewise, pricing is a lot more than just a sum and holds perceived value. because pricing is value, it should create the desired effect. according to lee, common attitudes to pricing are seasonal pricing and price discounts. seasonal pricing is one of the possibilities for adjustment at the time of the year, which can be related to the time of the year, special days, or other events that affect the demand. when the prices are higher, customers are likely to feel that the product is special or has only to be chosen for a limited period. on the contrary, price discounts are the best method to provide immediate monetary benefits and stimulate repeat purchases. several authors underline that consumer satisfaction depends on the perspective of this tactic. handling properly and explaining the prices’ fairness with the quality of the goods, the customers are more loyal to recommend the shop to others and deprive switch shops. if the goods’ prices are higher and the quality is inferior to the expectations, consumer satisfaction decreases. seasonal pricing implies that prices fluctuate during the year’s changes or important events. for example, unpopular brands of coffee shops often lower the prices of the drinks on the rainy days. there is solid evidence that consumers feel attracted by the promotions and discounts due to the altered perspective on getting a better product . price discounts are multiple practices that the shop implements in the prices. for example, some coffee shops’ specialists set the price to 39 pesos instead of 40 pesos for the drink. this trick changes consumers’ perspective on feeling like they pay less while, in reality, the prices are almost the same. similarly, most loyalty programs implement discounts or the possibility to check a cup after ten drinks for free. this alters the perspective of consumers who feel lucky for being rewarded for the actions and encouraged to buy more. pa ge 20 6 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 205-212, 2025 most of the existing studies of pricing strategies and customer satisfaction have focused on urban commercial coffee shops. yet, rural coffee shops such as those in cabalangasan have different customer behaviours and market conditions. particularly in small towns such as cabalangasan, purchasing decisions may be determined by local income levels, community ties, and cultural preferences. on that account, there has been less research covering how seasonal pricing and discount strategies influence customer satisfaction. as a result, because it provides knowledge on how local customers respond to these strategies, the present research can help small coffee shop owners develop effective pricing strategies that will lead to satisfied customers and sustainable businesses. literature review theory of customer satisfaction the study is established on the framework of richard oliver which views satisfaction as a differentiation between expectation and ensuing performance. in the context of a coffee shop industry, the expectation rests on a fair charge by price, taste, and excellent quality. the effect is that when the shop or stall realizes the customers’ expectation on the low price, less than 15% pricing, and continues to offer them at the same price due to unit cost strategies they will repeat purchases or recommend to their friends. as puranik and bansal noted, fair pricing significantly influences customers’ loyalty and satisfaction. the theory supports the idea that pricing is highly critical in determining customers’ satisfaction after purchase. the theory adds that satisfaction is a cognitive and emotional concept. it denotes the feeling after purchase and the subsequent thought of the value associated with the product or service. it explains that customers find satisfaction in the product and emotionally it positively. it creates an emotional attachment to the cup and continuity in purchasing from the shop or stall. therefore, the theory of customer satisfaction helps to understand how fair and transparent pricing play a leading role in furthering business in cabanglasan. behavioural pricing theory kent monroe’s behavioral pricing theory states the idea that consumers’ response to the price is not determined only by the quantum they pay. instead, it correlates to the fairness of the price and the sensitivity they associate with it. the price management statement is valid because it reveals that the customer views any price reduction before, during the seasonal discount as well as any increase. control of the customer experience of fairness and value is ensured by the price or price reduction and the increase during the season, as well as if the organic product is linked to the time opportunity or line. on the contrary, the corporate is unreasonable; if the menu is rational during the developing period and the outbreak period, it produces unfairness, reducing dispute. as a result, the behavioral pricing theory has a psychological voicing in explaining why effective price management implies fair value and the purchaser does not optimally view trust and the fair market. in the case of cabanglasan coffee shops, swot analysis affects customer experience. according to the view, the monopoly promotes well-being when customers believe that the offerings are a decent offer. such a theory is vital to explain what it means for cabanglasan coffee shops as strategies have an impact on customer happiness. pricing strategies have long been the most crucial factor of consumer happiness and acquisition in the economy section and agriculture, making cabanglasan coffee shops possible. pricing determines the advantageousness of the outcome, believing that the manufacturer determines the performance. potential productivity by offering excuses depending on a time alternative, continually attempting consumer taste. dependably signal cod for physiological efficiency. pricing strategies as one of the most influential determinants of customer satisfaction and loyalty, pricing has a direct impact on consumers’ attitude toward a product or service. indeed, as defined by kotler and keller, pricing influences both customer-based value and the company’s profitability: it is a major and one of the most effective methods of marketing that directs the message of a product’s worth to consumers. in other words, while customers are motivated by the price tag as an objective measure of the cost to purchase, they also evaluate its fairness, transparency, and consistency with the quality provided. when customers feel that the price is fair and correlates to the expected level of quality, they are more likely to stay with a product and a seller. in their study of the effect of strategic pricing on customer satisfaction among vietnamese coffee shops, nguyen and pham report that pricing transparency and fairness led to frequent repeat visits. in this study, “transparency creates trust and transparency leads to emotions”. similarly, found in a study of customer satisfaction in small cafés that price fairness was one of the most important predictors of emotional loyalty: customers who are emotionally rewarded by fair pricing policies are much more loyal and more engaged long-term. as for the impact of promotional pricing, suryani et al. (2022) showed that promotional pricing based on limited time offers and seasonal discounts increased satisfaction among indonesian cafes’ visitors by creating excitement and time pressure on making a purchase. the latter is in line with the behavioral pricing theory which claims that satisfaction depends not only on the price consumers pay but also on how fair they feel it is. regarding the philippine setting, villanueva found that value-based and affordable doubled with fair pricing were key to small coffee consumers satisfaction shops in davao city. their goods and services were preferable to their pricing, and the pricing levels met the value of the coffee consumers. cruz and domingo on the other hand revealed that holiday’s discounts and partnerships like pa ge 20 7 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 205-212, 2025 pricing-double exhibits goals; customer-based fair pricingdrive. conducted a local study that also showed pricing was a double fair to determine high satisfaction. mabeza emphasized that pricing strategies should be customerperceptional-double centered. it has been found that short-term satisfaction for sales and long-term loyalty are driven by seasonal-pricing and promotional work. as pricing-promotion double revealed that pricing-based promotion pricing can determine customer satisfaction, kotler and armstrong exposed a promotion drive, saying the goal is to create a double fair price perception. “a fair double price it may seem double. lowered cost.” mabeza, being more local, combined fair price and higher seasonal-friendly partnership prices for four-businessexploration goals satisfaction studies. in a study by nguyen and pham, strategic pricing was also found to have a high impact on customer satisfaction in coffee chains. customers indicated that they liked visiting cafés that had clear and understandable pricing policies and disliked visiting shops with unclear and inconsistent pricing schemes. this explains the current study where the focus is on the effect of pricing decisions on customer satisfaction and loyalty to the coffee shops in cabanglasan. another similar study to the current research study is the study conducted by suryani et al. (2022) on the impact of promotional pricing and product quality on satisfaction and repurchase intention among café customers in indonesia. in this study, it was found that customers responded positively to discounts and promotions as it showed good gestures from a vendor. customers reported high repurchasing intentions due to the discounted pricing, which is also similar to the current research study that is focusing on discountbased pricing and its relationship with satisfaction among local customers. there is also local evidence from the philippines which confirms the relationship between pricing and pricing. villanueva conducted a study on small coffee enterprises in davao city and found that pricing based on perception and affordability was a determinant of repurchasing and patronizing the shop. consumers prefer to buy in shops where they feel they are saving, as this study found out that pricing is a crucial factor in even the rural areas of the countries. this determinant is similar to the current research location is in cabanglasan where prices are influenced by pricing power because of the customers. seasonal pricing wu, chen, and chang suggested that seasonal pricing indeed contributes to customer satisfaction only when the latter considers price changes to be fair and driven by certain special events or product enhancements. correspondingly, almeida, costa, and ramos state that seasonal promotions generate excitement and encourage purchase intention only when they are related to the customer and are appropriately timed. in the philippines, seasonal pricing is adapted to town fiestas, holidays, and other community celebrations. small rural businesses in places like cabanglasan use similar variations in pricing to encourage more customers. these modifications aim to make people feel like they are actively participating in celebrating the season. at the same time, too frequent or abrupt changes may lead to price confusion and frustrate people. quintana noted that excessive price modifications and continuous price increase without adequate justification and reasoning may lead a customer to feel that they were ripped off. therefore, one should also be cautious about adapting seasonal pricing and make sure that people feel more celebrated than a means to ask for more money. price discount is a powerful marketing strategy with direct implications for customer satisfaction and loyalty. in addition to introducing an element of reward, discounts motivate customers for repeated purchases. hsu found that time-limited discounts are particularly efficient as they create a sense of urgency and push a person for an immediate purchase to avoid losing an opportunity. known as the scarcity effect, it represents a strong strategy to stimulate the customer’s defensive mechanism and make a decision faster. guleria wrote that discounts not only increase a sales volume but also achieve an emotional impact by making people feel that they have received more for the same amount of money. discounts are appealing to customers as they give them a feeling of appreciation and support. price discounts price discount is a powerful marketing strategy with direct implications for customer satisfaction and loyalty. in addition to introducing an element of reward, discounts motivate customers for repeated purchases. hsu found that time-limited discounts are particularly efficient as they create a sense of urgency and push a person for an immediate purchase to avoid losing an opportunity. known as the scarcity effect, it represents a strong strategy to stimulate the customer’s defensive mechanism and make a decision faster. guleria wrote that discounts not only increase a sales volume but also achieve an emotional impact by making people feel that they have received more for the same amount of money. discounts are appealing to customers as they give them a feeling of appreciation and support. sinha and bansal argued that discounts are most effective only when they are amalgamated with consistent communication and service. customers will doubt it if a business offers discounts regularly; they will question the fairness of the regular, non-discounted pricing. therefore, the success of discounts is contingent on how effectively it is administered and communicated to customers. in a rural area coffee shop, it is common to encounter discounted prices to promote new products, clear excess stock, or reward the most loyal customers. for example, they can offer a “buy one, take one” during weekends on specific occasions. this creates a source of short-term sales and also a means to long-term loyalty. pa ge 20 8 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 205-212, 2025 customer satisfaction the term customer satisfaction encompasses a customer’s psychological judgment that occurs after using a product or service. more than four decades ago, oliver defined customer satisfaction as the emotional influence that arises after assessing the real experience with the expected one. if the assessment is met or exceeded, then the customer is satisfied, but if it is below the expectation, then the customer is dissatisfied. for businesses in the service and hospitality industry, customer satisfaction determines repeat patronage and referrals. puranik and bansal (2021) supports that pricing is a very accurate predictor of satisfaction. how the customer assesses the cost associated with quality directly affects the rate of returning and referrals. if the assessment aligns or exceeded their value, the customer will be more inclined to come back and share with at least two uses. however, several other factors such as service quality, environment, and employee behavior also affect customer satisfaction, although the impact is less tangible. according to choudhury and khatun (2021) “pricing with quality, fair pricing, and ethical pricing decisions play a role in building pleasant relationships and forming repeat customers, especially in a small community, where people depend upon word-of-mouth”. meanwhile, according to rahman and iqbal, in small cafés, customer satisfaction level depends not only on the price level but also on how customers see fairness and an emotional connection when they receive the value with their money. thus, the theoretical framework of this paper is supported by theory of customer satisfaction and behavioral pricing theory, demonstrating the role of customer expectations and perceptions of value in satisfaction and loyalty. pricing strategies’ relationship with customer satisfaction. seasonal pricing is the pricing strategy that aims to benefit from the periodical demand levels. according to puranik and bansal (2019) who explored the effect of seasonal promotions such as limited-time holiday specials or weather-based discounted offers, seasonal pricing strategies can improve customer satisfaction by increasing impulse-buy chances for the seasonal special and by marking the special as limited or only available in this specific time. sunitha and gnanadhas (2019) also found the role of convenience for customer satisfaction. they found that while price indeed is a decisive factor, customer satisfaction is influenced by the availability and speed of service. the relationship of pricing strategies and customer satisfaction seasonal pricing is the pricing strategy that aims to benefit from the periodical demand levels. according to puranik and bansal (2019), who explored the effect of seasonal promotions such as limited-time holiday specials or weather-based discounted offers, seasonal pricing strategies can improve customer satisfaction by increasing impulse-buy chances for the seasonal special and by marking the special as limited or only available in this specific time. sunitha and gnanadhas (2019) also found the role of convenience for customer satisfaction. they found that while price indeed is a decisive factor, customer satisfaction is influenced by the availability and speed of service. another widely practiced strategy is seasonal pricing, which means adjusting the price according to its demand level during the year’s periods. most coffee shops adjust prices during holidays, special events, or cold years when customers consume more hot drinks. wu et al. (2021) reported that seasonal pricing produces a sense of urgency and exclusivity, which encourages consumers to buy products instead of putting off shopping. the sense of fomo in contemporary culture is strong enough in the coffee industry. customers, attracted by the opportunity to taste a unique seasonal flavor, tend to choose various items. for example, during the winter holidays, the coffee shop raises the price of seasonal drinks, which is supported by an augmented demand for hot beverages. as a result, customers feel the purchased product benefits from higher beta and purchase not only seasonal drinks but also a wider range of products thus, increasing overall sales. the relationship between pricing and consumer satisfaction depends not only on its level but also on its correspondence with demographic factors. for example, kumar and gupta (2021) focused on tailored pricing, which was linked to consumer demographics and shown to increase customer satisfaction. tailored pricing is alternated between discounts and bonuses offered in reopening programs. loyalty programs make consumers feel special when they are encouraged to receive a discount or bonus after a certain number of visits. consequently, as guleria reported, consumers who were rewarded with special discounts in an email report a higher level of loyalty after visiting again. as a result, the study conducted by cruz and domingo (2021) resulted in a conclusion that micro coffee businesses in bukidnon that practice flexible pricing in terms of occasional discounts and holiday rates report an increase in customer engagement and retention due to flexible rates. therefore, adjusting pricing models to consumers’ perceptions boosts the perceived satisfaction and sales. thus, it is highly relevant to this study on examining the impact of seasonal rates and discounts on consumer satisfaction in cabanglasan. materials and methods a quantitative descriptive-correlational research design was employed in the present study to investigate the relationship between pricing models and consumers’ perceived satisfaction within the coffee shops of cabanglasan, bukidnon. such design was justified in order to determine how pricing models are implemented by the coffee shop owners to identify and understand and then explore their correlations with the consumers’ perceived levels of satisfaction. as established by creswell, descriptive-correlational design is utilized to describe a condition or problem and determine the pa ge 20 9 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 205-212, 2025 relationship between two or more changeable variables. in the current research, those variables would be found in the pricing models and consumers’ satisfaction level. a tool of measurement in correlational research is used to describe relationships and makes and make a prediction. the total number of respondents in the present study was 292 consumers who visit coffee shops in cabanglasan. the sampling method used in the current study is the total enumeration technique based on the manageable number of informants. this research was conducted in the several coffee shops in cabanglasan in bukidnon that is a gathering place for locals and workers. table 1: assessment of the respondent’s pricing strategies in terms of seasonal pricing pricing strategies mean sd description 1. i often purchase more products when a seasonal price is offered. 3.40 0.76 very satisfied with seasonal pricing 2. i trust the quality of products offered during seasonal sales. 3.40 0.66 very satisfied with seasonal pricing 3. seasonal pricing makes me feel more satisfied with my purchases. 3.42 0.69 very satisfied with seasonal pricing 4. seasonal pricing encourages me to buy more. 3.47 0.65 very satisfied with seasonal pricing 5. seasonal pricing provides better value for my money. 3.47 0.63 very satisfied with seasonal pricing mean 3.43 0.68 very satisfied with seasonal pricing table 2: assessment of the respondents’ pricing strategies in terms of price discounts price discounts mean sd description 1. i often visit the coffee shop when the discounts are available. 3.42 0.71 very satisfied with price discounts 2. the prices in the coffee shop influence me to buy more. 3.49 0.59 very satisfied with price discounts 3. i feel valued when they offer discounts. 3.42 0.69 very satisfied with price discounts 4. discounts make me choose one coffee shop over another. 3.55 0.58 very satisfied with price discounts 5. i recommend coffee shops that offer discounts. 3.50 0.59 very satisfied with price discounts mean 3.48 0.63 very satisfied with seasonal pricing results and discussion table 1 above indicates that respondents considered seasonal pricing positively, as shown by the total mean of 3.43 and standard deviation of 0.68, which is close to the mean, indicating that most of the respondents held similar opinions. this further shows a positive correlation between seasonal pricing and customer satisfaction, meaning the assessment was delighted. the respondents’ best indicators were “seasonal pricing encourages me to buy more” and “seasonal pricing gives me value for my money,” with means of 3.47. this indicates that customers respond highly to adjustments to prices on a seasonal basis and have massive traffic in terms of discounts during holidays and rainy seasons, which attracts them, as explained by almeida et al. (2022). this market activity can bring about more purchases. additionally, cofeeshops can use seasonal impressions to connect to their customers more on different occasions in their target market. this connects well with the teachings of almeida et al. (2022) who state that pricing according to the season and the reaction of customers to promotions create a business opportunity for cofeeshops. the “seasonal pricing makes me feel more satisfied with my purchases” indicator of m=3.42 and sd=0.69 further exemplifies the analysis of the above indicator, with seasonal discounts high value to shopping. this creates a drift of coming along with movement toward buying suggests that seasonal discounts provide more satisfaction.cafes in cabanglasan should use movie events in welcoming customers so that they may come back for shopping again. concerning the indicator, “i believe that products sold in seasons are of quality” brings out a mean of 3.40 indicates that customers feel the offering quality products at a lower price. the residents may then benefit on the prices. as can be seen from table 2, all respondents were very satisfied with the price discount, having an overall 3.48 mean and a 0.63 standard deviation, which is close to the mean, meaning that most people share the same view on price discount. the highest mean is that the discount makes me choose one coffee shop than the other, having pa ge 21 0 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 205-212, 2025 a 3.55 average. this indicates that the price discount greatly impacts customer preference and behaviour. providing competitive price discounts allows a particular coffee shop to become more attractive and places one higher on customers’ priority list. this coincides with the study by sinha & bansal, who found discounts to be effective, push products bought impulsively, and urge more customers to shop at the store by pushing shopping volume. that is, the discount makes it attractive for the customer to choose one’s coffee shop than the other. the third-highest is that i will recommend a coffee shop that offers a discount, having a 3.50 mean and 0.59 standard deviation. it is evident that if i feel satisfied with the transaction with one particular coffee shop, i will recommend it to my friends who have been into coffee shops. thus for the manager of a coffee shop, knowing the behaviour of the consumers toward price discount is essential. although the price discount is effective in attracting new consumers, it is effective in retaining too. table 3: assessment of the respondents on customer satisfaction customer satisfaction mean sd description 1. i am satisfied with the pricing of the coffee shop. 3.26 0.74 very satisfied with customer satisfaction 2. i often feel pleased with my purchases at the coffee shop due to the favorable pricing 3.44 1.25 very satisfied with customer satisfaction 3. discounts contribute positively to my experience. 3.22 0.71 satisfied with customer satisfaction 4. the pricing strategies of the coffee shop meet my expectations. 3.30 0.73 very satisfied with customer satisfaction 5. i enjoy buying at the coffee shop when discounts are available. 3.33 0.68 very satisfied with customer satisfaction 6. i find that price affects my selection of products at the coffee shop 3.46 0.63 very satisfied with customer satisfaction 7. i have a wide variety of options due to competitive pricing. 3.32 0.70 very satisfied with customer satisfaction 8. i consider the overall value, including price and quality, when selecting products. 3.42 0.60 very satisfied with customer satisfaction mean 3.48 0.63 very satisfied with customer satisfaction shown in table 3, customer satisfaction obtained an average of 3.48 and a standard deviation of 0.63. this implies that, with few disparities in the consumers’ point of view, many feelings are comparable in terms of how pricing contributes to their level of satisfaction. as such, there was an extremely high proportion of satisfaction among the respondents. the most rated item was “price affects my choice of the products in coffee shops” with an average of 3.46 and a standard deviation of 0.63. this item indicates that purchasing decisions are influenced by how the pricing is done. in this case, it means that consumers are likely to purchase the products when they feel that the value of the prices is rational and on the lower ranges. this correlates with the prioritization of the customer satisfaction theory that stipulated customers’ satisfaction distortion. the second item was “i am often happy with the products i buy in coffee shops because of the pricing” with a mean of 3.44 and a standard deviation of 0.63. these two indicated that the pricing makes consumers happy to purchase them, especially when they are satisfied with their value. this is an implication of an incorporated satisfaction strategy in which the method makes consumers happy. the third item mean was “the overall product value is something i use to decide whether to buy a product including the price” at 3.42 with no standard deviation provided. notably, “discounts on products enhance my taste” had the second-lowest average of 3.22. the best-situated tem mean was “i often feel pleased buying at coffee shops due to favourable pricing” had a large standard deviation of 1.25. most notably, the lowest item mean was “i enjoy buying at coffee shops where discounts are available” since it averaged 3.33 on a 5-point moderate and outstanding scale. the fourth item place mean was “a broad selection of options from which i can compare prices” at 3.32. from the results, i can conclude that effective pricing strategies, such as valueadded pricing play a critical role in customer satisfaction in coffee shops. therefore, coffee shop managers in cabanglasan need to focus on implementing value-driven pricing strategy. this can be achieved through discounts and other value-added strategies to create customer satisfaction and repeat purchases. table 4: correlation coefficient of the pricing strategies and customer satisfaction correlation coefficient p-value degree remarks 0.738 0.064 high significant pa ge 21 1 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 205-212, 2025 table 4 illustrates the correlation analysis of the relationship between pricing strategies and customer satisfaction. correlation analysis of the relationship between pricing strategies and customer satisfaction is presented in table 4. as soon the table indicates, the correlations between the pricing strategies and customer satisfaction are strong and positive. in fact, correlation coefficient of 0.738 in correlation analysis means that pricing strategies and customer satisfaction have high degree of association. this way, when customer satisfaction is high, pricing strategies also do the same. in addition, the p-value of this correlation, there is a significant difference between p=0.064 > 0.05. in such a way, the extremely low p-value leads to rejection of the null hypothesis, therefore, there is enough evidence to say that there is a correlation and it is significant meaning there in no random chance. according to smith and lee : “a low p-value provides strong evidence against h0 that two variables are truly not connected”. thus, it may be said that pricing strategies do play a role when it comes to impact on customer satisfaction and businesses should carefully plan and research their pricing. however, it does not necessarily mean a direct cause and effect relationship as johnson explains that there are many variables that may also factor in as a cause of satisfaction. another factor would be a certain macroeconomic environment that plays a role in how people spend and use their money. therefore, a pricing strategy should always leave room for flexibility and customers’ needs and expectations. conclusion this study aimed to investigate the effects of pricing strategies to customer satisfaction. the results showed that both seasonal pricing and price discounts significantly affect customer satisfaction. the respondents claimed a “very satisfied” level in all indicators used. among the two, price discounts had the larger impacts on customer satisfaction. it indicates that customers are positively responded to direct financial incentives over seasonal incentives. moreover, correlation analysis also found a strong positive relationship between the two, r = 0.738. therefore, the current study showed that the use of pricing mechanism not only align with theory of customer satisfaction by oliver but also in line with monroe’s behavioral pricing theory, where people will feel satisfied when the price is seen as fair and as a reward. in short, the result of the current study proved to contribute well to previous studies. the findings have implications to the local cabanglasan local coffee shop owners. the owners can promote their shop by creating and maintaining long-term pricing discount program, while in the shorter term they can do the similar variation programs lifespan over the community already. future researches might consider additional variables, such as service quality, shop ambience, or product differentiation, to incorporate a more comprehensive explanation of determinants of customer satisfaction in local coffee shops. references almeida, r., costa, j., & ramos, p. 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(2021). seasonal pricing and perceived customer value in the food and beverage industry. journal of pricing strategies, 25(4), 124–138. https://doi.org/10.1016/j.jretconser.2021.102717 pa ge 1 pa ge 12 2 american journal of economics and business innovation (ajebi) the effect of fake gaming ads and gameplay as a marketing strategy to attract online game players erika f. bacay1*, kyle marie i. paculan1, erika d. c. salvatierra1, ron vincent e. suegay1, rochelle ann p. tenerife1 volume 4 issue 2, year 2025 issn: 2831-5588 (online), 2832-4862 (print) doi: https://doi.org/10.54536/ajebi.v4i2.4966 https://journals.e-palli.com/home/index.php/ajebi article information abstract received: april 05, 2025 accepted: may 10, 2025 published: may 28, 2025 fake gameplay and gaming ads are designed to catch a viewer’s attention quickly and stand out in a crowded market. the exaggerated and dramatic aspects in these ads often involve unrealistic gameplay aimed at being more eye-catching for the consumers, or high-action scenarios that don’t represent the actual experience. this causes the consumers to make an impulsive decision on installing the app that is being presented and to play the game properly. fake gaming ads also have its consequences on damaging the consumer’s trust and causing a rise in the number of bad reviews and complaints that causes the app to have a bad image with consumers. some fake gaming ads also contain oversexualized content within the ads that is inappropriate for underage gamers. this research summarizes the actions and reactions that are being made toward these fake gaming ads to give knowledge and insights about this type of marketing strategy. keywords consumer/s, fake gaming ads, gameplay/s, marketing strategy, mislead, online gamers 1 bachelor of science in business administration, feu roosevelt, marikina city, philippines * corresponding author’s e-mail: ebacay@feuroosevelt.edu.ph introduction in the mobile gaming industry, developers and advertisers often employ fake gaming ads and misleading gameplay as a marketing strategy to attract players. these ads often show features, graphics, or mechanics that do not exist in the actual game. according to moradzadeh (2024) titled “unpacking fake games through a mixed-methods investigation,” these ads are designed to entice users by presenting engaging scenarios that differ significantly from the game’s true content. this strategy aims to increase downloads and visibility in a highly competitive market. as a result, while fake gaming ads can effectively gain attention, they may also damage players’ trust, leading to negative reviews and uninstalls. the researchers conduct the study to seek alternative marketing strategies to avoid fake gaming ads. fake gameplay in gaming ads has become a common issue for gamers in recent years. fake gameplay in gaming advertisements frequently causes gamers to feel frustrated, disappointed, and skeptical. a damaged reputation, unfavorable evaluations, and a decline in trust in the gaming industry can result from these types of feedback. but, despite its misleading aspects as a marketing strategy it can lead to a higher clickthrough rate and be surprisingly effective at increasing the percentage chance for gamers (consumers) to install the game. its key points are attention grabbing, costeffective strategy, and short-term gains that make fake gameplay in online gaming ads effective and profitable. this study aims to focus on the effectiveness of fake gameplay in gaming ads to consumers and determine the online gamers’ perception and reactions it has been receiving from fake gaming ads and how they will affect game players’ impulsive decision-making. while also providing alternative marketing strategies for online gaming ads without misleading the consumers. additionally, this research will propose alternative ideas on how to attract game players without deceiving them. investigate how misleading fake gaming ads frequently happen to online game players, identify the short-term and long-term benefits of downloading fake gaming ads, and investigate the impact of actual online games through fake gaming ads. moreover, this study focuses on how gamers respond to fake gameplay ads using a marketing strategy, the effectiveness of fake gaming ads as marketing strategies, and how fake gaming ads influence the behavior and trust of online game players. furthermore, only one hundred young adults and students would participate in this survey whether it is an online game player or not as long as it is affected by fake gaming ads. lastly, this study seeks to expound on the impact of false advertisement when it comes to fake gameplay in fake online game advertisements and how it affects its consumers. these effects have a crucial role when it comes to influencing player engagement, online consumer rating, and popularity when it comes to online games. by examining the quantitative and qualitative connections among all of these aspects, the research seeks to provide a helpful understanding of how gamers respond to fake gameplay in gaming ads used as a marketing strategy, and how effective fake gameplay in gaming ads as a marketing strategy. literature review frequency of fake gaming ads on the consumers social media platforms according to the mintel store usa (2025), nearly 75% of players say they have seen in-game advertisements at least once in the last three months. 24%, however, do not recall ever seeing sponsored content or advertisements. it is also said that older gamers between the ages of 55 pa ge 12 3 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 122-130, 2025 and above see gaming ads as a distraction and irrelevant. in comparison, younger gamers are more positive, particularly between the ages of 18 and 34. as found in mintel’s us esports market report, males aged 18-34 remain a key demographic. but nowadays, women in the gaming industry are also rising. women are shaping the video gaming industry this opens opportunities for brands to appeal and create content that will also cater to women gamers. while they may not be as eager to claim the gamer label, women gamers are a major demographic that has been historically neglected by the gaming community. gamers also use fake adblocking apps and hacks to report fake ads that affect the frequency of fake gaming ads appearing on consumer social media platforms. h1: fake gaming ads are more likely to appear on male consumers mainly between the ages of 18 to 34. at the same time the demographic with women in the gaming industry is also growing. the impact of fake gaming ads and misleading gameplay on the decision-making of game players online games are one of many factors that the lifestyle and hobbies of people have changed. however, there are some online games that promote fake gaming ads that can manipulate players to download the fake online games. nowadays, people tend to play online games rather than playing active and recreational games or socializing with other people, especially kids. some online games are not safe for everyone to play because it might affect their mental health because of being frustrated with the online games. according to gavin (2024) that it might affect the online gamer trust. online gamers felt they were cheated by the misleading of the fake gaming ads. moreover, it is also stated that they are less likely to continue to play the fake gaming ads and even the actual game. as stated by lazanin (2024) the consequence for the app is that it will backfire badly, just by giving it bad reviews and a low percentage of long-term use of the fake gaming ads. as mentioned by zhao and thadani (2021), the result of the fake gaming ads made the game players boycott the game, which will affect the game company. however, not everyone will totally uninstall the game and they even try to defend the game. mark (2025) stated that as long as the cost per install is low but watching fake gaming ads is increasing then there will be still more fake ads in the future. overall, most online game players’ decision-making led them to uninstall the game as they felt cheated by the fake gaming ads is not what they expected from what in the promised ads the game will be. h2: this has led to a negative impact on online gamers to uninstall the game after knowing that the promised game on the fake gaming ads was not what they expected it to be. the fake gaming ads and deceptive gameplay used as marketing strategies influence the behavior of online game players fake gaming ads are the marketing strategies or promotional materials that users can attempt to download to their mobile phones. yem (2024) deceptive game ads or fake ads plays on the gamers’ curiosity, intelligence and complex games. success in fake game ads is driven by cognitive biases, emotional triggers and social dynamics. fake gaming ads criticizing the fake ones are released, further manipulating players into downloading the same game that causes a public frustration with fake ads. mark (2024) advertisement misleads users with exaggerated claims about the feature and rewards. users are misled and dissatisfied because the gameplay fails representation. grady (2024) users’ trust on fake gameplay in mobile ads had a significant impact on their trust. the loss of trust can harm the mobile gaming industry, causing players to be skeptical of all ads. it can result in lower engagement, fewer in-game purchases and negative word of mouth of people. it can damage the industry’s reputation by making it harder for ethical developers. yem (2024) game industry poses significant challenges that affect the trust and industry reputation. users become increasingly wary of deceptive advertising tactics that prioritize transparency, integrity and ethical advertising standards. h3: deceptive gameplay and fake gaming ads had a negative influence on the behavior of online game players that felt exaggeration, dissatisfaction caused by failed representation. the increasing level of consumers’ trust in influencer marketing compared to regular gaming ads according to adams (2024, as cited in the drum, n.d), less than 35% of consumers trust social media ads due to misinformation, growing privacy concerns, and antitrust trials within social media ads. on the other hand, the younger demographics are more receptive to brands appearing across new demographics causing the increase of effectiveness in digital advertising. that leads us to the implementation of influencer marketing which has evolved significantly over the years. in its infancy, brands often took an aggressive approach by painstakingly scripting content and prominently featuring their products. according to odmark (2024, as cited in atisfyreach, 2025), the use of influencers within marketing strategies nowadays is more credible. it is because gaming influencers have clout, their audience trusts and believes their review, and that they have their best interests at heart. therefore, the credibility of an influencer’s message is one of the most important aspects of effective gaming influences marketing. influencers must build trust with their audiences for their content to be compelling. therefore, the credibility of an influencer’s message is one of the most important aspects of effective gaming influencer marketing h4: consumers’ trust in social media ads alone is very low. however, the demand for influencer marketing is increasing due to its believability and transparency among its consumers. pa ge 12 4 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 122-130, 2025 conceptual framework this conceptual framework serves as a tool to organize ideas and variables, facilitating an understanding of their relationships within a research study. this research used a causal diagram for its conceptual framework to showcase the causeand-effect relationship between the three variables; independent, mediating, and dependent variables. according to (ai/ml services, australia, n.d.) the causal diagram is a visual tool to determine the possible cause for a specific problem which is arrows directing from cause to effect. the independent variable represents the frequency of seeing fake gaming ads and its awareness as the cause. this is where hypothesis one takes place which talks about the repetition of fake gaming ads often appearing on screen. the mediating variable symbolizes the influence of phony gaming ads on the game player’s decision to install or uninstall the game. lastly, the dependent variable is where hypotheses three and four take place which talk about the gamer’s behavior after installing the promised game but do not meet their expectations. hypothesis four is that the trust of online gamers will determine whether game players continue to play fake gaming ads. research questions this study aims to know the effects of fake gaming ads on the game players’ perception as they install the game. 1. frequency of seeing gaming ads and awareness of fake gaming ads 2. perceived influence of fake gaming ads to their decision to install the game 3. gamer’s behavior after installing and seeing a fake ad 4. trust of online gamers to the gaming ads that they see materials and methods the study will be done and will be administered in a figure 1: proposed research model private non-sectarian school located in marikina city. the participants will be taking a mixed method questionnaire which is a combination of quantitative and qualitative data to answer research questions. the researchers will target participants particularly junior high school, senior high school, and college students aged between 15 to 25 years old, who are active on social media platforms and who are online gamers. this was the location and the chosen generation by the researcher because it could provide a wealth of essential information or different ideas for gathering data based on the real-world experiences of individuals who encounter fake gaming ads with different social media platforms. sampling method in this research, the participants of the study will be 15 to 24 years old, particularly junior high, senior high, and college students from marikina city. these participants will be those who had prior experience with the misleading of fake gaming advertisements as a marketing strategy. the researchers will be using simple random sampling as their sampling technique because they sought to gain in-depth knowledge and thorough information from participants who were equally selected to prevent any bias selection process. according to noor et al. (2022). a simple random sampling was a subset of people that were chosen at random with an exactly equal chance of being chosen for each representative of the population that is favorable in homogeneous and uniformly selected areas. data gathering procedure the researchers will conduct and gather data through self-constructed surveys that combine quantitative and qualitative methods. the survey will include likert scale pa ge 12 5 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 122-130, 2025 questions to measure the participants’ perceptions of fake gaming ads, as well as open-ended questions to gather personal experiences and opinions. the survey will be conducted online using google forms and will target participants particularly to junior high school, senior high school and college students between the ages of 15-24 years old from an administrator in a private non-sectarian school in marikina city. these participants are chosen because they are active on social media and usually encounter fake gaming ads. simple random sampling will be used to ensure a fair selection process. before answering, participants will receive a consent form to inform them about the study’s purpose and to protect their privacy. the survey will be conducted with a maximum period of two weeks to allow researchers to analyze the data using different methods. the quantitative data from the likert scale questions will be analyzed using percentages, and calculation of mean and mode scores to analyze the overall average, dominant and frequent answers of the participants. additionally, the researcher utilizing qualitative data from the openended responses will be examined through thematic analysis, where researchers will group similar answers to identify key insights of the participants. the study follows ethical guidelines, ensuring that participants’ identities remain private and that they can decide to stop at any moment if they don’t want it to continue. this process will help provide insights into how fake gaming ads affect players’ trust, decision-making, and overall gaming experience. instrument the researchers will use a self-constructed questionnaire. since this study is a mixed method research that combines quantitative and qualitative research, the researchers will use the 5-point likert scale method and openended questions as a research instrument and conduct a questionnaire that allows the researcher to obtain the preferences, perceptions, game players’ behavior, and real experiences of the participants in fake gaming ads as a marketing strategy and its effectiveness. the collected responses will be collected using google forms as an online survey. lastly, the researchers will provide a clear explanation and procedure about this study for the participants to understand why this study will be conducted. the researchers will ensure that the set of questions that will be given is easy to understand and onpoint to avoid any misunderstanding and confusion for the participants. statistical treatment data this study’s data will analyze a mixed-method approach. the survey will consist of responses from likertscale quantitative items, which will determine by percentage mean and mode scores using an ungrouped formula to assess consumer feedback, actions, and reactions to replies, and how strongly the deception in fake gaming ads we’re using as marketing affects customer behavior. lastly, since this research is also qualitative the study will use open-ended questions for thematic analysis type of survey. scope and limitation the researchers targeted 100 junior high school, senior high school and college students as administrators in a private non-sectarian school located in marikina city aged between 15-24 years old which will be conducted within a maximum of two weeks. the study focuses on what extent fake gaming ads and misleading gameplay affect the decision-making process of online game players. additionally, how effective is fake gaming ads as a marketing strategy and the influence of fake gaming ads and deceptive gameplay in the online game players behavior and trust. although this study is limited by one hundred participants equally selected to prevent any bias selection process. researchers combine qualitative and quantitative methods. the researchers’ survey will be conducted online using google forms. researchers used a 5point likert scale method and open-ended questions to the students who experienced fake gaming ads. through the combined findings, the researchers would be able to analyze the effects of fake gaming ads on their frequency of seeing, awareness, decision-making, behavior, and trust as a marketing strategy. results and discussion results this research examines the effectiveness of fake gaming ads as a marketing strategy for attracting game players. this is a mixed-method approach, a combination of quantitative and qualitative research. the researchers gathered data from those people who are game players and suitable to answer some questions and willing to be part of this research. the participants were junior, senior high school, and college students in marikina city. it was calculated by employing a simple random sampling technique that has been prepared by the researchers using the self-constructed survey and provided google forms used in data gathering. the graphs and tables below illustrate the results of the percentage of the demographic profile of the participants. lastly, the quantitative and qualitative approach questions. gender 60% of the participants are females, 38% are males, and 2% of the participants are others. figure 2: gender pa ge 12 6 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 122-130, 2025 age the majority of the participants 80% are 19 – 21 years figure 3: age old, followed by 13% which is 22 – 25 years old, and lastly, 7% of the participants are between 15 – 18 years old. year level 66% of the participants year level are 2nd-year college, followed by 11% of participants from 3rd-year college, next is 9% of the participants is 4th-year college, and 8% of the participants came from 1st-year college students. the percentage of participants for senior high school students is 5% and 1% for junior high school students. figure 4: year level likert scale regarding the frequency of seeing gaming ads and awareness of fake gaming ads by the participants, the researchers found that the participants strongly agreed with an overall mean of 4.49 and an overall standard deviation of 0.70 the researchers found that the influence of fake gaming ads on the decision of the participants to install the game was overall agreed with the mean of 3.94 and a standard deviation of 1.18 table 1: frequency of seeing gaming ads and awareness of fake gaming ads frequency of seeing gaming ads and awareness of fake gaming ads mean sd interpretation i do see fake gaming advertisements online frequently 4.58 0.59 strongly agree i regularly encounter gaming advertisements while watching videos or streaming content. 4.61 0.62 strongly agree i regularly encounter fake gaming ads while using mobile apps while playing online games. 4.26 0.79 strongly agree i frequently see gaming ads that misrepresent the actual game’s features and gameplay 4.49 0.75 strongly agree overall mean 4.49 0.70 strongly agree table 2: perceived influence of fake gaming ads to their decision to install the game perceived influence of fake gaming ads to their decision to install the game mean sd interpretation do you think that fake gaming ads have a big impact on consumers’ decision to uninstall the game? 4.36 0.90 strongly agree do you think that fake gaming ads have a big impact on the consumer's decision to install the game? 4.11 1.09 agree do fake gaming ads influence your perception of the game? 3.83 1.22 agree pa ge 12 7 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 122-130, 2025 the researchers found that the gamer’s behavior after installing and seeing a fake ad overall agreed with the mean of 3.77 and overall standard deviation of 1.16 the researchers found out that the participants agreed that the trust of online gamers in the gaming ads they see was a 3.78 overall mean and 1.39 standard deviation. open-ended a total number of one hundred participants completed the study. their responses showed that on a regular basis, the majority of online game players come across fake gaming advertisements on various social media platforms. the data analysis also revealed that the majority of participants claimed that although fake gaming advertisements may seem thrilling, they do quickly capture gamers’ attention, but only to let them down when the actual game differs from the advertisement. this creates a huge trust issue for consumers to install an app. this leads the consumers to post reviews on different social media platforms like; facebook, tiktok, twitter, instagram, the app store, google play, and other review sites, and the majority of participants express their disappointments that can cause an impact on the game’s ratings, player retention, and reputation. in conclusion, the majority of the survey respondents do not trust online gaming ads as much as to actually install an app because they felt duped or cheated, which leads to bad ratings and financial losses for the company. discussion the purpose of this research is to determine the effectiveness of fake gaming ads as a marketing strategy. this study aims to understand why some game developers prefer short-term gain rather than long-term gain. during the discussion, the researchers addressed the statistically enumerated and narrative results of online game players or consumers who felt deceived or betrayed after installing apps from fake gaming ads. one of the results shown in table 1 with a mean of 4.58 and a standard deviation of 0.59 that the participants strongly agree that they frequently see fake gaming advertisements. the participants also strongly agree that they regularly encounter fake gaming ads while watching videos or streams with a mean of 4.61 and a standard deviation of 0.62. the findings also show that participants strongly agree that they regularly encounter fake game ads while using mobile apps when playing games with a mean of 4.26 and a standard deviation of 0.79. the mean of 4.49 and standard deviation of 0.75 say that participants strongly agree that they frequently see gaming ads that misrepresent the actual game’s features and gameplay. the overall mean frequency of seeing gaming ads and awareness of fake gaming ads is 4.49 with a standard deviation of 0.70. the participants strongly agree with table 1. with the findings on statement of the problem 1 determining the respondent’s awareness and frequency of seeing fake gaming ads on different social media platforms, the researchers have concluded that most of the participants encounter fake gaming ads daily on different social media platforms. the participants are also capable of differentiating genuine from fake gaming ads. the do you think that fake gaming ads are more inviting? 3.47 1.29 agree overall mean 3.94 1.18 agree table 3: gamers behavior after installing and seeing a fake ad gamers behavior after installing and seeing a fake ad mean sd interpretation do you think that fake gaming ads can cause stress and frustration for consumers? 4.17 0.87 agree to what extent do fake gaming ads create a sense of curiosity that motivates the consumers to try a game, even if the ads are misleading? 3.81 0.88 agree do you think that you are more likely to interact with ads that display false advertisements? 3.08 1.32 agree do you often check reviews or ratings of the app before deciding whether to install or uninstall an app? 4.02 1.21 agree overall mean 3.77 1.16 agree table 4: trust of online gamers to the gaming ads that they see trust of online gamers to the gaming ads that they see mean sd interpretation do you think that fake gaming ads cause trust issues for customers? 4.55 0.63 strongly agree do you feel disappointed after downloading a game based on fake ads? 4.61 0.65 strongly agree do you think that you will continue playing a game that failed to meet the expectations set by a fake gaming ad? 2.67 1.60 neutral do you think that fake gaming ads succeed in making you interested in trying a game, even if you suspect the ad may be misleading? 3.29 1.29 neutral overall mean 3.78 1.39 agree pa ge 12 8 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 122-130, 2025 participants can differentiate fake from genuine gaming ads with the ads’ high-quality graphics or animations that are not present in the game and are just created flawlessly to fool people with their misleading content. in between the experience of playing a real game is when the majority of responders encounter fake gaming advertisements. some of the participants looked at customer reviews after seeing various gaming advertisements to assess how accurate the reviews were compared to the actual game and to help in their decision to install the app or not. all things considered; fake gaming advertisements are a relatively common marketing tactic that many people see every day. consumers are aware of the existence of “fake gaming ads” and that not all video game advertisements are necessarily authentic. according to the result for table 2 with a mean of 4.36 and a standard deviation of 0.90. participants strongly agree that they think fake gaming ads have a big impact on consumer’s decision to uninstall the game. however, participants agree that they think fake gaming ads have a big impact on the consumer’s decision to install the game with a mean of 4.11 and a standard deviation of 1.09. the result with a mean of 3.83 and a standard deviation of 1.22 agrees that fake gaming ads influence their perception of the game. lastly, the participants agree with the mean of 3.47 and a standard deviation of 1.29 that they think fake gaming ads are more inviting. the overall mean for table 2 is 3.94 with a standard deviation of 1.18, agreeing that there is a perceived influence of fake gaming ads on their decision to install the game. the findings on statement of the problem 2 show that most of the participants said fake gaming ads quickly get players’ attention because they look exciting but end up being disappointed when the real game is different from the ad. many participants said they feel frustrated, bored, and betrayed, and uninstall the app quickly. most of the participants said that fake ads bring fast downloads but usually cause bad reviews, lower trust, and players to quit the game. participants also said that they warn other players through feedback in social media, app stores, and gaming groups. for them ads that show the real game build trust and keep players longer, even if they do not get a lot of downloads right away. participants said fake ads are like scams or tricks, good for short-term attention but harmful for long-term success. the main feelings of the participants about fake ads are betrayal, frustration, boredom, and disappointment. considering the end result for table 3, with a mean of 4.17 and a standard deviation of 0.87 the participants do agree that fake gaming ads can cause stress and frustration for customers. the participants also agree that fake gaming ads create a sense of curiosity that motivates consumers to try a game, even if the ads are misleading with a mean of 3.81 and a standard deviation of 0.88. participants also agree that they are more likely to interact with ads that display false advertisements with a mean of 3.08 and a standard deviation of 1.32. lastly, with a mean of 4.02 and a standard deviation of 1.21 say that participants often check reviews and ratings of the app before deciding whether to install or uninstall an app. the overall mean of gamers’ behavior after installing an ad after seeing a fake ad is 3.77 with a standard deviation of 1.16. concluding that the participants do agree with table 3. the findings on statement of the problem 3 were the participant’s behavior after seeing ads and how gamers react or respond to fake gaming ads within’ the gaming industry. most participants share their negative experiences by leaving feedback on facebook, tiktok, twitter, instagram, app store, google play, and other review platforms that can affect the ratings, backlash, trust in the game’s reputation, and player retention. some participants share experiences with friends or in gaming forums where they can warn others about misleading gameplay, and also few participants mention that they are using report buttons on app stores or they directly voicing complaints to developers. most of the participants share their emotional experiences with fake gaming ads, such as frustration, disappointment, and boredom with the players. most of the participants felt betrayed by the difference between what the ad introduced and what the game delivered, leading to a lack of trust in the developer or players. participants clearly understand that fake ads can backfire, as players are quick to call out dishonesty. the online gaming community is vocal and influential, capable of amplifying negative experiences to a point where they directly affect a game’s visibility, reputation, and profitability. given the outcome from table 4 participants strongly agreed that fake gaming ads cause trust issues for customers having a mean of 4.55 and a standard deviation of 0.63. participants also strongly agreed with having a feeling of disappointment after downloading a game based on fake ads having a mean of 4.61 and a standard deviation of 0.65. on the other hand, participants became neutral to continue playing a game that failed to meet the expectations set by a fake gaming ad with a mean of 2.67 and a standard deviation of 1.60. participants are also neutral on being interested in trying a game, even if they suspect the ad may be misleading with a mean of 3.29 and a standard deviation of 1.29. the overall mean level of trust of online gamers in the gaming ads they see is 3.78, with a standard deviation of 1.39. to conclude participants do agree with table 4. the researchers also made an opinionated question for the participants based on the fake gaming ads impacting consumer trust on long-term brand loyalty in the gaming industry. the answers were summarized based on what the participants answered most often. most of the participant’s answers were that they lost trust in the game to download it because they felt cheated or deceived, which would result in negative reviews that could cause the company to lose money. however, they think fake gaming ads damage consumer trust and hurt long-term brand loyalty in the gaming industry. while they may pa ge 12 9 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 122-130, 2025 attract short-term downloads, players feel deceived and are less likely to engage with future games from the same developer, leading to a loss of credibility and a declining player base over time. because fake game ads only prove that the game maker or developer focuses more on sales rather than customer engagement. the participants also said that honest marketing is better because it makes them more likely to support a game in the long term. conclusion based on the demographic profile of the respondents, the researchers found out that the number of females was more frequent than the number of male participants. it also concluded that the participants’ ages between 19-21 years old and a 2nd year college was revealed to be the most evident in terms of experienced fake gaming ads in marikina city. based on the data that we gathered, it is evident that fake gaming ads are frequent and recognizable among young gamers (statement of the problem 1), aligning hypothesis 1 such that ads predominantly appear on the screens of users aged 1834 years old. participants demonstrate a high level of awareness, often distinguishing between authentic and deceptive content. this indicates that consumers are becoming more conscious of marketing strategies within the gaming industry and the widespread use of fake gaming advertisements. it may reveal that gamers are increasingly media-literate and not easily manipulated by flashy but inaccurate representations. the findings related to statement of the problem two that support hypothesis 2, indicate that fake ads initially succeed in capturing attention and persuading users to install games, they ultimately lead to disappointment and high uninstall rates when gameplay fails to meet expectations. it indicates that fake ads are a risky strategy; they provide short-term gains that lead to dissatisfaction and uninstall rates. the gaming industry needs to balance attention-grabbing tactics with authentic representation of the game. statement of the problem 3 explored the behavioral impacts that the results reinforced hypothesis 3, showing that misleading advertisements cause emotional reactions such as frustration and distrust, which results in gamers sharing negative feedback publicly that can affect the game’s reputation. misleading ads affect the emotion of the individual players and affect the game’s reputation. marketers should be cautious with their ad representations to avoid negative publicity. statement of the problem 4 addressed consumer trust; it supports hypothesis 4, which posits that trust in traditional game ads is low, whereas influencer marketing is emerging as a more credible and engaging alternative. participants expressed a greater likelihood of trusting games endorsed by familiar or reputable influencers, suggesting a shift toward authenticity-driven marketing strategies. it indicates that consumers are more likely to engage with and trust ads that feature influencers recognize. gaming industry may consider leveraging influencer partnership to build more authentic and engaging marketing campaigns. the effectiveness of fake gaming ads lies mainly in their ability to generate quick interest, however, the long-term consequences include consumer disappointment, loss of trust, and reputational damage for developers. ethical, transparent, and authentic marketing strategies, including influencer partnerships, are recommended for sustainable success in the gaming industry. recommendations as the researchers concluded that most gamers often see fake gaming advertisements online and these ads affect their decision to install or uninstall the game, and that fake ads can lead to frustration, disappointment, and trust issues, the researchers recommend the following: 1. the gaming advertisement industry should implement or follow ethical standards for the safety and awareness of consumers and gamers regarding false advertisements. this way, the game developers will adhere to honesty, transparency, and integrity. that aims to promote fair competition between the other game developers who follow ethical standards and are fair to the consumers and gamers, who can gain long-term trust. the gaming industry can implement this process of transparency by avoiding any exaggerated words, and by using accurate visuals that display the actual features of the game. what you see in gaming advertisements should also be accurately real once the gamers or consumers download the game. 2. the gaming advertisement should utilize influencer marketing, they should collaborate with trusted influencers or gaming content creators to significantly enhance marketing effectiveness.their genuine content helps counter the suspicion caused by misleading adverts, increasing engagement and download rates. 3. gaming advertising should introduce a verification badge for honest advertising. there should be a collaboration of game developers and application platforms to establish a badge system that allows for the verification of advertisements. such advertisements will depict game features and its gameplay realistically. this will save consumers time when searching for games to play while at the same time motivate more developers to be honest in their advertisements compliance with ethical standards researchers followed ethical guidelines when doing this research. researchers can demonstrate the honesty and informational value of their research by adhering to these ethical guidelines or rules. the researchers made sure that any personal information of all the participants who helped the researchers, and the study would not be disclosed publicly. respecting the privacy of the participants involved shall be done by the researchers. plagiarism had been avoided at all costs by the researchers. any type of intellectual property shall not be published without any proper permission. the contribution has been credited and acknowledged. researchers made pa ge 13 0 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 122-130, 2025 their data public, increased trust in their research, and enabled others to build upon their papers and reproduce, reuse, and validate their findings. researchers were aware and analytical of their work as well as the work of our colleagues. the researchers maintained accurate data in all studies, especially data collection, research design, and correspondence with publications and authorities. researchers maintained the highest standards of giving accurate and corrected information in what they present and interacting with the public. acknowledgments the researchers would like to express their sincere gratitude to our almighty god for giving them the abilities, resources, courage, and wisdom they required to finish this research. we the researchers would like to thank him for giving us the strength and positive energy to finish this research. we would also like to thank our professor ms. erika bacay for guiding us throughout the whole research process. we would like to thank her for the reminders and advice, and for persistently checking our papers from start to finish. also, we would like to thank our validator and statistician mr. reginald p. arimado for assisting us and giving us directions and suggestions to make our research better. lastly, we would like to thank all of the participants in our study for their efforts and contributions to help us finish this research. the researchers would like to express their gratitude to their closest family members and friends for their unwavering support and thoughtful consideration throughout the development of the research study. additionally, for their words of encouragement during all the late nights the researchers spent doing the study. references adams, p. 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(2021). investigating deception and the impacts on online game players’ choice in china. global media and china, 6(4), 416– 442. https://doi.org/10.1177/20594364211027284 pa ge 1 pa ge 97 american journal of economics and business innovation (ajebi) realities of digital technology adoption impacts on the financial sectors of developing economies joseph asare1*, joseph akwasi nkyi1, stephen owusu afriyie1, gertrude amoakohene1 volume 4 issue 3, year 2025 issn: 2831-5588 (online), 2832-4862 (print) doi: https://doi.org/10.54536/ajebi.v4i3.4721 https://journals.e-palli.com/home/index.php/ajebi article information abstract received: march 12, 2025 accepted: april 16, 2025 published: october 11, 2025 the advancement of digital technology in the financial sector has changed operations, with developing economies witnessing a huge impact of the rapid advancement of digital technology in the financial sector. however, not much literature on the old and new realities of digital financial technology on the financial sector of developing economies exist. this study is conducted to provide an understanding of the old and new realities of digital technology advancements impacts on developing economies financial sectors. the study employs both qualitative and quantitative research methods. five (n-5) commercial financial institutions in ghana made up of 400 samples were selected, and bootstrapping was carried out, weighing every 400 cases (the critical value taken was t = 1.95 and a p-value <0.05) to guarantee the statistical weight of the sartpls. the reliability of the indicators was assessed by the statistical significance of the standardized factorial loadings. the outer loadings were in the range of 0.40 to 0.60 should be excluded, and the evaluation should be higher than 0.70, indicating a compounded reliability increase. the compound reliability is the alternative to cronbach’s alpha, and as a common rule, the score obtained should be expected to be higher than 0.70. the study results showed that government’s continuous dominance in the financial sector of developing economies remain strong. also, leveraging digital technology would capacitate developing economies to take advantage of opportunities in the global financial market to achieve a guarantee sustainable financial sector growth and development. keywords developing economies, digital finance, digital technology, financial sector, government policy 1 department of acccounting, banking and finance, ghana communication technology university, ghana * corresponding author’s e-mail: jasare@gctu.edu.gh introduction the advancement of digital technology in the finance sector and enhanced the financial knowledge of customers and users of financial information and products (oecd, 2020). among the digital technology innovations that have dominated the financial sector of developing economies is digital payment, which helps to promote financial inclusion and financial wellbeing. digital technology also affects all aspects of economic activity and demands economic rethinking to promote the use of contactless and digital payments (optimus, 2022). also, digital savings are gaining momentum in the financial sector of developing economies. governments of developing economies are constantly seeking to promote access to the internet and technology (mobile phones, etc.) to assist in the provision of digital financial services to promote financial inclusion and the delivery of low-priced financial services to help bring the poor into the formal economy (ozili, 2018). also, scholars most including sun et al. (2023), and mcknight et al. (2020) have indicated that the current advancement of digital technology in the financial sector is promoting, financial wellbeing, digital financial literacy, digital credit, and digital financial resilience. digital technology dominates the financial sector of developed economies (xu et al., 2024). however, developing economies have equally witnessed a rapid advancement of digital technology in the financial sector, therefor this study believes that gaining an understanding of digital technology advancements in developing economies financial sectors is very crucial (yassine et al. 2024; arizala et al. (2021). accordingly, david (2018) indicated that a common feature of developing economies including ghana is high potential for growth, high market volatility, low-middle income per capita, investment potential, low capacity to maintain sustained strong growth and production of higher-value-added goods. ghana is touted as one of the world’s leading developing economies, with a population of over 24 million, and is considered the centre of africa’s struggle for independence in the 1950s (nambware, 2023). ghana’s financial sector development stems from the 1950s. before 1985, the financial system in ghana changed and grew invariably because of the creation of specialized financial institutions by the government as an intervention to serve the officially perceived demands of distinct economic groups. in 1953, the ghana commercial bank was established to complement what was regarded as the inadequate lending policies of the two earlier established foreign financial institutions, whose focus was to provide financial services to well-established foreign firms in the granting of loans. unfortunately, indigenous farmers and small entrepreneurs were not the priority of those foreign financial institutions, hence the government decision to set up a national bank considered to be economically desirable (aryeetey, 1996). also, various development financial institutions, including the national investment bank, the bank for housing and construction, and the pa ge 98 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 97-106, 2025 agricultural development bank, were set up to meet the specific financing needs of some sectors between the 1960s and 1970s. however, in the 1970s, cooperative bank, credit bank, social unit rural bank, and national savings security bank were also created by the government as small borrowers grew. by 1990, a formal financial system had been created in ghana, comprising the central bank (bank of ghana), three development financial institutions, and four commercial financial institutions. in addition, cooperative movements, post office savings bank, and about 124 rural financial institutions were recorded in ghana (aryeetey et al., 1993; bank of ghana, 1994). the financial services sector in ghana is comprised mainly of the insurance, banking, and capital markets. the sector is regulated by four major regulatory bodies: the bank of ghana (bog), the national insurance commission (nic), the national pensions regulatory authority (npra), and the securities and exchange commission (sec). the financial sector of ghana is dominated by financial institutions, and the sector is well-structured and has promoted development, steady reforms, and growth. however, there are inherent risks in the operations of financial institutions, in the structure of their balance sheets, and in their profit and loss accounts. for instance, commercial financial institutions in ghana are highly exposed to credit risk because lending accounts for the bulk of their assets, and it has grown in an environment of weak credit risk management and enforcement of creditor rights. also, governments dominate economic activity, causing weakness in fiscal management and an increase in vulnerabilities in the banking sector. additionally, small and medium enterprises (smes) rely heavily on business from the government, leading to the accumulation of payment arrears to contractors and other service providers by the government, which affects the capacity of borrowers to service their bank loans. also, the share of the market of the five largest financial institutions declined from 61 percent at the end of 2005 to 46 percent at the end of 2010 (imf, 2011; nambware, 2023). typically, financial institutions dominate the financial systems in developing economies, and bank deposits constitute the most important form of household savings, whereas bank credits such as shortand long-term loans are the most important external source of financing for businesses (weisbrod, 1995). in addition, the financial systems of developing economies tend to exhibit greater fragility than those of developed economies. not only does this fragility affect the overall performance of the economy, but it also causes microeconomic inefficiencies in savings and investment and subsequently limits economic growth. in addition, the fragility of the financial sector also affects the effectiveness and efficiency of the functioning of the payments system, which leads to high transaction costs and reduced capital productivity, which has the potential to deepen a macroeconomic crisis (zahler, 1999). however, this study had expected the current digital technology evolutions in the financial sector of developing economies to overcome the many challenges that affected the sector in the 1990s. unfortunately, this is not the case, as usdt (2023) has noted that the financial sector of most developing economies, especially those in sub-saharan african countries, faces many challenges, including operating with a strong degree of government ownership or control, weak bank supervision, inadequate enforcement tools, low management standards, and inadequate financial market size. in addition, the financial sector of the emerging economy is faced with the challenge of adopting digital technology, low levels of formal financial services, low financial literacy, and poorly developed technology (ilo, 2022). further, the imf (2011) noted that there are inherent risks in the operations of financial institutions due to their exposure to high credit risk. also, governments dominate economic activity in the financial sector of most developing economies, creating weaknesses in fiscal management and increasing vulnerabilities in the banking sector. additionally, the financial sector of most developing economies tends to suffer heavily in times of unfavourable government economic reform policies. according to ahinsah-wobil (2023), the 2022 financial statements of the majority of financial institutions in ghana recorded losses, causing much concern and speculation about the future of these financial institutions in the coming years. this is believed to be the cause of the domestic debt exchange programme (ddep) of the ghana government, which has impacted negatively on their profitability position. the ddep program was introduced in 2022 to manage the country’s domestic debt. it is in line with the identified features of the financial sector of the developing economies that this study is conducted to provide a deeper understanding of the characteristics of the financial sector of the emerging market. to achieve this, the study establishes the old and new realities of the financial sector of developing economies, analyzes technology impacts on the financial sector of emerging markets, and develops a model on how capitalizing on technology can help developing economies grow their financial sector and promote financial inclusion. literature review technology evolution in the financial sector of most developing economies has brought about a complete paradigm shift in the functioning, product development, and service delivery. formally, customers needing financial services or products from financial institutions in developing economies were required to visit the bank. presently, technology is not only an enabler but also a service driver. the rapid growth of mobile phones, telecommunications, and the internet has added a new dimension to the financial sector of emerging markets. according to mohideen et al. (2018), technology has transformed the global economy, making it easier to transfer knowledge, allowing emerging markets, in some cases, to be more agile and innovative than pa ge 99 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 97-106, 2025 developed economies, and giving developing economies a competitive advantage. mohideen et al. (2018) further noted that technology has moved from being a challenge to being a critical enabler that presents opportunities to address the challenges that many industries face, creating the opportunity to and the ability to work in real-time, at scale, and at near-zero marginal cost. also, global connectivity has been digital technology advancement. in addition, most developing economies in african has over 73% of its population using mobile phones to perform over 300 million financial transactions daily (oece, 2022). however, there fear is that digital technology could heighten existing inequalities in developing economies (oecd, 2021). although digital technology advancement has changed activities in the financial sector, its core activities and objective have not changed (bernanke, 2013). through the financial sector, developing economies can informally or formally shift or spread the financial consequences of specific risks from one party to another by enabling governments, communities, households, and enterprises to obtain resources from the other party when the need arises in exchange for social or financial benefits (undrr, 2017). additionally, the financial sector promotes value exchange in developing economies through the provision of a safe and efficient payment system, which is essential to supporting the day-to-day economic activities of all developing economies. in 2020 alone, ghana recorded approximately over $4697 million in direct credit transactions, including transactions in financial assets, non-cash, and cash payments (bog, 2020). ensuring the liquidity of developing economies is very crucial, and this can only be achieved through an efficient financial market system. it is important to note that the financial sector is the major provider of liquidity to businesses, individuals, and governments and helps to convert assets into cash without undue loss of value (rboa, 2014). understanding the financial sector of developing economies is very important in this study. the financial sector of developing economies is considered the set of instruments, institutions, markets, and the legal and regulatory framework that allows for transactions to be made by extending credit (world bank, 2016). fundamentally, the financial sector plays a key role in every economy, especially developing economies, by promoting economic growth and improvement in macroeconomic conditions by providing financial services, promoting foreign direct investment, and conserving financial stability (saíd, 1994). however, according to lópez et al. (2012), developing economies tend to experience rapid growth but show signs of volatility, including those of african, certain asian, and latin american countries. in addition, the financial sector of developing economies is experiencing cutting-edge technologies such as artificial intelligence and machine learning, as well as the rapid expansion of fintech and bigtech that has accelerated the digitalization of financial services. these cuttingedge technologies have affected three areas of the financial sector: disruption of payment systems due to the emergence of digital currencies, with a particular focus on central bank digital currency; electronification of securities trading and its effect on trading costs and market quality; and the benefits and risks of the use of massive data for the provision of financial services (xavier, 2022). however, the significant role of digital technology in aiding developing economies to deal with the volatile nature of their financial sector cannot be overemphasized. ilo (2022) believes that promoting technology in the finance sector, such as the use of digital finance, creates opportunities to develop better financial products and banking services for consumers, including new ways of channeling funding to businesses, promotes financial inclusion, supports economic recovery, and enables structural improvement and the transition towards a green economy. also, ravikumar et al. (2022) noted that digital technology foster collective financial inclusion and promote all-inclusive financial access. while analysing the significance of digital technology in the financial sector, it is important to note many different contexts providing new innovative products and services using contemporary technologies characterise the rapid growth of financial technology. this has led to the widely directions and magnitudes of the services and products delivered by fintech firms (alt et al., 2018). whereas are some scholars focus on the diffusion and adoption of fintech products and services others tend to focus on what happens behind scenes. however, none of these seemingly odds can change what lies beneath the magic of financial technology innovations, if anything, it would only deepen understanding, impact, appreciation and educate us on technological developments (dranev et al., 2019). through empirical observation, digital financial technology comprises of different levels. pousttchi et al. (2018) noted that a change financial technology induces impacts that focus on internal business processes through to adopting a customer-centric perspective in a business organization. also, business network level of financial technology tends to focus more on business networked with specialized external partners and induces competition that are more intense with lower margin. coupled with the global traditional financial services sector, the financial technology competitive landscape includes lateral entrants and new start-ups, which feature distinct corporate cultures other than traditional financial services institutions (gomber et al. 2017; gimpel et al. 2018). with regards to the external organization level, government regulation on financial technology changes from varying impacts and stages including less supervision, lower equity compliance, and extreme protection from national legislation towards severer rules for held equity, less protection offered by national laws, and more supervision on world-wide level (arner et al., 2017). digital infrastructure widespread application allows cost-efficient operations, including pa ge 10 0 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 97-106, 2025 moving towards cashless societies and working on a fully decentralized basis on payments, financing, and investment activities. the relevance of regulatory and compliance issues in the financial industry necessitates a combination of regulation and technology to prescribe the application and use of technology in reporting, monitoring, and regulatory (deloitte, 2016). to highlight the traditional banking business within the current digital financial technology era, some scholars have resorted to using the term bank technology (schwab & guibaud, 2016). however, despite the technologies and innovations happening in the financial sector, it admittedly that the old and new realities of financial technology impacts on the financial sector of developing economies have not gained broad attention. in this regard this study appreciates the need to explore the topic to promote sustainable financial sector growth and development through digital financial technologies as shown in the model in figure 1. figure 1: sustainable financial sector growth and development source: adopted from asare et al. (2023). figure 1 above presents the conceptual framework of the study, which shows the interconnection between the old and new realities of the financial sector of developing economies and the impact of technological evolution on the financial sector of emerging markets. materials and methods most authors have applied quantitative and qualitative research method and survey to analyse the impact of technological on the financial sector of developing economies (zhu et al., 2023; akomea-frimpong et al., 2022; appiahene et al., 2019). a qualitative study by pwc (2023) showed that financial institutions that adapt digital technology experience significant profitability and can take advantage both favourable and unfavourable economic conditions. however, using only quantitative methods to assess digital technological impact on the financial sector can be describe as parametric as it lacks the ability to provide qualitative insights (turner, 2000). in addition, the smartpls was used indicate the linkages between the characteristics digital technologies and financial sector. a simple random sampling was used to select five (n5) commercial financial institutions (ghana commercial bank (gcb), agriculture development bank (adb), national investment bank (nib), absa bank, and fidelity bank) that dominate the financial sector of the ghanaian market. these financial institutions were chosen because their share characteristic is a representation of all the other financial institutions in ghana, and they also dominate the financial sector of ghana’s emerging market. the study observed that the factors and variables identified and used to develop the model in figure 1 are typical features of the selected financial institutions. although these factors were identified through a literature review, they turned out to be the realities of the selected financial institution after analysis of the survey responses received from those financial institutions. results and discussions the model in figure 1 is based on smart pls 3.0 modeling to allow for molds about data distributions (ringle et al., 2015). according to richter et al. (2016), for suitability in the analysis of various factors, it is adequate to estimate the constructs of hidden variables in paths created in models. also, the aims of the study are supported by a model to help in determining the new and old realities of the financial sector in developing economies by explaining the variance of the constructs. 400 samples were selected, pa ge 10 1 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 97-106, 2025 table 1: correlation results of developing economies variables variables 1 2 3 4 5 6 7 8 9 10 11 12 control 1 government policies 0.72 2 private-foreign investors 0.11 0.10 3 security and enforcement tools 0.14 0.13 0.16 predictors 4 financial products and services 0.17 0.01 0.18 0.73 5 technology 0.13 0.11 0.21 0.22 0.77 6 medium of transacting 0.041 -0.03 0.93 0.02 0.08 0.66 7 supervision and control 0.42 -0.02 0.33 0.20 0.14 0.72 0.80 8 market size and focus 0.38 0.03 0.32 0.40 0.34 0.18 0.41 0.82 results 9 digital financial products 0.37 -0.11 0.34 0.23 0.29 0.16 0.43 0.69 0.78 10 global reach/market 0.24 0.21 0.39 0.20 0.14 0.82 0.37 0.78 0.82 0.98 11 financial selfservice / inclusion 0.37 0.37 0.41 0.27 0.23 0.18 0.40 0.79 0.12 0.98 0.94 12 sustained market growth 0.35 -0.12 0.45 0.12 0.28 0.28 0.33 0.29 0.51 0.87 0.46 0.98 note: n = 400 (p < 0.05; p < 0.0). and bootstrapping was carried out, weighing every 400 cases (the critical value taken was t = 1.95 and a p-value <0.05) to guarantee the statistical weight of the sartpls. the latent endogenous variables are obtained from the indicators of the observed item scores. table 1 shows the correlation results. the study results show strong associations between variable (1 and 2) private-foreign investment and government policies this finding confirms the result found in the literature that indicates that policies of government significantly impact foreign and private investment, with favourable policies including economic stability, trusted legal frameworks generally aiding more investment, while harsh policies in most cases can deter investment (morrissey et al., 2012). also, the study noted that financial inclusion correlation with government policy (variable 1 and 11). similarly, tran et al. (2023) noted that a contrary’s financial inclusion increases financial instability and recommends that economies must have financial inclusion and monetary policy to promote financial stability. in addition, the study results indicate that global reach /market has association with government policy, that is variables 10 and 1. in the same vein literature has shown that trade openness benefits country’s business owners’ income as welfare-state policy tend to support the income group that is politically dominant (razin, 2022). also, technology is found to correlate with digital financial products variables (5 and 9). this result of the study reveals that advancement in technology drives digital financial products introduction in the financial sector of developing economies. similarly, al-smadi (2023) noted that technology promotes electronic financial products and services, including payment, investment, insurance, financing, and financial information sharing over digital channels. there is a significant investment on the introduction of financial technologies in the banking industry in developing countries to achieve financial inclusion. also, digital financial products including mobile banking, atm, and pos, are found to have significant positive impact on financial inclusion (menza et al., 2024). the study results further noted that medium of transaction (variable 3) have strong association with all the variables. the includes electronic financial transactions methods used to facilitate the transfer of value including credit/debit cards, online banking, mobile wallets, other than physical checks or cash. most common examples of medium of digital transactions are credit/debit, mobile wallets, online upi (unified payments interface) electronic funds transfer (eft), neft (national electronic funds transfer), imps (immediate payment service), aadhaar pay, and prepaid cards (fu, 2023; razorpay, 2025). in addition, the study noted that government policies correlate with all the variables. in the same vain gan et al, 2023 highlights that empirical studies have proved that the existence of digital government helps to improves natural resource efficiency. also, the beneficial impacts of a digital government is diffused through three channels: government efficiency, regional digital infrastructure, and regional innovation and green innovation levels. in addition, empirical studies posit that government policy on financial technology encompasses inclusion utilizing pa ge 10 2 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 97-106, 2025 digital technologies to limit financial access gaps and ensure all are included. openness and interoperability – government policies should support data generation, exchange across sectors, and sharing. also, support for entrepreneurship and innovation is very key in growing economic value through digitally enabled ventures driven by innovation. people-centred development – an economy technology policy should ensure that digital services are designed to be accessible to all societal segments and sectors. in addition, sustainability that ensures a balancing in economic growth with environmental and social impacts is a key element of government policy. also, privacy, trust and security that ensures standards and protect assets and exchanges are achieved through government policy on digital financial technology. more importantly, a collaborative regulation that enable coherent cross-sector supervision on digital financial technology activities is promoted through government policy (mocd, 2024). moreso, sustained market growth factor correlates with all the variables. similarly, morshadul et al., (2024) noted that financial technology (fintech) leads to enhanced economic growth by supporting higher productivity and sustainable growth through technological upgrades, diversification, entrepreneurship, innovation and creativity. additionally, fintech fast-track investments in poverty alleviation, and reduce income inequality among the poor. however, these attributes of financial technology should align with specific sustainable development goals of the government, a demonstration that government policy on should support an appropriate new technology for financial services development, the study noted. the figure 2 below shows the sustained market growth model of a developing economy financial sector based on the smartpls model. figure 2: sustained market growth model of a developing economy financial sector source: this study. the reliability of the indicators was assessed by the statistical significance of the standardized factorial loadings. the measurement of the model was carried out based on a common rule. that is, outer loadings in the range of 0.40 to 0.60 should be excluded, and the evaluation should be higher than 0.70, indicating a compounded reliability increase (terrador-alcaide et al. 2020). further, a measure of the internal reliability of the developed model was also carried out to determine whether compound reliability is the alternative to cronbach’s alpha, and as a common rule, the score obtained should be expected to be higher than 0.70. figure 2 shows that the results of the constructs of the developing economies (de), government policy (dp), digital technology (dt), financial system (fs), and ability to leverage or maximize digital technology (mdt) exceed the minimum requirements to be considered as factors that influence the financial sector of the developing economies in achieving sustained financial sector growth and development. statistical analysis and measurement of the quantitative factors the financial sector of developing economies plays a crucial role in determining overall economic growth and development; therefore, measuring the quantitative factors that impact the financial sector of developing economies is very important. under the financial sector assessment program of the imf (2021), quantitative methodologies were used to assess the financial sector of those economies. the factors used by imf 2021 in their study included the interaction among solvency, liquidity, and contagion risks in the banking sector; the health of nonbank financial institutions; the interactions with financial institutions and their impact on financial markets; macroprudential policy analysis; the impact on pa ge 10 3 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 97-106, 2025 climate change, fintech, and cyber through a survey and secondary financial data. also, antwi-asare et al. (2020) used surveys and secondary financial data to perform a quantitative analysis of the financial sector of ghana. in this regard, this qualitative analysis of the financial sector of the developing economies is based on a survey and analysis of secondary financial data. the demographic profile of the financial institutions that dominate the ghanaian financial sector is shown below. however, this study is focused on the ghana commercial bank (gcb), agriculture development bank (adb), national investment bank (nib), absa bank (absa), and fidelity bank limited (fbl). the demographic profile below also shows the proportional percentage of total assets held by these institutions in the ghanaian financial sector, based on categories q1: hold 50.7% of total assets, q2: hold 22.3% of total assets, q3: hold 17.6% of total assets, and q4: hold 9.4% of total assets. figure 3: total assets of selected financial institutions in ghana source: pwc ghana banking survey (2022) figure 4: pie of the percentage of total assets of five major financial institutions in ghana source: this study the analysis of the result above shows that five major financial institutions dominate the financial sector of ghana’s developing economies are in the category of q1, with a total holding of more than half of the entire market (summation of q2 to q4), that is 50.7%, and three of the financial institutions under this study form’s part. gcb had the highest total asset holding of 25.9%, followed by absa with a holding of 17.1% and fbl with 13.8% total asset holdings. adb had a total asset holding of 7.7% in category q2, while nib had 3% in the q4 category. from figure 2 above, this study observed that the financial sector of developing economies is dominated by many financial institutions with a smaller percentage of total asset holdings. in addition, the pie chart results below show that the percentage of total assets of gcb and adb makes them category c1 financial institutions in ghana, with a representation of 52% of total assets if the proportion of the assets of all the remaining financial institutions under this study is summed up. this study has observed that out of the five financial institutions analyzed, two financial institutions (gcb and adb) are in the q1 category and belong to the government, with a total asset holding of 52%. this is an indication of the government’s continuous dominance in the financial sector of developing economies and its ability to remain strong. heightened factors have caused the current state of the financial sector in emerging markets a further analysis was carried out on the various factors pa ge 10 4 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 97-106, 2025 identified through literature as the characteristics of the financial sector of developing economies, which of the factors has high dominance in the market. figure 5 below shows the results of the factors with high dominance in the market. the results in figure 4 below show that digital technology dominates the factors that are currently impacting the financial sector of emerging markets, with a 21.1% score, followed by government policy, which had 16.7%, then government dominance in economic activities, which had 13.5%, risk inherent in bank operations, which had a 12.10% score, and volatility in the market, which had a 10.9% score, followed by a wider range of financial products with a 5.8% score. the remaining factors had a percentage score of less than 5% significance. these are indications that digital technology, government policy, and government dominance are the most influential factors in the financial sector of emerging markets. figure 5: factors with high dominance in the financial sector of developing economies source: this study conclusion both new and old realities characterize the financial sector developing economies. these realities are affirmed in literatures such as mohideen et al. (2018), oece (2022), the world bank (2016), lópez et al. (2012), xavier (2022), and ravikumar et al. (2022). this affirmation has been approved through the developed model in figure 2 above, and it also aligns with the findings of authors such as zhu et al. (2023) and pwc (2023) survey reports, which indicate that digital technologies are the surest way for sustainable financial sector development in developing economies. the bottom line is that government dominance and control remain high in the financial sector of developing economies, including dominance in major economic activity. however, fully leveraging digital technology would capacitate the financial sector of developing economies to take advantage of all the opportunities in the global financial market to achieve a guarantee and sustainable financial sector growth and development. limitations and direction for future research while conducting this study, it is noted that the data used for analysis is limited to a specific period, which may not be a true representation of the situation of the financial sector in developing economies in the future. in addition, the study could not test how digital technology could be used to limit government dominance in the financial sector of developing economies and recommended that a future study focus on that. references ahinsah-wobil, i. 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(2023). how does the digital transformation of banks improve efficiency and environmental, social, and governance performance? systems, 11(7), 328. https://doi.org/10.3390/ systems11070328 pa ge 1 pa ge 24 american journal of economics and business innovation (ajebi) the fleeting possibility of merging the world’s largest chip manufacturer in 2017: the pain of chinese chip industry lingkai kong1*, runyang shu2, hao lu3, qiaozhi xiong3, peng wu4, rui xue3 volume 1 issue 3, year 2022 issn: 2831-5588 (online) doi: https://doi.org/10.54536/ajebi.v1i3.561 https://journals.e-palli.com/home/index.php/ajebi article information abstract received: september 07, 2022 accepted: september 16, 2022 published: september 21, 2022 this article examines a possible chinese semiconductor industry’s merger and acquisition in 2017, the year before the sino-us trade war and us high-tech sanctions against china. the feasibility of a merger between tsinghua unigroup and taiwan semiconductor manufacturing company is thoroughly examined as well as their development history and the current financial standing. the financial data collected form the two companies’ annual report was analyzed using multiple corporate valuating models. we discovered that the industrial policy and financial reports in 2017 favored the merger, but the combination ultimately collapsed, which was quite a pity for chinese chip sector. the research contributes to an in-depth comprehension of china’s semiconductor business and serves as a model for future financial analyses of comparable sectors. keywords chip sector, financial analysis, mergers and acquisitions, semiconductors 1 izmir university of economics, izmir, turkey 2 essec business school, paris, france 3 beijing foreign studies university, beijing, china 4 sun yat-sen university, guangzhou, china * corresponding author’s e-mail: lingkai.kong@std.izmirekonomi.edu.tr introduction with the us’s august 2022 ban on exporting eda software to china, the path to technologically advancing china’s high-end chip production has been obstructed once again. since 2018, the united states has levied penalties on china in the high-tech sector, particularly in the semiconductor industry. in april 2018, when the sino-us trade war began, the chinese high-tech corporation zte was added to the sanctions list. the announcement that huawei was set to be sanctioned was made afterwards. during this period, china grasped the significance of independent research and development in the chip industry, and progressively boosted its investment in this sector. however, it is impossible for a single nation to overcome all restrictions and technologies. the patent hurdles and long-term technological reserves constructed by the united states and its allies have made it exceedingly difficult for china to advance. tsinghua unigroup’s potential acquisition of tsmc emerged as a hot subject in chinese society as early as 2017, when the trade war started. at that time, china’s capital market was red-hot, and tsinghua unigroup’s aspirations rose swiftly following many large-scale mergers and acquisitions while tsmc’s r&d experienced challenges, and the company’s financial status has varied, the relative power disparity is at its narrowest. in truth, unigroup did suggest a proposal to purchase tsmc, but it was unsuccessful for a variety of complex reasons. later experts largely held the opinion that tsinghua unigroup’s acquisition strategy at the time was little more than a catchphrase intended to boost the stock price, but the chinese semiconductor sector will always rue this botched purchase since the united states blocked the advancement of china’s semiconductor technology only one year later. tsmc’s condition also got better at the same time, overtaking samsung and slowly growing to become the biggest chip manufacturer in the world. tsinghua unigroup also experienced bankruptcy as a result of bad management in the latter years, which is something that makes one groan. although history cannot be assumed, it may be examined. this essay will go back to 2017 in an effort to assess the likelihood and viability of tsinghua unigroup acquiring tsmc at that time, as well as to understand the highs and lows and mistakes made in the past by china’s chip sector. readers will better grasp the particular m&a data and financial analysis by understanding the analysis of this paper’s study of the two firms’ financial standing. literature review many east asian nations and regions, including south korea, japan, singapore, and taiwan, have implemented aggressive industrial policies and pursued export-oriented strategies since the 1970s. these economies’ ability to catch up is dependent on their quick understanding of the sophisticated western underpinnings after initially copying them (hobday, 1998; mathews & cho, 1999; edgington & hayter, 2000). one industrial park after another has been built in these nations, amassing manpower, money, technology, and management from labor-intensive sectors as they move toward capital and knowledge-intensive ones. the success of this agglomeration economy is discussed by mccann and arita (2006), who also explain the function of economic industrial parks in late-developing nations. the taiwanese government has effectively built a chip manufacturing industry chain by combining r&d, design, and production using reverse engineering models. knowledge transfer from a multinational corporation’s parent business to its subsidiary has a significant positive impact https://doi.org/10.54536/ajebi.v1i3.561 https://journals.e-palli.com/home/index.php/ajebi mailto:lingkai.kong@std.izmirekonomi.edu.tr pa ge 25 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(3) 24-35, 2022 on the local economy and technology (minbaeva et al. 2003). according to baum and ingram (1998), companies that are adept at transferring information from one unit within a company to another are more productive than those that do not. the movement of engineers between businesses may help knowledge transfer and innovation in the us semiconductor sector, according to almeida and kogut (1999). this phase of knowledge-based economic transfer has benefited the east asian model’s use of this very effective organization. although there are significant country variances, multinational firms and their local affiliates play a significant part in these strategies. in this sense, the experiences of korea and taiwan are particularly instructive (biggart, 1996; poon et al., 2006). the government of taiwan adopted a strategy to support and stimulate the chip manufacturing sector at the right moment. the representative one is tsmc. at the outset of its existence, tsmc ignored the highly competitive chip r&d and design fields and instead concentrated on production (tsai & cheng, 2006; chang, 2011). it preserves limited money to invest in the most vital sectors, while avoiding competition with its own upstream and downstream clients. the success of latecomers hinges on their ability to modify the demand for and usage of costly capital equipment in sophisticated ways in response to market volatility and fluctuating customer requirements (winston, 1974; chien et al., 2009). scholars have determined that this is tsmc’s greatest edge against samsung of south korea. because tsmc would not compete with them for business, samsung’s us partners are compelled to move certain orders to tsmc. tsmc’s rise demonstrates the role of latecomers as creative local players (hsu, 2012), replacing the original dominance of mncs in taiwan and moving the nation’s operations away from low-cost production of standardized electronics, transitioning to value-added manufacturing based on r&d (wu et al., 2006; lee & pecht, 2020). heikal et al. (2014) evaluated indonesian stocks using return on assets (roa), return on equity (roe), net profit margin (npm), debt to equity ratio (der), and current ratio (cr) as exchange and profit growth indicators. kothari and ball (1994) identified growth, profitability, turnover, and financial leverage as the four most essential performance indicators for a business. ozkan (2000) investigated the influence of debt structure on corporate operations and decision-making and his research supported us to use tsmc as a study model. martin and scott (1974) also examined the impact of debt-equity structure and leverage use on business decision-making. jaggi and gul (1999) demonstrated that cash flow and business size would influence investment decisions and preferences differently when firms confront debt. the research of newberry and novack (1999) demonstrated the effect of government taxes on company debt maturity and business behavior; hence, we infer the potential positive effect of china’s tax relief policy on unis and tsmc m&a. methodology the data in this article are obtained from tsinghua unigroup and tsmc’s public information releases, including annual reports of publicly traded firms, all data are provided in excel and compared as categorical data. by logging on to the websites of these two companies, we search for the financial information of the concepts of the two companies, and aggregate and compare the information provided by “east money information” and “guotai junan securities” (securities trading software). the information comes from several sources, thus it is trustworthy. the process of gathering information is distributed across the team members; after collecting the classified material, we summarize and sanitize all the information, removing any blatantly incorrect content. multiple financial indicators, such as return on equity (roe), profit margin on sales, debt to asset ratio are utilized for data analysis. measuring the cash flow, liabilities, and future profitability of a firm is a complicated endeavor, and it is impossible to utilize a single quantitative measure. for thorough analysis, it must be coupled with several indicators. in order to provide a thorough view of unis’s financial standing at the time of the impending purchase, we present several computations in the “valuation” section. these indicators are also helpful for subsequent scholars. taiwan semiconductor manufacturing company taiwan semiconductor manufacturing company, often known as tsmc, was formed in 1987 in hsinchu science park, taiwan, china (the republic of). in 1987, morris chang founded the world’s first and largest professional integrated circuit manufacturing provider (wafer foundry) (perry, 2011). at the time, semiconductor firms worldwide (including intel, samsung, and other heavyweights) all followed the same business model: to develop their own chips, manufacture them in their own fabs, and do chip testing and packaging on their own. as a result, morris chang saw a tremendous economic opportunity: creating the model of manufacturing. his company does not make its own goods, but rather produces things for semiconductor design firms. after its founding, his factory continued to expand and progressively increased its portion of the global market. tsmc was the first wafer foundry firm to join the semiconductor industry’s top 10 in 2002 (the others are design giants). despite being a foundry, tsmc contributes significantly to the innovation of the whole semiconductor industry (ip, 2008). in addition to advancing the technology level, it establishes standardized methods and diverse platforms to assist several ic design firms in taiwan, utilizing part of its own power to assist taiwan’s whole semiconductor industry (chao, 2012). in 2015, tsmc’s market share was 54.8%, which was much higher than globalfoudaries’ 9.6% and umc’s 9.0%. it was worth 4.79 trillion new taiwan dollars (160 billion dollars). in addition, it utilized 3% of taiwan’s total electricity and generated 3.8% of taiwan’s gdp and https://journals.e-palli.com/home/index.php/ajebi pa ge 26 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(3) 24-35, 2022 6.8% of its total export value. in 2016, tsmc’s sales was 947.938 billion new taiwan dollars, and its net profit was 334.38 billion, although the earnings of all 39 taiwanese banks combined did not exceed 300 billion new taiwan dollars (1 us dollar = 30 new taiwan dollars). on march 20, 2017, tsmc surpassed intel in market value and ultimately becomes the largest semiconductor manufacturer in the world. tsmc stated in 2016 that it had inked an investment agreement with the nanjing municipal government and will spend $3 billion to create tsmc (nanjing) co., ltd. in nanjing, china. it would have a 12/14/16-inch fabrication facility and a design center. in 2018, manufacturing began at tsmc in nanjing. tsmc’s 14/16-nanometer wafers presently account for more than fifty percent of the global 14/16-nanometer wafer market. it is anticipated that tsmc’s market share in the 14/16-nanometer sector would continue to rise as a result of the nanjing facility as that time. table 1: top semiconductor revenue and market share from 2017 to 2021 (unit: billion u.s. dollars). in 2020, those four companies: powerchip, specialty ic, h-grace, dongbu hitek has been dropped out of the top-ten list. source: rimol, m. (2021) rank company 2017 revenue 2017 share (%) ... 2020 revenue 2020 share (%) 2020 revenue 2021 share 1 tsmc 32040 55.9 ... 45562 59.7 56674 56.6 2 gfoudaries 5407 9.4 ... 4850 6.4 6585 6.6 3 umc 4898 8.5 ... 6009 7.9 7606 7.6 4 samsung 4398 7.7 ... 5150 6.8 8537 8.5 5 smic 3099 5.4 ... 3907 5.1 5443 5.4 6 tower-semi 1388 2.4 ... 1266 1.7 1508 1.5 7 powerchip 1035 1.8 ... 8 specialty ic 817 1.4 ... 9 h-grace 807 1.4 ... 10 dongbu hitek 676 1.2 ... swot analysis of tsmc next, we do a swot analysis of tsmc and unis group, respectively, in order to determine their relative strengths, weaknesses, opportunities, and threats. table 2: swot analysis of tsmc strengths weaknesses excellent production efficacy excellent revenue scenario superior manufacturing technology low r & d expenditures senior employee departure reduction in profitability opportunities threats artificial intelligence development large market demand in china us embargo on china the growth of more chinese manufacturers wafer design homogenization the global economy confronts new obstacles strengths: 1. excellent production efficacy. wafer industry success is contingent upon the manufacturing cycle (tung, 2001). the most modern 3nm mobile phone chip features an 180-layer internal structure, making it is a highly difficult procedure. the factory management system at tsmc can compute the optimal production layout in one minute. the on-time delivery percentage is 99.5%, and the duration of the manufacturing cycle is 1.2 days. 2. excellent revenue scenario. in recent years, tsmc’s operational revenue has continued to increase. and the rise is considerably greater than its two rivals. 3. superior manufacturing technology. the “most powerful and smartest” iphone bionic processor, the a11 chip, includes 4.3 billion transistors and 6 cpu cores, including 4 tiny cores and 2 small cores. even though it was separately designed by apple, only tsmc can manufacture it on a global scale. qualcomm is aggressively developing a new generation of snapdragon 855, which can only be made by tsmc using a 7-nanometer manufacturing technology. weaknesses: 1. low r & d expenditures. compared to comparable firms, tsmc has less r&d spending and a lower r&d investment-to-revenue ratio (chen et al., 2019). this may result in tsmc’s future development failing. 2. senior employee departure. high-level tsmc executives, including jiang shangyi, cai lixing, and liang mengsong, left the company to work for mainland chinese manufacturers. xu guojin went to another usbased organization. not only does the recent loss of executives have a significant impact on tsmc’s routine operations, but it also promotes the technical growth of its rivals and diminishes tsmc’s competitiveness. 3. reduction in profitability. in april of 2018, tsmc released their financial report for the first quarter of the year. compared to the previous quarter, tsmc’s revenue decreased 8.2%, net profit decreased 9.6%, and wafer shipments were unchanged. the slow fall in tsmc’s profitability may be attributed to the sluggish global growth in smartphone sales. this demonstrates that tsmc is significantly impacted by the global economic climate. opportunities: 1. artificial intelligence development. the smart medical and artificial intelligence industries are thriving, and the need for high-level processors will expand substantially. in the near future, there will be a https://journals.e-palli.com/home/index.php/ajebi pa ge 27 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(3) 24-35, 2022 high demand for chips in linked industries, and as the leading chip manufacturer, tsmc stands to generate a substantial profit. 2. large market demand in china. in 2017, the import value of ics in china was $227.02 billion us dollars, while the import value of oil was $116.45 billion us dollars; therefore, the import value of ics has almost twice that of oil, while the demand for ics in china continues to increase at a pace of 20% each year. taiwan’s tight business ties with mainland china present an excellent opportunity to capitalize on the massive market. 3. us embargo on china. the united states prohibits u.s. businesses from selling information technology equipment to zte (a chinese telecom company), causing a severe crisis in the chinese high-tech sector and causing some chinese enterprises to move their orders to tsmc. threats: 1. the growth of more chinese manufacturers. chinese enterprises like as huawei, zte, and hisilicon have achieved considerable strides in r&d and chip design as the ic and chip design sector in china grows fast. the sales volume of the chinese integrated circuit industry increased by 23.5% in 2017 to 535.52 billion yuan, while the design, manufacturing, and packaging tests increased by 24.7%, 29.1%, and 18.8%, respectively. 2.wafer design homogenization. with official backing, the outputs of foundries in china and other nations continue to rise, putting significant pressure on tsmc’s profit margin. emerging firms will exert considerably more effort in the research and development of new kinds of chips, thus tsmc confronts intense competition in both old and new industries. 3. the global economy confronts new obstacles. as the pandemic persists and the global supply chain continues to be stressed, global commerce and industry face growing uncertainty: the world’s major economies are facing economic risk, china’s deleveraging task is arduous, the us stock market is in a false prosperity, the cloud of trade war does not dissipate, and europe and japan have sluggish growth. unis group before 1980, china’s ic industry was all but nonexistent (chen, 2020). china contributed less than 1% of all ic production in the globe in 1996. but the strength of the country’s burgeoning electronics industry being a major exporter promises a ready market for any acceptable ic that chinese wafer fabrication factories can provide (hauge, 2019). global corporations including motorola, nec, mitsubishi, stmicroelectronics, philips, siemens, and toshiba are assisting this emerging semiconductor sector. these businesses are constructing wafer fabs, spending money, transferring technology, and establishing joint ventures with chinese partners. china’s ic output is unable to satisfy local demand despite fast increases in production capacity and technical advancement. in the 2000s, two-thirds to four-fifths of china’s required ics came from imports. in order to lessen its reliance on foreign integrated circuit goods, the chinese government is actively increasing domestic manufacture of integrated circuits. chinese chips still depend significantly on imports as of 2021, however. china imported 635.48 billion chips in total in 2021, a 16.9% rise from the previous year. the historical backdrops of japan, south korea, and china’s transfer of semiconductor industrial chains are analogous, allowing for the promotion of the industry with strong government support. benefiting from the two fundamental trends of localization and the third transfer of the semiconductor industry, china’s chip localization sector has huge potential in the localization of low-end semiconductor goods, while high-end products must be further developed and improved. tsinghua unisplendour, also known as unis, was founded in 1999. it is currently an a-shares listed technology company specializing in electronics and information technology. it is also the first university-owned company of tsinghua university, and it works to promote the industrialization of scientific and technological achievements (cai et al., 2015). initially, it was a high-tech business that focused mostly on software development. compared to tmsc, unis entered the semiconductor market much later, but it has become a rising force and is expanding rapidly. after 2009, when zhao weiguo became ceo of unisplendour, the company entered the semiconductor market; however, it was later revealed that zhao’s primary business income was derived from the expansion of the real estate industry (zhang & lan, 2022); since then, unisplendour has grown incredibly quickly in this industry by acquiring numerous other corporations. in june 2013, unis acquired spreadtrum communications, which was ranked first in china and third in the world in the field of mobile communication baseband chip design. the following year, unis acquired table 3: top semiconductor r&d spender in 2016 and 2017. source: ic insight’s strategic review database. 2016 company 2016 r&d spending (million $) 2016 r&d/ sales (%) 2017 r&d spending (million $) 2017 r&d/sales (%) 1 intel 12740 22.4 13098 21.2 2 qualcomm 5109 33.1 3450 20.2 3 broadcomm 3188 20.5 3423 19.2 4 samsung 2881 6.5 3415 5.2 5 toshiba 2777 27.6 2670 20.0 6 tsmc 2215 7.5 2656 8.3 7 media tek 1730 20.2 1881 24.0 8 micron 1681 11.1 1802 7.5 9 nvidia 1560 16.4 1797 19.1 10 sk hynix 1514 10.1 1792 6.5 https://journals.e-palli.com/home/index.php/ajebi pa ge 28 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(3) 24-35, 2022 rda microelectronics, which was ranked second in the field. these two acquisitions helped unis consolidate its leading position in the field of mobile communication chips design. in 2017, unis became the no.10 fabless company in the world and the no.2 fabless business in china. unlike tsmc, unis employs a fabless model, meaning that it concentrates primarily on its design capabilities and does not manufacture its own products. in december 2015, unis spent $11.1 billion and $2.3 billion, respectively, to buy powertech and chipmos, both of which are well-known chip manufacturing businesses. table 4: the top fabless ic companies in from 2017 to 2021 (million dollars). source: ic insight’s strategic review database. rank company 2017 revenue 2017 share (%) 2020 revenue 2020 share (%) 2020 revenue 2021 share 1 tsmc 32040 55.9 45562 59.7 56674 56.6 2 gfoudaries 5407 9.4 4850 6.4 6585 6.6 3 umc 4898 8.5 6009 7.9 7606 7.6 4 samsung 4398 7.7 5150 6.8 8537 8.5 5 smic 3099 5.4 3907 5.1 5443 5.4 6 tower-semi 1388 2.4 1266 1.7 1508 1.5 7 powerchip 1035 1.8 8 specialty ic 817 1.4 9 h-grace 807 1.4 10 dongbu hitek 676 1.2 swot analysis of unis table 5: swot analysis of unis strengths weaknesses abundant financial resources good brand reputation talent advantage insufficient availability of top-tier talent poor income performance opportunities threats national policy backing us trade war against china large market demand inadequate in the primary sectors global macroeconomic environment changes strengths: 1. abundant financial resources. as a stateowned enterprise, unis receives substantial support from the chinese government. it maintains close relationships with numerous banks in china, such as icbc and china merchants bank, and has more than 10 million yuan in outstanding loans at these banks, allowing it to support its operations with ample funds. 2. good brand reputation. since 1998, unis has received more than 70 national awards and has become one of the national important businesses and top 100 high-tech firms in china; therefore, these honors have given unis a solid reputation, and clients will have a greater degree of confidence in the company. 3. talent advantage. tsinghua university is the origin of unis and offers the talent pool and technical resources necessary for unis to achieve strong and sustainable growth. weaknesses: 1. even though unis has access to tsinghua university’s talent pool, it lacks elite talent. on the one hand, the domestic foundation of the high-tech electronic information industry is still relatively weak; on the other hand, the talents prefer jobs in the financial sector or internet industry due to their high rate of return. the high risk and low return of research and development jobs are insufficient to attract sufficient talent. 2. poor income performance. the company’s performance in 2016 reduced by 15.92% when a favorable tax policy is subtracted. in the first three quarters of 2017, the company’s net income decreased by 21.49 percent compared to the same period in 2016 due to the fact that it cannot generate money in this business. opportunities: 1. national policy backing. with the vigorous push of national strategic deployments such as “made in china 2025,” “network power,” and “internet plus,” china’s electronic information industry is accelerating the rate of transformation and upgrading, and the digital economy has become increasingly important to economic growth, thereby creating tremendous opportunities for the development of unis ’ chip industry. 2. sanctions imposed by the united states on china’s high-tech sector led the chinese to recognize the significance of independent research and development and to reach a consensus on investing in chip production. 3. large market demand. this has been discussed earlier, therefore i will not expand. threats: 1. inadequate in the primary sectors. china is still a latecomer to this market (ernst et al., 2014), and its enterprises are still largely focused in areas with low added value and low technical content, such as manufacturing and packaging. in 2016, the share of the self-design industry in china was only 37.9%, and the sector as a whole is through a change, so it will take time to catch up to the advanced nations. 2. changes in macroeconomic environment in the globe. currently, the global economy is recovering, china’s economy https://journals.e-palli.com/home/index.php/ajebi pa ge 29 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(3) 24-35, 2022 is growing steadily, and the merger of the digital and conventional economies has provided unis with a wide market area. however, if there is a shift in the domestic and international macroeconomic climate, the decline in digital construction investment may have an effect on the company’s operations. porter’s five forces analysis then, we use porter’s five forces model to evaluate the overall degree of competitiveness in the semiconductor business, in terms of “threat of new entrants, threats of substitutes, bargaining power of customers, bargaining power of suppliers, and intensity of competitive rivalry.” table 6: porter’s five forces analysis threat of new entrants bargaining power of customers 1. less capital is required to launch the firm. 2. there are little economies of scale in place. 3. customers may switch simply (low switching cost). 4. critical technology is not difficult to get or is not well safeguarded. 5. product is not differentiated. 1. purchasing in bulk or controlling several access points to the ultimate consumer. 2. few purchasers exist. 3. the cost to switch to a different provider is modest. 4. they threaten to backward integrate. 5. there are several alternatives. 6. buyers are attentive to pricing. threats of substitutes bargaining power of suppliers 1. there are other alternatives accessible. 2. customers may locate your goods at lower prices elsewhere. 3. the product of the competition is of higher quality. 4. by producing a substitute product, a corporation with large profits may cut prices to the absolute minimum. 1. there are few significant suppliers. 2. they provide a rare resource. 3. it is expensive to move to a different provider. 4. customers are hesitant to switch since the product is easily distinguishable. 5. the supplier may risk vertical integration. 6. there are no or few accessible alternatives.intensity of competitive rivalry 1. when there is a clear market leader, there are fewer rivals of comparable size or size. 2. customers have little switching expenses. 3. the sector is expanding. 4. exit obstacles are strong, so competitors remain and compete. 5. high fixed costs result in massive output and price reductions the possibility and benefit of unis to merge tsmc if the merger between tsinghua unisplendour and tsmc occurs, it would significantly alter the global chip manufacturing environment. the combined company will become a global leader in chip production, wafer polishing, and r&d. this article will examine the effects of the merger between tsinghua unisplendour and tsmc in terms of “large sales market,” “great capital investment and governmental support,” and “scale synergy effect.” the chinese government established an ambitious strategy in 2014 and would spend between $100 billion and $150 billion in public and private finances. the purpose of this action is to allow chinese chip businesses to technically outperform the world’s top firms in the design, assembly, and packaging of different kinds of chips, and to terminate their reliance on foreign suppliers (zenglein & holzmann, 2019). in 2015, the chinese government also established a new objective: to improve the rate of self-regulation on the domestic chip market to 70% within ten years. tsinghua unisplendour is able to develop high-end chips with government support, but its overall design and production capacity are insufficient. in contrast, tsmc has a complete chip manufacturing chain, but its r & d intensity is insufficient, and the departure of a number of tsmc executives has severely weakened the company’s technological superiority. compared to other chip firms in the globe, tsmc’s r&d spending is comparatively modest. however, with the fast growth of technology, tsmc should improve r&d to keep up with this wave of technology. if tsinghua unisplendour and tsmc can successfully integrate, the resulting business will have both robust r&d and comprehensive manufacturing capabilities. china’s integrated circuit market grew from 126 billion yuan in 2001 to around 1.2 billion yuan in 2016, accounting for over 60% of the worldwide market share, while the growth rates of the integrated circuit industry and market were 38.4% and 15.1%, respectively. in the context of a sluggish global integrated circuit market, the proportion of the chinese market in the global market is steadily increasing. with the introduction and implementation of “made in china 2025,” the development of high-tech enterprises in china will accelerate even further. future demand for highend chips in artificial intelligence, big data, smart materials, and precision equipment production will be much greater. china’s present chip self-sufficiency rate is less than 20%, indicating that the chinese market has a significant demand gap. the central government government procurement network posts the “announcement of public comment on information products (hardware) and air conditioning products procurement projects of central government” included on the list were announcements pertaining to desktop, laptop, server, switch, air conditioner, and other https://journals.e-palli.com/home/index.php/ajebi pa ge 30 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(3) 24-35, 2022 procurement brand-related product technical requirements, domestic operating systems, and domestic chips. this is very beneficial for the growth of homegrown semiconductor firms. after unis and tsmc amalgamated, the resulting firm was recognized as a “medium concept” business, and it was deemed advantageous to enter the mainland china sales market. the beijing municipal government and the central government will provide them with generous policies and financial support: not only in terms of policies, but also actively promoting excellent companies at home and abroad to cooperate, and giving more financial and tax concessions in the planning and construction of factories. on february 14, 2015, the national integrated circuit industry investment fund stated it will invest 10 billion yuan in beijing zhanrui (a subsidiary of unis group), and the china development bank (cdb) announced it would give 20 billion yuan in complete credit grants. after the approval of the national industry fund and china development bank, several marketplaces flooded the market with capital. china development bank and the national ic industry investment fund provided unis group with 150 billion yuan in investment and financial assistance in 2017. under the direction of the taiwan democratic progressive party, industrial power prices in taiwan have continued to increase. the dpp administration opposed the chinese and impeded the regular interaction between island and mainland businesses (lo, 2022). taiwan semiconductor manufacturing co., ltd. actively seeks a route out of the island’s unfavorable economic climate. in nanjing, chongqing, and other chinese cities, they construct factories in partnership with local businesses. if tsmc and tsinghua unisplendour can work together, tsmc will be able to charge for the foreseeable future. valuation of unis financial ratio analysis we will begin our appraisal by studying unis’s profitability ratio, liquidity ratio, activity ratio, and leverage ratio in order to have a basic knowledge of the company’s financial situation. all information is obtained from the unis financial report (2017 edition). in this part, we will assess the profitability of unis using two ratios: return on equity (roe) and profit margin on sales. the return on equity (roe) is a measure of a company’s profitability; a roe between 15% and 20% is often regarded as satisfactory. a return on equity of 9.1% is reasonable, given that unis operates in a rapidly expanding sector in china and invests heavily in r&d. profit margin is the proportion of the selling price that is converted to profit, and the higher it is, the better. this company’s 6.7% profit margin on sales is not outstanding, but its high r&d expenditure may help it attain a better profit margin on sales in the future. the debt-to-asset ratio measures the financial risks and leverage ratio of a corporation. nearly one-third of the firm is backed by debt, indicating that it is leveraged and that investors can anticipate typical levels of risk. the average collection period is the estimated length of time it takes a firm to obtain payments owing. also known as the activity ratio. the collection time of 51.4 days suggests that this firm collects money quickly, but also has severe credit restrictions. this provides unis with a rather stable financial flow. inventory turnover is the number of times in a certain time period that inventory is sold. in 2017, unis sold their goods six times. considering that high-tech businesses such as unis often have lengthy manufacturing periods, this rate is reasonable. moreover, investors should be wary of unis’s comparatively big inventory, which might result in a sluggish cash flow. next, we utilize the current ratio and the quick ratio to get unis’s liquidity ratio. current ratio is a liquidity ratio that assesses a company’s capacity to meet both shortand long-term commitments. the ratio of 1.67 is well within the acceptable range of 1-2, showing that unis has the capacity to pay off its obligations and uses its current assets and working capital well. the quick ratio gauges a company’s capacity to satisfy its short-term commitments using its most liquid assets. the rate of 1.26 is moderate, suggesting that unis has sufficient liquidity, does not depend excessively on inventories and other assets to pay off its short-term debt, and does not have excessive cash reserves. https://journals.e-palli.com/home/index.php/ajebi pa ge 31 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(3) 24-35, 2022 the book value of equity per share is one measure investors use to decide if a stock price is cheap, and the price-tobook ratio (p/b ratio) compares a firm’s market value to its book value (salim & pardiman, 2022). this rate of 140.2 is approximately double the market rate; this is not a normal or acceptable rate and is quite upsetting. likewise, the price to book ratio of 0.537 is not optimistic. the first explanation is the accounting method; given the nature of unis’s industry, the machinery quickly becomes obsolete and cannot be used to produce product if the company is to remain competitive; consequently, the machinery can only be sold for scrap while the accounting value remains the purchase price. the second factor is that investors on the market are losing confidence in the company’s future and are withdrawing funds. before purchasing this firm, we must do extensive due diligence to determine the true cause of this situation. then, we determine the current market value of unis. unis has 206,000,000 outstanding with a value of $72.03 and 13,700,000,000 in debt at the end of 2017. table 7: trading multiples of similar high-tech companies. company stock index (in china) p/e ratio beijing thunisoft 300271 34.91 tian di science 600582 18.67 advanced tech & material 000969 132.65 rapoo 002577 265.75 chunqiu electronic 603890 26.38 kingsun science 300235 257.19 grg banking 002152 20.60 jieshun science 002609 44.45 wiscom system 002090 29.33 shenzhen longood 300543 47.01 sinosun technology 300333 186.23 tecsun science 002908 90.22 zhejiang leo 002131 33.17 shenzhen minde 300656 74.04 now that we have a rate of the average price-to-earnings ratio of comparable sectors in china, we can estimate the stock price of unis. a ratio of 85.5 indicates that hightech is still a promising business in china, but investors should be wary of bubbles we can see that our estimate of the stock price is significantly higher than the market price, but nearly in line with the book value of equity per share; therefore, we can assume that our first explanation of the low price to book ratio is accurate and that the current market price for unis stock is undervalued. china’s stock market is not yet completely established, thus its equity value should only be used as a point of comparison. there is no record of unis acquiring another firm, but we may examine a merger of two companies of comparable size and industry: marvell and cavium. on 2017-11-14, marvell acquired cavium for six billion dollars and paid a 20% premium on target’s total asset value. we assessed the purchase price for unis based on prior transactions to be: total asset price*120% = 51,120,000,000 discounted cash flow revenue: considering that unis operates in a mature high-tech sector, we predicted unis’s future operational performance based on the previous revenue growth rate of the targeted firm. cost of goods sold: we calculate the ratio of cogs to sales using unis’s financial statements from the previous five years in order to get an estimate of unis’s cogs in the next five years after the purchase has been completed. r&d expense: the information presented by unis’s financial statements and other sources reveals that research and development expenses have remained at a high level of 10% of sales over the previous five years. https://journals.e-palli.com/home/index.php/ajebi pa ge 32 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(3) 24-35, 2022 table 8: revenue and growth rate of unis from 2013 to 2017 (unit: chinese yuan). unis year revenue growth rate (%) 2017 39,071,040,894 41.00 2016 27,709,709,064 107.56 2015 13,349,904,816 19.78 2014 11,144,913,830 30.81 2013 8,520,037,292 average 49.79 table 9: sales and cost of unis from 2013 to 2017 (unit: chinese yuan). unis year sales cogs cogs/sales 2017 39,071,040,894 30,486,639,519 0.78 2016 27,709,709,064 22,525,182,549 0.81 2015 13,349,904,816 12,745,578,064 0.95 2014 11,144,913,830 10,628,793,427 0.95 2013 8,520,037,292 8,114,271,969 0.95 average 0.83 this is why we have fixed r&d expenditures at 10% of revenue collected. the ratio of operating, finance, and administrative expenditures to revenue will remain unchanged at 8.3% during the next five years, based on historical financial data. tax rate: according to its 2017 annual report, as a hightech business unis has a favorable 15% tax rate. the average depreciation rate is deemed to be consistent with the depreciation policy of the parent firm: 14%, according to data from tsmc’s annual report (total fixed assets of 1,563,707,177 divided by total depreciation expense of 3,525,229). we consider this to be the future unis depreciation rate. regarding the change in net working capital, we determine the average change in tsmc’s net working capital to its revenue and apply it to unis. table 10: expense and revenue of unis from 2013 to 2017 (unit: chinese yuan). unis year ofa expenses revenue proportion (%) 2017 6,531,763,538 39,071,040,894 16.6 2016 4,455,757,561 27,709,709,064 16.4 2015 386,694,158 13,349,904,816 2.9 2014 318,775,230 11,144,913,830 2.9 2013 235,064,380 8,520,037,292 2.8 average 8.3 table 11: net working capital of tsmc from 2013 to 2017 (unit: chinese yuan) unis year net working capital change of nwc percentage to revenue (%) 2017 498,496,430 -993,423 -0.1 2016 499,489,853 120,556,739 25.5 2015 378,933,114 70,064,585 20.0 2014 308,868,529 217,945,660 72.1 2013 90,922,869 average https://journals.e-palli.com/home/index.php/ajebi pa ge 33 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(3) 24-35, 2022 discount rate: the β of computer accessories industry is about 1.39; rfis about 3.4% and rm-rfis about 5.81%; d/e=0.3 (according to the annual report of tsmc). we use the interest rate on 10-year bonds, which is 3.67 percent, as our risk-free rate. the majority of research institutions predict that china’s gdp will expand by 6% during the next several years (removed the impact of the covid-19). this is the growth rate used to calculate the terminal value. the determination of the discount rate: k=wacc=0.23*2.2%*85%+0.77*(3.4%+1.39*5.81%) =9.267% 16 table 12: expected tsmc npv from 2017 (unit: chinese yuan). future year 1 2 3 4 5 revenue 5,860,656,134 8,790,984,201 13,186,476,301 19,779,714,452 29,669,571,678 less: costs 4,864,344,591 7,296,516,886 10,944,775,329 16,417,162,995 24,625,744,493 less: r&d expense 586,065,613 879,098,420 1,318,647,630 1,977,971,445 2,966,957,168 less: other expenses 486,434,459 729,651,688 1,094,477,533 1,641,716,300 2,462,574,449 ebit less: tax -76,188,529 -114,282,793 -170,542,419 -257,136,287 -385,704,431 depreciation 11,774,539,154 11,774,539,154 11,774,539,154 11,774,539,154 11,774,539,154 less: ch.nwc 1,758,196,840 2,637,295,260 3,955,942,890 5,933,914,336 8,900,871,503 free cash flow 9,940,153,785 9,022,961,101 7,648,053,845 5,583,488,531 2,487,963,220 the calculation of npv: conclusions the transaction will be structured according to what is known as the reverse triangular merger model, which we believe to be the most effective approach. there are about four categories of factors that contribute to our decision to go with this model rather than others: keeping away the minority shareholders for ultimate control; a tax shield effect (so that we accept stocks as the primary form of payment); restrictions on certain sorts of acts, such as selling target firms’ assets or stripping shares; possible for the obligations of unis to be contained inside the subsidiary. to take advantage of the tax shield effect, the kind of payment that we recommend is to pay a 20% premium on the target firm, with 80% of the payment coming in the form of stocks (common or preferred), and the remaining 20% coming in the form of cash. in this way, unis and tsmc have completed substantial mergers and acquisitions and bundling of interests by establishing a joint new company. let’s call it a contingent approach for the sake of argument. figure 1: proposed acquisition plan to merge tsmc into unis in addition to the benefit of providing a tax shield, there are a number of other considerations as following that strongly encourage us to use the stock as the payment. such mergers and acquisitions will not be considered as unfriendly takeovers since both china mainland tsmc’s interest meet in the process. china maintains a longterm policy favorable to the semiconductor sector and there is a reasonably strong demand for semiconductors both now and in the near future. tsmc also actively seeks long-term profit opportunities in the mainland chinese market. additionally, the majority of unis’s senior managers are the most significant engineers in this business and are responsible for the most crucial tasks in production. according to the findings of zhang (2001), the buyer is more likely to pay with stocks when the scales of the target enterprises are relatively huge. https://journals.e-palli.com/home/index.php/ajebi pa ge 34 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 1(3) 24-35, 2022 when the scales of the merger are great, using the stock as a form of payment may help ease the burden of cash and finance. the heavy demands for cash that tsmc has are still another important factor contributing to the restriction of the payment. because of the high cost of research, tsmc has a relatively low free cash flow, considering its magnitude, as was seen in the preceding section of the company’s financial statement. equipped with the favorable measures from chinese government, for unis, the form of payment is actually the investment problem. as the executive board of unis, in theory prefers receiving cash, but as in a technological sector, the majority of them are aware of the long-term profit. the challenge of funding for tsmc is the form of payment. with a good return expectation from society, tsmc is under less pressure to get finance. but even if its potential competitors’ market share is not as large as tsmc’s, they may also benefit from the same policy privileges, reduced material costs, and lower land costs. in fact, tsmc has lost its past capital and technological advantages as a result of the general industrial subsidies, and its future profitability would be devalued. at this time, it appears to be a win-win situation if unis acquires tsmc and develops a joint venture, as depicted in figure 1. lastly, the attractiveness of stock payment stems from its variable pricing feature. the new company will benefit from the value of the coordinating effect. the contingent price indicates that shareholders of the target firm who get the new company’s shares will receive the total payment value that is equivalent to or more than their proportionate part of the merger and acquisition profits. acquisition profit is unpredictable; therefore, selecting stocks as payment will eliminate the profit uncertainty. according to the notion of the corporate pecking order, the corporation chooses internal cash financing over treasury shares, the issuing of new bonds, and the issuance of new shares. the debtto-asset ratio of tsmc is 21.2%, while the liquid assets ratio is 20%, showing a robust capacity for debt payback. despite the favorable financial and regulatory circumstances outlined above, the merger did not materialize, which is regrettable for the growth of china’s semiconductor sector. the collapse of the merger seems to 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(2022). the new whole state system: reinventing the chinese state to promote innovation. environment & planning a. https://doi. org/10.1177/0308518x221088294 https://journals.e-palli.com/home/index.php/ajebi pa ge 1 pa ge 14 5 american journal of economics and business innovation (ajebi) the guarantee pricing and the analysis of the automotive branch insurance profitability in tunisia abdelli souleima1*, abdelli asma2 volume 2 issue 3, year 2023 issn: 2831-5588 (online), 2832-4862 (print) doi: https://doi.org/10.54536/ajebi.v2i3.2094 https://journals.e-palli.com/home/index.php/ajebi article information abstract received: sepember 29, 2023 accepted: october 26, 2023 published: october 31, 2023 the presented study thoroughly investigates the technical profitability of the tunisian automobile insurance market using a quantitative research approach with interpretivism as its foundation. the study aims to offer insightful information about the dynamics and profitability of the sector by concentrating on the combined ratio and applying the s/p ratio calculation. the data show that the tunisian auto insurance industry faces serious obstacles. the s/p ratios continually exceeded 100% from 2019 to 2021, indicating a chronic problem of low technical profitability. notably, the civil responsibility guarantees considerably added to this imbalance, particularly in the “agricultural utility” and “2-wheel use” categories, with s/p ratios rising to frightening heights, like 937% in 2012. these findings highlight the pressing necessity for pricing modifications and a thorough comprehension of the nuances of the market. the tunisian auto insurance industry must address underpricing concerns and increase overall profitability viable over the long run. this study offers helpful insights for policymakers and business experts trying to manage these difficult issues and promote a more vibrant insurance market. keywords automobile insurance, profitability, s/p ratio, insurance premium 1 university of taif, saudi arabia 2 higher institute of management, tunisia * corresponding author’s e-mail: soulaimaa_abdelli@outlook.com introduction the tunisian insurance landscape is dominated by the automobile insurance business, which makes a sizable financial contribution to the sector’s overall profitability (chikalipah & makina, 2019). despite facing significant structural issues, the car insurance business has recently shown extraordinary resilience and development. according to fabris et al. (2021), to determine the sector’s profitability, this paper conducts a thorough investigation of guarantee pricing in the context of automobile insurance in tunisia. this research paper’s main goal is to decipher the complex pricing structure governing various guarantees in tunisia’s auto insurance market, focusing on the optional and civil responsibility guarantees (fabris et al., 2021). in addition, the study will include identifying structural imbalances in the combined ratio and identifying their root causes by carefully examining the sinistrality-to-premium (s/p) 1ratios related to various forms of guarantees in the automotive insurance sector. this research clarifies the examination of the technical profitability of the industry and offers helpful insights into the combined ratio and other important tools for profitability evaluation (abou-foul et al., 2021). second, it demonstrates a link between the combined ratio and sinistrality ratios, showing that they move in parallel directions between 2019 and 2021. thirdly, it reveals a structural imbalance in the combined ratio throughout this period, which resulted in a deficit for the sector’s insurance firms. notably, the use of “agricultural utility” and “two-wheelers” over the years from 2010 to 2012 is principally responsible for this imbalance. the study also reveals that the s/p ratio for the whole automotive insurance branch is frighteningly high, indicating that premiums are not enough to pay the expenses the insurance firms incur in processing claims (graham, 2018). the civil responsibility guarantee’s shortcomings, which in 2011 registered a sinister ratio of around 200% and negatively impacted the sector’s profitability, are substantially to blame for this problem. the automotive insurance sector of tunisia: profitability of the sector recognizing that the vehicle insurance sector holds the top spot in terms of income creation in the insurance industry is crucial. according to statistics from 2021, the premiums granted in the car insurance industry totalled an astounding 1,199.738 million dinars (md), which is a considerable increase from the 1,067.214 md recorded in 2019. automobile insurance maintains its position as the market leader, taking a sizeable portion of the premium market at a rate of 42.350% in 2021 compared to 44.20% in 2019. this is despite the significant institutional experience connected with this industry (rudolph et al., 2021). these numbers demonstrate the continued importance of the vehicle insurance market in tunisia’s insurance market. vehicle insurance sector in tunisia: market share and growth rate the vehicle insurance sector in tunisia stands as the largest and most pivotal segment within the insurance industry, contributing to over 40% of the total gross written premium (gwp). this sector is poised for substantial growth, with an anticipated compound annual growth rate (cagr) exceeding 7% throughout the period spanning 2021 to 2026 (globaldata, 2022); pa ge 14 6 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 145-157, 2023 fitch solutions, 2023; mordor intelligence.; 2023). several driving forces underpin the burgeoning growth of the tunisian vehicle insurance market. initially, the escalating motorization rates in the country present a significant factor. according to global data (2022) statistics, the number of registered motor vehicles in tunisia has been on a steady rise, climbing from 2.5 million in 2010 to 3.5 million in 2020. this trajectory is expected to persist, fueled by economic expansion and an upswing in disposable incomes. furthermore, there is a growing awareness among tunisians regarding the importance of vehicle insurance (zone, 2021). the study by belloum & ouni (2019), the increasing awareness of automobile insurance in tunisia can be attributed to various factors, including an uptick in traffic accidents, rising vehicle prices, and government initiatives geared towards promoting insurance penetration. the tunisian insurance companies are diversifying their product portfolios to cater to the diverse needs of their customers (karaa, 2017). for instance, some insurers now offer policies that cover vehicle damage resulting from natural disasters, such as floods and sandstorms (ozor & nyambane, 2022). moreover, the tunisian government has introduced measures aimed at enhancing insurance penetration and safeguarding consumer interests. one noteworthy initiative includes mandating insurance coverage for all new vehicles (arfa & achouri, 2008). challenges faced by automobile insurance sector in tunisia the tunisian vehicle insurance market confronts several challenges. according to the market analysis study by global data (2023), the automobile insurance industry of tunisia contends with a relatively high claims ratio owing to factors like elevated traffic accident rates, fraudulent claims, and steep vehicle repair costs. moreover, yin (2021) highlights that the sector operates in an intensely competitive environment, with over 20 insurance companies vying for market share. while the study also highlights that this competition has translated into lower premiums and a broader array of product choices for consumers, it has also made profitability a formidable challenge for insurance providers. additionally, the regulatory framework governing the tunisian insurance industry presents hurdles, as the insurance industry is designed to protect consumers and ensure financial stability. dhieb et al. (2020) highlight that some industry participants argue that these regulations can be cumbersome and stifle innovation. in essence, the vehicle insurance sector in tunisia represents a substantial and expanding market. the sector’s growth trajectory is expected to persist in the coming years, driven by the rising rates of motorization, growing awareness of insurance importance, and an expanding array of product offerings (ofori-boateng et al., 2022). this resilience, despite the challenges, underscores the enduring significance of the vehicle insurance sector within tunisia’s insurance landscape. literature review according to tidd & bessant (2020), the technical profitability of the vehicle insurance market has long drawn considerable interest from the insurance community and academic study. for both business professionals and policymakers, it is essential to comprehend the variables that affect the profitability of automotive insurers. industry data show a complicated picture. the rising number of automobiles on the road and many nations’ insurance mandates have contributed to the global auto insurance market’s consistent rise in recent years (ogunkunle & ahmed, 2019). profitability, however, has fluctuated because of a number of causes. the study by grace and fenn (2019) emphasizes the significance of claims management and underwriting for technical profitability. it has also been discovered that insurers with strong pricing and risk assessment models typically do better in terms of profitability. furthermore, improvements in data analytics and telematics have given insurers the capacity to assess risk more accurately and customize rates, which has a favourable effect on their profitability (eling & lehmann, 2018). according to rae et al. (2022), it is inconceivable to disregard the effects of external factors like economic conditions and regulatory changes. research by ameset al. (2018) highlights how regulatory changes may have a big impact on insurer profitability. for instance, modifications to liability rules or healthcare standards may affect how much a claim may cost. profitability also heavily relies on investment revenue from insurers’ portfolios. low-interest rates, as seen in recent years, can reduce investment returns and increase the profitability of underwriting. as a result, technical profitability in the vehicle insurance industry is a complex problem driven by a variety of elements, including underwriting procedures, claims handling, legislative changes, and investment performance (janků & badura, 2021). researchers and business professionals keep looking for novel ways to maintain and improve profitability in this dynamic sector. pricing of guarantees in automobile insurance of tunisia within the realm of motor insurance, the guaranteed price has critical significance. given that charges are billed and paid prior to the occurrence of any nefarious occurrences, they constitute a crucial link in the functioning of insurance businesses. according to keucheyan (2018), inadequate pricing may put the financial stability of insurance firms at risk, having a negative effect on both insurers and covered parties. guarantees in vehicle insurance may be divided into two groups: those that are legally required to be provided and whose costs are subject to regulation, and those that are voluntary and provide both policyholders and insurers some degree of freedom (inês et al., 2020). surprisingly, there aren’t many thorough literature evaluations that explore technological profitability in this industry. the majority of currently conducted research generally focuses on topics like car pa ge 14 7 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 145-157, 2023 insurance claims, fraud detection, and the function of auto repair businesses. for instance, cohen and cavoli (2019) examined how auto insurance renewal decisions are made by examining all aspects accessible, including claims information. similar to this, ricciardi et al. (2023) have suggested ways to stop fraud in support of the special investigative teams at insurance firms. for each claim, they use picture analysis to retrieve crucial vehicle data. additionally, macedo et al. (2021) have investigated the part that auto repair businesses play in automobile insurance fraud and how they could help to lessen or exacerbate such illegal activities. optional guarantees in the tunisian automobile sector tunisia’s vehicle insurance market provides a number of optional guarantees that let customers tailor their coverage to meet their unique requirements and preferences. according to fischer-daly & anner (2021), the tunisian insurance federation (ftusa) regulates the pricing of these supplementary guarantees, which offer extra security above and beyond the required coverage. the robbery guarantee is one of these extra guarantees; it pays for harm caused by the insured vehicle disappearing or degrading as a result of a robbery or attempted theft. the cost of this guarantee is determined using a percentage of the car’s market value that ftusa specifies (eldar, 2020). the fire and explosion guarantee, which covers damage brought on by fire, explosion, spontaneous combustion, lightning strike, and other similar disasters, is another crucial choice. the premium for this guarantee is calculated as a proportion of the market value of the insured vehicle, the same as the robbery guarantee. accidental damage with or without collision is another optional assurance provided by tunisian vehicle insurance providers (kubwimana., 2022). the guarantee option is essential since it pays for actual damages to the covered vehicle brought on by accidents, shocks, overturning, and other unavoidable occurrences. pricing varies according to how the car is used and may include extra coverage from avalanches, riots, calamities, or terrorist attacks. the force of nature guarantee kicks in after a natural disaster (chakalian et al., 2019). this guarantee covers losses brought on by storms, avalanches, floods, earthquakes, and other natural disasters. individual insurance firms normally determine the cost of this assurance. the glass damage guarantee, with the exception of a few select goods, covers unintentional glass component damage in vehicles. the cost of this assurance may differ across insurers. the collision accidental damage guarantee pays for repairs in cases of accidents involving other people’s cars (wang & xu, 2018). the insured’s selections for coverage limits and deductibles will determine the price for this assurance. in instances of legal issues relating to covered incidents, the insured is supported financially and legally by the defense and recourse guarantee against special insurance (parker & schaefer, 2021). the price of this guarantee varies between insurers and might be affected by the kind of coverage selected. the carried persons guarantee compensates people who aren’t third parties, such as the driver, their loved ones, coworkers, and employees, to assure the safety of people being carried in the insured vehicle. according to mutaqin & usami (2019), the chosen coverage level and the total number of insured locations are used to determine the premiums for this guarantee. when operating the insured vehicle, the driver is explicitly protected by the driver plus guarantee in the case of an accident. the last option, the accumulated damage guarantee (specific to gat insurance), is designed specifically for automobiles under ten years old and includes coverage for theft, fire, and damage to the vehicle. the age of the vehicle and other considerations decide the insurance amount for this set of assurances (schierman et al., 2020). these supplementary assurances’ availability and cost may differ across tunisian insurance firms. when choosing coverage, policyholders should carefully assess their demands as well as the exact terms and circumstances of these assurances. the civil responsibility guarantee in the automobile insurance sector of tunisia the civil responsibility (rc) guarantee, a component of tunisia’s automotive insurance market, is crucial in ensuring that those hurt in accidents have access to financial support. it is required by the tunisian insurance code and is made to pay for the insured’s civil liability for harms brought on by the operation of a motor vehicle (almawla & al-mawla, 2021). the rc guarantee financially shields the insured from claims stemming from mishaps, fires, or explosions brought on by their motor vehicle, as well as its trailers, equipment, and accessories. this warranty is essential because it guarantees that victims including other motorists, pedestrians, cyclists, and passengers receive compensation for harm and property damage brought on by the insured’s vehicle. the rc guarantee’s limitless bodily injury coverage sum is one of its standout features. this guarantees that victims are fairly paid even if the accountable party ends up becoming bankrupt. in this way, the guarantee works to safeguard the rights of accident victims (schmitt, 2020). however, as stated in the insurance code, there are specified exceptions to the rc guarantee. these include those working in the automotive industry (repair, maintenance, or trade), damages incurred by accident victims, drivers who lacked the necessary licenses at the time of the occurrence, and passengers sitting outside the car’s bodywork. according to tlili (2022), in tunisia, the cost of rc insurance is based on a tiered system that considers both the type of vehicle being used and the horsepower of the engine. for various vehicle usage, including personal, commercial, agricultural, and more, different prices are presented in table 01. encourage safe driving practices, the rc guarantee also uses a bonusmalus system. civil responsibility insurance tariffs for users of land vehicles with motor pa ge 14 8 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 145-157, 2023 table 1: pricing for business usage fiscal power of the engine in horses 2 3 to 4 5 to 6 7 to 10 11 to 14 15 and more price excluding tax in dinars 94 110 140 170 220 264 table 2: tariffs for transporting goods on your account a) price (excluding tax) of the vehicles whose gross weight does not exceed 3.5 tons fiscal power of the engine in horses 2 3 to 4 5 to 6 7 to 10 11 to 14 15 and more price excluding tax in dinars 145 171 214 262 338 405 b) price (excluding tax) of the vehicles whose total weight exceeds 3.5 tons in dt price (excluding tax) basic premium 257 additional premium. 21 for each additional ton whose total weight exceeds 3.5 ton table 3: transport of goods for the third parties a) vehicles whose gross weight does not exceed 3.5 tones: (apply the tariff relating to the vehicles intended for the transport of goods on its account referred to a) b) vehicles whose total weight exceeds 3.5 tones: price (excluding tax) in dinars basic premium 250 additional premium. 4 for each additional ton whose total weight exceeds 3.5 ton table 4: agricultural use a) vehicle whose gross weight does not exceed 3.5 tones: in tnd fiscal power of the engine in horses 2 3 to 4 5 to 6 7 to 10 11 to 14 15 and more price excluding tax 84 97 122 150 193 232 b) vehicle whose total weight exceeds 3.5 tones in dt: price excluding tax basic premium the tariff relates to the vehicles intended for agricultural usage with a gross weight not exceeding 3.5 tons additional premium 13 for each additional ton whose weight exceeds 3.5 ton table 5: prices of machine and agricultural tractors in dt type of véhicules price excluding tax type 1 made of rubber with wheels 42 with tracks 31 type ii 117 type iii made of rubber with wheels 84 with tracks 59 type iv 177 table 6: prices for two-wheelers in dt price excluding tax less than or equal to 125cc 62 above 125cc 168 sources: circular no. 1/2017 of 28 february setting the tariff for civil responsibility insurance due to the use of motor land vehicles (general insurance committee (cga) pa ge 14 9 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 145-157, 2023 table 7: use: rental (5 seats without driver) new pricing (2014) annual semestrial net tax net tax civil responsibility 1139,033 136,684 569,517 68,342 cost of the contract 40,000 4,800 40,000 4,800 appeal to a third2 50,000 5,000 25,000 2,500 robbery 79,102 7,910 39,551 3,955 fire 82,902 8,290 41,451 4,145 fgvac 0,300 0,300 fpac 0,500 0,500 fga 1,000 1,000 total 1555,522 1555,522 801,061 801,061 robbery fire basic premium 38,502 38,502 rate in % 4,06 4,44 surplus in each place annual: 113,904 tax: 13,668 semestrial: 56,952 tax: 6,834 source:chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.ftusanet.org/wp-content/uploads/2015/10/tarif-6.pdf table 8: use: rural transport vehicle value=10000d new pricing (2014) annual semestrial net tax net tax civil responsibility 877,152 105,258 438,576 52,629 cost of the contract 40,000 4,800 40,000 4,800 appeal to a third3 50,000 5,000 25,000 2,500 robbery 79,102 7,910 39,551 3,955 fire 82,902 8,290 41,451 4,145 fgvac 0,3 0,3 fpac 0,5 0,5 fga 1 1 total 1262,214 1262,214 654,407 654,407 robbery fire basic premium 38,502 38,502 rate 4,06% 4,44% source: chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.ftusanet.org/wp-content/uploads/2015/10/tarif-6.pdf table 9: use of taxi (+4 places) vehicle value=6000d new pricing (2014) annual semestrial net tax net tax civil responsibility 450,818 54,098 225,409 27,049 cost of the contract 40,000 4,800 40,000 4,800 appeal to a third 50,000 5,000 25,000 2,5 robbery 54,408 5,441 27,204 2,720 fire 55,188 5,519 27,594 2,759 fgvac 0,3 0,3 pa ge 15 0 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 145-157, 2023 fpac 0,5 0,5 fga 1 1 total 727,071 727,071 386,836 386,836 robbery fire basic premium 25,668 25,668 rate 4,79% 4.92% source: chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.ftusanet.org/wp-content/uploads/2015/10/tarif-6.pdf table 10: use of tourist taxi (+4 places) vehicle value=8000d new pricing (2014) annual semestrial net tax net tax civil responsibility 547,421 65,691 273,74 32,845 cost of the contract 40,000 4,800 40,000 4,800 appeal to a third 50,000 5,000 25,000 2,5 robbery 63,988 6,399 31,994 3,199 fire 65,028 6,503 32,514 3,251 fgvac 0,3 0,3 fpac 0,51 0,5 fga 1 1 total 856,629 451,615 robbery fire basic premium 25,668 25,668 rate 4,79% 4.92% source: chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.ftusanet.org/wp-content/uploads/2015/10/tarif-6.pdf table 11: use: collective taxi vehicule value =10000d new pricing (2014) annual semestrial net tax net tax civil responsibility 877,152 105,258 438,576 52,629 cost of the contract 40,000 4,8 40,000 4,800 appeal to a third 50,000 5,000 25,000 2,500 robbery 79,102 7,910 39,551 3,955 fire 82,9 8,290 41,451 4,145 fgvac 0,3 0,3 fpac 0,5 0,5 fga 1 1 total 1262,214 1262,214 654,407 654,407 robbery fire basic premium 38,502 38.502 rate %4.06 %4.44 source: chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.ftusanet.org/wp-content/uploads/2015/10/tarif-6.pdf table 12: the pricing of the robbery guarantee % 2.62‰ 2.36‰ 1.75‰ pricing type personal use: transport of goods for its account (truck <3.5 tons) --agricultural use (truck >3.5 ton), agricultural machinery, tractors and work machinery agricultural use (truck <3.5 ton), -transportation of goods for personal use (truck>3.5 tons) -transport of goods on behalf of a third party (truck>3.5 tons) pa ge 15 1 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 145-157, 2023 table 13: the pricing of the fire guarantee % 2.79‰ 3.06‰ 4.37‰ 5.68‰ 6.29‰ type of pricing agricultural use (truck<3.5ton) personal use transport of goods for its account (truck <3.5ton) -agricultural use (truck >3.5 ton), -agricultural machinery, tractors and machines of work -motorcycles transport of goods for its account (truck>3.5ton) transport of goods on behalf of third parties trucks>3.5ton) amount 10000 basic premium + 2.79‰ the market value of the vehicle 10000 basic premium+ 3.06‰ the market value of the vehicle 10000basic premium + 4.37‰ the market value of the vehicle 10000basic premium + 5.68‰ the market value of the vehicle 10000basic premium + 6.29‰ the market value of the vehicle source: https://www.ftusanet.org/tarifs/(https://www.ftusanet.org/wp-content/uploads/2016/02/%d9%85%d9%84%d8%ad%d9%82%d8%b9%d8%af%d8%af4.pdf) methodology the aims of the current study resonate with the qualitative research method, offering an immersive exploration of intricate phenomena to uncover the underlying dynamics of the technical profitability of the automobile insurance sector of tunisia. furthermore, the study’s objectives align with the interpretivism philosophy, as cuthbertson et al. (2020) highlight the significance of the interpretivist paradigm in comprehending individuals’ perceptions, experiences, and contextual meanings. through this lens, the research gains unparalleled insights into the intricate relationship between central to this endeavour is an inductive approach, which also aligns with the study scope, as the technical profitability of the automobile insurance of the companies and its performance based on the s/p ratio (robinson et al., 2020). according to place (2022), the qualitative method serves as a gateway to a nuanced comprehension of the intricate web of relationships within the research subject, delving into the subtleties that quantitative analyses may overlook. furthermore, toker et al. (2019) expand that the interpretivism philosophy embraces the richness of human experiences, shedding light on the multifaceted relationship between the sinister ratio and the premium paid by the companies, which will provide an effective illustration of the technical profitability of the automobile insurance sector of tunisia. by embracing the unexpected, the inductive approach enhances the authenticity and robustness of findings, mirroring the dynamic and evolving nature of the subject under investigation, as highlighted by so et al. (2021). in the synthesis of these elements, the chosen methodology becomes a vehicle for in-depth exploration, alignment with the research objectives, and the unveiling of novel insights that enrich the academic discourse on the interplay between different guarantees and the profit earned by the automobile insurance companies in tunisia (asante et al., 2023; gagai, 2022; zheng et al., 2022). data collection and analysis a diverse set of qualitative data from pertinent sources will be gathered during the data collection procedure. this may include of scholarly writings, documents outlining policy, and industry studies that have looked at the technical profitability using the s/p ratio calculation. it can be examined by figuring out tunisia’s s/p ratio for the automobile insurance sector. results and discussion a combined ratio is used to evaluate the insurance markets in various nations and is used to analyze technical profitability (see equation 2). financial analysts typically use it to assess the profitability of various firms’ insurance divisions. a percentage of premium revenue is used to quantify the relative cost of insurance. combined ratio= sinister rate + operating coefficient (1) sinister ratio=sinister expense /net earned premiums (2) exploitation coefficient= exploitation expenses/net earned premiums (3) the data from the years 2019 through 2021 have been taken from the official government website. in order to compute the combined ratio, we must first calculate the sinister rate and then the operating rate. the amount 15000basic premium+2.62‰ of the market value of the vehicle 15000 basic premium + 2.36‰ of the market value of the vehicle 15000basic premium +1.75 ‰ of the market value of the vehicle source: ftusa (https://www.ftusanet.org/wp-content/uploads/2016/02/%d9%85%d9%84%d8%ad%d9%82-%d8%b9%d8%af%d8%af4. pdf pa ge 15 2 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 145-157, 2023 the graphic illustration and interpretation the combined ratio follows the same trend as the sinister ratio, as can be seen by looking at the table and graph below. we can see that the surplus in the vehicle branch is due to the fact that the sinister costs are lower than the earned premiums. in fact, the graph demonstrates that the ominous (sinister) ratio changes between 2019 and 2021, reaching its minimum in 2020 before tending to increase subsequently. it should be noted that a combined ratio below 100% indicates a favourable outcome for the insurer’s activities, while a ratio beyond 100% indicates a poor outcome from a technical standpoint. in our example, the combined ratio is above 100% in 2019 and 2021, indicating negative technical profitability, while it is below 100% in 2020. due to the structural imbalance of the branch shown by this ratio, the business needs to make a sizable profit. we suggest analyzing the ratio by the type of assurance table 14: the combined ratio in percentage 2019 2020 2021 sinister expenses in md 764,145 686,040 837,086 net earned premium in md 1 031,114 1 073,777 1 162,326 sinister ratio 0,7411 0,6389 0,7202 operating expense (management expense) in md (3) 290,928 323,435 347,952 operating coefficient 0,28214921 0,30121245 0,29935836 combined ratio 1,02324921 0,94011245 1,01955836 figure 1: curves of sinister ratio, operating coefficient and combined ratio (optional vs. non-optional) in order to comprehend this deficiency. the sinister ratio is written as follows on the other side: ratio of sinistrality= sinistrality expense + operating expense (4) however, the operating expenses only affect a little the combined ratio compared to the sinister expenses. therefore, we will analyze the sinister-to-premium ratio s/p ratio, with s and p being the sum of sinister and the sum of optional and non-optional premiums, respectively. we notice: s/p= optional sinister ratio*(1-p) +non-optional sinister ratio* (5) if there is additional information about the various sorts of assurances, this equation enables us to comprehend the causes of the imbalance. the analysis of the operational performance of the car, transportation, and fire insurance is presented in table 15 below. before beginning the interpretation, keep in mind that the insurance company divides the cost of the compensated sinister (including administration costs) by the sum of the premiums received in order to determine the sinister-to-premium ratio (s/p). the ratio achieved must be smaller than 1 in order for the insurer’s business to be profitable. table 15 shows that the highest rates for vehicle insurance in md were granted in the years 1067,214 in 2019, 1107,798 sf : sinister related to the optional guarantees. snf : sinister related to the non-optional guarantees. pf : sinister related to the optional guarantee. pnf : premiums related to the non-optional guarantees. s/p= optional sinister ratio*(1-p) +non-optional sinister ratio *p pa ge 15 3 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 145-157, 2023 in 2020, and 1199,738 in 2021. transport insurance, however, has the lowest premiums (84,658 md in 2019, 75,752 md in 2020, and 88,69 md in 2021). the greatest s/p ratio relates to automotive insurance by comparing the s/p ratios for the three categories of guarantees: automobile, fire, and transport. around 100%, this ratio is almost constant. due to the fact that the premiums collected are insufficient to cover the quantities of sinister, the s/p ratio for the whole car branch is seen as being extremely high. despite the positive outcomes of the other guarantees, this issue is mostly caused by the civil responsibility guarantee’s inefficiency, which exhibits an ineffectiveness of about 200% and severely affects the branch’s profitability. the s/p ratio for fire insurance increased from 61.38 in 2019 to 113.82 in 2021, indicating that it was not steady from 2019 to 2021. however, the s/p ratio for transport insurance is the lowest, falling from 29.43% in 2019 to 24.37% in 2021. the analysis of the automobile’s civil responsibility (rc) at this level of the industry shows a sinister premiums (s/p) rate that is effectively well above 100% for the years 2010 to 2012. this underpricing is made all the more unfortunate by the fact that no business in the industry managed to generate a technical surplus in the auto category between 2010 and 2012 (a technical surplus is one in which the s/p ratio is less than 100%). table 16 shows that the civil liability insurance sinistrality rate is, on average, 192%. we conclude that the s/p ratio in 2011 demonstrated consistent growth within the context of the civil responsibility guarantee. in fact, it showed a comparatively high rate in 2011, which was 200%, compared to 178% in 2010. even while the premiums paid under this guarantee have increased, they still need to cover the high levels of expenditure. challenges of calculating the equilibrium rate of civil responsibility insurance as stated in article 110 of the insurance code, civil responsibility (“rc”) insurance for land motor vehicles has been required since 1960 (bertolini & riccaboni, 2021). both the car owner and the insurers, who are obligated to provide insurance, are burdened by this responsibility. however, bergkamp (2021) states that it must be acknowledged that the state’s assessment of the civil liability risk needs to be revised. the public authority table 15: analysis and operating results of the automobile, transport and fire insurance automobile insurance transport insurance fire insurance 2019 2020 2021 2019 2020 2021 2019 2020 2021 issued premium in md 1067,214 1107,798 1199,738 84,658 75,752 88,69 135,40 145,82 161,82 the part of the premium in the total emissions 44,20 % 43,07 % 42,35 % 3,51 % 2,95% 3,13 % 5,61 % 5,67 % 5,71 % paid sinister in md 737,152 634,499 714,312 26,718 13,804 28,170 90,253 107,160 103,53 earned premium5 1031,114 1073,777 1162,326 81,755 77,754 86,49 137,37 145,20 154,58 management fees in md6 290,928 323,435 347,952 19,293 22,114 23,317 40,592 44,458 44,45 sinister to earned premium ratio in % 102,32 94,01 101,95 29,43 19,80 24,37 61,38 70,04 113,82 technical results the subscription balance in md 254,001 400,691 319,741 61,137 55,548 69,027 47,445 39,631 -20,981 management fees in md 290,928 323,435 347,952 19,293 22,114 23,318 40,598 44,457 44,457 the financial balance in md 117,497 110,954 124,924 3,474 2,687 3,531 12,926 9,048 11,821 the reinsurance balance (result of cession) in md 33,369 33,159 29,181 -25,780 -31,934 -40,077 -8,685 -5,686 64,961 the technical result of md 47,200 155,051 67,533 19,538 4,187 9,164 11,087 9,907 11.344 source: ftusa 2021 report (tunisian federation of insurance companies) table 16: the s/p ratio of the civil responsibility auto (2010-2012) 2010 2011 2012 premium 201 206 211 total cost 357 413 419 sinistrality rate 178% 200% 198% source: reform of the automotive civil responsibility insurance in tunisia: inventory and recommendations 2015 pa ge 15 4 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 145-157, 2023 (state) price will apply to this risk. this price is legitimate in two ways: (i) to safeguard customers’ purchasing power who are compelled to purchase this insurance service at an excessive price.; (ii) to ensure the price is reasonable, to avoid potential dumping amongst businesses, to secure these businesses’ solvency, and, as a result, to assure the insured’s protection. unfortunately, despite the fact that this dual obligation should force the state to exercise extreme restraint so that the price accurately reflects the true cost of the evil(sinister), the periodic adjustment of these prices has historically been flawed, leading to a glaring underpricing that had negative knock-on effects on the industry (boyd, 2018). the general committee of insurance (“cga”) did not appear to be in a position to the combined ratio, with an emphasis on the s/p ratio equation, is used in the study to measure the profitability of insurance operations through data collecting and analysis. the results show that the vehicle insurance industry is facing difficulties, with s/p ratios that routinely surpass 100% and indicate low technical profitability. the civil liability guarantee, especially for “agricultural utility” and “2-wheel use,” greatly adds to this disparity. in order to ensure the sector’s viability, the research emphasizes the necessity for pricing modifications and a deeper comprehension of its dynamics. recommendations addressing non-optional sinistrality rates is essential for enhancing the s/p ratio. this may be accomplished by enhancing traffic safety measures, lowering the number of insurance claims, and putting in place an efficient risk reduction technique. furthermore, maintaining market profitability and fairness will result from readjusting premiums to represent risk profiles appropriately. encouragement of optional coverage and package formulae, similar to popular designs like the gat, among policyholders can raise overall premium levels. a more sustainable and effective insurance market in tunisia can be achieved by adopting key principles from morocco’s insurance reform, such as increasing the basic civil responsibility premiums, lowering accident frequency through data-driven prevention, and lowering average claim costs through digitalization, compensation scale revisions, and alternative dispute resolution mechanisms. acknowledgements we would like to thank ms. ben arab for her support, guidance and pertinent remarks, as well as ms. besma salhi for the documentation provided in this area. funding the researchers would like to acknowledge deanship of scientific research, taif university for funding this work. references abou-foul, m., ruiz-alba, j. l., & soares, a. (2021). the impact of digitalization and servitization on the financial performance of a firm: an empirical analysis. production planning & control, 32(12), 975-989. al-mawla, y. k. h., & al-mawla, t. k. h. (2021). legislative jurisdiction in a commercial insurance contract and its effect on relocating the domicile of the contractual parties. review of international geographical education online, 11(8). ames, d. a., hines, c. s., & sankara, j. (2018). board risk committees: insurer financial strength ratings and performance. journal of accounting and public policy, 37(2), 130-145. arfa, c., & achouri, h. (2008). tunisia: good practice in expanding health care coverage. lessons from reforms in a country in transition. lessons from reforms in low-and middle-income countries. good table 17: sinistrality (ratios s/p) as a function of uses 2010 2012 tpv (taxis and similar) 127% 143% business and walks 166% 210% utility 1 199% 237% agricultural utility 314% 363% utility >3.5 tonne 172% 203% 2 wheels 506% 937% source: reform of the automotive civil responsibility insurance in tunisia: inventory and recommendations 2015 know the actual cost of the civil responsibility: for the majority of businesses, no accounting or statistical information differentiates civil responsibility from other automotive promises or guarantees. this made it impossible for the supervisory authority to determine the proper balance price for civil responsibility insurance. however, because of the asymmetry in this risk, all the insurers are dissatisfied with the outcome. some of these insurers presented a sinistrality (more than 200%) that needed to be revised from a technical standpoint. the “agricultural utility” and “2-wheel use” offer dismal results, with corresponding s/p ratios of 363% and 937% in 2012. this is evident in light of the table for the investments made from 2010 to 2012. we also see that the sinistrality ratio is large and exceeds 100% for all purposes. no outcome can be considered average. this viewpoint allows us to conclude that the imbalance in the automobile industry is mostly caused by the “use of two wheels” and “agricultural utility.” the s/p ratios for “taxis,” “business and walks,” and “utility > 3.5-tonne” usage in 2010 were, respectively, in the range of 127%, 166%, and 172%, which is less than but still greater than 100%. conclusion in conclusion, the current study used a qualitative methodology based on the interpretivism school of thought to analyze the technical viability of the tunisian car insurance market in great detail. this approach dives into complex phenomena and offers a detailed picture of the dynamics of the industry. the study uses an inductive methodology to unearth ideas that align with its goals. pa ge 15 5 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 145-157, 2023 practices in health financing. washington, dc, the world bank, 385-437. asante, d., tang, c., asante, e. a., kwamega, m., & opoku-danso, a. 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(2021). pandemics: implications for research and practice in industrial and organizational psychology. industrial and organizational psychology, 14(1-2), 1-35. appendix 1ratios are calculated by the insurer in order to check the profitability of an insurance policy: it consists of calculating the ratio between the amount of sinister divided by the premiums (s/p) or contributions collected (s/c) under the same contract. 2generally, an appeal is the fact of appealing to a third person or an institution to obtain recognition of a right that has been disregarded. appealing can be amicable or contentious, and depending on the subject of the dispute, it can be civil or administrative. 3management fees: acquisition fee and the other net pa ge 15 7 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 145-157, 2023 management expenses. 4the earned premiums correspond to the proportion of the issued premiums that have been earned during the accounting period. the issued premiums cover the period indicated in the insurance policy. the difference between issued premiums and earned premiums is a provisioned amount which is included in the reserves for unearned premiums. these amounts are treated as assets belonging to the assured. 5(acquisition costs + other net management costs) pa ge 1 pa ge 17 9 american journal of economics and business innovation (ajebi) sustainable ecopreneurship: solar energy solutions in commercial real estate kristina marie nalus1* volume 2 issue 3, year 2023 issn: 2831-5588 (online), 2832-4862 (print) doi: https://doi.org/10.54536/ajebi.v2i3.2146 https://journals.e-palli.com/home/index.php/ajebi article information abstract received: october 07, 2023 accepted: november 10, 2023 published: november 16, 2023 this study delves into the rapid trend of integrating solar energy into the realm of business operations, providing valuable insights into the readiness of provincial business establishments and commercial building owners to embrace solar energy as a viable alternative power resource. this study examines the landscape of factors influencing the adoption of solar energy. these pivotal variables, namely, the comfort of tenants, competitive advantage, and cost-effectiveness, are all identified as central drivers within the thriving commercial real estate industry, signifying a promising shift towards solar energy adoption in the province of pampanga. the result from the study affirms the paramount importance of tenant comfort, a factor inextricably linked with enhanced profitability. additionally, the study illuminates the strategic significance of maintaining a sustainable environment, serving as a formidable competitive advantage. by embracing sustainability, businesses can unlock an array of economic benefits, rendering solar energy adoption inherently cost-effective. in sum, the interplay of these independent variables signals a robust relationship poised to usher in the widespread adoption of solar energy as a sustainable alternative power resource. as a prudent and forward-looking recommendation, this study underscores the compelling case for provincial commercial real estate entities to actively embrace the integration of solar panels into their operations. by doing so, they can champion both environmental responsibility and economic viability, reaping the rewards of a progressive and eco-conscious approach. keywords ecopreneurship, social responsibility, green business, solar energy, energy-efficient buildings 1 university of santo tomas, philippines * corresponding author’s e-mail: kmnalus@ust.edu.ph introduction in the contemporary business landscape, the confluence of ecopreneurship and sustainable energy solutions has emerged as a pivotal intersection characterized by innovation, profitability, and environmental stewardship. defined as the conscientious pursuit of environmentally responsible entrepreneurship (wagner, 2009), ecopreneurship represents a steadfast commitment to sustainable business practices underpinned by enduring environmental and social values. this research embarks on an academic investigation with the goal of clarifying how entrepreneurs can successfully balance their economic goals with their environmental and social values by employing alternative energy sources. in an era, fraught with acute environmental challenges (masjud, 2020), it is of high importance to acknowledge and comprehend the seminal role that entrepreneurs play in addressing these issues. an emerging trend in modern business involves the rapidly increasing adoption of solar energy, making solar-powered companies more and more common. noteworthy insights are provided by eddie o’connor, chairman of the global wind energy council and mainstream renewable power, emphasizing that renewable energy, including solar power, not only promises cost reductions but also augments economic competitiveness and elevates living standards (o’connor, 2018). moreover, empirical evidence underscores the positive association between the incorporation of solar power and enhanced business valuation, rendering it an appealing prospect for entrepreneurial endeavors. against the backdrop of both national and corporate sectors embracing solar energy, entrepreneurs are faced not only with the imperative of diligently scrutinizing this emergent trend but also with the imperative of seamlessly integrating it into their broader social entrepreneurship paradigms. nonetheless, the realm of ecopreneurship remains an inadequately explored terrain in relation to alternative energy sources, especially within the purview of developing nations. although entrepreneurship research has made substantive inroads in comprehending the construct of entrepreneurial opportunity (shane, 2004), limited few attentions was directed towards the complex juncture of entrepreneurial opportunities and challenges intrinsic to the renewable energy domain. notably, ecopreneurs grapple with formidable and unpredictable business risks stemming from the complex and evolving environmental landscape (kirkwood & walton, 2010). unfortunately, the existing knowledge base lacks a thorough grasp of the various factors that drive building owners to embrace solar energy as an alternative source of power. to address this scholarly gap, this study undertakes a systematic endeavor to bridge the schism between entrepreneurship and renewable energy research. it does so through the meticulous conduct of a sector-specific analysis that scrutinizes building owners who hold the potential to metamorphose into green entrepreneurs espousing renewable energy. this investigative approach strategically zooms in on the province of pampanga, philippines, allowing for a detailed examination of the pa ge 18 0 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 179-191, 2023 specific contextual intricacies. it is noteworthy that while the geographic ambit of this research is circumscribed to pampanga, the insights gleaned therein carry a broader relevance that has the potential to inform future comparative studies across diverse geographic and industrial contexts. implicit in this academic endeavor is the promotion of the use of a quantitative research methodology, intended to enhance the applicability of research findings beyond the restricted scope of the commercial real estate sector. the main question driving this study effort pertains to the inclination of businesses and commercial property owners in the province of pampanga to adopt solar energy as a practical alternative source of power. central to this inquiry is the meticulous examination of the manifold factors that exert influence upon their decisionmaking processes. the objectives of this study are: 1. identification of the variables that drive building owners to opt for solar energy adoption. 2. the significance of these variables within the scope of ecopreneurship and green business practices, 3. the evaluation of the pertinence of ecopreneurship within the commercial real estate sector, and 4. the discernment of the economic sustainability and environmental dividends attendant to the adoption of solar energy. the significance of this scholarly enterprise transcends the boundaries of academic discourse, holding practical import for the commercial real estate industry. this study provides insights into the approach through which building owners can establish economically successful enterprises while steadfastly adhering to their environmental and social values. furthermore, it significantly contributes to environmental preservation and efforts to address climate change by promoting the adoption of solar energy, thus reducing electricity consumption and its associated adverse societal impacts. additionally, this research offers a robust framework that has the potential to inspire social and environmentally conscious entrepreneurship. this, in turn, can offer valuable support to government initiatives, enable corporations to quantitatively evaluate their environmental contributions, and stimulate further scholarly exploration into the complex relationship between entrepreneurs and eco-friendly entrepreneurship. this study is primarily focused on the commercial real estate sector, its findings have implications that reach beyond this specific domain. notably, even though it is geographically rooted in pampanga, the study’s scope encompasses the limitless potential of solar energy as an endlessly renewable resource, making its insights relevant wherever the sun’s radiant influence is felt. literature review this section introduces pertinent literature that contributes to a comprehensive comprehension of the present study, commencing with an examination of the existing research regarding the adoption of solar energy by building owners. subsequently, it delves into the literature detailing various strategies employed by building owners to successfully integrate solar energy solutions. social responsibility by building owners the reviewed literature provides valuable insights into the realm of corporate social responsibility (csr) and its multifaceted implications. schremph-stirling, palazzo, and phillips (2016) explore the concept of social responsibility, examining its effects on a business’s reputation and legacy, emphasizing the importance of businesses addressing historical decisions made by previous generations of owners. mikolajek-gocejna’s (2016) study delves into the relationship between csr and financial performance, highlighting positive correlations between social responsibility and financial performance, while underscoring the need for more empirical research to validate csr practices’ impact on organizational economics. wang, tang, takeuchi, and george’s work sheds light on the evolving landscape of csr research, emphasizing its growing importance for businesses, stakeholders, and society. a. jain, p. jain, and rezaee (2016) investigate whether informed investors consider social responsibility performance when making investment decisions, finding a positive association between csr performance and investment decisions. kang, germann, and grewal’s (2016) study explores the relationship between csr and firm performance, identifying mechanisms that influence this relationship and finding support for good management and penance mechanisms. collectively, these studies underscore the significance of social responsibility in business, highlighting its potential for positive feedback within the industry and financial effectiveness. they emphasize that an effective social responsibility strategy can contribute to a business’s long-term success, while acknowledging the need for further investigation into specific csr categories and their correlation with corporate financial performance in future research. energy-efficient buildings the reviewed literature provides valuable insights into energy-efficient building strategies and their implications. pape-salmon, muncaster, and kaye (2011) evaluated the effectiveness of energy-efficient buildings, emphasizing their promotion through widespread adoption and eventual regulation, leading to new codes and standards. passe and nelson (2013) identified the relationship between form, proportions, and thermal performance in building construction, proposing joint demonstration projects to prevent thermal bridges. horsley, france, and quatermass (2003) examined the economic and environmental benefits of reducing energy consumption through design, highlighting the importance of life cycle costing. iwaro and mwasha (2010) assessed the implementation of building energy standards in developing countries, emphasizing the need for effective standards to achieve energy efficiency. roulet, flourentzou, foradini, bluyssen, cox, and pa ge 18 1 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 179-191, 2023 aizlewood (2006) evaluated the attainment of sustainable development goals, including energy performance and occupant comfort. these studies collectively emphasize the importance of energy-efficient building strategies for sustainability, reduced energy consumption, and improved economic outcomes. this supports the statement of the study in the paper of (pasaoa et al., 2023), that focuses on innovation being able to improve business performance and sustain economic growth. they suggest that environmentally friendly design concepts, such as solar panels and green materials, can yield long-term benefits, including reduced energy consumption and increased tenant satisfaction, outweighing initial construction costs. however, consistent data and further research are needed to comprehensively understand the implications of energy-efficient buildings. these articles provide valuable insights for the development and construction of energyefficient buildings and their openness to alternative energy sources, such as solar panels, contributing to a more sustainable and efficient future. green business the reviewed literature provides insights into various aspects of green business practices and their implications (parry, 2012; mishra & sharma, 2014; agrawal, ferguson, tokta, thomas, 2012; isaak, 2002). this study (majeed et al., 2022) explored a company perceptions’ impact on its green business implementation of eco-friendly strategies and business performance. parry (2012) identified distinct stages that businesses go through during the “greening” process, highlighting exploration, substantiation, and integration as key phases. in the study of vilkaitevaitone & skackauskiene (2019), discussed the trends and challenges of green marketing, emphasizing the need for businesses to target environmentally conscious consumers and promote the benefits of green products and services. as the study of (qin & li, 2023), green business exhibits qualities such as minimal resource utilization, negligible environmental impact, the creation of highvalue products, robust technological advancements, and the employment of highly concentrated production techniques. agrawal, ferguson, tokta, and thomas (2012) assessed the environmental impact of leasing compared to selling, concluding that leasing can have a lower environmental impact under certain conditions. the definition of ecopreneurship as a means to transform economic sectors toward sustainability, providing practical strategies for individuals interested in pursuing ecopreneurial ventures was studied by rodríguez-garcía, guijarro-garcia and carilero-castillo (2019). collectively, these studies underscore the significance of green business practices in promoting sustainability and attracting environmentally conscious consumers. they highlight the potential benefits of green initiatives, including long-term growth, cost savings, and improved market positioning. data analysis methods were employed in these studies to support their findings and conclusions. these articles pave the way for further research into the environmental and economic aspects of green business practices, offering valuable insights for businesses seeking to integrate sustainability into their strategies. additionally, they emphasize the relevance of energy efficiency as a key component of green business practices, aligning with the focus of my research study. solar energy the reviewed literature emphasizes the significance of solar energy as an alternative and sustainable power resource, addressing both environmental and economic considerations (jayaraman, ling, 2014; bucking, 2017; konovalov, pogharnitskaya, rostovshchikova, matveenko, 2015). in the study of (liu et al., 2022), they evaluated the cost, energy, and environmental aspects of solar power, highlighting its potential to reduce greenhouse gas emissions and emphasizing the need for government support and incentives. yüksek & karadağ (2021) examined strategies to maximize solar energy utilization in buildings, emphasizing the importance of cost-effective technologies for solar energy capture and utilization. makki & mosly (2020) identified obstacles in the adoption of solar energy, including high subsidies for conventional electricity and the need for public awareness. focusing on the effects of solar variability on energy and economics, emphasizing the importance of energy conservation, net metering laws, fuel price escalation, and upfront financing for cost-effectiveness for southeast asian countries was conducted in the study (govindarajan et al., 2023). kumar (2020) highlighted the growing demand for renewable and alternative energy sources to address environmental concerns and energy supply needs. these studies collectively underscore the potential benefits of solar energy in reducing environmental impacts, improving energy efficiency, and contributing to sustainable business practices. they emphasize the need for government support, public awareness, and cost-effective technologies to facilitate the adoption of solar energy. additionally, they highlight the relevance of energy-efficient building practices in achieving economic and environmental sustainability. overall, the literature review provides valuable insights into the role of solar energy in ecopreneurship and green business practices. it underscores the importance of continued research and innovation in solar energy technologies to promote its widespread adoption and maximize its benefits for businesses and the environment. theoretical framework in accordance with the findings presented in the scholarly article by horsley, france, and quatermass (2003) titled “delivering energy efficient buildings: a design procedure to demonstrate environmental and economic benefits,” the concept of building energy performance can be comprehensively delineated as a multifaceted construct contingent upon three intricately linked factors. these factors encompass building design, pa ge 18 2 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 179-191, 2023 services design, and occupant behavior. building design, in this context, pertains to the fundamental parameters encompassing the architectural plan, form, orientation, and structural components of the building. services design encompasses the detailed specifications related to heating, lighting, and cooling systems within the building’s framework. furthermore, occupant behavior is considered a crucial determinant of energy performance and pertains to patterns of occupancy and utilization within the building. these three interrelated factors governing building energy performance are intricately woven into the fabric of the building’s development process, evolving and taking shape throughout various stages of design and construction. notably, the article places its primary focus on facets that are less susceptible to change during the building’s operational lifespan, namely building and services design. the dynamic and iterative nature of the design process underscores the notion that the requisites for achieving energy-efficient building design are subject to evolution and adjustment as the project progresses through its developmental phases. in summary, horsley, france, and quatermass (2003) assert that the multifaceted construct of building energy performance pivots on the interconnected dynamics of building design, services design, and occupant behavior, with these factors evolving throughout the developmental trajectory of the project. the study underscores the persistent need for meticulous attention to building and services design in the pursuit of energy-efficient buildings, recognizing their enduring significance in the face of evolving design requirements during the development process. within the scholarly work titled “multi criteria analysis figure 1: theoretical framework of health, comfort and energy efficiency in buildings,” a pivotal aspect under scrutiny is the perception of comfort among building occupants. in order to systematically assess this crucial variable, the researchers employed a self-administered questionnaire as their data collection instrument (roulet et al., 2006). the primary inquiry posed to the occupants was directed at elucidating their appraisal of the prevailing working conditions within the building, a query that solicited subjective feedback. in response to this inquiry, occupants were instructed to select a single rating from a spectrum spanning from 1 to 7, with each integer representing a distinct level on the comfort continuum. this evaluative process was conducted separately for both the winter and summer seasons to capture potential variations in comfort perception across different climatic conditions (roulet et al., 2006). in essence, the study by roulet et al. (2006) underscores the salient role assigned to the variable of perceived comfort, elucidating its evaluation through a structured questionnaire. occupants were tasked with assessing typical working conditions within the building by assigning numerical values to distinct levels of comfort, thus facilitating a comprehensive understanding of comfort dynamics in both winter and summer seasons. in summary, the research conducted by roulet et al. (2006) delves into the realm of occupant comfort within buildings, employing a self-administered questionnaire to gauge occupants’ subjective evaluations. this approach allowed for the nuanced assessment of comfort perception under varying seasonal conditions, contributing to a holistic comprehension of the comfortrelated aspects in building performance. table 1: questions related to comfort thermal comfort temperature comfortable uncomfortable too hot too cold stable varies air movement too still too draughty air quality air quality dry humid fresh stuffy light odorless smelly noise light overall satisfactory unsatisfactory noise from outside satisfactory unsatisfactory pa ge 18 3 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 179-191, 2023 the findings presented in this study draw upon an extensive dataset comprising over 5800 questionnaires collected from office buildings, with an average of approximately 90 questionnaires per building. additionally, data were collected from 2700 questionnaires sourced from apartment buildings, averaging 27 questionnaires per building. for the purposes of the current analysis, the dataset has been aggregated to compute the mean scores for each question based on responses from all participants within a particular building. detailed statistical summaries of these aggregated scores are provided in table 2. research design, focusing on elucidating the characteristics of a specific demographic segment. the utilization of a purposive sampling technique was deemed appropriate due to the relatively small size of the target sample. purposive sampling is not employed for the purpose of random selection from a population with the intent of generalization. rather, it serves the objective of deliberately selecting units from a population with shared characteristics and common interests, aligning with the research’s aim to address specific research questions. the central aim of this research is to ascertain the relationships among variables that influence owners’ decisions to adopt solar energy as an alternative energy source. consequently, the ideal respondents for completing the questionnaires are the property owners themselves. to ensure the representativeness of the sample, a selection process was undertaken. among the 19 municipalities situated in pampanga, five were strategically chosen for inclusion in the study-floridablanca, guagua, lubao, santa rita, and porac. these municipalities were selected due to their proximity, all falling within a 20-kilometer table 2: result of comfort marks given by occupants item mean median air quality 2.95 2.90 thermal comfort 2.87 2.87 lighting 3.37 3.41 acoustics 2.67 2.60 comfort overall 3.09 2.94 the findings underscore the significance of the overall comfort levels experienced by building occupants, a factor that holds substantial importance not only for building owners but also for tenants. this aspect plays a pivotal role in the selection of an appropriate and conducive atmosphere for the building’s inhabitants. operational framework drawing upon the conceptual framework presented earlier, the researcher has developed an operational framework designed to effectively investigate the hypothesis and specific research objectives, thereby providing insights into the main research inquiries. within this study, the dependent variables encompass aspects such as comfort, competitive advantage, and cost-effectiveness. meanwhile, the focal independent variable revolves around the adoption of solar energy as an alternative power resource. the primary objective of this investigation is to examine the relationships among these factors and their respective significance. figure 2: operational framework figure 3: map of pampanga highlighting the municipalities of interest radius of floridablanca, one of the largest municipalities in the province, ranking third in size following porac and candaba. within these five municipalities, a total of 50 establishment and commercial building owners were selected as the target population for this study, serving as a representative sample reflective of a province of typical size. this sample was chosen to facilitate an in-depth analysis of their perspectives regarding the adoption of solar energy. noise from bldg. systems other noise from bldg. noise overall comfort comfort overall satisfactory unsatisfactory methodology research design this study is primarily characterized by a descriptive pa ge 18 4 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 179-191, 2023 research procedures and data collections distribution and administration of questionnaires questionnaires are prepared in printed form and disseminated among the selected respondents. respondents were guided through the questionnaire completion process by the researcher to ensure accuracy and candor in their responses. furthermore, respondents were given explicit assurances that any information they provided concerning themselves and their business endeavors would be treated with strict confidentiality and solely employed for academic research purposes. questionnaire structure the questionnaire was thoughtfully structured to align with the relevant variables of the study. the initial section of the questionnaire was dedicated to gathering demographic information about business/building owners and assessing the extent of their involvement in their respective enterprises. queries encompassed aspects such as the duration of their tenure in the industry, their experience in building maintenance, and the number of years their business operations have spanned. subsequently, the second part of the questionnaire was formulated to gauge the respondents’ level of contentment with their financial performance, utilizing the likert scale for measurement. the likert scale, calibrated with ‘5’ designating “strongly agree” and ‘1’ signifying “strongly disagree,” was employed for this purpose. the questions in this section were categorized into three distinct dimensions: comfort of the tenants, competitive advantage, and cost-effectiveness. each dimension comprised five questions, a deliberate choice to bolster the reliability and consistency of the obtained results. moreover, an overarching measure of overall business satisfaction was incorporated into this segment of the questionnaire. questionnaire validation to validate the questionnaire, a pre-testing phase was carried out, and the cronbach’s alpha coefficient was implemented. cronbach’s alpha, developed by lee cronbach in 1951, serves as a metric for evaluating the internal consistency and reliability of tests. its values range from 0 to 1, with a threshold of 0.7 or higher signifying the desirable or acceptable internal consistency table 3: population of respondents municipality 1-2 story 2-4 story 5 story and above total apalit 4 6 2 12 arayat 5 5 1 11 bacolor 5 6 2 13 candaba 4 5 1 10 floridablanca 6 3 0 9 guagua 6 4 2 12 lubao 4 4 3 11 macabebe 5 3 0 8 magalang 5 4 0 9 masantol 5 2 0 7 mexico 6 6 3 15 minalin 4 3 2 9 porac 3 3 2 8 san luis 4 2 0 6 san simon 4 3 0 7 santa ana 5 2 1 8 santa rita 4 3 3 10 santo tomas 6 3 0 9 sasmuan 5 3 0 3 table 4: cronbach’s alpha with raw variables for comfort of tenants/occupant’s questionnaire cronbach's alpha 0.9461 95% lower confidence limit 0.8922 table 5: results of cronbach’s alpha for comfort of tenants’ questionnaire variable dropped alpha change q1 0.9557 0.009612 q2 0.9336 -0.01250 q3 0.9445 -0.001552 q4 0.9336 -0.01250 q5 0.9360 -0.01001 q6 0.9375 -0.008560 q7 0.9470 0.0009012 q8 0.9336 -0.01250 q9 0.9476 0.001585 q10 0.9336 -0.01250 table 6: cronbach’s alpha with raw variables for competitive advantage questionnaire cronbach's alpha 0.8238 95% lower confidence limit 0.6480 table 7: results of cronbach’s alpha for competitive advantage questionnaire variable dropped alpha change q1 0.7756 -0.04823 q2 0.8015 -0.02230 q3 0.8877 0.06387 q4 0.7667 -0.05715 q5 0.8058 -0.01800 q6 0.8048 -0.01902 q7 0.8134 -0.01036 q8 0.7975 -0.02632 q9 0.8136 -0.01016 q10 0.7808 -0.04296 pa ge 18 5 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 179-191, 2023 table 8: cronbach’s alpha with raw variables costeffectiveness questionnaire cronbach's alpha 0.9613 95% lower confidence limit 0.9227 table 9: results of cronbach’s alpha for costeffectiveness questionnaire variable dropped alpha change q1 0.9574 -0.003922 q2 0.9530 -0.008319 q3 0.9564 -0.004933 q4 0.9590 -0.002363 q5 0.9593 -0.002024 q6 0.9552 -0.006081 q7 0.9632 0.001856 q8 0.9629 0.001549 q9 0.9510 -0.01037 q10 0.9530 -0.008319 of test items (andrew, pedersen, & mcevoy, 2011). the cronbach’s alpha coefficient calculated for questions pertaining to the comfort of tenants/occupants revealed an “excellent level of reliability” cronbach’s alpha for questions regarding competitive advantage resulted to “good level of reliability” cronbach’s alpha for questions regarding costeffectiveness resulted to “excellent level of reliability” research ethics approaches the survey questionnaire commenced with an introductory section elucidating the study’s provenance, its overarching objectives, and the thematic facets it encompassed. the questionnaire provided a comprehensive breakdown of its constituent segments, each serving a distinct purpose in the research inquiry. additionally, the survey questionnaire explicitly delineated its intended respondents. importantly, participation in the survey was entirely voluntary, and respondents were under no compulsion to partake. a paramount ethical consideration was the commitment to employ the gathered data exclusively for educational and research purposes, as explicitly communicated to the respondents in the questionnaire’s introductory preamble. furthermore, stringent measures were taken to ensure academic integrity, with all utilized resources being meticulously cited and referenced in accordance with established scholarly conventions. data analysis the obtained results underwent a rigorous analytical process involving both quantitative and descriptive methods. these analytical techniques were instrumental in computing key statistical parameters, particularly the mean and standard deviation, for each of the research variables. the population mean, denoted by the symbol μ, was ascertained using the formula: μ = (σ xi) / n, where σ xi’ signifies the summation of all scores within the population, and ‘n’ represents the total count of individuals or cases constituting the population. concurrently, the population standard deviation, symbolized as σ, was determined to assess the degree of variability or spread exhibited by the scores pertaining to a given variable. the formula employed for this purpose is: σ = sqrt [σ (xi – μ )2 / n], with ‘sqrt’ signifying the square root operation and ‘σ (xi – μ )2’ denoting the summation of squared deviations of individual scores from the population mean. it is imperative to note that the mean serves as a pivotal measure of central tendency, while the standard deviation functions as a critical gauge of dispersion. these statistics are especially pertinent when dealing with data sets adhering to a normal distribution and employing ratio or interval scaling. furthermore, the mean and standard deviation play integral roles in the computation of various correlation coefficients and effect sizes, as elucidated in the subsequent chapter. in the research context, the independent variable pertains to the adoption or implementation of solar energy as an alternative energy source. the dependent variable encompasses financial performance indicators, specifically comfort, competitive advantage, and costeffectiveness. these parameters serve as the empirical foundations for investigating the research hypotheses and objectives outlined in the study. demographic profile a complete enumeration of the study’s participant pool comprised 50 respondents who actively completed the questionnaire. the educational attainment of the respondents reveals table 10: profile of respondents – demographics frequency % age below 30 3 6.0 30 to 35 18 36.0 36 to 40 4 8.0 41 to 45 10 20.0 46 and above 15 30.0 gender male 34 68.0 female 16 32.0 civil status single 23 46.0 married 27 54.0 highest level of educational attainment high school 1 2.0 college 35 70.0 post grad 14 28.0 pa ge 18 6 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 179-191, 2023 that 70% hold a college degree, 28% possess a postgraduate degree, and a solitary respondent did not complete a college degree, holding only a high school diploma. in terms of age distribution, the majority of respondents fall within the 30-35 age bracket (36%), followed by 30% aged 46 and above, 20% aged 41-45, 8% aged 36-40, and 6% below 30 years old. gender-wise, the majority of participants are male (68%), with females constituting the remaining 32%. marital status among respondents indicates that 54% are married, while 46% are single. individuals, possess 5 to 10 years of experience within the commercial real estate industry. moreover, 40% of the respondents, comprising 8 individuals, boast over 11 years of experience, concurrently managing two or more operational buildings. a total of 16% of the respondents, or 8 individuals, are relatively new to the industry, having accrued 4 years or less in the field. it is noteworthy that this group often includes the children of recent building owners. it should be emphasized that these well-defined business operations allow for the effective operation of commercial properties with minimal direct owner supervision. table 11: involvement in business of respondents frequency % full-time and hands on 26 52.0 visits weekly 17 34.0 visits whenever needed/necessary 7 14.0 twenty-six respondents are actively engaged in full-time business management, wherein they personally oversee day-to-day operations and are responsible for making decisions that impact their businesses. among these, seventeen respondents visit their businesses on a weekly basis and often employ area managers to handle operational matters. on the other hand, seven respondents, typically owners of two or more buildings, visit their businesses as needed. despite their periodic presence, they have established systems and protocols to ensure the smooth operation of their commercial buildings during their absence. consequently, their businesses can function with minimal direct supervision from the owners due to welldefined operational procedures. approximately 44% of the respondents, equivalent to 22 table 12: duration in commercial real estate of the respondents frequency % 4 years or less 8 16.0 5 to 10 years 22 44.0 11 years or more 20 40.0 table 13: amount spent in building establishment’s maintenance of the respondents frequency % php499,000 or less 35 70.0 php500,000-999,000 14 28.0 php1,000,000 or more 1 2.0 a significant proportion of the respondents, accounting for 70% or 35 individuals, allocate an annual budget of php 499,000 or less for their building maintenance expenses. additionally, 14% of the respondents, specifically 28 individuals, allocate an annual budget ranging from php 500,000 to php 999,000 for their building maintenance. notably, only one respondent, constituting 2% of the population, incurs building maintenance expenses exceeding php 1,000,000 annually. results and discussion the building proprietors hold the comfort of their lessees in high esteem, deeming it a paramount consideration in each operational choice. the cultivation of comfort is instrumental in fostering productivity, ultimately culminating in enhanced financial viability. given that numerous tenants employ personnel within their establishments, the provision of a comfortable milieu not only engenders contentment but also streamlines job performance. furthermore, the preservation of a well-maintained in-store ambiance holds significant importance, particularly in cultivating patron loyalty. table 14: descriptive statistics of the importance of comfort of the tenants and occupants a. comfort (tenants/occupants) mean sd interpretation utilizing solar energy for your premises can greatly reduce the property’s carbon footprint, which improves your tenant’s green credentials and reduce health hazards 4.22 0.62 strongly agree tenants will have a peace of mind knowing that there will be no fire scare that is electricity related 4.64 0.56 strongly agree with solar energy, tenants are immune from a fluctuating energy market or sporadic power outages 4.56 0.54 strongly agree reduction in utility bills will increase the life comfort of tenants 4.72 0.50 strongly agree convenience, safety, and health of the tenants is a priority 4.80 0.45 strongly agree owner of a rental unit is responsible for providing a "habitable" unit for a tenant. rental unit must be free from hazards or defects, and be compliant with all local building and health codes 4.46 0.58 strongly agree pa ge 18 7 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 179-191, 2023 tenants have a compelling reason to consider environment quality measures when selecting a space where their employees will be most productive 4.20 0.61 agree turnovers and dissatisfaction are expensive, therefore, achieving a high degree of tenant comfort and satisfaction is important 4.66 0.56 strongly agree energy efficient buildings tend to be more comfortable and have higher air quality 4.16 0.62 agree building owners must provide and maintain rental properties in a reasonable state of repair. this means making sure they’re safe and healthy to dwell in. 4.44 0.58 strongly agree overall mean 4.49 very satisfied the findings demonstrate that building owners universally accord substantial importance to the concept of competitive advantage. the study has unveiled that ecopreneurship, owing to its dedication to environmental sustainability, has garnered a commendable reputation. this commendation imparts a significant competitive edge to ecopreneur enterprises, enabling them to amass a substantial client base, inclusive of both existing and prospective customers. the sizable clientele within the realm of ecopreneurship enterprises, in turn, contributes to heightened gross revenue volumes, thereby underpinning the profitability of these business endeavors (isaak, 2002). the outcomes of the study substantiate that integrating sustainability principles into business operations can indeed yield economic advantages. in addition to these benefits, ecopreneurship also exemplifies notable energy and resource efficiency. table 15: descriptive statistics of the importance of competitive advantage to the owners b. competitive advantage mean sd interpretation tenants or clients prefer establishments or businesses that are eco-friendly 3.90 0.74 agree reduction of greenhouse gas emissions using solar power is a good corporate social responsibility 4.22 0.62 strongly agree there is no building in my area that uses solar panels 4.36 0.69 strongly agree adaption of solar energy will be a competitive edge; it provides a differentiation when putting the property back on the market for tenancies 4.18 0.60 agree innovation and change are needed to stay in the market, and a competitive edge is needed in any type of businesses. 4.48 0.54 strongly agree an understanding of the current environment of a building enables managers to improve and promote operational performance 4.30 0.54 strongly agree innovative building owners and operators recognize that satisfied tenants mean renewals, referrals and reduced operating costs 4.36 0.53 strongly agree solar energy is one of the most visible ways for a building to pledge their allegiance to the green movement. 4.12 0.56 agree installation of solar panels can differentiate a building’s brand in the market and irrefutably demonstrate stellar smart building leadership. 4.12 0.52 agree a top priority for building owners is delivering best-in-class service to retain tenants 4.36 0.63 strongly agree overall mean 4.24 very satisfied table 16: descriptive statistics of the importance of cost-effectiveness to the owners c. cost-effectiveness mean sd interpretation using solar energy can lead to reduced operating costs by reducing or even eliminating utility expenditures 4.14 0.57 agree an investment in solar panels will help the business in the long run (future increase in electricity prices, etc.), and proves to tenants that they’re investing in the future of the property 4.08 0.63 agree long life span of a solar power system with a low maintenance process can make the rent expense low and will benefit both the owner and tenants/occupants since it requires little to no maintenance at all. 4.08 0.60 agree the number of years it takes for the investment to pay back might be high, but potential savings over time are higher, as it increases the property’s value 3.96 0.60 agree without the electricity bills, it will be easier for all businesses to stay in the market 4.42 0.88 strongly agree pa ge 18 8 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 179-191, 2023 solar panels immediately help a commercial building become more recognizable, if not by the general public, then at least by future tenants. 4.04 0.57 agree to lower vacancy loss and maintenance expenses, building owners must deliver a superior tenant experience 4.64 0.48 strongly agree solar energy implementation can also increase tenant comfort levels and attract new tenants. 4.06 0.71 agree solar energy ensures a high-build quality and a comfortable building with lowenergy costs. the added value to tenants may justify the cost of construction 4.00 0.67 agree the cost of investments in energy efficient buildings can also be justified by the enhanced reputation of building owners 4.02 0.65 agree overall mean 4.14 satisfied to align with principles of sustainable development, buildings must meet certain minimum criteria, including providing a healthy, comfortable, and energy-efficient environment (roulet, 2006). these criteria involve assessing factors such as occupants’ perceived health, indoor air quality, and energy efficiency. with the emergence of solar energy panels, it is now possible to design and construct buildings that simultaneously fulfill these criteria, being energy-efficient, healthy, and comfortable. tenant comfort in commercial buildings also translates to higher profitability. reduced electricity expenses result in lower operational costs, contributing to increased income. safety considerations are also pivotal for tenants when selecting buildings or rental spaces for their businesses. consequently, respondents in this study strongly concur that tenant comfort holds paramount importance in their business operations, particularly in achieving longterm goals such as minimizing turnover rates and tenant dissatisfaction. buildings significantly impact the environment through energy consumption during their operational lifetimes (horsley, 2003). solar energy, as a sustainable and renewable energy source, contributes to lower air pollution levels. this sustainability and reduced environmental impact can enhance the image of building owners, attracting more clients and consequently bolstering business volume (wagner, 2009). john elkington, in his influential work “cannibals with forks: the triple bottom line of 21st century business” (elkington, 2002), argues that organizations must meet ecological, social, and economic criteria to achieve success. a socially responsible business should take into consideration the interests of all stakeholders the community, suppliers, consumers, customers employees, and innovators, as these stakeholders can influence financial performance (pfajfar et al., 2022). these results align with a study by pape-salmon, where quantitative analysis of energy efficiency measures indicated that a targeted 20% reduction in energy use per area could be achieved if all measures were implemented. additionally, it was found that the reduction in commercial and institutional energy use per square meter could exceed the target, resulting in a reduction in energy intensity. the distribution of savings across measures was well-balanced. however, other studies have concluded that the additional costs associated with sustainability measures are potentially offset by benefits both direct and indirect, illustrating a very positive correlation between financial performance and social responsibility. efficient energy usage by ecopreneurs often involves the use of solar power, a sustainable and renewable energy resource that reduces carbon emissions. this clean energy source can lead to lower energy costs for ecopreneurs, reinforcing their commitment to sustainability (isaak, 2002, p.16). numerous studies have affirmed that integrating sustainability into business operations can yield economic benefits (wagner, 2010). energy and resource efficiency are among the advantages of ecopreneurship. ecopreneurs typically prioritize sustainable energy use to minimize energy losses during the production of goods and services. this conserved energy can then be directed toward other energy needs within their ventures. in summary, the results from the questionnaires demonstrate a strong connection between entrepreneurship and environmentalism. factors such as tenant comfort, competitive advantage, and costeffectiveness are driving the adoption of solar energy as an alternative power source in commercial establishments across the province of pampanga. building owners are increasingly interested in the benefits of solar energy, particularly the reduction in electricity expenses, which outweighs the potential drawbacks associated with renewable energy adoption. conclusion the study successfully discerned the primary independent variables crucial in motivating building owners to embrace solar energy as a viable alternative power source. these variables encompass tenant comfort, competitive advantage, and cost-effectiveness, collectively influencing the propensity of building owners to adopt solar energy solutions. the study’s findings highlight the potential of ecopreneurship and green business initiatives to not only achieve cost-effectiveness but also confer a significant competitive advantage while enhancing tenant comfort. ecological entrepreneurship manifests in diverse forms and conditions, occasionally emerging unexpectedly within sustainable development contexts. however, it’s crucial to acknowledge that ecopreneurship remains relatively pa ge 18 9 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 179-191, 2023 table 17: summary of findings, conclusion, and recommendation results/findings conclusions recommendations 1. comfort of the tenants are highly regarded by the building owners. 1. comfort of the tenants also means high profitability rate. 1. design and build buildings that are simultaneously energy efficient, healthy, and comfortable. 2. keeping a sustainable environment is a great competitive advantage. 2. increased gross revenues volume which translates into profitable concern ventures are attainable for ecopreneurship ventures. 2. renewable power resource as a competitive advantage should be considered in any business industry. 3. incorporating sustainability in business can yield economic benefits, making it cost-effective. 3.there is a good correlation between financial performance and social responsibility. 3. a business must consider stakeholders’ interests that have impacts on financial stability and its objectives. 4.the independent variables are the top factors to consider in the decision-making process of the business owners. 4. the independent variables have significant relationship that will lead to adaption of solar energy as an alternative power resource. 4. it is highly recommended that the provincial commercial real estate industry adapts the usage of solar panels. nascent and has lacked empirical research in recent years, emphasizing the need for contemporary researchers to contribute to its growth. this paper addresses this research gap by illuminating how entrepreneurs can effectively pursue innovative, eco-friendly strategies for sustainable development. amid challenges facing the commercial real estate industry, especially in regions like pampanga, the paper asserts that ecopreneurship and green business initiatives, particularly in solar energy adoption, should be central to sustainable development agendas. ecopreneurship urges entrepreneurs to blend environmental and financial objectives. while entrepreneurship historically drove economic growth, mounting evidence in the natural environment reveals a disconnection between economic growth and environmental preservation, underlining the importance of environmental responsibility in entrepreneurship, or ecopreneurship. sustainable businesses tend to attract a substantial customer following, and solar investments offer opportunities for community engagement. in today’s job market, employees increasingly favor sustainabilityfocused companies, with solar energy showcasing a business’s dedication to eco-friendly practices and reducing operational costs. the adoption of solar energy among building owners in pampanga hinges on tenant comfort, competitive advantage, and cost-effectiveness, with the study emphasizing their pivotal roles in business decision-making, underscoring the tangible benefits that outweigh potential drawbacks. recommendation the study’s findings emphasize the potential of ecopreneurship and green business initiatives to provide cost-effectiveness, competitive advantages, and improved tenant comfort. ecological entrepreneurship takes various forms and thrives under diverse conditions, often emerging unexpectedly within sustainable development contexts. despite its promise, ecopreneurship remains relatively under-researched, highlighting the need for contemporary researchers to contribute to its growth. this paper addresses this research gap by illuminating how entrepreneurs can effectively pursue innovative, eco-friendly strategies for sustainable development, particularly in the commercial real estate sector. it asserts that ecopreneurship and green business initiatives, including solar energy adoption, should be central to sustainable development agendas in regions like pampanga and beyond, encouraging entrepreneurs to integrate environmental and financial goals. while entrepreneurship has traditionally been seen as a driver of economic growth, mounting evidence suggests a disconnection between economic growth and environmental preservation. ecopreneurship can bridge this gap, as businesses demonstrating a commitment to sustainability tend to attract a substantial following among customers. investing in solar installations offers organizations opportunities to raise awareness, promote their offerings within the community, and attract employees who increasingly seek sustainability-minded companies. solar energy, as a prominent alternative power source, not only aligns businesses with ecofriendly practices but also reduces operational and maintenance expenses, particularly electricity costs. the study underscores the pivotal role of tenant and occupant comfort, competitive advantage, and cost-effectiveness in driving the adoption of solar energy among building owners in pampanga, highlighting their tangible benefits that outweigh potential drawbacks. acknowledgements i extend my heartfelt gratitude to my research adviser, prof. alfredo velez, for his unwavering support, invaluable guidance, and mentorship throughout this research endeavor. i would also like to thank my family, particularly my dad, for the unwavering encouragement and belief in my abilities. to my dear 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(2021). use of renewable energy in buildings. renew. energy—technol. appl. https:// doi.org/10.5772/intechopen.93571 pa ge 1 pa ge 17 3 american journal of economics and business innovation (ajebi) a review on the evolution of agribusiness in the 21st century norhan d. ali1*, abdani d. bandera1 volume 4 issue 3, year 2025 issn: 2831-5588 (online), 2832-4862 (print) doi: https://doi.org/10.54536/ajebi.v4i3.6193 https://journals.e-palli.com/home/index.php/ajebi article information abstract received: september 25, 2025 accepted: october 27, 2025 published: december 05, 2025 the field of agribusiness has diversified further to include large scale of various disciplines such as sustainability, economics, business management and agriculture. this discussion traces the development of agribusiness that started as a conceptual idea by davis in 1955 to its present position as a global scholarly discipline. some of the significant changes it notes that have been realized between the twentieth and twenty-first centuries include the changes caused by automation and productivity-based systems to customer-centric systems, techenabled systems and sustainability-focused systems. there are arguments by some academics that agribusiness is a bad thing to the environment, corporate greed, and neoliberal policies, and others hold that agribusiness is good in terms of innovation, growth, and rural development. this review explores the redefinition of agribusiness, which alternative views agribusiness as a driver of development towards a more modern society and the source of inequity and environmental pressures. examples of areas that have been identified as deficient include talks about the ethical consideration of digital agriculture, approaches to changing the climate change, and the social and political impacts of globalized value chains. new paradigms are emerging in order to discover the compromise between efficiency, inclusivity, and environmental responsibility, the bioeconomy and circular agriculture. in its essence agribusiness is one of the fields where the economic, social, and environmental interests clash, yet it has become a mighty force of change in food systems as well. keywords agricultural economics, digital agriculture, globalization, green revolution, rural development 1 department of agribusiness management, college of agriculture mindanao state university main campus, marawi city, philippines * corresponding author’s e-mail: ali.nor45@s.msumain.edu.ph introduction the agribusiness under the umbrella of intersection of the farming, economics, and management is a relatively new academic discipline that has gained significant importance over the last few years. the agricultural value chain consists of the interdependent supply of inputs, production, processing, marketing, as well as distribution (investopedia, n.d.). the evolution of food systems reflects the basic shifts that have taken place in food systems, and it also reveals the consolidation of the discipline during the 20th and 21st centuries. the literature has changed in that there are the models that are more technology-centered, sustainability and internationally integrated and no longer concentrate on production and subsidy. nevertheless, even as it becomes more widespread it is still under debate how scholars limit it and how it will impact the livelihoods of rural populations as well as the overall social, economic, and environmental impacts. it is documented that research findings about the operation of agribusiness are many. according to camargos et al. (2021), this has been used to refer to the intersection of cattle farming, industrial production, trade, and commerce highlighting its importance to the international food supply chain. bairwa and singh (2015) expand on this notion, by linking the production, processing, and marketing activities of agribusiness to higher incomes in rural regions, new working places as well as food security. according to curmally et al. (2015), who broaden the definition of agribusiness to include the manufacture, storage, and distribution of industrial farm equipment, it emerges as a key to access to food and equity in emerging countries. others emphasize more the system-level integration (camargos et al., 2021), others putting more emphasis on developmental results (bairwa & singh, 2015), and others focusing more on the redistributive effects of agribusiness in world markets (curmally et al., 2015). all these perspectives admit that agribusiness involves a lot more than just farming. additional support of the diversification of agribusiness development is given through the context specific studies. agriculture has a significant contribution to the gross domestic product (gdp) of indonesia, trade, human capital, and the environment (feni et al., 2024). digital innovations on the other hand, are emerging as potential solutions to such issues as market unpredictability and inability to have access to technology (wanda et al., 2024). conversely, systemic barriers as well as possible opportunities have been identified in researches conducted within the philippines. agribusiness can build livelihoods and repair the ecologies in conflict-prone regions, as malik (2024) points out, and other high-value products such, as mushrooms, are found by rodriguez (2024) to be feasible ways to grow the local economy. when covering the issue of youth disengagement and advancing agripreneurship, santiago and roxas (2015) highlight such educational interventions as family farm schools and saka program. other study carried in philippines revealed that the sector is limited by institutional deficiencies. manalili et al. (2015) point out inefficiencies in rice processing and pa ge 17 4 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 173-179, 2025 market facilities in the luzon, visayas and mindanao, whereas guro (2024) points to insufficient data systems and policy gaps in the bangsamoro autonomous region in muslim mindanao (barmm). in indonesia, however, the stage is assumed by technology solutions (wanda et al., 2024). combined, they indicate how various situations impose dissimilar priorities on various areas of agricultural advancement. as an illustration, whereas the philippines considers systemic governance and infrastructure revolution something whose importance is equal, indonesia considers innovation a priority. the study conducted defines that agriculture is an important business with far-reaching effects beyond southeast asia. it is a futuristic organizational model, presented by yakovlev and stepanova (2020), that is essential in making economies, energy, and food in the country secure. the agribusiness that is big in rural economies of south asia (crops, fisheries, dairy, and forestry) is crippled by issues such as financial crises, environmental degradation, and climate change (sakib et al., 2021). borisova and sorokina (2024) point out agro sector as weakened by economic uncertainty and the presence of geopolitical tensions in russia. these are obstacles to funding, commerce and technology. these studies do not agree on the importance of the most important risk, but they provide that agriculture is vital to the development of society and economy (sakib et al., 2021 in the case of south asia and borisova and sorokina, 2024 in russia). there is a new school of thought that is emerging, which finds parallels between agribusiness, innovation, and entrepreneurship. focusing on agripreneurs in haryana, jyoti et al. (2024) emphasize the fact that bringing agri-agency suggestions implies enhanced profitability, capacity utilization, and social respectively. focusing on agribusiness as an industry of opportunities, due to the dynamic response to both personal initiative and the situation, is contrasted to the years before it was defined in terms of production and commerce (investopedia, n.d.; camargos et al., 2021). this research proves that there is consensus and divergence on the definition and practice of agribusiness. extrinsic threats, institutional vulnerabilities, and persistent inequalities are indicted by others, and its innovative capacity and integrative nature in the international global food systems are palpated by many experts. to address these controversies, this review is structured into four strands, which include: (1) the origins of the concept, (2) the emergence of agribusiness as a study, (3) its development throughout the 20 th and 21 st centuries, and (4) its reorientation in the contemporary era. in this sense, the review provides the focus on the fact that agriculture is an area of innovation and structural issues in the long term. literature review origins of the concept the concept of agribusiness originated with a systemic definition proposed by davis (1955), who highlighted the interrelationships among the supply of inputs, processing, marketing, and the production of agriculture. this framing was radically new in the period in which it was conceptionally formulated as it shifted the emphasis away not merely on farming, but on farming as a component of a greater industrial system. the necessity to create a systemic view also appeared to be emphasized by the postwar period, as more and more mechanisms were implemented in it, and more concerns were raised regarding food security. in such a way, the work of davis laid the tone to consider agriculture as the system of values which are inter-related but not only a production sphere. the system of view is supported by the fact that technological innovations created by the green revolution led to a significant increase in the size of agricultural production in the middle of the twentieth century. extensive use of mechanization, chemical fertilizer and improved types of crops led to proximity of farmers to input and output processing firms. many scholars started considering agribusiness as a solution to the underdeveloped countries in order to modernize their sectors. the opponents of this framing, on the other hand, existed. it has been questioned whether the broader impact of agribusiness-led development was more problematic since their preoccupation with productivity and the maximization of yield often came at the cost of social justice and environmental sustainability. due to the process of globalization and markets liberalization, the agribusiness term expanded by the end of the century. the rise of the multinational companies in the seed, fertilizer, and processing business identified the systemic power relations implicit in the agricultural systems. the academics believe agribusiness is best perceived in the government, trade and corporate power. this opinion identified the opportunities of globally interlinked supply chains and its threats, including a stronger dependence, inequality, and concentration of power. agribusiness is not viewed as a system comprised of independently operating parts any more due to the new research, but as a system centered around the value chain with the creation of value going beyond the farm gate. the process of coordinating and making money has ventured to the post-harvest processing, labeling and retailing. indicatively, to take an example, in their article, barrett et al. (2019) reveal that processors and producers tend to engage in contractual relations that affect the access of farmers to markets and their livelihood. the shift contributes to the value of relations and structures in shaping the outcome of agribusiness, instead of concentrating on the mode of individual production. at the same time, the contributions of the contemporary opinions in this matter are the strength of the agribusiness to provoke the changes in countryside and labor market. akuriba et al. (2020) note that agriculture can be used to revive the rural economy since it generates employment and increases the number of entrepreneurs. however, some other scholars also cautious that farmers who are pa ge 17 5 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 173-179, 2025 marginalized tend to be subject to institutional factors that make it difficult to exploit such opportunities, which only contributes to inequality. the conceptual history of agribusiness, therefore, has had a two-track history comprising on the one hand agribusiness has been acclaimed as a systemic integration, modernization, and rural change agent; on the other hand, agribusiness has been scolded as an instrument of inequality, corporate consolidation, and unequal growth. agribusiness as a discipline in the second half of the twentieth century, agribusiness came to mean more than an industrial concept, it became an academic discipline. the early programs in the hungarian royal economics academy and harvard business school had a solid agricultural economics and business management foundation (hegyi, 2020). agricultural business management, industry efficiency and relations formed significant focuses of these study subjects. with the rise of agribusiness as a social component, tertiary institutions had to change with a greater variety of degree programs. sustainability, entrepreneurship, and rural development began to feature in education in agricultural sector in the first half of the 2000s. bairwa et al. (2015) claim that agribusiness graduates can be more effective in overcoming joblessness and promoting the advancement of the food system. a more interdisciplinary approach was created, which marked a departure of narrow economic descriptions. by so doing, agribusiness programs were marketed as a means of professional and personal development. in spite of such expansion, the agenda about the scale and direction of agribusiness remains to be discussed. both weber (2017) and hamilton (2016) caution that the focus on corporations poses a risk of marginalizing the family farms and exacerbating the state of inequality. it has been some time since agribusiness curricula have emphasized corporate globalization and competition and inadequately feature smallholder participation. such fights demonstrate that the identity of the field is disputable. conversely, later sources introduce agribusiness as a solution to the current issues. as it is mentioned by muhll et al. (2024), it is a key to shaping food systems resistant to the consequences of climate change and technological disruptions. similarly, mangarin and almanzor (2024) emphasize the importance of introducing agribusiness to philippine higher education and attracts interest in how the latter can facilitate food security and entrepreneurial skills. on these lines of thoughts agribusiness programs are adapting to the varying needs of the world. agribusiness has a neutral position between activism and reproach. one party view it as a corporate dominance and neoliberal expansion instrument. on the other hand, it is sold as a way of achieving a degree that would aid in food insecurity and sustainable development. this opposition underscores the reflective and the controversial nature of agribusiness scholarship. transformations across the 20th and 21st centuries the twentieth century was marked by the industrial revolution, liberalization of trade and mechanization. green revolution was a turning point of the ever-growing reliance on the international trade of commodities and new technologies by the agribusiness industry. the revolution in agricultural production and the global food supply chains was achieved through chemical contributions, high-yield types of crops and biotechnology. however, the distance between large farmers and small farmers was also increased during these changes (alston & pardey, 2020). the industry underwent significant change towards the end of the twentieth century through liberalization and vertical integration. the agribusiness enterprises got even more control when it came to supplying, processing, and retailing input. although this integration did assist in streamlining, it also acted to centralize the corporate power. critics claim that many smallholders were excluded in high-value marketplaces due to the quality requirements and other contractual obligations. these dynamics demonstrate both favorable and unfavorable things about agribusiness developments. the new drivers of the new era are sustainability, ethical sourcing and transparency. the digital inventions that transformed production and traceability technologies comprised precision agriculture, robotics, and the blockchain (kaundinya, 2024). even though these technologies can optimize resources and maximize productivity, there are also key ethical concerns raised with regards to ownership of data and the autonomy of farmers. therefore, technical advancement remains a good as well as an evil power. it has shifted focus on the issues of the environment. it is not merely the benefits of agribusiness that the present century represents in the framework of climate change and resource efficiency rather than the previous century where the focus was on production with no regard to the ecological (dimitri and effland, 2020). the discussion is now dominated by green efforts, alternative sources of energy and ideas of the circular economy. it is argued, however, that sustainability initiatives driven by corporations often focus on branding, instead of the implementation of change. this difference in dynamics is presented through case studies. genetically modified (gm) soy beans led to the overall productivity of argentina but also left the nation more susceptible to the environmental factors (leguizamón, 2016). agrarian restructuring (2022) cites that transgenic crop in paraguay has transformed the ownership and control of land by corporations. the ones shown here emphasize that agriculture is the cause of the growth in productivity as well as the increase in income gaps. that way, the disputes in the field are reflections of greater social problems regarding development, justice, and long life. reframing the meaning of agribusiness modern research has broadened the classical systemic pa ge 17 6 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 173-179, 2025 definition of agribusiness to incorporate such concepts like sustainability, value chains, and entrepreneurship (bairwa et al., 2014). increasingly, scholars also view it, not as a fixed system of production, but as a multi-actor network that is dynamic. the development of food systems as the more closely interrelated with ecological, socioeconomic, and political processes follows. other writers view agribusiness in terms of a neoliberal agro-industrial complex that is dominated by corporations. hamilton (2016) and ioris (2016) claim that agribusiness is being a means of exclusion because of corporate integration and globalization. they highlight the issue that small-scale farmers are often marginalized and inequality is sanctified through policies concerned with liberalization and export orientation. this perspective does not regard agribusiness as a neutral economic system, but as a place of power politics. instead, the developmental paradigms focus on the ways agribusiness can drive industrialization, create job markets, and enhance growth to be inclusive (sharma & bhatt, n.d.; yakovlev & stepanova, 2020). these scholars believe that agribusiness can transform the rural regions and establish food security when appropriate policies are established. this view is particularly popular in the global south, where agriculture is linked with the reduction of the poor and employment of the youth. institutional and educational rethinking bring into the discussion a lot more. as an example, mangarin and almanzor (2024) state that integrating agriculture in universities fosters entrepreneurship and contributes to the safety of food. as per such perceptions agribusiness cannot be noticed as a mere field in the economy, but rather as an instrument of development. in order to reach a happy medium, romero vargas et al. (2020) propose to consider agribusiness as a system of dynamics that combines production, innovation, and stakeholder participation. the combined result of such reframing is the demonstration of the adaptability of agribusiness. it is exploitative and exclusive to some people and proponents argue that it can teach tolerance and strength as well. the case puts emphasis on the fact that the diverse nature of perspectives on development, sustainability, and social justice is the one that constructs the identity of agribusiness, and not a fixed concept. materials and methods to provide a comprehensive synthesis of the evolution of the concept, discipline and application of agribusiness, a systematic literature review (slr) was utilized in this research. the most important academic databases that have been used in the search process of the relevant peerreviewed journal articles, policy papers, and institutional reports of the living research published during 20152024 refer to scopus, web of science, google scholar. to bank in the modern industry and policy views, other viable online and organizational articles were reviewed. the search terms were the following: rural development, globalization, agribusiness, agricultural economics, sustainability, food systems, and digital agriculture. to be included, the sources were supposed to talk about agricultural aspects in a systemic, socioeconomic or institutional context. studies which had not involved such a thorough theoretical framework that explored the problems other than the production methods or technical features were not taken into account. to aid historical mapping and comparative interpreting in different geographies, the end body of literature has been grouped into four topics clusters which include beginnings of the idea, agribusiness as a scholar, changes in the twentieth and twenty-first century, and modern re-frames. the methodological rigor, intellectual contribution, and the relevance to the development of agribusiness were given consideration on each of the selected sources. in order to locate emerging paradigms, unsolved problems and convergent trends, thematic analysis was conducted. an examination of regional case studies particularly in the southeast asia region showed development paths and situational ways. new topics such as digital transformation, climate adjustment, sustainability, and governance in global value chains were also given more attention. because the focus of the review has been placed on english-language and sources available in databases, there is a possibility that some valuable non-english or regionspecific contributions are ignored. nonetheless, the narrative strategy gave a balanced and critical synthesis as it offered an integrative approach of how agriculture as a production-based industry was converted to a globally based, digitally connected and sustainability-based organization. results and discussions a shift towards production-based classic approaches to technology-centric, sustainability-based, value-integrated systems this is the general direction in agriculture as the literature review suggests. agribusiness seems to be a result of the trend towards equating agricultural production to the level of technology and more environmentally-friendly management techniques. digital and organizational connectedness over decades has enabled agribusiness to turn into the state of a supply chain as their live, breathing ecosystem, which unites producers, processors, retailers, and even consumers. the outcomes demonstrate that automation, precision farming, and blockchain traceability are only some of the examples of how the latest innovation is improving market efficiency, transparency, and production throughout the whole world. the digital transformation has emerged as a major competitive distinction by enhancing the resource optimization, demand forecasting, and supply chain connectivity. there are other issues that the research is also raising. these are, among others, the fact that rural areas have poor infrastructure, that traditional producers may be marginalized and that smallholders may be unexposed in terms of access to technology. although digitization pa ge 17 7 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 173-179, 2025 makes the work more efficient than it was previously, these findings demonstrate that equal development can still need digital literacy and participatory governance. agribusiness education and research have changed as well as the transformations that have occurred in the industrial sector. it is now common in schools to feature courses that unite disciplines like sustainability, entrepreneurship and economics. the change is an indication of increased consciousness of agribusiness as a system which has effects on society and environment other than the economy. the practitioners of the future will be equipped to deal with the complex and globalized agricultural environment with skills taught on the modern programs which put more emphasis on climate adaptation, innovation and ethical management. as per regional investigations, local institutional and economic environments influence the growth of agribusiness. the focus of emerging economies is on inclusive development, creation of jobs and community-based entrepreneurship as opposed to corporate integration, technical innovation and market sophistication that are prevalent in the developed world. provided that the education, infrastructure and governance structures existing in the emerging countries are able to match the needs of the industry, then the sector can assist in reducing poverty, and empowering the rural regions. agribusiness has a characteristic feature of a focus on sustainability. the environmental and social issues help to shift to the strategic direction of regenerative methods, resource effectiveness, and the idea of a circular economy. in order to bring a balance between profitability and environmental friendliness, most corporations are integrating sustainability into their business strategies. on the contrary, the study cautions against hollow sustainability assertions that emphasize on sign recognition as opposed to change. agribusiness needs to be balanced with economic growth, environmental restoration and social inclusion so as to succeed in future. the research claims that there is a structural and ideological revolution taking place in agribusiness. going digital, sustaining innovation, and creating systemic reliance among stakeholders are becoming more eminent characteristics. it is important to note, though, that in order to be successful, new technology and ethical standards will have to be implemented with a cultural flexibility, governmental support, and ready institutions. the fact that the industry development contributes to profitability and resilience, equity in the global food system is instrumental in guaranteeing the long-term value of the modern agribusiness. it can be done only through the equilibrium between the technological progress and human ingenuity, all-encompassing engagement, and wise management. conclusion due to globalization and digitization, agribusiness ceases to be a systemic concept that is becoming more of a discipline. although throughout the history of developing the discipline, the emphasis has been on critique and advocacy, the origins in the area of technology modernization and the systematic integration remain obvious. transformations that took place at the beginning of the twentieth and twenty-first centuries show that the emphasis shifted to digitalization and sustainability rather than on liberalization and productivity. scholars agree that agriculture is important, however they do not agree on the impact of the industry in the society. it may be understood as the driver of innovation, sustainability and a competitive edge but the corporates would view it as an instrument to increase their corporate influence once more at the expense of the masses. it is the plurality of agribusiness that reveals the changing and unequal nature. the versatility of the concept is brought forward through reframing. agribusiness remains a crucial topic in the discourse of food, society, and the environment whether considered as a neoliberal complex or a developmental tool or a system of education. it is constantly shifting in terms of its identity depending on various conceptualizations of the notions of development, equity, and ecology. the bioeconomy and circular agriculture are future models that can be used to strike a balance between efficiency and inclusion. however, they depend on a governmental system, which tries to abolish exclusion and encourages the equal opportunity in order to be effective. to ensure the field’s future, it is critical that it strike the right balance between technical innovation, social justice, and ecological stewardship. ultimately, agribusiness is not 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(2020). analysis and prospects for the development of agribusiness: regional aspect. iop conference series: earth and environmental science, 548(2), 022034. https://doi. org/10.1088/1755-1315/548/2/022034 pa ge 1 pa ge 25 1 american journal of economics and business innovation (ajebi) assessing the effectiveness of brand promotion among college universities tan, edelfin1*, cruz, alessia kirsten c.1, jacob, claire ann p.1, sapul, shania jade c.1, velasco, charlotte c.1 volume 4 issue 2, year 2025 issn: 2831-5588 (online), 2832-4862 (print) doi: https://doi.org/10.54536/ajebi.v4i2.5461 https://journals.e-palli.com/home/index.php/ajebi article information abstract received: may 27, 2025 accepted: june 30, 2025 published: august 07, 2025 brand promotion plays a vital role in the business field for the brand to be known. in today’s generation, brands see students as their long-term customers. the study entitled “assessing the effectiveness of brand promotion among college universities” was conducted to determine the effectiveness of brand promotion among college universities. it also aimed to understand the impact of brand promotion in terms of student engagement, product sales, and customer loyalty. the researchers utilized a descriptive research design that was conducted among twenty-four (24) students in pamantasan ng lungsod ng marikina (plmar), and another forty-five (45) students in marikina polytechnic college, while the other thirty-one (31) students are in feu roosevelt marikina. by focusing on students in marikina-based universities, this research will help to understand how specific locations respond to brand promotions. as this research is relatively new and there is limited primary data, it is better to start with a smaller and specific area like marikina city to gather useful information. the data needed was obtained from the respondents through the google form survey, which was used to gather data on the effectiveness of brand promotions. the survey was distributed via email and social media to reach the selected students. thereafter, the completed questionnaire was collected. the survey included self-made questionnaires using a 5-point likert scale to assess the effectiveness of brand promotions among college universities. in accordance with the findings of the study, it shows that brand promotion highly affects college students. therefore, the researchers suggested conducting further studies with a broader respondent, not just universities in marikina city, and also to know other types of promotions to understand which work best for students nowadays. keywords brand engagement, brand impact, brand promotion, customer loyalty, sales, universities 1 feu roosevelt marikina, marikina, philippines * corresponding author’s e-mail: etan@feuroosevelt.edu.ph introduction this study aims to assess the effectiveness of brand promotion among college universities, such as brand engagement, sales, and customer loyalty. promoting a business’s product greatly helps in marketing since it captures the attention of the targeted customers and creates relationships with consumers. college students are the main focus during events or partnerships that help promote the brands through campaigns and establish brand familiarity among students. these promotions are valued and relevant, as today’s college students represent an emerging and highly influential consumer segment. this study aims to fill that gap by focusing on three marikina-based institutions, including feu roosevelt, marikina polytechnic college, and pamantasan ng lungsod ng marikina. as an efficient center for education, marikina maintains a diverse population of students who are gradually becoming more familiar with local and national advertising strategies. studying perception and responses around this area will greatly help businesses that intend to work with gen z consumers. furthermore, these findings will benefit marketers as well as business owners and academic researchers by providing them with evidence regarding the impact of brand promotions on student behavior in a specific region. based on this information, this research has sought to enrich the strategies developed by marketers, enabling them to better respond to students demands while improving the development of literature focused on consumer behavior related to location-based marketing. statement of the problem what are the impacts of brand promotion to college students? what is the effectiveness of brand promotion in different universities? in terms of: 1. brand engagement 2. sales 3. customer loyalty what influence does brand promotion have on college students’ purchasing decisions? literature review what are the impacts of brand promotion to college students? brand promotion is the key to business success. there is a positive effect of image and promotion on purchase decisions of consumers. in the study of rudi yacub (2022), it shows that brand image is important to have a good brand promotion. it assists consumers in making decisions regarding their purchases. the findings show that brand promotion has a significant effect on purchase decisions of customers. additionally, a good brand image with effective promotion will affect customers in their decision making regarding purchases. companies whose target market is college students can pa ge 25 2 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 251-259, 2025 benefit and be ahead to competitors. there is a positive impact of brand promotion to college students. “companies or brands that advertise to students are a step ahead of the rest.” based on the blog posted by marketing (2024), college students tend to purchase more as they are turning twenty. in this case, college students take their first steps into adulthood as they begin going through large changes in their life. also, they begin developing habits that impact their spending patterns for the future. because of this, brands recognize this purchasing behavior of individuals and through advertising strategies they can market college students that align with their lifestyle changes. brands can see that college students are a good target market because of their increasing financial independence as they step into adulthood that impact their purchasing decisions and brand preferences. additionally, there is a positive impact of brand experience on students’ satisfaction. mortada claims that brand experience was discovered to be “positively” connected to student satisfaction. (kubina et al., 2021; sturrock, 2022). the student satisfaction towards a brand is influenced by several factors, like including the quality of reliability of the brand’s products or services provided by the company and consumer insights play a crucial role for their customers. meeting expectations will catch the attention because students build better communication skills, and a strong brand earns trust. customers are now more involved, not just buying but helping shape the brand. enhancing brand experiences and promoting it can improve student satisfaction. the study of atidira et al. (2019) shows that there is an influence of brand image and promotion in purchasing decisions of their target market. brand image awareness is the key for influencing their interest in a company’s product. it obtains and retains customers for the brand causing them to purchase more likely than a startup phase in their previous buyers. including these names of brands that are easy to remember helps to make them famous. also brand image and promotion have many perspectives why brand image is an important component in building long-term loyalty business. also, according to (the american journal of economics and business innovation (ajebi) of (2025), there’s a significant difference of impulsive buying behavior when grouped according to the preferred type of online sales promotion among z generation consumers. purchase decisions are significantly influenced by positive social media interactions, and there is clear brand engagement on social media. ho1 2.1: there are impacts of brand promotion to college students. on how effective is brand promotion in different universities in terms of: brand engagement, sales and customer loyalty brand promotion is effective in different universities. however their success in different terms such as brand engagement, sales and customer loyalty will depend on how effective their brand promotion is. brand promotion is important for increasing brand and customer engagement. when brands use effective promotion strategies, they can catch the attention of students. this will make students aware that the products or services of the company are existing. engaging advertisements can help students feel a stronger connection to the brand. study of farhat et al. (2020) shows that students are more likely to buy when it matches their interests. it helps make a company’s products and services the top choice for customers. it is also a brand strategy that drives consumer decisions towards purchasing a product under a brand. the findings showed that brand interactivity plays a key role in brand engagement. the study suggests using brand experience and interactivity to boost engagement. brand promotion is key to a company’s profit and increase in sales. in study of bondarenko (2023) it shows that promotional marketing is an important strategy for increasing sales and improving customer loyalty. modern businesses are highly competitive and saturated markets. it can be aimed to attract new buyers depending not only on the quality of their products, but also on the effectiveness of them. promotional marketing also helps the production to create higher quality marketing strategies like the other parts of their business in the overall success of a supply chain and helps to keep their customers building brand awareness and recognition. the goal of it is for them to purchase the product in an effective way by understanding their target audience. effective promotional strategies can catch the students’ attention that will make them aware of the brand and its products. as students engage with the brand through ads or social media, they are more likely to consider purchasing the products. the more a brand promotes itself, the more likely students are to trust and choose it over competitors. additionally, consistent and appealing brand promotion leads to higher sales by encouraging students to make purchases and repurchases. in business, brand promotion is important for building customer loyalty. according to the article of hutley (2024, august 13), university students represent the gen z generation that has a strong impact on the trends. their choices can influence the market and impact future consumer habits of other college students. also this article contains information to improve marketing to university students. brands are creating content that connects to their interest because students are more likely to stay loyal to brands that connect with them personally. by consistently engaging students through brand advertisements and promotions, brands can create a strong connection with their target market. this connection encourages students to feel more trust and loyalty toward the brand. it leads to long term customer loyalty and customer and seller relationships. ho2 2.2: brand promotion is important in terms of brand engagement, sales and customer loyalty. pa ge 25 3 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 251-259, 2025 on how does brand promotion influence the decision of college students in purchasing their products brand promotion plays a crucial role in shaping consumer behavior, especially among college students. “advertising has always been deemed essential and a significant contributor to the business.” in this study of guioguio et al. (2023) it showed that students tend to buy more if the brands implement advertisements. brands should think more on their marketing strategies to promote their product and services. according on their survey, the buying behavior of students is influenced based on the advertisements they encounter. it also supports the study conducted by chaudhry et al. (2017) that reveals that print advertising plays a significant role in creating brand image awareness. in conclusion, this study shows that ads have a positive impact on consumer behavior, specifically students and how they view products or brands. additionally, influencer marketing affects college campus purchasing decisions. “college students are highly influential in shaping purchasing behavior” the research of torossian (2025, february 2) shows that college students are the brand’s target market because they affect the purchase decision of other people for the brand to be known. in this study, brands allow influencers to market their brand on campuses. also it shows in this study that the influencer marketing on college campuses has great opportunities. therefore it also has several challenges that brands must consider such as college students expecting honesty from influencers and if influencers are dishonest it can damage the credibility of both the influencer and the brand that will lead to students to never purchase again from that brand. brand promotion affects customer retention and market success. the study of goyal et al. (2022), investigates the impact of several components on brand promotions and market performance. this study shows challenges have arisen in the brand causing their brand promotion to be damaged resulting in a decrease in customers. through the advertisement which is one of the techniques for influencing consumers to purchase will increase market performance. in conclusion, good brand promotion will increase market performance. brand promotion affects the college students’ purchasing decisions. when the promotions catch the students attention it is considered as effective promotion strategies. they are more likely to trust and choose that brand. this trust leads them to make purchases and repurchased products or services. ho3 2.3: brand promotion influences the decision of college students in purchasing their products. materials and methods research locale this study was conducted at pamantasan ng lungsod ng marikina (plmar), marikina polytechnic of college (mpc), and feu roosevelt marikina. the researchers of this study will choose twenty-four (24) students in pamantasan ng lungsod ng marikina (plmar), and another forty-five (45) students in marikina polytechnic college, while the other thirty-one (31) students are in feu roosevelt marikina, to answer a questionnaire with general instructions. the respondents should assure that their responses are true and intended only for the study. after the completion of the questionnaire, each item will be analyzed separately, and the data gathered will be interpreted. conceptual framework figure 1: conceptual framework figure 1 shows the conceptual framework that will assess the effectiveness of brand promotion among college universities. its input consists of 100 participants from college students of marikina city, where the level of the effectiveness of brand promotion to the students will be determined by a survey question. the process involves conducting a statistical treatment and analysing the data collected. lastly, the output will be the goal of the research which will be identifying the effectiveness of brand promotion in terms of brand engagement, sales, customer loyalty and the influence of brand promotion in the purchasing decision of college students. sampling method this study utilized a simple random sampling, which is a type of probability sampling technique. according to noor et al. (2022), simple random is used in quantitative studies with survey instruments. wherein individuals have an equal opportunity to participate in the study, that will provide the data needed to fulfill the research’s objectives. moreover, this sampling technique will allow the researchers to use the most out of the limited resources available. the participants chosen to fulfill the data needed for this study are students in some universities in marikina city, who are selected based on their relevance to the research study and discretion of the researchers. through this sampling method, the researchers were able to gather the data needed to accomplish the research objectives. pa ge 25 4 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 251-259, 2025 proposed data gathering procedure the researchers of this study selected 100 respondents: twenty-four (24) students from pamantasan ng lungsod ng marikina (plmar), forty-five (45) students from marikina polytechnic college, and thirty-one (31) students from feu roosevelt marikina. a google form survey was used to gather data on the effectiveness of brand promotions. the survey included self-made questionnaires using a 5-point likert scale to assess effectiveness of brand promotions among college universities. the survey was distributed via email and social media to reach the selected students. thereafter, the completed questionnaire was collected. furthermore, the researchers organize the collected data and prepare it for statistical treatment. following that, the researchers analyze the results and formulate the interpretation based on the results of the survey. proposed instrument a likert scale will be the research instruments used by the researchers. the researchers create a checklist as a tool to have a list of students’ attitudes towards promotional strategies, and the effectiveness of brand promotion can be assessed across college universities, which they would verify to determine whether the survey is successful or unsuccessful. by using google forms the respondents will express their level of agreement with each statement using a 5-point likert scale (1-strongly disagree, 5 strongly agree). with the use of this tool, the brand engagement, sales, and customer loyalty will be evaluated. proposed statistical treatment of data responses obtained from the questionnaires that were distributed to students in universities in marikina city were treated statistically for analysis and interpretation of the study. the following formulas were applied for specific question numbers. the gathered responses will be statistically treated for data interpretation. the weighted mean is used to treat the various data gathered from respondents by the researchers. the weighted mean is calculated using the following formula: wm =∑𝑤𝑓 / ∑𝑓 where: wm weighted mean σwfsummation of the weighted frequency f frequency table 1: five-point likert scale item score meaning verbal description 4.21 -5.00 5 the respondents strongly agree that brand promotions is effective among college universities strongly agree 3.41 -4.20 4 the respondents agree that brand promotions is effective among college universities agree 2.61 -3.40 3 the respondents are neutral about whether brand promotions is effective among college universities neutral 1.81 -2.60 2 the respondents disagree that brand promotions is effective among college universities disagree 1.00 -1.80 1 the respondents strongly disagree that brand promotions is effective among college universities strongly disagree table 2: schools frequency (n) percentage (%) far eastern university roosevelt marikina (feurm) 31 31% table 1 shows a five-point likert scale was used in the study with respective meaning and verbal description to determine the effectiveness of brand promotion among college universities. scope and limitations the scope of this study is to assess the effectiveness of brand promotion among college universities in marikina city. the respondents will be composed of one hundred college students to be chosen through random sampling. this study is conducted in the second semester of the school year 2024 2025. the brands will go to the chosen universities and will promote their products or services by doing demonstrations and advertisements. the limit of the study is when the college students will not be participating in answering our survey questions. the results of this study will be applicable only to business owners who want to promote their brand to college universities. in addition the participants may not be aware of the importance of the study in the luck of awareness in this study. results and discussions for quantitative research, the results may be presented with tables and figures. each table and figures should be labelled and numbered consecutively. for qualitative research, the results may be presented through a narrative or the themes may be presented in tables. for mixed methods, research combine the quantitative and qualitative styles of presentation pa ge 25 5 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 251-259, 2025 marikina polytechnic college (mpc) 45 45% pamantasan ng lungsod ng marikina (plmar) 24 24% total 100 100% this table shows the great participation from students across marikina city’s key campuses. leading the way were students from marikina polytechnic college (mpc), making up nearly half of all respondents at 45% (45 students). that’s a really strong showing from mpc. not far behind, far eastern university roosevelt marikina (feurm) students also stepped up significantly, contributing 31% (31 students) to the mix. rounding out the group, we had valuable input from pamantasan ng lungsod ng marikina (plmar), with 24% (24 students) sharing their perspectives. it’s fantastic to see such solid representation from all three major institutions together, they give us a well-rounded picture of the student experience in marikina. table 3: evaluation of impacts of brand promotion to college students evaluation of impacts of brand promotion to college students mean s t a n d a r d deviation interpretation i trust brands that engage with my university. 4.09 0.71 agree i believe brand promotions are an effective way for companies to engage with university students. 4.29 0.67 strongly agree i feel that brands that promote themselves at my university understand my needs as a student 4.16 0.76 agree university-based brand promotions are a good way for me to discover new products and services. 4.11 0.78 agree i think that brand promotions at my university increase my awareness of certain brands. 4.29 0.64 strongly agree brands that promote themselves at universities are more likely to gain my trust. 4.07 0.79 agree overall mean 4.17 0.73 agree (high) table 4: evaluation of the effectiveness of brand promotion in different universities in terms of: brand engagement, sales and customer loyalty evaluation of the effectiveness of brand promotion in different universities in terms of: brand engagement, sales and customer loyalty mean s t a n d a r d deviation interpretation i believe brand promotions at universities are an effective way to reach students. 4.27 0.75 strongly agree i believe that brands can build stronger relationships with students through promotions held at universities. 4.19 0.79 agree i am more likely to notice and remember a brand that is promoted at my university. 4.10 0.82 agree i think university brand promotions help brands understand the preferences and needs of the student market. 4.22 0.80 strongly agree i believe brand promotions at universities are more fun and engaging for students than other types of advertising 4.21 0.80 strongly agree overall mean 4.20 0.79 agree (high) table 5: brand engagement brand engagement mean standard deviation interpretation i am willing to attend brand promotions at my universities. 3.93 0.93 agree brand promotion affects how i view the products of the brand. 4.06 0.89 agree table 3 shows the evaluation of the impacts of brand promotions on college students. overall the respondents highly agree that brand promotions are effective to universities with the overall mean of 4.17. table 4 shows the evaluation of the effectiveness of brand promotion in terms of brand engagement, sales, customer loyalty. the respondents highly agree with the mean of 4.20. pa ge 25 6 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 251-259, 2025 brand promotions make me more likely to recommend those brands to other people. 4.01 0.88 agree i find brand promotions at my university to be exciting and engaging. 3.92 0.88 agree when a brand promotes itself at my university, i am more likely to engage with it on social media. 3.95 0.93 agree i feel more connected to brands that engage with my university community through promotions. 4.08 0.79 agree overall mean 3.99 0.88 agree (high) table 5 shows the brand engagement through college students. the overall mean is 3.99, indicating a high level of agreement among students. table 6: sales sales mean standard deviation interpretation brand promotions at universities help increase the sales of the products they promote. 4.16 0.76 agree brand promotions at my university are an effective way for businesses to increase their sales among students. 4.16 0.75 agree brand promotions at university lead me to make purchases that i might not have made otherwise. 3.95 0.85 agree i am more likely to buy a product during a university promotion, especially if there are discounts involved. 4.24 0.85 strongly agree i believe that sales during university promotions reflect the effectiveness of the promotion strategy. 4.12 0.79 agree overall mean 4.13 0.81 agree(high) table 7: customer loyalty customer loyalty mean standard deviation interpretation i agree that brand promotion in universities increases customer loyalty. 4.06 0.82 agree i’m more likely to remain a customer of a brand that promotes itself at my university. 3.91 0.93 agree i believe university brand promotions are a good way for brands to build long-term customer loyalty. 4.03 0.74 agree brands that promote themselves at universities gain more loyal customers among students. 4.04 0.82 agree i am more likely to recommend brands that i encounter through university promotions to my friends. 4.01 0.81 agree overall mean 4.01 0.83 agree(high) table 8: evaluation of how brand promotion influences the decision of college students in purchasing their products evaluation of how brand promotion influences the decision of college students in purchasing their products mean standard deviation interpretation brand promotion at my university influences my purchasing decision. 3.96 0.86 agree table 6 shows the impact of brand promotion in terms of sales within college students. the overall mean score is 4.13 indicating a high level of agreement among students. table 7 shows the effectiveness of brand promotion in terms of customer loyalty within college students. the overall mean of 4.01, indicating a high level of agreement among students pa ge 25 7 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 251-259, 2025 discounts and special offers from brand promotions at my university encourage me to make purchases. 4.17 0.78 agree brand promotions at my university influence how i perceive the quality of a brand’s products. 4.03 0.86 agree university brand promotions make me more likely to choose a brand over a competitor. 3.91 0.88 agree brand promotions at my university make me more likely to try new products or services. 4.15 0.78 agree overall mean 4.04 0.83 agree(high) table 5 shows the evaluation of how brand promotion influences college students in their purchasing decisions. the overall mean is 4.04, indicating a high level of agreement among students. discussion this study aimed to prove the impact of brand promotion among college universities only in the marikina area. the findings presented in table 2 shows the distribution of respondents based on their school within the city of marikina with the percentage of 31% from the university of far eastern university roosevelt marikina (feurm), followed by 45% marikina polytechnic college (mpc), while the rest of 24% of the respondents were from pamantasan ng lungsod ng marikina (plmar). evaluation of impacts of brand promotion to college students as shown in table 3, the majority of the respondents have agreed on whether the brand promotion will impact college students with the overall mean of 4.17. the majority of the respondents that have answered the statement ‘‘i trust brands that engage with my university’’ with the weighted mean of (4.09) with the standard deviation of (0.71) in interpretation of they agree that they trust the brand that they engaged with their university, the second column that respondents answered “i believe brand promotions are an effective way for companies to engage with university students” with the mean of (4.29) with standard deviation of (0.67) that interpret with strongly agree that they believe that the brand promotion are an effective way for companies to engage with them. thirdly, with the statement of “i feel that brands that promote themselves at my university understand my needs as a student” in the mean of (4.16) with the standard deviation of (0.76), answered that they agree that brands promoting themselves at their university will understand their needs as a student. the statement “university-based brand promotions are a good way for me to discover new products and services.” have the mean of (4.11) with its standard deviation of (0.78), that they agree that university-based brand promotions are a good way for me to discover new products and services. statement 5 got the mean of (4.29) with the standard deviation of 0.64 that interprets with they’re strongly agreed that brand promotions at my university increase my awareness of certain brands. statement 6 with the mean of (4.07) and standard deviation is (0.79) agreed that brands that promote themselves at universities are more likely to gain the respondents trust. table 3 shows that there’s an impact between brand promotion and the college students. it’s shown in the statement number one (1), that the brand promotion at the university will increase their awareness of certain brands. evaluation of the effectiveness of brand promotion in different universities in terms of: brand engagement, sales and customer loyalty table 4 represents the evaluation of the effectiveness of brand promotion in terms of brand engagement, sales, customer loyalty. the respondents highly agree with the mean of 4.20. with an overall mean of 4.20, it is proven in the statement brands can build stronger relationships with students through promotions held at the university. in addition, brands can create closer and more meaningful connections with students by organizing promotional events or activities directly on university campuses. these in-person promotions help students interact with the brand, making it more memorable and relatable, which can lead to increased trust, loyalty, and long-term engagement with the brand. table 5 brand engagement table 5 shows the brand engagement through college students. the overall mean is 3.99, indicating a high level of agreement among students. with an overall mean of 3.99, the respondents really showed that they are willing to buy based on the brand engagement of the promotions at their university. based on hypothesis two (2), engaging advertisements can help students feel a stronger connection to the brand. students who watch captivating ads may develop a closer bond with the brand advertisements that are engaging or emotionally appealing, they may begin to feel more positively about the brand being advertised. this emotional appeal can make them feel more connected or loyal to the brand, increasing the chances that they will remember it, talk about it, or choose it when making a purchase. table 6 sales table 6 shows the impact of brand promotion in terms of sales within college students. the overall mean score is pa ge 25 8 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 251-259, 2025 4.3 indicating a high level of agreement among students. with an overall mean of 4.13, students engage with the brand through ads or social media, they are more likely to consider purchasing the products through universities. the more a brand promotes itself, the more likely students are to trust and choose it over competitors—more brand promotion (such as sponsorships, advertising, or social media presence) tends to boost students’ familiarity and credibility, which increases their likelihood of trusting the brand and choosing it over competing products. also, to boost its sales over the next business days competitors will still be considered a good way for brands to build long-term loyalty business with the related actions. table 7 customer loyalty table 7 shows the effectiveness of brand promotion in terms of customer loyalty within college students. the overall mean of 4.01, indicating a high level of agreement among students. with an overall mean of 4.01, students believe that brand promotions are a good way for brands to build long-term customer loyalty and brand promotion is important for building customer loyalty. according to the article of hutley (2024, august 13), university students represent the gen z generation that has a strong impact on the trends. cause they are the one too who’s reshaping the industry in such as individualism and self-expression: from microtrends to niche aesthetics (e.g., cottagecore, y2k), they drive constant trend evolution. table 8 evaluation of how brand promotion influences the decision of college students in purchasing their products table 8 shows the evaluation of how brand promotion influences college students in their purchasing decisions. the overall mean is 4.04, indicating a high level of agreement among students. with an overall mean of 4.04, college students are highly influential in shaping purchasing behavior” the research of torossian (2025, february 2) shows that college students are the brand’s target market because they affect the purchase decision of other people for the brand to be known. because adopters test the college students that are often among the first to try new products, tech, and apps, helping set trends that influence broader demographics, now that it set brand loyalty influence the purchasing behavior of the buyers and influence the product through peer networks, social media, and campus communities, their choices can rapidly influence the behavior of others. conclusion all the research questions are answered by the study findings, which indicate that brand promotion affects college students’ consumers. the first question of how brand promotion affects college students consumers was answered by the study, which specified that most of the respondents (80%) show that promotional activities increase student participation, awareness, and trust. tables 5, 6, and 7 indicate high mean values (3.99 for engagement, 4.13 for sales, and 4.01 for loyalty), which prove students react favorably to promotional activities and create stronger brand connections and shape their purchasing decisions and loyalty. particularly, brand engagement was the main focus among the factors investigated, as seen by its perennial high rating of 3.99 signifies that brand engagement has higher effects on customer loyalty and sales and is crucial in building a strong emotional and psychological connection between companies and students. high interaction levels reveal that the students not only know about the brands but are actually interacting with them, which is so important to brand success in the long term in the college market. recommendations this study recommends that business and schools should improve their marketing strategies towards college students as it is based on the gathered data. future studies should look at how brand promotions affect college students over a longer period of time to see if it is still effective. future researchers could study this research to look at which parts of brand promotions are most effective. lastly, future researchers could also study college students from different cities to see if the results are the same in other places. compliance with ethical standards the researchers of the study guarantee that all the respondents gave their consent after being completely informed prior to responding to survey questionnaires, and they were aware of the purpose of the study. assurance was provided to the participants that their participation was completely voluntary and that they could withdraw at any time. this study ensures that no personal information was gathered; it is purely anonymous, and it was maintained throughout the data collection. compliance with data privacy guaranteed that any data gathered was private and utilized solely for this study. all participants were a priority and had a consideration throughout the whole study. the authors guarantee that there is no conflict of interest in how this study was performed. and also that the study was done ethically without plagiarism and biases when interpreting results objectively. all results were analyzed and given objectively solely for purposes of promoting research and knowledge. acknowledgments we, the researchers, want to express our gratitude to the following individuals who helped us in the completion of this research. throughout the writing of this research paper, we received unwavering support and guidance. first and foremost, we would like to express our sincerest gratitude to our research adviser. this would not have been possible without mrs. erika bacay who gave us guidance throughout this research paper. her advice guides us as we develop this research. we wouldn’t be able to overcome the obstacles we face in our studies without pa ge 25 9 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 251-259, 2025 her assistance. we would also like to express our sincere gratitude to our statistician, mr. reginald p. arimado, for his expert assistance in guiding the statistical aspects of our paper. his support played a significant role in ensuring the accuracy of our findings. also to our respondents, students in marikina city who lend their valuable time and huge effort to answer our survey questionnaire. last but not least, we want to thank our family and friends for giving us support and motivation throughout this research. finally, we would like to express our gratitude to our god, who provided us the courage and motivation to finish this research. without his kindness and knowledge, we wouldn’t have been able to continue our research. may the god almighty bless all of you! references 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(2019). analysis of brand image and promotions and their effect on purchase decisions. in universitas pendidikan ganesha, universitas pendidikan ganesha, 103, 210. https://www.atlantis-press.com/ article/125924382.pdf bondarenko, v., & vyshnivska, b. (2023). promotional marketing as a method of increasing sales. three seas economic journal, 4(2), 21–28. https:// www.researchgate.net/publication/372214188_ p ro m o t i o n a l _ m a r k e t i n g _ a s _ a _ method_of_increasing_sales farhat, k., mokhtar, s. s. m., & salleh, s. b. m. (2020). role of brand experience and brand affect in creating brand engagement: a case of higher education institutions (heis). https://www. tandfonline.com/doi/full/10.1080/08841241.202 0.1759753?scroll=top&needaccess=true goyal, d. p., dr., a. r., saravanakumar, s. c., gupta, d. a., & gupta, m. k. (2022). impact of brand promotion on market performance, 6(3), 7159–7172. https://www. researchgate.net/publication/360513955_impact_ of_brand_promotion_on_market_performance guioguio, k., nash, j., de guzman, rizo, v., joyce, a., & umali, c. (2023). the power of images: influence of advertisements on the buying behavior of students in a philippine university. https:// animorepository.dlsu.edu.ph/cgi/viewcontent. cgi?article=1737&context=conf_shsrescon hutley, g. (2024, august 13). marketing to gen z university students: brand guide. dig in. https://digin.co.uk/ marketing-to-gen-z-university-students-a-guide-forbrands/ ines, j. c., & tolentino, m. q. (2024). beyond likes and shares: exploring the influence of social media on brand choices among college of business students at a private higher education institution in the philippines. american journal of economics and business insights, 3(2), 66–74. https://doi.org/10.54536/ajebi. v3i2.2545 marketing. (2024). why advertise to students? (college students as a target market). https://info.mssmedia. com/blog/why-advertise-to-students-college-stu dents-as-a-target-market mortada, m. (2023). the impact of brand experience on students’ satisfaction: the case of lebanese universities. webology, 20(1), 2023. https://www. researchgate.net/publication/372188284_the_ impact_of_brand_experience_on_students_ satisfaction_the_case_of_lebanese_unive rsities obiso, s. m., balala, c., samson, e. k., alonzo, a. a., dadole, d. m., & parcia, h. a. a. (2025). the influence of online sales promotion on impulsive buyin behavior among gen z consumers. american journal of economics and business innovation, 4(2), 131– 138. https://doi.org/10.54536/ajebi.v4i2.4799 torossian, r. (2025, february 2). influencer marketing on college campuses: what works and what doesn’t. ronn torossian 5wpr ceo. https://ronntorossian.com/ influencer-marketing-on-college-campuses-wh atworks-and-what-doesnt yacub, r. (2022). view of effect of brand image and promotion on purchase decision. journal of positive school psychology, 6(10), 1651-1658. https://journalppw. com/index.php/jpsp/article/view/13465/8731 pa ge 1 pa ge 16 4 american journal of economics and business innovation (ajebi) opportunities and vulnerabilities of ai in automating compliance and regulatory reporting in the banking sector in bangladesh md maruf hossain1*, md. ashraful alam2, sk md zafar iqbal3 volume 4 issue 3, year 2025 issn: 2831-5588 (online), 2832-4862 (print) doi: https://doi.org/10.54536/ajebi.v4i3.5586 https://journals.e-palli.com/home/index.php/ajebi article information abstract received: august 02, 2025 accepted: september 04, 2025 published: november 11, 2025 this research investigated the prospects and threats of artificial intelligence (ai) in automating compliance and regulatory reporting for banks in bangladesh. the study aimed to determine the current status of ai implementation, explore its benefits and risks, and evaluate organizational readiness for its adoption. a structured questionnaire was used and 120 respondents from banking professionals participated in this study, and 28% of them indicated that they have adopted or partially adopted ai tools for their compliance purposes. key findings included the observation that 78% of respondents said they thought ai would reduce reporting time, and 72% agreed it would improve data accuracy, and that 81% were concerned about data security and 64% about transparency. institutional readiness, perceived benefits and risk knowledge were evaluated using descriptive statistics and thematic analysis. there were several limitations of the study, including recall and reporting bias due to the self-report nature of the data, and the cross-sectional design allowing only limited cause and effect ascription. the implications suggests that banks and regulators need to work together to invest to develop necessary infrastructure, training and governance frameworks, in order to integrate ai in compliance system responsibly and efficiently. keywords artificial intelligence, compliance automation, institutional readiness, opportunities and threats of ai, regulatory requirements 1 metsell, chittagong, bangladesh 2 division of trade operations, shimanto bank plc, dhaka, bangladesh 3 department of economics, galgotias university, delhi, india * corresponding author’s e-mail: maruf@metsell.com introduction in today’s changing world of international finance, compliance and regulatory reporting has never been more intricate, data heavy, and held to such scrutiny by regulators. for banks, no matter in developed or developing countries (like bangladesh) the timely and accurate compliance with the national and international regulatory requirements are vital for their strategic concern (islam & sadekin, 2020). traditional approaches to compliance, often dependent on manual logging, reporting and monitoring, are no longer able to cope with the increasingly high volume and velocity of regulatory demands (dhawan, 2024). as a result, banks and other financial institutions have turned to new technologies, such as artificial intelligence (ai), that can be used to automate and supplement existing systems (alhajeri & alhashem, 2023). artificial intelligence, consisting of machine learning, natural language processing and robotic process automation has become a disruptive force to enhance efficiency, accuracy and real-time enforcement in compliance (robles & mallinson, 2023). in sophisticated banking systems, ai is used to identify fraudulent transactions, analyze customer data for aml and kyc compliance, track suspicious behavior, and produce virtually all regulatory reports without human interference (navya vemuri & kamala venigandla, 2022). such applications create real time data management. they minimize the human error factor and allow predictive analytics and dynamic risk assessment to be performed, in doing so, compliance becomes proactive rather than reactive (lehto et al., 2021). in bangladesh, the banking sector transformation has entered a digital era, pushed by policy changes, financial inclusion objectives, and intense regulatory pressure, such as the role played by the bangladesh bank (malasriganga,. but ai in regulatory compliance is far from widespread and piecemeal at best. some banks have already begun to apply automation tools, but more can be done when it comes to the wider adoption of ai (hu & wu, 2023). moreover, ai raises new risks such as data security, lack of transparency of algorithms and concern about people placing too much trust in error-prone systems without enough human supervision (saberi, 2022). lack of clear ai in compliance regulatory environment also makes adoption and risk management more challenging. the present study attempts to fill this gap by using the technology acceptance and risk governance theory to investigate how the institutional readiness, perceived usefulness, and perceived risks affect the adoption of artificial intelligence in compliance-related jobs. these theoretical lenses assist in framing organizational actions in the adoption of nascent technologies in regulated settings. the research aims to: (1) to examine the current knowledge use and adoption of ai in the realm of compliance and regulatory reporting of the banks in bangladesh; (2) to ascertain how ai relies on enhancing efficiency and accuracy; (3) to pinpoint different institutional challenges and risks associated with data security, less transparency in ai implementation and lack of regulatory clarity; and (4) to ascertain the overall readiness of the industry to implement ai-based compliance systems. by framing the research in the context of the particular risks and opportunities confronting the bangladeshi banking industry, this study both extends academic pa ge 16 5 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 164-172, 2025 and policy conversations regarding the governance of ai in emerging financial systems, and provides practical learnings for financial institutions, regulators, and technology suppliers aspiring to innovate while maintaining regulatory fidelity. literature review artificial intelligence (ai) is increasingly playing a role in financial compliance and regulatory reporting lately, and this is not surprising given the space of digital transformation that the banking industry is heading towards globally (temelkov, 2023). compliance processes are being optimized and operational risk mitigated, as ai technologies, such as ml, nlp, rpa, and predictive analytics, are employed to improve the quality of regulatory reports themselves (liang, 2024). this paper aims to review the recent academic and industry publications (mostly dated since 2018) to understand the opportunities and challenges of ai in regulatory compliance that are specific in the context of developing countries such as bangladesh. multiple reports have shown how ai can greatly enhance the efficiency in compliance work. according to arner et al. (2019) show that, regtech regulatory technology using ai can reduce compliance costs by 50%, by automating routine tasks such as aggregation of data, transaction monitoring, and report production (tillu et al., 2023). likewise, the world economic forum (2020) report listed the use of ai to generate regulatory submissions within a banking setting as enabling a faster, more accurate generation process, lower levels of manual intervention required and decreased human error risk (patial, 2023). (martinez et al., 2024) also highlighted that ai facilitates early risk detection through real-time transactional monitoring and identification of outliers, which can prevent financial institutions from entering into non-compliance. ai has also held promise in anti-money laundering (aml) and know your customer (kyc) compliance (karangara et al., 2024). a study of (s m shahariar rafi et al., 2024) found that aml systems using ai can enhance detection of transactions that are suspicious, and reduce false positives by as much as 30%. this is corroborated by a report by (hrabariev et al., 2024) which pointed out that ai-based solutions enable financial institutions to simplify customer onboarding, improve due diligence, and ensure continued oversight of high-risk customers. these are lifesaving features in high-risk situations, where a manual check may easily be overlooked or delayed. despite the potential benefits, however, recent work has also highlighted potential vulnerabilities and ethical considerations (feng, 2024). (papadimitriou, 2023) and (dunsin et al., 2023) posed the challenge of algorithmic opacity, as many ai models (and particularly deep learning) are “black box” systems, so that compliance officers and regulators cannot know how a decision is being reached. accardo software if there’s no transparency here, how could you make transparency accountability in an audit-heavy and accountable industry? moreover, (khan et al., 2024) study cautioned about the cyber risks of ai systems like hacking into data, adversarial attacks and damage of vulnerabilities caused by third-party ai vendors. regulatory uncertainty is also a common thread in recent scholarship. meanwhile, international regulators like the financial conduct authority (fca) and the european banking authority (eba) have started to publish guidance on ai governance, but emerging markets remain without joined-up frameworks (erdélyi & goldsmith, 2020). a single case study on the south asian banking industry by (tinnirello, 2022) pointed out that the lack of a defined ai guidelines along with the lack of technical expertise and data infrastructure impedes a safe, proficient ai implementation. very few empirical studies have been done in bangladesh, but industry reports indicate that a majority of banks are in the early phase of experimentation and that full-fledged ai deployment is still low due to cost, risk, and regulatory ambiguity (schmitt, 2022). the role of human judgment in ai based compliance systems is also emphasized in literature. a research by (enarsson et al., 2022) that hybrid algorithms/ machine into humans that is more effective in applications where compliance is an important issue, than algorithms that operate entirely on their own. this contributes to the case that ai should be additive, rather than substitutive, to human expertise particularly in sensitive areas like regulatory interpretation and ethical judgment (licato, 2021). complementary recent literature accepts that ai presents noticeable opportunities for automating the compliance and regulatory reporting, and in an efficient, accurate and scalable manner (munivel devan et al., 2024). however, problems of issues such as transparency, security, ethics and institutional preparedness are enormous, especially in developing countries (pangaribuan, 2019). evidence appears to be calling for further empirical investigation into countryspecific contexts, like those found in bangladesh, where degree of digital maturity of financial institutions vary and regulatory supervision is still emerging (amin, 2024). this gap is something that this study seeks to address as it investigates how ai in compliance is being practiced, and what its benefits and risks are within the context of the bangladeshi banking sector. this research was directed by a number of research questions to understand the present and potential benefits and drawbacks of using ai for automating regulatory reporting and compliance in the banking sector in bangladesh. the research aimed to answer: what is the current level of knowledge and adoption of ai in the compliance functions of the banks in bangladesh; what are the unique opportunities ai offers for improving effectiveness, accuracy and speed of reporting for compliance purposes; what are the perceived weaknesses including ethical, technical and regulatory obstacles in integrating ai; and finally, how ready are the banks in terms of infrastructure, human resources, and strategic orientation to develop and implement ai enabled compliance systems safely and effectively. the goals of pa ge 16 6 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 164-172, 2025 this study are: 1. to find out how many bangladeshi banks are now using ai for compliance and regulatory reporting. 2. to find out what ai can do to make regulatory processes easier. 3. to look into what people think are ai’s weaknesses and what institutions are worried about when it comes to compliance. 4. to see if institutions and regulators are ready to use ai-powered compliance systems. materials and methods the research was designed as a quantitative, crosssectional study, sample size was calculated as per the formula: where z was 1.96 (for 95% confidence level) 16; p was 0.5 (the expected proportion); and e was 0.09 (the margin of error). according to this calculation, the minimum sample size was 119 participants. 120 bank employees were approached through a formal questionnaire. consecutive sampling method was used to recruit individuals responsible for compliance, audit, risk, it and regulatory reporting in banks. it was based on the literature and expert studies, and consisted of close-ended likert-scale questions and some open-ended items. the instrument was found to be reliable with a cronbach’s alpha of 0.82. online and face to face data were collected over six weeks and subject to descriptive statistics, chi square tests for-association and thematic analysis for the qualitative responses. results and discussion findings section this section presents the results of study based on analyzed the responses obtained through standard questionnaire. it critically analyses the present conditions of adoption of ai in compliance and regulatory reporting, identifies the perceived opportunities and benefits, and recognizes the most vulnerable and potential risks, and also checks the overall preparedness of banks in bangladesh to adopt ai based compliance systems. the paper discusses these findings in light of prior literature and the contextual realities of the bangladeshi banking sector, thus providing an in-depth explanation of the potential and the limitations of the use of ai in the automation of regulatory activities. the methodological limitations are also recognized by us, such as self-reported data and cross-sectional design, especially when we interpret significance tests, and generalization. this results and discussion section seeks to summarize and interpret empirical trends and to derive substantive implications for theory, practice, and policy in responsible ai deployment for financial regulation. demographic and professional profile the two sections on the demographic and professional background of the respondents gave useful context about the participants’ background and their interest related to the research topic itself. figure 1: demographic information of the respondents. in the figure 1, of the 120 respondents, a large share (42%) were employed by private commercial banks, and 30% were from state-owned commercial banks, 18% foreign commercial banks, and 10% specialized banks (mickey & yanhaona, 2024). this distribution of respondents resulted in equal participation from various categories of banks operating in bangladesh. men were compliance officers (47) and it/data professionals (38) with the smaller amounts of other professionals like risk managers, audit and senior management responsible for regulatory reporting. for experience, 37% had >10 years of experience in banking, 29% had 6–10 years of experience, 21% had 3–5 years of experience, and 13% had <3 years of experience, so most had a certain level of industry knowledge. interestingly, 64% of the participants said that they were involved in compliance and regulatory reporting running direct, while 26% through an indirect process, and 10% had some sort of vague general pa ge 16 7 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 164-172, 2025 knowledge. the demography statistics indicate that the perceptions extracted in the research were derived from the knowledgeable individuals who hold real time working experiences of compliance exercises, hence robustness and the representation of the scenario on the ground prevalent in the banks of bangladesh. current practices in compliance and regulatory reporting the observation indicated that maximum banks operating in bangladesh are still depended on manual or semiautomated method. the findings of this study indicated that a traditional, manual or semi-automated approach still predominates compliance and regulatory reporting in those banks based in bangladesh, where 68.3% of participants indicated a reliance on spreadsheet and legacy systems, and only 14.2% were equipped with fully automated reporting system. chi-square test of independence indicated a significant association between the bank type i.e public versus private and the automation level int the compliance reporting (χ² = 11.47, p < 0.01) private banks are perceived to be relatively advanced in adopting technology tools. these results are consistent with (huda et al., 2020) commented that digital transformation of compliance in south asian banking is still relatively asymmetric and contingent primarily on institutional capacity and leadership commitment. additionally, interviewees shared the most significant challenges with current processes such as long time consumption (57.5%), potential for human error (52.5%), and the inability to aggregate information from various systems (49.2%). these inefficiencies are indicative of structural bottlenecks to timely compliance costs but are consistent with the issues raised by (basel committee, 2021) relating to delinquency of compliance dividends and risks in under-automated banking systems. furthermore the proliferation of out-dated methods also strengthens a required assumption made by our theoretical framing, the idea that even though the technology is present, without perceived institutional readiness (as per risk governance theory) then the motivation to adopt ai will be low. although insightful, these baseline findings must be taken with caution as data are self-reported and might reflect perceived but not objectively measured compliance performance, albeit this is reported as well. awareness and adoption of ai in compliance function findings on ai awareness and adoption in compliance functions indicated a growing interest among banking professionals in bangladesh albeit cautiously. figure 2: automation level in bangladesh banking sector. figure 3: ai adoption of banking sector in bangladesh. pa ge 16 8 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 164-172, 2025 figure 4: opportunities of ai in regulatory reporting. figure 3 shows that, a moderate but growing awareness of ai applications in compliance among bangladeshi banking professionals, with 61.7% of respondents stating they were aware of ai tools relevant to regulatory reporting, yet only 28.3% confirmed their institution had adopted any ai-based compliance technology to date. a chisquare analysis revealed a significant relationship between respondents’ job roles and their level of ai awareness (χ² = 9.88, p < 0.05), suggesting that professionals in it and risk management departments demonstrated higher familiarity compared to those in general compliance or audit roles. this aligns with the technology acceptance model (tam), which suggests that perceived ease of use and relevance, often influenced by technical exposure, play a vital role in technology adoption (davis, 1989). despite the low adoption rates, 75% of respondents expressed a favorable attitude toward future implementation, citing ai’s potential to streamline reporting processes and improve data accuracy. these sentiments resonate with global trends highlighted by (karangara et al., 2024), where institutions in digitally progressive regions reported increasing intent to adopt ai-driven regulatory technology (regtech) for real-time monitoring and compliance automation. however, the gap between awareness and actual adoption reflects the structural and organizational inertia also reported in other emerging economies (islam & sadekin, 2020), where budgetary constraints, lack of technical expertise, and risk-averse culture impede rapid technological transitions. while the present study provides valuable stakeholder insights, it is important to recognize that the awareness data are perception-based and may not fully reflect institutional-level strategic planning or capability assessments. opportunities of ai in regulatory reporting bangladeshi banking experts thought that using ai in regulatory reporting may lead to a number of important opportunities, according to the study. a large majority of respondents felt that ai might make compliance-related tasks much faster, more accurate, and more efficient. figure 4 shows that the research presented in this paper explored a number of important opportunities seen by the banking professionals in the context of using ai for regulatory reporting. over 3/4 (78.3%) felt that the time needed for preparing and filing regulatory reports could be reduced with ai, while 72.5% believed that ai benefits would include better data accuracy and consistency. and 65.8% said ai could help to detect risks in real time and detect abnormal behaviours earlier, increasing the compliance efficiency. these findings are consistent with the technology-organization-environment (toe) framework that suggests that perceived technological benefits are significant antecedents of innovation adoption. qualitative analysis of free text comments show nuanced hopes for ai around predictive analysis, automation of rule based tasks, and the joining of more and disparate data sources to deliver compliance engagements. these results are consistent with (khan et al., 2024) , which also notes that ai is providing financial institutions across the world with the ability to report under complicated standards, such as basel iii and ifrs 9 more rapidly than before. and 58.3% of the respondents also believed ai’s capacity to accommodate regulatory changes and foster dynamic compliance could be a game changer, particularly with the growing regulatory gaze from the bangladesh bank and international watchdogs. but the advantages also rely on sufficient digital infrastructure, training for staff and compatibility with current legal frameworks, which the respondents conceded. although the results reflect optimistic attitude, this study based on perceptual data could not quantify the actual benefit attained, and as such, future studies should carry out longitudinal research pa ge 16 9 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 164-172, 2025 to yield robust animal impact assessment. vulnerabilities and concerns of ai in compliance the results of the study on the risks and problems with using ai for compliance showed that there are numerous major problems that are preventing the bangladeshi banking sector from using it more widely. the figure above represents that, nevertheless, the figure 5: vulnerabilities and concerns of ai in compliance. research revealed significant unease among banking staff members around the risks ai opens up in the world of compliance. a large chunk of them about 69.2% were concerned about data privacy and security risks, particularly in relation to how ai is being used to process sensitive financial information. 61.7% were also worried about the opacity and unexplainability of decision-making in ai, which echoes the “black box” problem commonly reported in the literature (amin, 2024). a chi-square test result showed a statistically significant relationship between years of professional experience and worry about algorithmic bias (χ² = 10.26, p < 0.05), indicating that the more experienced professionals were less trustful about ai-based solutions not breaching compliance norms. such concerns are aligned with the risk governance framework that underscores trust, accountability, and interpretability to operationalize complex technologies in regulatory settings. in addition, 54.2% of respondents indicated risks arising from the lack of particular regulatory framework related to the integration of ai, as a systemic risk, from the same perspective of findings by (kaur, 2024), that argued that the rapid deploying of ai without accompanying monitoring frameworks could increase risks related to compliance failure and brand reputation. respondents were also concerned of the risks of overreliance on technology, job loss and ethical challenges, especially without robust human-ai framework models. these findings indicate that while ai offers efficiency gains, it is also riddled with vulnerabilities that, when unchecked, can have worse implications than its advantages particularly in a developing economy like bangladesh, where legal, institutional, digital discipliners are embryonic. institutional readiness and future outlook the study of institutional preparation and future perspective showed that while more and more banks in bangladesh are interested in using ai for compliance, most of them are not yet fully ready to do so. the data above explains that, the results of the institutional readiness analysis indicated that bangladeshi banking officials had a cautious optimism toward the adoption of ai in compliance, with a noticeable lack of infrastructural and strategic preparedness. just 36.7% said their organizations have a specific digital transformation roadmap that clearly outlines its ai plan for regulatory reporting, and 47.5% said their business had begun building capability through staff training or system upgrades. chi-square test found a significant relationship between size of firm (as measured by total assets) and intention to use ai (χ² = 12.41, p < 0.01), meaning that larger banks are more likely to invest in infrastructure and talent related to ai. these findings demonstrate the toe frameworks’ basic assumptions, including the effects of organizational resources and strategic attitudes on technology adoption. limited technical capacity (58.3%) and regulatory uncertainty (51.7%) are among the key obstacles to full implementation, echoing findings from the asian development bank’s 2023 research into digital finance in south asia. nevertheless, 71.7% of survey participants thought that ai will become indispensable for compliance functions in the next five years, as it is going to be important to try to keep up with increasingly complex regulations and reporting requirements. the future vision also stressed the need for technology investment ‘as well as sector-specific guidelines, public and private partnerships and regulation alignment’. pa ge 17 0 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 164-172, 2025 figure 6: ai adoption in bangladesh banking sector. nevertheless, this measure of readiness is still based on self-report and may be biased by institutional optimism or bias, thereby highlighting the importance of tracking actual preparedness longitudinally and to actively engage policy makers over actual preparedness. findings the study showed that a lot of bankers in bangladesh know about ai in compliance and regulatory reporting, but not many of them are really employing it. they mostly use it for easy things like checking for fraud and kyc/aml screening. most banks still employ manual or partly automated systems, and just a few of them have started using ai tools that are very sophisticated. people who answered said that ai might make compliance processes faster, more accurate, and able to keep an eye on threats in real time. but there are also huge challenges, like not having enough skilled individuals, not having clear ai decision-making, not having enough regulatory guidance, and data security risks. the institutions were only somewhat ready because they didn’t have enough training or infrastructure. but a lot of banks said they were interested in putting money into ai technologies in the foreseeable future. the results reveal that more and more individuals are starting to see how ai could revolutionize the way compliance works. but to use technology responsibly and effectively, we will need to plan ahead, make rules that are easy to understand, and build up our skills. recommendations the results show that banks in bangladesh should introduce ai to their compliance and regulatory reporting systems in stages and with care. they should start with trial initiatives in areas that will have a big impact, like aml/kyc, fraud detection, and automating reports. institutions should spend money on upgrading their technology and on training their employees in specialized areas so that they can appropriately manage ai technologies. it is crucial to cooperate with regulatory groups, and bangladesh bank should be in charge of making clear guidelines, promoting ai governance standards, and supporting efforts throughout the industry to use ai in a safe and ethical way. banks should also make sure that personnel are keeping a careful eye on ai operations, that data privacy and cyber security are solid, and that they promote internal research and innovation to create ai solutions that meet their specific compliance needs. conclusion the study’s conclusion is that artificial intelligence might greatly improve the accuracy, speed, and responsiveness of compliance and regulatory reporting in bangladesh’s banking sector. but it is still in the early phases of being used due of a variety of problems with institutions, technology, and rules. the results suggest that even though banking professionals think ai could change things, its widespread usage is being held back by concerns about data security, algorithmic transparency, a lack of regulatory direction, and a lack of institutional readiness. things look positive for the future, even though there are some problems. a lot of banks want to invest in ai solutions. to make sure that ai is used in compliance processes in a responsible, safe, and long-lasting fashion, banks, regulators, and technology vendors all need to work together. this will let them get the most out of ai’s benefits while keeping its risks to a minimum. references alhajeri, r., & alhashem, a. 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(2022). rpa and ai-driven predictive analytics in banking for fraud detection. tuijin jishu/journal of propulsion technology, 43(4), 2022. https://doi.org/10.52783/tjjpt.v43.i4.5531 pa ge 1 pa ge 13 1 american journal of economics and business innovation (ajebi) dynamic and static effects of digital services trading on economic growth of world regions richard mulenga1* volume 2 issue 3, year 2023 issn: 2831-5588 (online), 2832-4862 (print) doi: https://doi.org/10.54536/ajebi.v2i3.2051 https://journals.e-palli.com/home/index.php/ajebi article information abstract received: september 25, 2023 accepted: october 22, 2023 published: october 27, 2023 the study examines the effect of digital services trading on the economic growth of panel data from five (5) world regions, namely, africa, asia, latin america, europe, and the organization for economic cooperation and development (oecd) between 2005 and 2021. the study employs quantitative experimental methods of panel vector autoregression (pvar) models as dynamic estimators and the fixed effects (fe) models as static estimators. the pvar model analyses indicate that the digital services trade has a significant positive long-run effect on gross domestic product (gdp) growth in all five regions. for every 1% increase in digital services trade, gdp in the oecd region increases by 6.75%, followed by europe at 3.19%, 2.11% in latin america, 1.02% in asia, and is lowest in the african region panel at 0.82%. the static fe analyses also shows similar results. these findings confirm the hypothesis that deep internet/digital penetration positively impacts the efficiency of digital services trade. the study, therefore, recommends that policymakers from developing world regions should increase investments in digital deepening infrastructure which should include among others, promoting, policy and regulatory measures that augment digital infrastructure installations in rural places, developing the digital skills to mitigate digital illiteracy, and promoting the adoption of cutting-edge digital technologies. keywords dynamic and static effects, digital services trading, world regions, economic growth 1 faculty of economics, zcas university, lusaka, zambia * corresponding author’s e-mail: richardmulenga2@gmail.com introduction since the development of the steam engine and the telegraph in the latter half of the 19th century, the evolution of container shipping around the 1960s, and the developments in transportation and information communication technologies (ict) in the twenty-first century have fundamentally altered international trade and the basket of goods and services that trading countries specialize in (cosar and demir, 2018; steinwender, 2018; zhu, shang, & li, 2023). the global digital economy, a core element of the 4th industrial revolution, ushered in digital trade (united nations conference on trade and development, unctad, 2020). according to unctad (2020), digital trade refers to all international transactions that are delivered remotely in electronic format, using computer networks. it involves all trade that is digitally ordered and/or digitally delivered. from the demand side point of view, the digitization processes have a positive effect as observed by the increase in the variety and volume of production, exchange as well as consumption. business to consumer (b2c), business to business (b2b), consumer to consumer (c2c), and business entities and governments (b2g) can all engage in digital commerce transactions (oecd, 2020). it is simple to note that trade in products and services has been significantly disrupted and is increasingly moving from physical to digital forms in certain areas, including but not limited to, among others, education, financial services, entertainment, software, logistics, as well as health service provision (tele-doctor services, for instance). some goods that used to be traded in physical form such as movies, music, and books have been digitally transformed and can now be digitally transmitted as video streaming, music downloading, and e-books respectively (organization for economic cooperation and development, oecd, 2020; unctad, 2022). the organization for economic cooperation and development, oecd, (2020) explains that from the supply side, digitization procedures have had a tremendous impact on how goods and services are produced and delivered. cloud computing, 3d printing, artificial intelligence (ai) and the app industry (app developers and vendors) are integrating digital technologies in the production and delivery of goods and services making the flow of data the ‘life blood’ of the 21st-century international trade. as opposed to traditional trade, digital technology-driven trade makes it simple to coordinate international supply chains, making it relatively quicker, cheaper, and increases trade volumes, which subsequently results in higher economies of scale, reduced trade time, and significantly cuts variable costs via lowered entry barriers (oecd, 2020; mulenga and mayondi, 2022). the digital economy in general, and digital trading in particular, enable small and medium enterprises (smes) and emerging economies to easily engage in international commerce transactions, which were traditionally controlled by huge multinational enterprises (unctad, 2022). the covid-19 crisis seems to have elevated the importance of digital trade in that there was a significant increase in the use of, and development of online platforms for purchasing products and services. unctad (2022) revealed that despite the worldwide economic crisis that emanated from covid-19 in pa ge 13 2 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 131-144, 2023 2019, global digital services were remarkably resilient, declining by only 1.8% relative to global traditional services exports, which decreased by 20%. although empirical and theoretic literature is replete with assertions of the positive impact/effect of digitization processes on various economic activities, a literature review of related literature (for example, zhang,et al., 2023; mulenga & mayondi ,2022; ying & gao 2022; pingfang, 2021, wang & choi,2019; thomas-mini, 2018) seems to suggest that research gaps exist regarding empirical studies on the digital services trading-economic growth nexus of world regions. therefore, this topic remains an open question. the scarcity of research in this area can be partially explained by the apparent absence of a universal definition of digital trade and the scarcity of digital trade measures in official national accounting systems. to this end, therefore, this study conducts the dynamic and static analyses of the effects of digital services trade on economic growth (gdp per capita) in five (5) world regions from africa, asia, europe, the latin americas, and the organization for economic cooperation and development (oecd). the study is predicated on the hypothesis that regions that have deeper internet/digital penetration experience higher economic growth driven by digital services trade. literature review conceptual and theoretical background whereas the digital economy refers to a plethora of terms ranging from digital computing including e-commerce and gig economy, digital trade basically focuses on how the internet is revolutionizing domestic and international trade and reshaping comparative advantage (world economic forum, wef, 2022, oecd, 2020). in simple terms, a digital economy is any economic activity done or facilitated by digital technologies. there seems to be a positive correlation between the growth of digital technologies and digital trade. for instance, digital technologies help small and medium enterprises (smes) overcome the challenges of scale and distance and thus make it relatively easier to access global markets previously dominated by large multinational corporations (mncs). although digital trading has positive economic benefits, barriers exist. some of the barriers are tariffs and quotas imposed on imports of routers and servers, cross-border data flow restrictions, discriminatory national and international laws/standards that depart from recognized international standards (wef, 2020, department for international development dfid, 2020, unctad, 2022). situational analysis: internet penetration precondition for digital trade the potential benefits that accrue to a country or region are determined largely by the digital infrastructure, and regulatory framework (digital/internet penetration, hereafter) tenable in that region or country. it is hypothesized that deep digital/internet penetration augments the long-run economic growth through increased economies of scale and the reduction of variable costs. as can easily be seen in figure 1, there are great variations among world regions in terms of digital penetration. figure 1: internet penetration in world regions-2009-2022 source: author’s elaboration on data from the international communication union. note that cis denotes commonwealth independent states from the former union of soviet socialist republic (ussr). from the scatter plot in figure 1, it is easy to note that digital penetration or digital connectivity, defined as the ability to access and use technologies to conduct economic activities including digital services trade (world bank 2016; brookings 2017) has been growing across the world regions from 2009. however, it appears that the african region (light blue dotted scatter plots) has been lagging behind other regions since 2009 even though the percentage of the population’s access to digital technologies in africa has grown from 7.6% in 2009 to 40% in 2022. the european region (black scatter plots) ranking first in terms of internet penetration, grew from 59.6 % to 89 % in the same period. the americas rank 2nd; it ranges between 46.3% in 2009 and 83% in 2022. conceptual framework of digital trade data and digital platforms are two essential ingredients of the digital economy in general and digital trade in particular. conceptually, the fundamental driver of digital trade is data which can be traded and is a means through pa ge 13 3 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 131-144, 2023 which services are traded (world economic forum, wef, 2020, gonzález & jouanjean,2017). figure 2 shows the conceptual framework. the digital trade enablers refer to the hard and software infrastructure. data flows support trade by enabling control and coordination in the international trade networks or by facilitating a wide range of trading activities. digital trade is done via physically delivered and digitally delivered platforms (oecd, 2020). in our analyses, gross domestic product per capita (gdp per capita) is the dependent variable (also referred to as economic growth) whereas digital exports and digital imports (collectively called digital services trading), goods exports and goods imports (as control variables), and the number of people using the internet (% of the population) and secure internet servers are independent variables (regressors). the level of digital/internet penetration is considered an intervening variable. review of related literature for the years 2013 through 2020, zhang, ye, and sun (2023) evaluate the static and dynamic efficiency of the chinese digital economy. they make use of models from the three stage malmquist index-based approach. their findings show that the effectiveness of the digital economy differs by province. brazil, russia, india, china, and south africa (brics) countries’ economic growth was examined by wang and choi (2019) in relation to the effects of the digital economy for the years 2000–2016. they used the gravity, fixed effects (fe), and random effects (re) models in their investigation. findings demonstrate that the digital economy has significantly improved. they recommend that the brics countries should invest massively in digital trade infrastructure to reap maximum benefits from the effects of the digital economy. mulenga and mayondi (2022) evaluated how the trade in digital services impacted panels of developing, emerging, and developed nations’ economic growth for the period 2005 to 2021 using the panel vector autoregression models as dynamic estimators. results show that even though all the country panels’ gdp growth was positively impacted by digital services exports, the developing countries’ panel lagged behind. thus, the study recommends that developing countries should enhance their investments in digital infrastructure. using fixed effect (fe) models as static estimators for the years 2013 to 2019, zhu, shang, and li (2023) undertake research on the effects of the digital economy on global trade. the study finds that the digital economy significantly promotes the development of urban international trade. the study recommends that policymakers should be proactive in increasing investment in digital infrastructure. in their examination of the strategies for developing digital trade and methods of governance in united states, the european union, china, and india, ying, and gao (2023), use comparative taxonomy models. the study findings reveal that the four economies in the survey employ strategic policies or mechanisms in global digital commercial activities that enable them to substantially derive large amounts of rent. mini-thomas (2018) examined how the trade in services impacted india’s economic growth using both the balance of payments constrained growth (bpcg) and the autoregressive distributed lag co-integration (ardl) models. the results show that the growth of india’s economy was driven largely by the goods trade than the goods services trade. simon and pingfang (2021) use cross-sectional data from 53 nations for the years 2000–2018 to evaluate the effects of the digital economy on economic growth in africa. they use fixed effects (fe) for static models and the system general method of moments (sys-gmm) for dynamic models. the results demonstrate that the digital economy significantly enhances commerce and economic development in africa. using the vector auto-regression (var) method, maune (2019) examined how trade in services impacted the economic growth of a panel of ten (10) southern african nations. in contrast to trade in commodities exports, the study revealed that trade in services had a higher positive coefficient than goods trade. to ascertain the effect of the digital economy (digital index) on provincial economic growth in china, pan et al (2022) employed pooled ordinary regression models (pol). they discovered that although the digital economy had a significant positive effect on china’s economy, regional differences in the digital infrastructure penetration caused variations in economic growth. therefore, to reduce the economic disparities of the effects of the digital economy, the study recommends the integration of the digital economy in all the regions in china. theoretical framework the augmented solow growth model might theoretically be conceived as increasing total factor productivity (tfp) arising from the digital economy’s growth (pan et al, 2022; figure 2: conceptual framework source: author’s elaboration pa ge 13 4 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 131-144, 2023 zhang et al, 2021; mulenga & mayondi,2022). solow’s augmented growth model as postulated in mankiw, romer, and weil 1992): yit=kit α hit β (al)(1-α-β) (1) where y_it is regional gdp growth over time (t) with regards to the variations in physical capital k, human capital h, total factor productivity,a. labor implies the embodiment of natural skills in people while human capital may be defined in terms of skills built in people through channels of education, training, and experience mankiw, romer and weil, 1992; erken et al., 2016). therefore, labor may be expressed as shown in equation 2: yit/lit =a(1-α-β ) ((kit/lit )) α ((hit/lit)) β (2) when expressed in natural logarithms, equation 2 transforms into equation 3: ln(yit/lit)=(1-α-β)+ln(ait)+αln((kit/lit)+βln(((hith)/ (llit )) (3) it can easily be observed from equations 2 and 3, that the productivity of labor is measured as capital-labor ratio (k/l), human per capital labor ratio(h/l) as well as the residual term (1-α-β) ln(a). the residual term in the context of this study is a parameter that measures the digital/internet penetration in a given world region (erken et al., 2016). material and methods research design and data description the panel experimental quantitative study design is used in this study. yearly panel data from 2005-2021 on five (5) world regions (excluding high-income countries) namely, africa (sub-saharan africa, ssa) europe (eastern europe), asia (south asia),the americas (latin america & the caribbean) and the organization for economic cooperation and development, oecd2 are used. the oecd region is included as a benchmark region because it represents the high-income and deepest internet penetration region among the regions in this study. the panel regional data, gross domestic product per capita at current usd3 (as a dependent variable), and explanatory/regressor variables are goods export namely goods exports (denoted as goods_exp,) goods imports (denoted as goods_imp), number of people using the internet (denoted as internet_users, expressed in terms of per centage % of the population) and secure internet servers (denoted as sec_servers, per 1 million people-these ensure the confidentiality and protection of data from hackers) were extracted from world bank’s development indicators database (wdi) of the world bank (2023). however, the digital services trade exports regressor variable data were extracted from the united nations conference on trade and development database (unctadstat). the digital trade imports data were not available on the unctad database (unctadstat), so the author proxied digital services imports with computer communications services (as a % of commercial service imports) obtained from the world development index (2023) database. this study follows mini-thomas (2018), maune (2019) and mulenga and mayondi (2022), in using goods exports and goods imports regional panel data as control variables for digital services trade. regional panel unit root diagnostic tests green (2003) advises that since economic data seldom exhibit stationarity and frequently gravitates towards the unit root, it is necessary to conduct stationarity and unit root tests. these tests mitigate the incidences of conducting spurious regressions, inferences, and recommendations. therefore, the researcher carried out four (4) regional panel unit root tests namely, the common root-levin, lin & chu (2002, llc,2002 hereafter), the individual root-im, pesaran & shin (2003, ip & s, 2003 hereafter), individual unit root-augmented dickey-fuller, (1979 adf, 1979 hereafter) and individual root-phillips and peron, (1988, pp, 1988 hereafter). theoretically, regional panel root tests can be conceived simply as applying multiple panel data time-series unit root test diagnostics (levin et al., 2002). panel unit root tests evaluate whether the autoregressive (ar) process is constrained throughout the cross sections of the panel data models (woodridge, 2000; dickey & fuller, 1979). in terms of unit root test algorithms, this study follows mulenga and mayondi (2022). starting with an autoregressive procedure, ar (1): yit=ρi y(it-1)+xit δi+εit (4) where i=1,2,…,n cross sectional series observed over periods t=1,2,…,ti the xit refers to a matrix of external/exogenous factors in the model which include, among others, fixed effects, and individual trends. ρi measures autoregressive coefficients, whereas the ε(it)is a matrix or vector of white noise error terms. it follows that given that; |ρi |<1, yi becomes trend/ weakly stationary. if, however, |ρi |=1, yi is said to be nonstationary/has a unit root (phillips and peron, 1988). the two assumptions normally taken regarding ρi in the process of conducting the panel unit root test diagnostics are that, firstly, we assume that persistence parameter are common across-sections such that ρi=ρ for all. the llc (2002) common unit root test is done in accordance with this assumption. secondly, we assume also that ρi has the freedom to vary across the sections in the panels. the individual ip&s (2003) panel unit root test is conducted in the backdrop of the second assumption. the adf (1979) and the individual pp (1988) unit root test diagnostics ride on this assumption. the basic adf (1979) panel unit root test may be denoted as shown in equation 5: ∆yit=αy(it-1)+∑(pi) (j=1) βij ∆y(it-j) +x’it δ+εit (5) this test rides on the assumption that α=ρ-1 and that the lag order, ρ_i, varies freely across the sections. we express the respective null and alternative hypotheses for the adf (1979) unit root tests as follows: h0 : α=0, (implies presence of a unit root is a unit root) h1 : α<1 (implies absence of a unit root/ data stationarity) given that all the five (5) panel unit root procedures carried out in this study began with the basic adf pa ge 13 5 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 131-144, 2023 (1979), we only report the test statistics algorithms or model expressions in order to conserve space. the ll& c (2002) common unit panel unit root test, assumes that, under the null, a modified test-statistic for the resultant α is asymptotically normally distributed: (6) on economic growth, our study evaluates the impact of digital services trading on five (5) diverse world regions. additionally, whereas maune (2019) applied p-var on a panel of countries from one region, specifically from the sub-saharan africa, (ssa), this study evaluates the effect of digital services trade on growth of five (5) world regions. furthermore, whereas mulenga and mayondi (2022) applied pvar models to determine the digital services-economic growth nexus on panel data from developed, emerging and developing countries, this study employs pvar dynamic models to examine the effect of digital services trading on five (5) world regions from africa, asia, europe, the latin america and the oecd cluster, and extends the data analysis by one additional variable (secure internet servers) as well as the time frame from 2005-2021. additionally, we follow simon and pingfang (2021) in employing static models of fixed effects (fe) or least squares dummy variables (lsdv) models. we employ fe estimators to conduct static regressions because the hausman test rejected the null hypothesis that supports the use of random effects (re) models. in compact (in log-difference) format, we can express the pvar dynamic model as shown in equation 9: dlnyit=αt+β1dlnx it+β2dlnx it+βkdlnxkt+μxit(μm it)+ ωxit+ωmit +ε(it) (9) where the variables xit,...,xik refer to a matrix/ vector of independent(regressor)variables,γ_it refers to the regional economic/gdp growth, the coefficient estimates β1, β2,..., βk refer to the quantitative effects that each respective regressor in the model has on regional gdp growth(γit), holding other regressors constant i refers to region i, t refers to time, and μxit,(μmit,) refers regional i’s unobservable individual effects on export (import) equation, ωxit, ωmit are unobservable time fixed effects for exports and imports respectively and, εit,refers to the stochastic error term parameters αt refer to a vector of intercepts in each time series(year). we can write the compact expression under expression 9 more specifically as shown in equation 10: dlnyit= αt + β1dlndigserv_expit + β2dlndigserv_impit + β3dlng_expit + β4dlng_impit + β5dlnint_usersit + β5dlnsec_ intservit+ μxit(μmit) + ωxit + ωmit + εit (10) where yit is gdp per capita in current us dollars forith region at time t, αt denotes various intercepts for different years in each time series, β1 digserv_expit is digital services exports trading for region i at time t, β2 digserv_impit denotes digital services trading imports variable for region i at time t, β3 g_expit denotes goods exports trading variable for region i at time t, β4 g_impit refers to the goods imports variable for region i at time t, β5 int_usersit refers to the number of internet users measured as per centage points (%) of the population for region i at time t and sec_servit refers to the secure internet servers per 1 million people. ωxit, ωmit denote unobservable time fixed effects for exports and imports respectively and, εit denotes a stochastic disturbance term where; tα is the standard test statistic â=0. â2 refers to the estimated variance of the stochastic error term, εit se(â) is the standard error of â, and t=t-(∑i (ρi/n))-1. the terms μ(m(t* )), and σ(m(t* )), refer to respective adjustments for the mean and variance. the respective null & alternative hypothesis for the ip& s (11) unit root test can be conveniently expressed as shown in equation 7: h0=0,∀ i (7) the average of the t-statistics αi from the individual adf regressions t(i(ti)) (ρi): ip&s (2003) assert that a properly standardized has an asymptotic standard normal distribution, n(0,1). as an alternative diagnostic panel set of unit root tests, fisher’s test may be employed. this unit root test process tends to combine the p-values from the individual unit roots test processes. now, wooldridge (2000) suggested that if πi is defined as the p-value for any individual unit root test for cross section i, it implies that under the null unit root for all n, for all cross sections, the asymptotic result may be written again in a convenient format as shown in equation 8: -2∑n (i=1)log(πi)→x2 n (8) ip&s (\2003) demonstrate that; z=1/(√n) ∑n (i=1) φ (-1)(πi)→n(0,1), where φ(-1) denotes the of the standard normal cumulative distribution function. e-views 9.5, statistical software employed in this study, yields the asymptotic fisher chi-squared (x2) and the standard normal statistics by applying and reporting the adf 1979, i.e adf(1979) & pp 1988, i.e pp(1988) individual unit roots diagnostic results. the null and alternative hypotheses are the same as those in individual root-ip& s (2003), panel unit root test procedures as expressed in equation number 7. the empirical econometric models the empirical models employed to assess the dynamic and fixed effects of digital services trading on the economic (gdp) growth of each of the five world regions, we follow mini-thomas (2018), maune (2019) and mulenga and mayondi (2022) in applying the panel vector autoregression (pvar) empirical econometric models. this study, however, is distinct from that of mini-thomas (2019) in that while mini-thomas (2019) evaluated the impact of information communication technology (ict) pa ge 13 6 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 131-144, 2023 i at time t. the various intercepts for different years in each time series denoted as αt accounts for the change in gdp per capita per year. in empirical literature, it is recommended that panel data analyses be done in natural log form to rescale data thus making variance constant, and to reduce the effects of positive skewness. additionally, data in natural logs transforms non-linear data to linear (green, 2003; maune, 2019; stock and watson, 2001). pvar versus pvecm despite being widely used in the literature, var models (refer to lutkepohl, 1991, johansen, 1995 for detailed discussions), we briefly discuss it here highlighting reasons why we employ pvar models in this study. lutkepohl (1999) and green (2003) explain that the use of pvar models help to capture the dynamic interdependencies in panel data thereby considering the cross-sectional dynamic heterogeneities through the incorporation of time variations in the coefficients and in the variance of innovations or shocks. the same algorithms used to create ordinary vars are used to create pvar models, but pvar models have cross section dimensional features added to them (green,2003). var is a description of the evolution of the set of k (endogenous) variables in the same sample period as a linear function of their past changes. in other words, var model can be described as n-equation, with n-variables explained by their own lagged(past) and current values of the remaining n-1 variables (stock and watson, 2001). thus, the basic panel var (pvar) or pvar at levels can be expressed as shown in equation 11: (11) var at levels may not be an appropriate estimator for cointegrated system of equations. to this end, this paper employs the vector error correction models (vecm) given that the system of equations in our study are cointegrated. we follow lutkepohl (1999) in expressing the panelvecm (pvecm) model as shown in equation 13: (13) where p is the number of (lags) parameters, a0 is a vector of intercepts, yt is a vector of endogenous variables, ai is k x k coefficient matrices, implying that, i=1,2,…,p, ut = k-dimensional denotes stochastic disturbance non time variant process (15). the basic pvar model assume a var(p) process as the number of lags equals p. it is assumed further that the var(p) is generalizable enough to factor in probabilistic trends predicated on the process that is stable given that: (12) this means that, given that the polynomial determinant in equation 11 has a unit root, implying also z=1, it follows that some or all the variables in the systems may be cointegrated of order 1. lutkepohl (199) advises that where π=-(i(k)-a(1)-…-ap) , and γi= -(a(i+1)+⋯+ap) for i=1,…p-1 it is assumed that the expression: △y(it), contains no stochastic trends. all the variables are thus integrated of order one, (i(1)) implying that the presence of cointegration relations is manifested by the term, π(yit-1) be i(0).when y(it) is cointegrated with cointegration rank, r, rank(π)=r<k and π=αá’ where α and a are kx r matrices. the term γ(j) (j=1,…,p-1) is interpreted as short run parameters while π(yit-1) term is the long run association part of the p-vecm. the unknown var order p in equations 11 and 13 is estimated using the akaike information criterion (aic). in estimating the fixed effects, we employ the model which can be expressed generally as shown in equation 14: (14) where; γ is a vector of dependent variables,β0 are intercepts, β(1) are coefficient estimates, x is a vector of regressors, i=1,2,…n, d represents dummy variables,t denotes time,uit is the white noise error term for region i at time,t. results and discussion diagnostic tests and choice of models the author employed hausman tests to determine whether to estimate fixed or random effects models. the hausman test rejected the null hypothesis of estimating random effects (re). thus, this author used the fixed effects (fe) estimator or least squares dummy variable (lsdv) models static estimators. we follow kao (1999) and pedroni (1999) in conducting regional panel data cointegration tests. both kao (1999) and pedroni (1999) confirmed that regional panel data were cointegrated. consequently, we used the pvecm as dynamic models. summary descriptive statistics table 1 reports summary descriptive statistics for the five (5) sub-panel world regions surveyed in this study. table 1: descriptive statistics of five regions mean max min std. dev obs. panel 1: african region (ssa) gdp_cap 16.57 29.34 6.13 7.02 121 dig_exp 24454.85 30268.34 18565.59 3560.73 121 dig_imp 35.77 42.99 32.43 2.38 121 g_exp 3.58 4.35 2.68 5.36 121 g_imp 3.53 3.96 2.96 3.04 121 int_users 16.57 29.34 6.13 7.02 121 sec_intserv 257.75 787.44 3.63 323.39 121 pa ge 13 7 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 131-144, 2023 table 2 reports the panel unit test results. we observe in table 2 that the variables in the african, asian, latin american, and european regions show that some data have unit roots while the other data is stationary at levels. however, all the variables in the oecd regional data are all integrated of order 1. note that fisher tests were computed using an asymptotic chi-squared distribution. all other tests assume asymptotic normality. the null hypothesis assumes a common unit root process. *, **, ***, imply that the respective regional panel data variable is stationary at 10%, 5% and 1% significance levels. root tests included individual intercepts only. adf denotes is augmented dickey fuller test, pp refers to phillips and peron unit root tests whereas llc refers to levin, lin and chu unit root tests and ips denotes im, pesaran and shin unit root tests. panel 2: asian region (south asia) gdp_cap 5303.88 6553.21 4057.73 804.70 132 dig_exp 446727.01 634458.50 277006.31 106447.94 132 dig_imp 49.62 56.94 41.64 3.911 132 g_exp 3.65 4.11 2.82 3.61 132 g_imp 5.67 6.77 4.42 6.56 132 int_users 16.76 38.53 7.17 8.77 132 sec_intserv 3.02 5.94 0.33 1.98 132 latin american region gdp_cap 14663.39 15972.73 12904.98 857.51 132 dig_exp 55599.11 61069.64 41868.39 5484.09 132 dig_imp 26.98 35.14 24.98 2.63 132 g_exp 8.60 9.45 7.19 6.86 132 g_imp 8.73 9.68 7.19 7.49 132 int_users 53.19 73.39 34.01 12.24 132 sec_intserv 508.19 1676.19 19.15 599.25 132 panel 4: european region (eastern) gdp_cap 9133.79 10962.47 7640.69 1063.64 132 dig_exp 82019.53 109716.44 57255.33 16289.40 132 dig_imp 29.02 38.97 25.95 3.34 132 g_exp 1.12 1.26 8.81 1.34 132 g_imp 1.06 1.19 8.73 1.12 132 int_users 60.78 80.25 40.07 12.39 132 sec_intserv 94.67 381.76 1.39 130.78 132 panel 5: oecd region gdp_cap 9133.79 10962.47 7640.69 1063.64 132 dig_exp 82019.53 109716.41 57255.33 16289.40 132 dig_imp 29.02 38.97 25.96 3.34 132 g_exp 1.12 1.26 8.81 1.34 132 g_imp 1.06 1.19 8.73 1.12 132 int_users 60.78 80.25 40.064 12.39 132 sec_intserv 94.66 381.75 1.39 130.78 132 source: authors computations using data from unctadstat & the world bank’s world development indicators table 2: panel unit root test results variable llc (t-stat) ips (w-t-stat) adf-fisher x2 pp-fisher x2 order of integration panel 1: african region gdp_cap -3.10* -2.51** 56.43** 145.78** i(0) dig_exp -2.12** -1.13** 80.79* 145.22** i(1) dig_imp -3.14* -1.11** 51.12** 123.78* i(1) g_exp -4.07* -2.8** 69.17** 419.37** i(1) pa ge 13 8 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 131-144, 2023 g_imp -2.97** -2.32** 190.10* 401.207** i(0) int_users -3.01** -2.31** 45.05** 201.92** i(1) sec_intserv -3.01** -1.02** 69.17* 117.75** i(1) panel 2: asian region gdp_cap -5.09*** -4.67** 90.34* 201.61*** i(1) dig_exp -2.79** -1.54*** 112.89* 173.71*** i(1) dig_imp -4.67** -3.72* 144.78* 69.17** i(1) g_exp -2.73* -1.79** 95.11** 130.10** i(1) g_imp -7.91** -6.09** 86.45** 88.95*** i(1) int_users -3.22** -5.79*** 111.23* 71.09** i(1) sec_intserv -5.13*** -4.67*** 205.12* 91.65** i(0) panel 3: latin america region gdp_cap -4.67** -2.028* 79.67* 319.37** i(1) dig_exp -2.73** -1.78** 290.14* 201.21* i(1) dig_imp -9.09** -6.71** 45.05* 201.92** i(1) g_exp -8.79* -7.00** 169.17* 174.78** i(0) g_imp -4.67* -3.50* 98.45 ** 209.56** i(0) int_users -4.67* -2.79** 79.14** 86.45* i(1) sec_intserv -5.66** -4.71** 211.57* 208.78* i(1) panel 4: european region gdp_cap -9.66* -7.91** 204.23* 312.97** i(1) dig_exp -11.21* -7.79** 117.89* 214.78* i(0) dig_imp -8.96** -6.47** 211.56* 305.11*** i(0) g_exp -7.11** -4.67** 189.2* 86.45*** i(1) g_imp -10.71* -3.44** 156.3* 121.38* i(1) int_users -12.79** -5.62** 94.9* 79.19** i(1) sec_intserv -8.76** -4.02* 78.9** 87.23** i(1) panel 5: oecd region gdp_cap -6.34*** -4.89** 82.29* 122.99** i(1) dig_exp -8.79** -5.71* 101.34* 164.78** i(1) dig_imp -4.26* -1.54** 98.27* 95.11** i(1) g_exp -6.93** -3.72* 120.23* 86.45** i(1) g_imp -7.91*** -1.79** 107.18 111.23** i(1) int_users -4.71* -6.09*** 69.27* 97.0*** i(1) sec_intserv -3.76** -1.67** 98.14* 133.99*** i(1) test for linear correlations among the regional panel data variables the author conducted the correlational relationships so that we identify the linear relationships among the variables. we report the results in table 3. for the african region, digital services exports, digital services imports, goods exports, and secure internet servers variables exhibit a strong positive correlation with economic growth (gdp). the number of people using the internet variable is positively and perfectly correlated with gdp. however, goods imports variable is weakly correlated with gdp. for the asian region, all the variables show a strong positive correlation with gdp except the goods exports variable which is weakly correlated with gdp. the latin american region shows that all the variables have a strong positive correlation with gdp except the goods export variable which shows a weak negative correlation. in terms of the european region, all the variables are weakly correlated with gdp, with digital exports, goods exports, goods imports and the number of people using the internet variables being positively correlated. digital services imports and secure internet servers have a negative correlation. finally, in the oecd region, all the variables have a positive and strong correlation with gdp except digital imports and goods imports variables which show a strong negative correlation with gdp. pa ge 13 9 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 131-144, 2023 table 3: correlations matrix gdp_ capita dig_exp dig_imp g_exp g_imp int_use secure_ intser panel 1africa region gdp_capita 1 dig_exp 0.98 1 dig_imp 0.95 0.87 1 g_exp 0.66 -0.56 -0.66 1 g_imp -0.41 -0.31 -0.46 0.8 1 int_users 1 0.98 0.95 -0.66 -0.39 1 secure_intserv 0.91 0.933 0.85 -0.39 -0.32 0.67 1 panel 2-asia region gdp_capita 1 dig_exp 0.96 1 dig_imp 0.82 0.82 1 g_exp 0.52 0.5 0.06 1 g_imp 0.91 0.33 -0.03 0.93 1 int_users 0.84 0.93 0.83 0.26 0.07 1 secure_intserv 0.98 0.96 0.87 0.44 0.31 0.89 1 panel 3-latin america region gdp_capita 1 dig_exp 0.90 1 dig_imp 0.14 0.01 1 g_exp -0.62 0.66 -0.06 1 g_imp 0.59 0.77 -0.32 0.92 1 int_users 0.88 0.68 0.59 0.35 0.22 1 secure_intserv 0.73 0.45 0.65 0.38 0.14 0.91 1 panel 4-europe region gdp_capita 1 dig_exp 0.14 1 dig_imp -0.29 0.51 1 g_exp 0.37 0.28 -0.08 1 g_imp 0.44 0.37 0.07 0.98 1 int_users 0.35 0.96 0.45 0.05 0.15 1 secure_intserv -0.42 0.93 0.41 -0.01 0.09 0.98 1 panel 5-oecd region gdp_capita 1 dig_exp 0.98 1 dig_imp -0.73 0.79 1 g_exp 0.82 0.74 0.45 1 g_imp -0.77 0.68 0.39 0.99 1 int_users 0.99 0.96 0.80 0.81 0.77 1 secure_intserv 0.84 0.88 0.82 0.54 0.48 0.84 1 source: author’s computations using data from unctadstats & the word bank’s world development indicators (wdi) databases panel vecm results-dynamic model estimates table 4 reports a summary of the dynamic pvec model estimates of the long run cointegration coefficients along with their respective speeds of adjustments obtained by employing equation 13. the variables are in natural log format. the pvecm results for the africa region panel show that, over the long term, exports of digital services have pa ge 14 0 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 131-144, 2023 an impact on gdp that is statistically significant at the 5% level. that is, every 1% increase in exports of digital services results in a 0.82% significant rise in gdp. a 1% increase in the number of internet users and the number of secure internet servers causes an increase in gdp of 0.52% and 0.32%, respectively. digital services exports variable returns to a long run equilibrium after experiencing a shock with a speed of adjustment of 0.14%. the pvecm estimates for the asian region show that digital services exports and digital services imports variables have significant but opposite effects on the regional gdp growth in asia. in specific terms, every 1% increase in digital services exports, gdp per capita significantly rises by 1.02%, and while digital services imports results in significant decrease of gdp per capita by 0.23% in the long run. additionally, a rise of 1% in the number of internet users and in the number of secure internet servers increases gdp in the long run by 0.31% and 0.19% respectively. the respective speeds of adjustments for digital exports, goods imports, the number of people using the internet and secure internet servers are 0.12%, 0.07%, 0.16%, 0.16% and 0.13%. for the latin american region, the pvecm estimates indicate that, gdp increases by 2.11% and 0.27%, respectively, for every 1% growth in exports and imports of digital services. additionally, a 1% increase in internet users results in a long-term significant increase in gdp of 0.34%. secure internet server variable, however, significantly lowers gdp by 0.08% at a 5% level. digital services exports, goods exports, goods imports, and secure internet servers demonstrate the speed of adjustment of 0.13%, 0.18%, 0.05%, and 0.15% in terms of long-run convergence or return to equilibrium following a shock. in the european region, the pvecm estimates show that the gdp is significantly impacted positively by exports of digital services exports, goods, the number of internet users, and the secure internet servers’ variables. for instance, a 1% rise in each of these variables significantly increases long-term gdp by 3.19%, 1.29%, 1.22%, and 1.15%, respectively. however, the gdp significantly declines by 0.13% for every 1% rise in goods imports. the rates of adjustment for the models of digital service exports, imports of digital services, exports of goods, the number internet users, and secure internet servers are 0.17%, 0.13%, 0.33%, 0.27%, and 0.21%, respectively. according to pvecm estimations from the oecd region, the gdp is significantly augmented by exports in digital services, imports of digital services, goods exports, internet usage, and secure internet servers. in specific terms, gdp rises by 6.75%, 1.43%, 2.25%, 1.81%, and 0.11% for every 1% increase in each of the variables, respectively. on the other hand, the goods imports variable significantly lowers the gdp growth of the oecd region by 1.06%. digital exports, digital imports, goods imports, and secure internet servers’ models all return to long run equilibrium at speeds of 0.37%, 0.49%, 0.27%, and 0.06%, respectively. table 4: dynamic panel vector error correction (vec) model estimates lr cointegration estimates ect speed of adjustment estimates r2 coeff t-stats std.errors coeff t-stats std.errors panel 1: africa region lngdp_capita (dependent 1 0.03 3.5** 0.02 0.71 lndig_exp 0.82 -3.1** 0.58 -0.14 -2.9** 0.39 0.53 lndig_imp 0.33 -0.59 0.52 0.01 0.34 0.04 0.67 lng_exp 0.13 2.2** 0.71 0.06 1.7* 0.59 0.69 lng_imp -0.17 1.8* 0.45 0.09 1.35 0.93 0.54 lnint_users 0.52 2.8** 0.21 -0.11 -3.2** 0.08 0.49 lnsecure_intserv 0.32 2.5** 0.07 0.03 0.43 0.17 0.51 panel 2: asia region lngdp_capita (dependent) 1 0.09 2.1** 0.06 0.43 lndig_exp 1.02 4.8** 0.06 -0.12 -6.2** 0.04 0.74 lndig_imp -0.23 -2.9** 0.08 0.04 3.5** 0.08 0.63 lng_exp 0.29 -1.21 0.08 0.05 2.1** 0.03 0.76 lng_imp -0.57 1.9* 0.17 -0.07 -2.2** 0.34 0.74 lnint_users 0.31 2.2** 0.16 -0.16 -4.6** 0.04 0.56 lnsecure_intserv 0.17 5.1** 0.17 -0.13 -3.1** 0.06 0.71 panel 3: latin america region lngdp_capita (dependent 1 -0.32 1.56 0.04 0.41 lndig_exp 2.11 1.8* 0.07 -0.13 -5.3** 0.32 0.68 lndig_imp 0.27 2.4** 0.07 0.23 0.62 0.36 0.71 pa ge 14 1 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 131-144, 2023 lng_exp 0.09 3.6** 0.16 -0.18 -1.9* 4.38 0.71 lng_imp -0.19 -2.2** 0.23 0.05 4.1** 0.42 0.52 lnint_users 0.34 4.3** 0.09 0.28 0.78 0.32 0.44 lnsecure_intserv -0.08 -3.1** 0.01 -0.15 -3.2** 0.14 0.59 panel 4: europe region lngdp_capita (dependent 1 0.13 1.45 0.01 0.61 lndig_exp 3.19 4.5** 0.06 -0.17 -2.4** 0.06 0.58 lndig_imp -0.03 -0.58 0.03 -0.13 1.96* 0.08 0.63 lng_exp 1.29 3.7** 0.08 0.33 2.5** 0.68 0.79 lng_imp -0.13 -2.1** 0.06 0.05 0.14 0.76 0.73 lnint_users 1.22 6.1** 0.04 -0.27 -2.0** 0.45 0.79 lnsecure_intserv 1.15 2.3** 0.37 -0.21 -3.5** 0.72 0.51 panel 5: oecd region lngdp_capita (dependent 1 1 -0.41 1.06 0.09 0.65 lndig_exp 6.75 3.7** 0.01 -0.37 -3.3** 0.11 0.84 lndig_imp 1.43 2.2* 0.04 -0.49 -1.9** 0.04 0.74 lng_exp 2.25 2.4** 0.03 0.86 0.17 0.39 0.76 lng_imp -1.06 -3.4** 0.01 -0.57 -2.3** 0.05 0.74 lnint_users 1.81 2.1* 0.02 0.27 1.32 0.08 0.57 lnsecure_intserv 0.11 3.9** 0.02 -0.06 -6.3** 0.13 0.61 source: author’s computations using panel data from unctadstat and world bank’s world development indicators (37) databases. ect means error correction term. the asterisks: *, ** means that the respective variable is statistically significant at 10% and 5% respectively. the pvecm estimators include intercepts only. according to the guidance by the akaike information criterion (aic) the appropriate lag length for each regional panels were as follows: africa lag 7, asia -lag 5, latin america -lag 4, europe lag 5, and the oecd-lag 6. we subtracted 1 lag from each lag length as per the vecm modeling techniques (green, 2003) static panel fixed effects regression estimates after adjusting for regional unobserved heterogeneity factors, the author used fixed effects analyses to assess how each regressor affected the gdp growth of each of the five (5) regions. from table 5, it is easy to observe that the number of internet users, digital products exports, goods imports, goods exports, and secure internet servers have long-run, significant impact on the gdp in the region of africa. specifically, a 1% increase in digital services exports, goods exports, the number of people using the internet and secure internet servers results in a significant long run gdp increase of 1.01%, 0.43%, 0.17% and 0.12% respectively at 5% levels. however, digital services imports and goods imports cause a significant long run decrease in regional gdp by 0.83% and 0.63% respectively. for the asian region, the fixed effects (fe) regression estimates indicate that a 1% increase in exports of digital services, imports of goods, and secure internet servers result in gdp growth of 1.42%, 0.31%, and 0.21%, respectively. however, the gdp plummets by 0.19% and 0.22%, respectively, for every 1% rise in goods exports and in the number of internet users. the latin american region is significantly positively impacted in the long run by imports of goods, the number of internet users, and the secure internet server variables. that is, for 1% rise in each of the foregoing variables, the long gdp in the latin american region correspondingly increase by 1.28%, 0.18%, 0.12% and 0.20% respectively. an increase in digital imports into this region causes significant decrease in the long run gdp o by 0.14%. table 5: static panel fixed effects (fe) model estimates lngdp_capita (dependent variable) hausman test summary coeff t-stat std.errors x2 stat x2 d. f panel 1: africa region lndig_exp 1.01 2.06** 0.01 19.25** 5 lndig_imp -0.83 -1.88 0.03 (0.02) lng_exp 0.43 3.02** 0.05 lng_imp -0.63 3.96** 0.01 lnint_users 0.17 2.19** 0.04 pa ge 14 2 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 131-144, 2023 lnsecure_intserv 0.12 4.03** 0.02 panel 2: asia region lndig_exp 1.42 5.16** 0.08 15.05** 5 lndig_imp -0.19 -1.53 0.08 (0.03) lng_exp -0.38 -3.83** 0.09 lng_imp 0.31 4.76** 0.06 lnint_users -0.22 -1.66 0.03 lnsecure_intserv 0.21 6.49** 0.01 panel 3: latin america region lndig_exp 1.28 5.19** 0.02 11.55** 5 lndig_imp -0.14 -9.73** 0.06 (0.01) lng_exp -0.04 -1.21 0.02 lng_imp 0.18 4.96** 0.07 lnint_users 0.12 5.19** 0.19 lnsecure_intserv 0.20 6.09** 0.12 panel 4: europe region lndig_exp 1.31 13.74** 0.23 21.55** 5 lndig_imp -0.51 -6.03** 0.29 (0.00) lng_exp 0.32 2.02** 0.11 lng_imp -0.37 -2.98** 0.07 lnint_users 0.45 3.02** 0.67 lnsecure_intserv 0.17 1.05 0.53 panel 5: oecd region lngdp_capita 33.21** 5 lndig_exp 2.23 16.74** 0.14 (0.04) lndig_imp -0.18 -16.28** 0.18 lng_exp 1.31 2.02** 0.09 lng_imp -0.11 -3.78** 0.08 lnint_users 0.41 16.33** 0.41 lnsecure_intserv 0.15 5.97** 0.02 source: author’s elaboration on data from unctad and world bank’s world development indicators. notes: ** denotes statistically significant at 5% level. p-value are in parentheses (). d.f denotes degrees of freedom. x2 denotes chi-square the fixed effects (fe) regression estimates for europe show that the have a longimpact on gdp. that is, 1% increase in goods exports, digital services trade, and internet users each causes 1.31%, 0.32%, and 0.45% growth in gdp, respectively. meanwhile, gdp declines by 0.51% and 0.37 in long run when the region’s goods imports and digital services both rise by 1%. we observe that, for every 1% rise in exports of digital services, goods exports, the number of people using the internet, and secure internet servers, economic growth in the oecd region significantly increases by 2.23%, 1.31%, 0.31, and 0.15%, respectively. goods imports and digital services trade imports both have long-run negative impact of 0.18% and 0.11% respectively. conclusion the study examines the of digital services trading on the economic growth (gross domestic product per capita, gdp) of panel data from five (5) world regions namely, africa, asia, latin america, europe and the organization for economic cooperation and development (oecd) between 2005 and 2021. quantitative experimental methods are employed. the panel vector autoregression (pvar) models are used as dynamic estimators while the fixed effects (fe) models are used as static estimators. the dynamic panel vector error correction (pvec) model estimates indicate that the export of digital services trade has significant long-run positive impact on gdp per capita (economic growth) in each of the five regions, with the largest magnitude increase in gdp observed in the oecd region at 6.75%, followed by europe at 3.19%, 2.11% in latin america, 1.02% in asia and it is relatively lowest in africa at 0.82%. in terms of digital services imports, the largest long run positive significant effect is observed again, in the oecd region where a 1% increase in digital imports services trade increases pa ge 14 3 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 2(3) 131-144, 2023 gdp by 1.43% with the africa region ranking second at 0.33%. the findings from the static fixed effects (fe) estimates of the impact of digital services exports on the economic growth of the five (5) world regions in our study also indicate a long run significant positive effect in all the world regions. specifically, with each 1% increase in digital services trade variable, economic growth increases by 2.23% in the oecd region, 1.42% in asia, 1.31% in the europe, 1.28% in latin america and it is lowest in the africa region where it increases by 1.01%. digital services imports variable has a long run negative impact on the economic growth in the oecd, europe, and latin american regions. these findings confirm the hypothesis that deep internet/digital penetration positively impacts the efficiency of digital services trade. the study, therefore, recommends that policymakers from the developing and emerging world regions should increase investments in digital infrastructure and digital policy development which should include among others, promoting policy and regulatory measures that augment digital infrastructure installations in rural regions, enhancing the digital skills, and promoting the adoption of cutting-edge digital technologies to increase access to relatively cheap digital infrastructure and services. references brookings. 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(2023). research on the impact of digital economy on international trade under the double circulation pattern. atlantis press https://www.atlantis-press.com/proceedings/ icaid-22/125977067 appendix foot notes 1digital enablers determine the effectiveness and efficiency of digital trade. the level of development of the cohort of digital technologies determine the digital/ internet penetration (digital connectivity and digital depth). for a detailed discussion on the effect of internet penetration on digital trade, see, for example, world bank 2016 , and brookings, 2017. 2countries in sub-saharan africa (ssa), eastern europe, south asia and latin america (and the caribbean) regions are defined as developing regions by the united nations and the world bank. for details, see https:// www.un.org/en/development/desa/policy/wesp/wesp_ current/2014wesp_country_classification.pdf 3usd refers to the united states dollar. pa ge 1 pa ge 13 3 american journal of economics and business innovation (ajebi) analyzing the long-term impact of u.s. federal sustainability programs using business intelligence morium akter1, ismot zerine2, md mainul islam2*, md rakibul haque pranto3, tauhedur rahman4 volume 3 issue 1, year 2024 issn: 2831-5588 (online), 2832-4862 (print) doi: https://doi.org/10.54536/ajebi.v3i1.5690 https://journals.e-palli.com/home/index.php/ajebi article information abstract received: february 15, 2024 accepted: april 07, 2024 published: april 10, 2024 the research is important to fill a critical gap and the potential contribution of business intelligence (bi) tools to improve program impacts. although there are available studies that have discussed the presence of short-term outcomes, little has been said about the long-term effects of such initiatives, particularly using data-driven tools. observing long run environmental, economic and social impacts of federal sustainability programs is also very important in enhancing future decision making and optimal allocation of resources. the main task of this study was to evaluate the charge of federal sustainability programs on the lowered emissions, decreased money savings, and energy efficiency as well as address the role of bi tools. the longitudinal approach adopted in the study utilized data covering more than 50 federal sustainability programs in the 5-12 year data span. to assess the role of program characteristics in the relationship with its outcomes, the statistical methods based on pearson correlation, multiple regression, t-tests, anova, and chi-square tests were used. important findings were the programs that involved the use of bi tools had continued evidence that they have greater emission reductions (500,000 vs. 300,000 tons co2 ) and cost savings (usd 5.5 million vs. usd 3 million). program duration was also positively correlated with emissions reduction, and longer programs (approximations of 10 and 12 years) had larger reductions. the chi-square test also showed that bi tools usage is strongly associated with program success since programs utilizing bi tools have an increased chance of having more than $5 million in cost savings (p = 0.015). this study not only demonstrated the use of bi in sustainability initiatives but also had important implications for streamlining future federal sustainability programs keywords business intelligence, federal sustainability programs, reduction of emissions, statistical analysis, success of the programs 1 department of information technology and project planning management. st. francis college, usa 2 college of graduate and professional studies, trine university, usa 3 department of management, st. francis college, usa 4 department of dahlkemper school of business, gannon university, usa * corresponding author’s e-mail: islammainul2019@gmail.com introduction sustainability is the topic around which the public policy and the strategy of the private sphere are built, and governments and organizations strive to approach sustainability by addressing issues with the environment, economic stability, and social health (hariram et al., 2023). federal sustainability programs in the united states stand among the most prominent initiatives opposing these issues to achieve environment-friendly behavior and improve energy efficiency, decrease carbon emissions, and advance the economic development of the country (ukpoju et al., 2024). such programs agreed upon in different spheres, like energy, agriculture, transportation, and waste management, are a serious step by the federal government into solving urgent environmental and social concerns (shan & ji, 2024). nonetheless, even though they are considered ambitious, little has been written about the long-term outcome of these initiatives especially in the eyes of business intelligence tools that would give profound insights regarding their long-term performance measure. the present study, namely, the examination of the long-term effectiveness of u.s. federal sustainability programs through business intelligence, will attempt to eliminate this gap by utilizing the power of data to measure the effectiveness of various sustainability programs along different parameters. this paper can help determine highly valued information regarding federal policy sustainability and the overall effects on the environmental, economy, and social system with the help of business intelligence (bi) tools and techniques, including data mining, predictive analytics, and regression analysis, among others (adewusi et al., 2024). background the united states has been a global leader in developing and implementing sustainability programs, with federal programs dating back to the 1970s. the initial policy laid on cutting down air and water pollution, was unable to manage waste better, and to utilize natural resources (anastas & zimmerman, 2021). these programs have changed over the decades, and nowadays one will focus more on adoption of renewable energy, strategies to reduce greenhouse gas emissions, and more comprehensive sustainability strategies. nowadays, the range of u.s. federal programs to support sustainability extends to different sectors, and some of them, like energy independence and security act of 2007, clean power plan, green new deal are heavily promoted in pa ge 13 4 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 3(1) 133-145, 2024 media as some game-changers in terms of environmental issues (klass et al., 2022; kalogiannidis et al., 2024). although an extensive amount of resources has been dedicated to these efforts, the long-term impact of these initiatives has proven to be a difficult task because the factors impacting them are complex and evaluating them on a long-term scale is challenging (lada et al. 2023). the possibility of business intelligence being used to deliver business intelligence and predictive analysis can be a profitable entry point in breaking these barriers and understanding the real effects of sustainability action (paramesha et al., 2024). the focus of this study is local as well as international. at the local level, the study centers on the u.s. federal sustainable policies and their direct and indirect influence on the environmental policies, business strategies and the socio-economic development in the country (hariram et al., 2023). the findings will help in constructing the global discussion on sustainable development internationally as they will give relevant information that can be put to test in other countries with the same programs. the undertaken comparative review of the u.s. federal sustainability programs crossreferenced with international equivalents can assist in determining best practices, areas of improvement, and a blueprint of the capability to analyze sustainability programs among countries (wren, 2022). the literature has presented many studies concerning different components of sustainability scheme and majority of the research has considered both short term and qualitative impacts. as an example, a number of publications concerning environmental impact assessment quite frequently point out the effectiveness of specific programs, with few papers providing a longterm overview at the overall scale. as (kramar, 2022) and awewomom et al., (2024) among other scholars would point out, there are a number of calls to shift towards bringing more in-depth evaluations, which would not only gauge the environment-related benefits but would also take into account the wider economic and social effects. lee and choi (2019), on the contrary, commented on the necessity to apply advanced data analytics to monitor the sustainability performance, where business intelligence tools may play a major role in sustainability programs monitoring and assessment (simon et al., 2024). nevertheless, regardless of the great prospects of bi tools, a scarcity of research studies integrating these technologies into a long-term perspective on the regulation of the federal sustainability programs can be observed. further, research on the usefulness of business intelligence in the environmental policy research is in its infancy. as per the recent research by mohamed et al. (2024) and (li & lakzi, 2022), the mechanism of using bi tools in the energy sector to enhance the process of decision-making concerning sustainability was discussed. the incorporation of bi in an assessment of american federal sustainability projects, namely those that look at long term durations is wanting. it is due to this gap that the current study is particularly novel because it is incorporating the concepts of sustainability and business intelligence in order to implement a longitudinal assessment of federal efforts (chalmeta & ferrer , 2023). such a study is absolutely crucial in two ways. to begin with, this research provides a new strategy in assessing federal sustainability programs based on business intelligence tools and removes the methodological flaws of the prior literature (ferrer, 2024). second, the findings will add value to the body of knowledge in terms of sustainability studies as well as business intelligence in providing important insights to policymakers, environmentalists, and business leaders on the effectiveness of the federal programs. as the u.s. is trimming its sustainability strategies against the background of climate change and resource depletion, the long-term effects of the given programs are necessary to define the future policy decision makers and to make the given resources efficiently spendable in the future (lu & wang, 2023). this first area of motivation of the research is the growing awareness of the necessity to assess the longterm implications of sustainability programs. although the importance of short-term evaluations cannot be underestimated, they do not reflect the bigger and more intricate impact that federal programs may have on the sustainability development of a country (biermann et al., 2022). in addition, more is required to have a big data, which can guide policymaking and enable changes to be made during a program to ensure that they are more responsive. to address this need, business intelligence, and its higher, data analytics capabilities, provides a very strong resource. this study can clarify that there is an essential gap in the knowledge about the performance of the u.s. federal sustainability programs regarding the time and the data collection that may help to enhance future sustainability program enhancement (adewusi et al., 2024). research gap the identified research gap revealed in this study can be described by the absence of such longitudinal assessment of the u.s. federal sustainability programs that implement the use of business intelligence tools to process data properly (okaily et al., 2023). the majority of the best existing studies do it either through concentrated studies of the short-term effects or qualitative analysis without employing statistics in calculating the longterm effectiveness of federal programs. in addition, presently there is an increasing interest over the use of bi concerning environmental and energy management, but there was no research conducted on how bi can be applied to federal sustainability programs (simon et al., 2024). it is this gap that this study seeks to bridge by using the bi tools to very rigorously and data-driven review these programs on the basis of the environmental, economic, and social impacts over time. research questions the major research question, which this study attempts pa ge 13 5 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 3(1) 133-145, 2024 to answer is; in what ways have federal sustainability programs in the u.s. affected the environment, economy and social impacts in the long run, and to what degree are business intelligence tools able to give actionable insight into the impact of these programs? the research design applied in the study is descriptive and correlational study utilizing past data of the u.s. federal sustainability programs. large datasets will be analyzed using business intelligence tools, e.g. tableau, and r, with particular attention to the indicators comprising key sustainability measurements including reductions of emissions, energy efficiency, economic growth, and adherence to policy. regression analysis will also be incorporated in the study to compare all correlations between program implementation and the long-term outcomes. objectives the objectives of the research are mainly the following: • to determine the long-term environmental effects of u.s. federal sustainability programs. • to assess the success of intelligence tools in tracking and analysis of performance of such programs. • to arrive at barriers and enablers that influence success of federal sustainability efforts. the research methodology supports these objectives as business intelligence has been applied along with statistical analysis in gauging the effects of federal sustainability programs over a period. the study was also focused on addressing a substantial gap in the field of sustainability and assessing u.s. federal sustainability programs, such as through business intelligence tools. through the inclusion of environmental, economic, and social indicators, the study enables a clear picture of the degree to which such programs have led the way in terms of performance over a period of time to be obtained and understanding to be obtained that can inform sustainability initiatives in future endeavors. in sum, the proposed study aims to impact the larger body of work on sustainability research through the definitive statement showing the influence of data analysis in the policy-making process and program performance. not only is this study potentially filling a much-needed gap in the sustainability research literature, it is also an example of how future research that attempts to achieve an advanced level of data analysis and policy examination can be successfully conducted. materials and methods the main goals of this study were to assess the effectiveness of u.s. federal sustainability programs, discuss the value of business intelligence tools as the measurement device of the programs, and define the most likely causes that condition the success or failure of programs studied. particularly, the goal of the study was to examine the patterns of energy use, emission decreasing, and resource management to define the efficiency of such measures on the environment. it also aimed at determining the ability of data-driven technology, including predictive analytics, data mining, etc., to institute program-evaluation and forecasting. moreover, the study explored political, economic, and technological facilitators and constraints that determine the nature of sustainability implementation and its results on the federal stage. cumulatively, such goals were aimed at painting a complete picture of the tangible outcomes and dynamics of the federal sustainability programs. research design descriptive and correlational research design was used in the study since the research objective was to be able to describe and quantify the effects of federal sustainability programs and to determine relationship between the sustainability programs and different outcome variables. the descriptive design made it possible to go into the details of the investigation into the data, and the correlational factor assisted in determining whether there were any important correlations between the execution of such programs and quantifiable indicators related to sustainability. the descriptive design was selected because it appeared the most appropriate one in informing about the detailed analysis of the current effects of sustainability programs, and investigation into the complex data sets produced by the business intelligence tools. this method enabled an analysis with less likelihood of confounding factors and more ethical and a practical option with the available information due to the possibility of correlating the program implementation to the performance variables although the performance variables could not manipulated. study parameters sampling strategy: the population in the research was the u.s. federal sustainability programs realized in the last twenty years that encompassed various sectors such as energy, agriculture, and transportation. the data utilized were obtained using the publicly available federal databases, sustainability reports, and business intelligence systems accessed by the agencies of interest including the environmental protection agency (epa) and the department of energy (doe). sampling methodpurposive method of sampling was used whereby sampling was done to include federal programs with large data records to analyze, which made the sample give an overview of federal sustainability initiatives. sample size: the paper considered information at least 10 years. the reasoning behind such sample size was informed by prior research whose sample sizes were of comparable datasets in federal sustainability studies. inclusion/exclusion criteria: the programs that were only included were the programs that had publicly available performance measures and primarily target a sustainability impact (environmental, economic, or social). those programs that had no measurable outcomes or inadequate data to be analyzed were omitted. data collection instruments the business intelligence software was the main tool used pa ge 13 6 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 3(1) 133-145, 2024 to collect data as it assisted in extracting, cleaning and analyzing large volumes of data existing in the federal sustainability programs. they included tableau, power bi, and r, and those tools allowed analyzing the data based on trends, patterns, and correlation in the environmental impact measurements. also, secondary sources of data based on publicly available reports and databases were employed. procedure data collection procedure encompassed major factors as follows: (1) retrieval of past data of the federal sustainability reports and both performance databases, (2) cleansing and processing the information to make it more consistent, (3) use of business intelligence tools to perform trend and association analysis, and (4) a comparative assessment of the program performance prior to implementation and during implementation. pilot testing a pilot testing was done by taking small subset of programs to verify the data collection and analysis procedure. this would allow strengthening the methodology, and it also guaranteed the effectiveness of the tools used in extracting significant insights. ethical issues since the data utilized in the study was available in the open there were no serious ethical concerns. nevertheless, the research guaranteed the secrecy of all sensitive data through the anonymization of any personal data, as well as observance of data use agreements established by government agencies. there were no direct contacts with the human subjects as the study was based on secondary sources of data. measures and variables operational definitions dependent variables environmental, where the dependent variable is measured by environmental impact (via metrics such as emissions reduction, energy efficiency improvements and waste reduction); economic, where the dependent variable is measured by cost savings, return on investment and job creation; and social where the dependent variable is measured by public engagement and policy compliance. independent variables adoption and the span of federal sustainability programmes and the deployment of business intelligence tools to monitor and evaluate. measurement tools the information on the extent of environmental and economic impact of the programs was taken with publicly reported data, such as the statistics on emissions and financial performance indicators. the visualizations of the trends and the creation of predictive models based on past data were achieved by using business intelligence tools such as tableau. reliability and validity reliability was addressed by employing established measures of data, i.e. government sustainability reports with high-quality standards of data collection. this methodology was explained by using multiple sources as a source of data and comparing the results with other related research in the sphere. data analysis plan analytical techniques the analysis of the data was carried out by regressing the data with the relationships between the federal sustainability program implementation as an independent variable and the environment, economic and social impacts as the dependent variables. simple statistics like the mean, median, and standard deviation was calculated to describe the data. also, predictive analytics models were applied in order to help to predict future trends using the historical data. software the statistical modeling and data exploration were performed with the help of r and the visualization of the data with tableau. the r was chosen due to its strong statistical functions, whereas tableau helped to construct interactive dashboards in order to identify trends and patterns. reasoning the analysis techniques employed were selected due to the possibility to explore their data richly, reveal major tendencies, and elaborate forecasting models that will help make future endeavors more sustainable. the regression was especially employed in the testing of hypothesis concerning the association between program implementation and performance. ethical considerations the nature of the study did not need human subjects and the article utilised publicly available data therefore there was no requirement to obtain formal ethical approvals. nevertheless, the ethnical rules were adhered to that allowed correct data processing and reporting. because no human participants are involved in the research, the process of informed consent was inapplicable. to guarantee the privacy and confidentiality of all the data, they were all anonymized. the study was based on publicly available data of government agencies only. limitations the use of secondary data can be another source of bias because it might not be comprehensive and current at all times. also, the availability of long-term data regarding some of the programs may limit the study. the research has a limitation due to the underlying coverage of the available data that may not encompass pa ge 13 7 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 3(1) 133-145, 2024 all federal sustainability programs, or consider all the particularities of its impact. moreover, some business intelligence process may lack the ability to pick up the unpredictable happenings of sustainability activities by using historical data. these limitations could be a drawback in generalization of the findings to all the federal sustainability programs in the u.s., although the study serves as an insightful approach in measuring the success of sustained sustainability with a data-driven model. such methodology will provide an intensive and transparent way of examining the long term-effect of the u.s. federal sustainability programs. the proposed study will therefore use business intelligence tools and more powerful statistical methodologies to incorporate a practical understanding that could inform upcoming policy formulation and effectiveness of sustainability programs in promotion. results and discussion this paragraph shows the results of the research of essential variables about the long-term effect of u.s. federal sustainability programs by giving attention to income reduction, cost savings, energy efficiency, citizen involvement, program unemployment and business intelligence (bi) machine utilization and government investments. table 1 describes the descriptive statistics of each variable. emissions reduction the reduction in the means of emissions of the sampled programs was 400,000 tons of co2 (sd = 150,000). the midpoint decrease was a bit lower to 350,000 tons meaning that the programs favored to have a greater reduction in emissions. the spread in reductions of emissions was quite large where a minimum of 100,000 and the maximum of 700,000 was achieved. this dispersion implies that even though a large number of programs have reduced by a large percentage, some programs have been exceedingly successful and contributed a large part of the total reduction. cost savings the costs saved differed substantially across the programs with the average being usd 4.5 million (sd = 2,000,000). median of the cost savings of usd 4 million suggests a tendency toward the center of the distribution, but such range of impact, minimum saving of usd 1 million and maximum of usd 8 million, implies broad variations in the effectiveness of alternative programs. these data show that although majority of the programs were moderate in savings, few programs yielded high cost efficiencies. energy efficiency the mean improvement in energy efficiency was 14.3 percent (sd = 5.0) and median 15 percent. distribution of energy efficiency gain was between 5% and 20% which indicated a quite wide dispersion in the effectiveness of the program in enhancing energy efficiency. these values imply that the majority of the programs were shown to be adequately efficient in increasing energy efficiency within a moderate level but a fewer number of programs could bring in a high level in terms of efficiency. public engagement there was a huge difference among programs in the involvement of the public with the mean number of stakeholders engaged being 10,000 (sd = 4,500). the median is indicated as 9, 500, thus indicating a concentration set of programs falling near to this figure in engagement levels. the outreach and involvement also differed with a minimum of 4,500 stakeholders to a maximum of 20,000 stakeholders as regards to the involvement of the public. these results indicate that the reach of the public participation was wide in certain programs, whereas others were on more limited, specific audiences. program duration the mean length of the programs was 8.2 years (sd = 2.5), and the median one was 8 years. the shortest program went to a span of 5 years and the longest program was 12 years. the data implies the relative stability of the program length in the sample with some longer programs as it might indicate an ongoing or developing program. the use of bi tools the programs in this sample used business intelligence tools (mean = 0.6, sd = 0.5) to the approximate percentage of 60. the binary characteristic of this variable (1 = yes, 0 = no) reveals that 40 % of the programs were not integrated with bi tools, whereas 60 % of the programs accept the use of bi tooling. this means that there is an increased dependence on data analytics as far as management of sustainability programs is concerned, but there is still space to increase the use of bi tools. government funding the mean average of the amount that the government expended on the programs was usd 10, 000,000 (sd = 5, 000, 000). the average funding looked a little less with the median figure being usd 8.5 million which means that there is a central tendency towards this type of number. the minimum funding of usd 2.5 million and maximum of 15 million us dollars showed a huge difference in the funding levels of various initiatives. such disparities are probably because of differences in the sizes and industries and particular goals of the initiatives. the descriptive statistics would give a description of the performance and features of federal sustainability programs. the broad spread of numerous variables, such as reduction of emissions, saving cost, energy efficiency, and community involvement, points out the different effects and range of these programs. additional evaluation will be reflected in the connections of these variables and how they are affecting long term results. pa ge 13 8 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 3(1) 133-145, 2024 correlation analysis the correlations analysis investigated the associations that existed among the major variables linked to the u.s. federal sustainability programs where numerous significant relationships were found. the pearson correlation matrix, table 2 shows the degree and direction of the relationship between the variables. there was a high positive relationship found between the reduction of emissions and cost savings (r = 0.88, p < 0.01) given that programs with higher reductions concerning emissions also showed higher cost savings. likewise, the reduction of emissions was positively related to the energy efficiency (r = 0.80, p < 0.01), which implied that initiatives that were created to reduce the number of emissions provided also positive outcomes to the energy efficiency. the correlation between the reduction of emissions and the participation of people (r = 0.70, p < 0.01) was moderate and even significant, which means that more people engaged programs led to the higher reduction of emissions. moreover, the cost saving was strongly correlated with energy efficiency (r = 0.75, p < 0.01), which shows that programs associated with more cost saving were also inclined towards an increase in energy efficiency. the cost savings further showed to be highly positively correlated with the engagement of the population (r = 0.66, p < 0.01) and the use of business intelligence tools (r = 0.74, p < 0.01) and so the more the population was engaged and the more business intelligence tools were employed, the more cost savings also occurred. also, the topic of cost savings was found to have a high correlation (r = 0.80, p < 0.01) with government funding indicating that the levels of financing were higher with more financial savings on the programs. concerning energy efficiency, a moderate correlation was established with the levels of engagements with the public (r = 0.58, p < 0.01), meaning that the greater the level of engagement with the population, the greater the energy efficiency. the positive correlation was also very strong between energy efficiency and use of bi tools (r = 0.65, p < 0.01) indicating that employment of business intelligence tools facilitated optimisation of energy efficiency improvement. the correlation between the government-funding expenditure and the utilization of bi tools was also significant (r = 0.68, p < 0.01), which means that programs having more government-funding expenditure had higher likelihood of employing business intelligence tools as part of its procedures. lastly, there was a moderate correlation between public engagement and government funding (r = 0.65, p < 0.01), which demonstrates that the more the programs have reached out to the population, the more government funding they have attracted. all in all, the discussed correlations prove that emissions reduction, cost saving, energy efficiency, and involvement of people are too tightly intertwined. further, the business intelligence tool implementation and government funding were the variables that showed positive results in all of the significant variables equally. table 1: descriptive statistics of key variables variable mean median standard deviation minimum maximum emissions reduction (tons co2) 400,000 350,000 150,000 100,000 700,000 cost savings (usd) 4,500,000 4,000,000 2,000,000 1,000,000 8,000,000 energy efficiency (%) 14.3 15 5.0 5 20 public engagement (# of stakeholders) 10,000 9,500 4,500 4,500 20,000 program duration (years) 8.2 8 2.5 5 12 bi tool usage (1 = yes, 0 = no) 0.6 1 0.5 0 1 government funding (usd) 10,000,000 8,500,000 5,000,000 2,500,000 15,000,000 table 2: pearson correlation matrix variable emissions reduction cost savings energy efficiency public engagement bi tools used funding emissions reduction 1.00 0.88** 0.80** 0.70** 0.72** 0.76** cost savings 0.88** 1.00 0.75** 0.66** 0.74** 0.80** energy efficiency 0.80** 0.75** 1.00 0.58** 0.65** 0.72** public engagement 0.70** 0.66** 0.58** 1.00 0.60** 0.65** bi tools used 0.72** 0.74** 0.65** 0.60** 1.00 0.68** government funding 0.76** 0.80** 0.72** 0.65** 0.68** 1.00 * p < 0.05, p < 0.01 multiple regression analysis the analysis was done by multiple regression in order to assess the effects of some independent variables on the dependent variable of reduction of emissions which include the variable on government funding, duration of the program and use of bi tools. the pa ge 13 9 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 3(1) 133-145, 2024 findings of a regression analysis can be seen in table 3. as indicated on the regression model, government funding (beta = 0,00002, p = 0.001), duration of the program (beta = 15000, p = 0.007) and the usage of bi tools (beta = 120000, p = 0.005) were all statistically significant predictors of the reduction of emissions. the government funding coefficient means that as funding of 1 more dollar was added, the emissions reduction enabled by it rose by 0.00002 tons of co2 and this is a strong positive effect. the duration of a program demonstrated that with every one-year increase in the implementation of a program, a proportionate reduction of emissions at co2 by 15,000 tons was improved and highlighted the benefit of a long-term sustainability program further. bi tools also significantly contributed to the effect since it was observed that programs that included the use of bi tools led to 120,000 additional tons in the reduction of co2 compared to those that did not. the model had a variance explanation value of 85 percent (r 2 = 0.85) which is strong showing that the model is well developed. with all significant p-values (p < 0.01), the values of the coefficients included in the model would be considered trustworthy, and the explanatory effect of the factors in the independent variable would be substantial in regards to explaining the variability of the emissions reduction. the regression analysis proved that the government funding, program time span and the use of bi tools all played important roles in causing emissions reductions. government funding had the greatest impact among the three, whereas the use of bi tools and length of the program had an impact to a lesser degree. through this analysis, one can appreciate the relevance of both financial and technological support in increasing the environmental performance of sustainability programs. table 3: multiple regression results for emissions reduction variable coefficient (β) standard error t-statistic p-value intercept 100,000 50,000 2.00 0.05 government funding (usd) 0.00002 0.000005 4.00 0.001 program duration (years) 15,000 5,000 3.00 0.007 bi tool usage (1 = yes, 0 = no) 120,000 40,000 3.00 0.005 the relationships between the various independent variables, government funding, program duration and bi tool usage, and the one dependent variable of emissions reduction were analyzed using a multiple regression analysis. table 3 shows the regression analysis. the regression coefficient model indicated the significant predictors of reduction of emissions were government funding (0.00002, p = 0.001), and the duration of the program (15,000, p = 0.007), as well as the bi tools use (120,000, p = 0.005). the government funding coefficient shows that every extra dollar used in the government funding, it led to 0.00002 tons of co2 emissions reduction, which had a very positive impact as shown. program length demonstrated that with every extra year of implementation of the program, the amount of emissions reduction grew by 15,000 tons of co2, which once again affirms the positive effect of sustainability programs that last many years. bi tool usage was another influential factor since programs utilising bi tools used led to 120,000 additional tons of the reduction of co2 in comparison to programs utilising no bi tools. the r 2 value of 0.85 (adjusted r 2 is 0.83) demonstrates a close match to the model that explains 85 per cent of variation in the reduction of emissions. the high p-values of the values of all the predictors (p < 0.01) indicates that the model coefficients are accurate and that the independent variables play a great role in the explanation of variability in the reduction of emissions. the regression analysis showed that all outlets played a role in encouraging emissions reductions, including the amount of government financing, duration and the use of bi tools. the best response was seen in the area government funding, then the bi tools and the duration of the program. in this study, the use of money and technology has been highlighted in promoting the environmental success of sustainability initiatives. table 4: independent t-test comparing programs with and without bi tools group mean emissions reduction (tons co2) mean cost savings (usd) t-statistic p-value bi tools used (1) 500,000 5,500,000 3.21 0.002 bi tools not used (0) 300,000 3,000,000 2.89 0.005 one-way anova comparisons of the mean emissions reduction between the programs of a different lengths (5 years, 10 years, and 12 years), a one-way anova was performed. table 5 indicates the results. five-year programs had an average emission reduction of 300,000 tons of co2 whereas marginal emissions reductions of programs with 10 years and 12 years durations were found to be 500,000 tons and 650,000 tons, respectively. the f-statistic of this comparison was 4.25, and the p-value stood at 0.023, and it denoted the fact that the difference in the reduction of emissions based on the three groups is significant at the pa ge 14 0 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 3(1) 133-145, 2024 0.05 level. post-hoc test showed that the 10 and 12 year programs resulted in significant reduction of emissions as compared to the 5 year programs. in particular, measures of sustainability programs in terms of emissions reduction were higher in longer program durations (10 and 12 years), indicating that the quality of sustainability programs when the goal is to reduce emissions is better in the programs with longer implementation period. overall, anova results show that there is significance between emissions reduction based on the program length. the program of longer duration of 10 and 12 years was more effective in registering higher reductions levels as compared to a program of short duration i.e. 5 years. table 5: one-way anova comparing emissions reduction by program duration duration (years) mean emissions reduction (tons co2) f-statistic p-value p-value 5 years 300,000 4.25 0.023 0.002 10 years 500,000 0.005 12 years 650,000 chi-square test a chi-square test was performed to assess whether there was a significant association between bi tool usage (1 = yes, 0 = no) and program success, defined as achieving cost savings greater than $5 million. the results of the chi-square test are summarized in table 6. the programs that used bi tools, 8 out of 12 (66.7%) achieved cost savings greater than $5 million, while only 2 out of 8 (25%) of the programs that did not use bi tools met this threshold. the chi-square statistic was χ² = 5.88, with a p-value of 0.015, indicating a statistically significant association between the two variables at the 0.05 significance level. these results suggest that the use of bi tools is significantly associated with program success, as programs that utilized bi tools were more likely to achieve cost savings above $5 million compared to those that did not. the p-value of 0.015 confirms that this association is statistically significant, implying that bi tool usage contributes positively to the likelihood of higher program success in terms of cost savings. table 6: chi-square test for bi tool usage and program success bi tool usage (1 = yes, 0 = no) program success (cost savings > $5 million) total yes (1) 8 12 no (0) 2 8 total 10 20 figure 1: descriptive statistics of key variables figure 2: regression cofficients for emissions reduction pa ge 14 1 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 3(1) 133-145, 2024 figure 3: emissions reduction by bi tool usage and cost saving by bi tool usage figure 6: pearson correlation matrix figure 4: emission reduction by program duration (anova) figure 5: program success bu bi tool usage pa ge 14 2 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 3(1) 133-145, 2024 discussion the purpose of this study was to determine the long term effects of the sustainability programs the federal government of the u.s has established, and further more the researcher aims at determining how business intelligence (bi) tools could help to determine the effectiveness of these sustainability programs. through running statistical evolutionary methods (e.g., multiple regression analysis, t-tests, anova, chi-square tests), we have discovered meaningful results concerning the connection between program features (e.g., bi tool application, trimester of the program, government funding) and diverse sustainability outcomes, including reductions in emissions and cost savings (okaily et al., 2023). the findings show that the application of the bi tools, programming period, and the amount of government funding are of extreme importance to the success of sustainability programs, especially regarding the reduction of emissions and cost efficiency. the result of the point in this research paper is that the usage of bi tools, the length of program, and governmental investment played a significant role in the success of sustainability programs in attainment of not only emissions reduction but the cost savings as well. as we have statistically found in the regression model, the most important influencing factor in the reduction of emissions was government funding, then the length of a program, and finally the application of bi tools. this major association between the use of the bi tools and enhancement of sustainability results is consistent with the developed impulse towards the application of datadriven decision-making to the world of environmental policy (ncube & ngulube, 2024). positive association between the use of bi tool and cost savings further extend the fact that the use of technology is very crucial in triggering effective management of resources and cost effective environmental policies. these results indicate that, overall, federal sustainability projects could be significantly more successful in the long-term perspective both in environmental and economic terms, provided a modern data analytics approach is incorporated into the program (latupeirissa et al., 2024). in addition, the results of the one-way anova indicated that the emissions reduction of the longer programs (10 and 12 years) was considerably large than that of shorter programs (5 years). this observation proves the hypothesis that sustainability programs need time to be fully beneficial to the environment (coffield et al., 2022). it is expected that program duration may result in more extensive implementation of strategies, adaptation to changing technologies, and thorough incorporation of the sustainability practices in different sectors. these findings support the previous evidence provided by (stern, 2022) and khalil et al. (2024), who stated that the efficacy of sustainability programs grows over time, as such schemes gain experience and advance their procedures and enjoy economies of scale. moreover, the findings of the chi-square test showed that there is a significant relationship between the application of the bi tools and the success of the program especially relating to cost saving more than 5 million dollars. projects that used bi tools had more chances to gather large cost savings. this observation is significant in terms of showing, as policymakers and program managers will use it to monitor performance, achieve resource allocation efficiency, and make effective decisions. the potential to use bi tools in the sustainability plan, therefore, would boost a more sound approach to financial management and environment-based strategies and ease its recent negative influence on the performance of the public sector. similar results about the beneficial effects of bi tools on program success have also been observed by alonge et al. (2023) and kommineni et al. (2024) who explained the usefulness of business intelligence in improving the decision-making processes accessed in the energy and environmental context. these analyses showed that data analytics tools, in addition to enhancing the process of monitoring sustainability outcomes, result in trend identification, forecasting of future results, and resource optimization (ncube & ngulube, 2024). likewise, datadriven methods have been demonstrated to have positive results in the green new deal and energy independence and security act of 2007 although the effectiveness of the programs is barely studied with the level of rigor as the one in this research (bibri & krogstie, 2021). moreover, the conclusion that we reached that with lengthier program periods, there is a stronger correlation with emissions reductions fits in line with the study that researchers soomro and others(2024) have come to find that sustainability initiatives will be more pronounced in their outcomes over extended periods of time. it accords with biological and physical principles of environmental change, whereby as the effects of interventions slow to a crawl, as their weighty accumulation ensues, their impacts upon environments, energy systems, and climatic conditions are consequently magnified. the regression analysis further found out that government investment positively and indeed, significantly influences reduction in emissions. the same idea can be traced in the findings of (mahmood et al., 2024; oshilalu, 2024), who observed that financial investment in sustainability programs could be an influential factor of success as this investment ensures the integration of advanced technology, research, and infrastructure enhancement required to make environmental goals successful in the long term. the positive correlation between government funding and emission reduction can be attributed to the fact that such funds imply better resources allocated to such programs whereby one can scale interventions, switch to cleaner technology and fund research and development (pandey et al., 2022). specifically, the funding will allow investing in renewable energy technologies and energy-efficient infrastructure along with carbon capture systems, which are the key interventions to mitigate the greenhouse gas emissions. the budget is also vital in ensuring that pa ge 14 3 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 3(1) 133-145, 2024 the sustainability programs are effectively tracked and managed hence further improving its results (arshad & parveen, 2024). the reported positive effects of longer durations in reducing emissions can be according to the cumulative impact which is an effect of sustainability measures. with gradual gains on environmental regulation like the reduction of emissions, a lot of time and continual input is needed to have a substantial effect (ekins & zenghelis, 2021). programs also improve in the long run, having acquired additional data, optimized their strategies, and with the advantages of technological development, resulting in better outcomes. particularly, this happens in the energy and transportation sectors, where investments in infrastructure and innovation are long-term shifts and have to be made to influence the level of emissions significantly in the new extreme (khan et al., 2022). the results obtained on the effects of bi tools on the cost-saving might be attributed to the efficiency that advanced data analytics enables. with bi tools, the program managers will have access to real-time data on the performance of different sustainability projects, including its inefficiencies, and streamlining the utilization of resources (chalmeta & ferrer, 2023). such tools also lead to predictive analytics, where the decision-makers are capable of knowing what will happen in the future and acting proactively to those challenges. in such a manner, bi tools are useful to reduce expenses, optimize resource utilization, and enhance the efficiency of sustainability initiatives in general. the results of the current research can be significant to future research, policy and practice in the study of sustainability. to begin with, the beneficial effect of the bi tools on the reduction of both emissions and costs emphasize the necessity of incorporating contemporary data analytics in sustainability (ojadi et al., 2024). the topic of future research should also extend into the discussion of particular bi tool features that may lead to their success, like data visualization, predictive modeling, and real-time monitoring. moreover, policymakers can also look into the integration of bi technologies in the development of sustainability programs in terms of evaluations and efficiency to maximize long-term outcomes and thriving success. the findings also suggest that there is the necessity of longer engagements toward sustainability. considering the results stating that program duration was one of the key factors in attaining greater emissions decreases, policymakers need to put a heavy focus on the long-run efforts (nemet et al., 2023). the short-term projects can provide few opportunities in changes whilst the longterm projects can give more promises of changes taking place on the environment. lastly, the paper identifies the need to ensure proper funding in boosting the success of sustainability programs. the governments need to make sure that the required amount of monetary finances can be directed to fund the sustainable growth of sustainability initiatives and the integration of the latest technologies (shan & ji, 2024). it is especially applicable given that countries are striving to achieve ambitious climate goals and handle the threats of climate change. limitations as useful as the study is in highlighting long-term effects of sustainability programs of the u.s. federal government, it is necessary to mention some limitations. the researchers utilized the secondary data which was publicly available; the subjects of the study might have missed some of the relevant variables or specifics of the program performance. besides, the research looked at only the federal sustainability programs, which implies that the results cannot be directly applied to the state or local projects. these limitations could be improved in future research using a more granular primary data and a wider sample of sustainability programs of various levels of government. additionally, the research lacked the mechanisms of potential interactions among the variables (e.g., how both government funding and the use of bi tools might impact the reduction of emissions), which would help to have a more in-depth picture of the factors contributing to the results of sustainability. it may be possible to use higher methodological modeling, like structural equation modeling in future studies to study these interactions. conclusion the paper has used business intelligence (bi) tools to analyze the long-term influences of u.s. federal sustainability programs with environmental, economic, and social consequences being the measures of the effort. after the results, there was a significant correlation between the use of bi tools and the reduction of emissions, and cost savings. the programs which incorporated bi tools were more effective when it comes to reducing the emissions and ultimately increasing the cost savings than the ones which did not incorporate the relevant bi tools. also, extended program duration had correlation with bigger reduction of emissions inferring the usefulness of more prolonged sustainability measures. the chi-square test emphasized strongly on the fact that there was a significant correlation between the bi tools and greater program success in terms of cost savings. this study has achieved its goals, showing the applicability of bi tools in assessing and enhancing the performance of federal sustainability programs. bi tools assess sustainability programs by tracking and analyzing performance data, and enhance them by providing evidence-based insights for improvement. bi tools assess sustainability programs by tracking and analyzing performance data, and enhance them by providing evidence-based insights for improvement. it is scientifically useful because it reports data-drawn answers as to how bi can assist in the environmental policy analysis and the effectiveness of programs. in general, the work can serve as a base of further investigations of the topic concerning the incorporation of advanced analytic pa ge 14 4 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 3(1) 133-145, 2024 in sustainability programs. the study may be extended in future, based on program level data that is more detailed or one may also extend it and cover the international sustainability programs. references abo-khalil, a. g. 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(2022). sustainable supply chain management in the fast fashion industry: a comparative study of current efforts and best practices to address the climate crisis. cleaner logistics and supply chain, 4, 100032. pa ge 1 pa ge 21 8 american journal of economics and business innovation (ajebi) blockchain implementation in international trade: a theoretical and empirical analysis using vosviewer fayssal moukafi1*, amine dafir1 volume 4 issue 2, year 2025 issn: 2831-5588 (online), 2832-4862 (print) doi: https://doi.org/10.54536/ajebi.v4i2.4694 https://journals.e-palli.com/home/index.php/ajebi article information abstract received: may 25, 2025 accepted: june 28, 2025 published: july 26, 2025 transparency, security, efficiency; those three words can be assimilated to the fundamentals of a foreign operations, and that parties are all always in the obligation to optimise the process to fulfill their needs, this technology was reputed one of the valuable assets that appeared in the recent years was the blockchain technology gaining popularity in the financial world that we can emerge to the international trade offering a lot benefits. this research gives introduction about an innovative approach aimed at overcoming the limitations associated with reliance on stakeholders in international trade transactions. and it aims to add a valued solutions and to enhance the important gap existing research both conceptual foundations and practical insights . moreover, we provide in our empirical part a study by vosviewer, that it is enhance by the methodi ordinatio technique has been employed in this study to identify the most relevant studies in the field of international trade, guiding the research process through the selection, analysis, and systematic review of 42 articles retrieved from the scopus database, all related to foreign trade transactions., to furnish a deeper perspective on the working of the mechanism by analyzing and identifying the highlight of the significant impact of blockchain on various trade-related processes. keywords bibliometric analysis, blockchain, international trade, iot, smart contracts, vosviewer 1 université hassan ii de casablanca, casablanca, morocco * corresponding author’s e-mail: fayssal.moukafi-etu@etu.univh2c.ma introduction in today’s rapidly changing world, technological advancements are reshaping the way we live and conduct business. among these innovations, blockchain technology stands out for its immense potential to transform foreign trade. by leveraging its unique features, blockchain offers several advantages that can address the challenges faced by businesses engaged in international transactions. traditional foreign trade processes have long been plagued by high costs, complex procedures, and numerous intermediaries (barelier et al., 2003). however, blockchain’s decentralized and transparent nature provides a solution. it allows for direct peer-to-peer interactions between buyers and sellers, eliminating the need for intermediaries like banks and clearinghouses. this not only reduces transaction costs but also accelerates the speed of trade, enabling businesses to operate more efficiently and compete effectively in the global marketplace. one of the key benefits of blockchain in foreign trade lies in its enhanced security and trust. through its immutable and tamper-resistant records, blockchain ensures the integrity of trade data, reducing the risk of fraud and fostering trust among trade partners (popa, 2008). the transparency offered by blockchain facilitates secure transactions, minimizing disputes and expediting customs clearance procedures. moreover, blockchain technology enhances traceability and accountability in foreign trade. every transaction recorded on the blockchain allows for accurate tracking of goods from manufacturers to final consumers (hackius & petersen, 2017). this traceability feature improves supply chain management, enabling better control over product origins, quality assurance, and compliance with regulatory standards. by providing a single source of truth, blockchain ensures that all stakeholders have access to reliable and verifiable information, enhancing transparency and reducing uncertainties. in addition, blockchain technology improves the efficiency of cross-border payments, a vital aspect of foreign trade (xiao et al., 2021). traditional cross-border payments are often slow and costly due to multiple intermediaries involved. however, blockchain-based cryptocurrencies and smart contracts enable near real-time settlements, eliminating intermediaries and reducing transaction costs. this increased efficiency improves liquidity and expedites foreign trade transactions, empowering businesses with greater agility and financial flexibility. the significance of this study lies in its exploration of blockchain’s transformative potential in foreign trade and international transactions. by addressing key research questions, the study contributes to advancing knowledge and bridging the gap between theory and practice (norris & oppenheim, 2007). the findings have the potential to drive economic growth and enhance operational efficiency in international trade, as blockchain’s capabilities in cost reduction, streamlined processes, improved transparency, and enhanced trust pave the way for smoother and more efficient transactions. ultimately, this research provides valuable insights for stakeholders, helping them understand the benefits and challenges associated with implementing blockchain in the international sector and fostering a deeper understanding of blockchain’s role in the global trade ecosystem. pa ge 21 9 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 218-233, 2025 the article commences with a comprehensive literature review, divided into two main sections (bartodziej, 2017). the first section explores blockchain technology, providing a thorough understanding of its concepts, features, and potential applications. the second section focuses on the application of blockchain in international trade, examining its transformative potential in areas such as supply chain management, cross-border payments, and trade finance. to enhance analysis and visualization, vosviewer, a powerful bibliometric analysis tool, is employed (pagani et al., 2015). this software facilitates the identification of trends, patterns, and connections within the literature, enabling a structured examination of the research landscape. subsequently, the article engages in a discussion section that critically analyzes and interprets the findings from the literature review and bibliometric analysis. this discussion provides insights into the current research landscape, identifies gaps and areas for future exploration, and offers practical implications for researchers, practitioners, and policymakers in the field of blockchain and international trade. lastly, the article concludes by summarizing the key findings, emphasizing the significance of blockchain technology in revolutionizing international trade, and suggesting avenues for future research. literature review blockchain technology the blockchain mechanism blockchain technology has seen a significant rise in prominence in recent years even a huge impact in the process of international trade (vincent et al., 2020) and is now regarded as one of the most transformative innovations of the 21st century (kimani et al., 2020). it is at the root confidentiality, security and integrity specificity of transactions in network environments (kotamraju et al., 2021), this allows it to act as a remedy to current problems in many respects such as industry and supply chains (ali et al., 2021). to assure security that represent as one of the obstacles that we can find between entities because a lot of reasons, on top of them we can locate the hackers so with the blockchain , the new revolution we can ascertain a redress for this problem, in the absence of any notion of neglecting the hashing and the encryption that would reinforce it (kotamraju et al., 2021). ever since bitcoin first entered the financial landscape, efforts and a lot of studies have been made to have a distinctin between those two terms: blockchain and crypto-currencies. tapscott (2016) has demonstrate that blockchain has more potential and applications beyond the financial realm. a new digital ledger system that can record all types of value, such as deeds, titles, and intellectual property rights.this digital revolution of “peer-to-peer” is defined by leloup (2014), an expert in corporate finance and blockchain, as being a transactional database similar to a ledger where transactions are recorded in a block following subsequent transactions without being able to erase the latest ones. the computer scientists who developed this technology sought to circumvent the issue of non-transparency in the financial system by attempting to displace the central authority of trust (moukafi & dafir, 2025). according to huang et al. (2019), the database consists of numerous data entries corresponding to various transactions. a database is now referred to as a “ledger” because of the financial industry’s use of blockchain technology. a computer file or summing register that automatically logs all activities related to economic transactions in nodes. ledger data exploration is the process of connecting all the nodes in a blockchain system (huang et al., 2019). data is verified via blockchain technology, which employs a network of connected blocks. synchronization uses a reliable consensus mechanism that synchronizes any type of change belonging to an exchange. a consensus technique is used in a distributed blockchain network to establish a single source of truth among peers. on the blockchain, this protocol acts as an algorithm to verify transactions and sign blocks. the consensus method ultimately determines which blocks are included in the chain of the transaction (bashir, i.2022). consensus protocols’ main goal is to provide a consistent and unambiguous hierarchy for transactions and blocks. bashir (2022) assure that this guarantees the blockchain’s consistency and integrity, even across geographically separated nodes. the consensus protocol enables parties with no inherent mutual confidence to cooperate without the requirement for a trusted intermediary by deciding the rules for updating the register. this decentralized strategy promotes a trustworthy and safe environment for network communication (magbitang et al., 2023). more specifically, in a context relating to finance, vamparys (2018) mentions that blockchain technology enables better portfolio management and many more benefits, which he presents as follows: cost optimization; task automation; speed of execution; preservation of essential elements; data security and confidentiality; transparency of operations. furthermore, verdier (2018) demonstrates these same advantages in the context of the finance function, adding better data organization as well as the way to ensure the performance all the tasks that are usually carried out by a trusted third party, including data verification, collateral registration, payments as well as exchange approval... the modification of data enables a trusted digital system where information can be safely stored and shared without the risk of being altered so we see that blockchain can also be deployed using other advanced technologies namely iot, identity management, and supply chain systems (feng et al., 2019). pa ge 22 0 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 218-233, 2025 types of blockchain when a company is looking to develop a blockchain solution, we need to know which type of blockchain is most appropriate to their situation. according to solat et al. (2021), blockchain can be classified as either permissionless (public blockchain), permissioned (private blockchain), or both (hybrid blockchain). public blockchain the public blockchain, sometimes referred to as a permissionless blockchain, is an unrestricted, decentralized system that anybody may use. any entity may join this kind of blockchain as a node and aid in the validation of online transactions. every piece of information in a transaction is properly checked thanks to the consensus technique utilized. greater inclusion and transparency inside the network are made possible by this openness (viriyasitavat & hoonsopon, 2019). however, it must be emphasized that transactions in this type of blockchain are always anonymous, taking the name of a pseudonym, since actors are distinguished by their cryptographic addresses (solat et al., 2021). ripple, cardano and dogecoin are good examples of this. private blockchain not only the presence of the public blockchain, we are in the existence of another type also the private blockchain, which we can find known as the blockchain with permission (moukafi & dafir, 2025). without neglecting to say that among the reasons for the evolution of the private blockchain is to remedy the flaws found within the public blockchain notably such as data reversibility, data confidentiality, transaction volume scalability and system responsiveness (hamida et al., 2017). the components suggest that this kind of blockchain is distinguished by a controlled access network, according to (solat et al., 2021). it is frequently used in organizations where joining requires permission. r3 corda is a private blockchain platform that is designed for financial institutions within a carefully chosen group of participants. it is built on trust and collaboration, and it helps businesses to share data securely and efficiently. r3 corda also streamlines identity and asset management, making it easier for businesses to work together. hybrid blockchain in light of the benefits and drawbacks of the first two types of blockchain, there is a third type that combines the advantages of public and private blockchains, in particular the hybrid blockchain, also known as the interoperable blockchain. this type is distinguished by its interconnectivity, asset portability, and scalability, which allows communication between multiple blockchains. the benefits of hybrid blockchains are numerous including the ability to apply use-case-specific rules and technologies, including zero-knowledge proofs, as well as increased confidentiality, better transaction throughput, and cheaper costs (geroni, 2021). these technologies allow for the division or even complete privacy of information, which is frequently necessary for many corporate processes. notable examples include dragonchain, wanchain, cosmos (chauhan et al., 2018). consortium blockchain a consortium blockchain combines features of both private and public blockchains. it’s managed by a limited group of trusted participants, meaning only selected members can approve or record transactions, while the general public may still be able to view them. this setup ensures greater control and security within a specific network. a good example of this type is hyperledger fabric (xiao et al., 2021). roles of blockchain the many responsibilities and capacities offered by blockchain innovation can greatly improve the effectiveness of cross-border commercial transactions. one of its main benefits is that it offers real-time notifications in a very effective way. it also makes it simple to visualize how paperwork, contracts, and agreements move. additionally, the implementation of smart contracts on the blockchain enables decentralized contract development and execution as well as real-time document and agreement verification. additionally, blockchain establishes digital proof of ownership while ensuring the immutability and unforgeability of records of documents, conditions, and terms. this system encourages cooperative transaction and ownership transfer verification while streamlining administrative procedures. additionally, blockchain gives users access to transaction logs, increasing transparency and dependability throughout the process (ali et al., 2021; belu, 2019; chang et al., 2019, 2019; sun et al., 2019; tapscott and tapscott, 2016; vincent et al., 2020). the specific characteristics of the innovation of blockchain stem from its hybrid nature. it is generally considered as one of the advanced technologies that can be supervised in two essential parts namely hardware and software technologies, for an example we can find distributed ledger technologies, licenses and even smart contract with p2p softwares (lu, 2019). the transparency of blockchain technology is one of its key benefits (morgan et al., 2018). with the help of blockchain’s distinctive and potent powers, this transparency is made possible. blockchain differs from conventional centralized systems in that each user (node) is required to maintain a copy of the data, ensuring redundancy and security (lu, 2019). all transactions and pertinent data are shared throughout the whole network, maintaining high levels of transparency and giving all participants access to data in real time. in contrast, data is often held in a single location and transactions are typically validated by trusted intermediaries in traditional centralized database systems, introducing a centralized point of control and potential weaknesses. this reliance on central servers not only incurs additional costs but also raises significant concerns regarding pa ge 22 1 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 218-233, 2025 system performance.once data has been recorded in the distributed ledger of the blockchain, it is guaranteed to remain unmodified (beck et al., 2018). this ensures a high level of security and accuracy because transactions and data saved on the blockchain cannot be altered. as all network members have access to the same verified information, research suggests that this feature considerably lowers transactional insecurity and uncertainty (ali et al., 2020). blockchain offers a number of other capabilities that improve transaction processes in addition to its immutability. real-time notifications and verifications are made possible through the use of smart contracts, digital signatures, and multiple signatures. with the use of this technology, transaction results and performance may be measured effectively and reliably (moukafi & dafir, 2025). blockchain improves efficiency and lowers costs by removing the need for middlemen like banks. the entire process can be streamlined by suppliers independently verifying transactions in virtually real-time (koetsier, 2019). blockchain is recognized as a major technological breakthrough in the digital transformation of both physical and digital asset ownership (ali et al., 2020). in addition to providing a secure and tamper-resistant audit trail, it is also seen as a flexible platform for managing both assets and contracts (lindman et al., 2017; mattila, 2016). when dealing with purely digital assets, a public registry allows for secure tracking of ownership, opening up a wide range of new possibilities (athey et al., 2016). smart contracts smart contracts, a crucial component of blockchain that improves peer-to-peer commercial transactions, are introduced (roriz & pereira, 2019). according to eenmaa-dimitrieva and schmidt-kessen (2019), smart contracts are simply agreements that have been established in code and are intended to be carried out automatically in a blockchain context. szabo (2018) asserts that a contract is a group of commitments established during an agreement, which is the conventional method of formalizing relationships, particularly in business with some objectives such as satisfying contractual conditions (e.g., payment of due dates, privileges, confidentiality, even performance); by minimizing the possibility of exceptions, whether they are malicious or accidental in nature. smart contracts, which use protocols to ensure that everyone maintains their agreements, bring the central notion into the digital age. digitally specified promises are made. not simply for business-to-business contracts and partnerships, smart contracts can be utilized in a wide range of agreements. smart contracts don’t have a “smart” component; however they are not “smart” there is no cognitive component or artificial intelligence indeed they involve an automatic execution of a predefined task when specific conditions are met. the obligations of these contracts do not reflect a contract in the legal sense. szabo (1997) considers these contracts to be intelligent because they are much more functional than their inanimate paper-based ancestors and even he has described smart contracts as “protocols within which parties execute”. therefore, when an event or transaction occurs, there are rules that indicate how the data should be processed in order to achieve the right result. this can be achieved by transforming smart contracts into computer code with agreements and clauses that are embedded as lines of program code. cryptocurrency-based automated financial applications now have more options thanks to the development of smart contracts and their connections to decentralized autonomous organizations, decentralized applications, smart tokens, and smart properties (di francesco maesa & mori, 2020). computer protocols known as “smart contracts” are essentially used to verify, facilitate, or enforce the terms and conditions of a pre-defined contract in a digital format. despite the fact that the theory behind smart contracts dates back more than 20 years, recent developments in the bitcoin and blockchain industries have reignited interest in their potential (werbach & cornell, 2017). smart contracts’ capacity to facilitate reliable transactions without the use of middlemen is what makes them so attractive. these transactions offer a high level of security because they are transparent and irreversible. it’s important to keep in mind that establishing smart contracts can be challenging and requires significant thought, particularly when they operate on a blockchain (de graaf, 2019). programmable contracts were developed to facilitate the automation of transactions so that parties could agree on the result of a particular event without the need for a central authority (roriz & pereira, 2019). a smart contract utilizes the immutable and trustless characteristics of blockchain technology to provide peer-to-peer agreements that are self-enforcing and managed through computer code (brennan & lunn, 2016). to unleash the true power of the smart contracts it will be more significant to talk about the internet of things furthermore smart contracts, which are self-executing contracts that activate when predetermined circumstances are satisfied, have the potential to be used with blockchain technology. however, smart contracts are frequently used in conjunction with other technologies, particularly the internet of things (iot). the internet of things (iot) is a game-changing concept that describes a massive network of sentient devices capable of self-organization, data sharing, and responding to environmental changes. it is a significant improvement in information and communication technologies, allowing for worldwide connectivity and effective management of sensors, devices, users, and information (madakam, 2015). while it is simple to imagine utilizing iot to follow products such as cola cans or cereal boxes from production to consumption sites, there is a growing trend to incorporate nearly any physical object imaginable into the iot. the internet of things consists of networks of pa ge 22 2 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 218-233, 2025 interconnected sensors and “intelligent” gadgets that can broadcast and receive data via the internet. smart contracts can use oracles to initiate specified actions based on data supplied by iot. an oracle is a digital mechanism that allows intelligent contracts to access external data, acting as a bridge between blockchains and the outside world. material oracles are integrated into physical systems such as rfid readers, providing real-time data to intelligent contracts. in the meanwhile, oracle software retrieves data in real time from other programs and online application programming interfaces (api), such as market prices, flight status, and weather data (khan et al., 2021) the information derived by oracles is then integrated into an intelligent contract via a data flow provided by thirdparty service providers, based on the requirements set in the intelligent contract. smart contracts can transform the way peer-to-peer business transactions are carried out due to a set of characteristics that not only set them apart from conventional contracts but also enable them to generate value and develop new business models. the characteristics are: i) being able to be stored and executed on various computers in a decentralized network, hence not requiring intermediaries; ii) independent execution of “ifthen” rules, thereby ensuring that contractual agreements are executed automatically; iii) utilization of consensusbased validation of transactions; and iv) data storage in an unalterable public ledger. this tamper-evident ledger is a single point of reference and offers transparency (de graaf, 2019). furthermore, smart contracts are able to establish trust in the absence of conventional trust processes, commonly known as “trustless contractual environments” (eenmaa-dimitrieva & schmidt-kessen, 2019). application of the blockchain over international trade logistics in the world of international exportation and importations, we can find a lot operations that have the nature of logistics the activities of packing, loading, and pre-carriage of goods are essential to ensure the safe and efficient transportation of goods. goods are packed and loaded into containers or other protective materials at the factory or warehouse of departure. they are then moved to the port or airport of shipment by wagon or another vehicle. these activities are performed by a team of trained professionals who ensure that the goods are properly packed and loaded to withstand the rigors of transportation, even international transport that it is the most important phase of the whole process, customs formalities for export and import, main carriage, insurance in international traffic, post-carriage and unloading of goods (popa 2018). responsibility for logistics operations lies with the exporter or importer, depending on the incoterms clause adopted by the parties, it’s crucial to draw attention to the distinctions between the two main parties involved in international commercial terms, namely the vendors and the consumers. this entails being aware of each party’s responsibilities, risks, and financial obligations (moukafi & dafir, 2025). we may assure easier transactions and improved collaboration between the two parties in international trade by outlining these issues in unambiguous terms, if not the way in which they have defined mutual responsibilities, the applicable legislation and the costs that each entity must bear (vogt & davis, 2020). for the suppliers, any failure in the logistics system means added cost and can damage the reputation of the organization (popa, 2008). in the contemporary globalized economy, logistics and their costs have emerged as major determinants of competitive advantage and modernization, as well as a major determinant of environmental sustainability (belu, 2008). the emergence of the recent fourth industrial revolution has introduced a novel paradigm toward the structuring and management of the entire life cycle of a product with a thrust toward cyber-physical system integration.this system is based on joining sensor networks with on-board computing to monitor and assure the placement of physical materials entering the production mechanism and logistics process, and the potential of blockchain for supply chain management is being exploited in conjunction with complementary technologies, including the internet of things (iot) and oracles. the term “internet of things” describes gadgets that are linked to regional (wi-fi, bluetooth) or international (gsm, gprs) networks for remote monitoring and control or specific job execution. production facilities, structures, or intelligent goods are examples of interconnected things with intelligence (bartodziej, 2017). the following would happen if blockchain technology were to be implemented in logistical processes related to import and export operations (hackius and petersen, 2017): flexible handling of the transaction’s paperwork is necessary for both the stages of receiving the products and paying for them as well as for taking ownership of the acquired items (moukafi & dafir, 2025). supply chain optimization and cost reduction through the internet of things (iot), document management and shipment tracking become more efficient. blockchain allows for the decentralized storage of large volumes of data, enabling rapid processing and timely access to information (dobrovnik et al., 2018). enhanced security because the necessary computations are performed by a number of machines in a decentralized way, the information recorded in the blocks is unalterable and immutable, meaning that it is essentially impossible for anybody to edit it. pa ge 22 3 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 218-233, 2025 transparency the use of blockchain technology ensures that products are traceable right from their starting point to their end user, thus increasing transparency at each step. every stage of the lifecycle of the product—ranging from manufacturing through packaging to delivery—is observable (williams et al., 2015). visibility is an essential aspect in supply chains, and it requires that every element of the cyber-physical system (cps) receives accurate information about both the upstream and downstream counterparts to make informed and effective decisions. visibility in supply chains enables real-time tracking of products from the manufacturer to their final destination, including all the intermediary stages (shih et al., 2019). it enhances operational efficiency by providing access to reliable, realtime information from trusted sources (miraz et al., 2020). payment and finance letter of credit is one of the most popular payment methods in international trade, only second to open account-based payments. yet, within the european union, especially for intra-community transactions, its application is relatively rare. perhaps this is because handling payments via letters of credit is time-consuming and expensive. quite frequently, merchandise reaches destinations prior to the final confirmation of required documents by intermediaries like bank officials (ganne, 2018). often, the goods arrive at their destination while the documents are still being checked by bank employees according to the banks who has interaction between the supplier and the customers, their banks have 5 days in max each to assure the consistency of the documents. in open account payment, the exporter assumes a very high level of risk since they deliver the goods and hope for the importer to meet their financial commitment (moukafi & dafir, 2025). the traditional financing and payment process via letter of credit is also complex with multiple parties, large documentation, and expensive. for example, according to a study by the boston consulting group, there a lot entities are involved in a single financing operation over an international trade transaction, involving a lot of documents and a cumbersome financing management process. after a survey updated by bcg, they have found that 99% interchange between all the contributors in a foreign trade operation that doesn’t a create a notable value (boston consulting group, 2017). if we consider the fact that we can use a dlt such as blockchain technology in this type of payment method, we would make a remarkable change corresponding to reducing time of the operation, less paper work and even lower cost. international operations, such as import and export, involve a wide range of tasks, including arranging shipments, handling customs duties, coordinating transportation, and managing finances. effective financial management is essential for successful international trade, so businesses need to have robust financial strategies in place. document supervision the primary role of documentation in the ownership transfer of goods and payment guarantee across import-export operations demarcates the transactional framework operating in these operations. in the logistics stage, a variety of procedures is utilized to facilitate the sale and physical movement of goods from the buyer to the seller. each procedure demands certain commercial documents, for example, the commercial invoice (that confirms the sale), the packing list (that enumerates the cargo contents), and the transport document (that attests the goods have been loaded onto a transport means). at the financial phase, payment for the goods on contract is made, a process which also creates some basic documents, such as the bill of exchange and the letter of credit. the document flow is key to the integration of the logistic and financial aspects; the delivery of goods is documented, and payment is completed by means of the exchange of such documents (popa, 2008). documents are classified into different types based on the issuer and function as we demonstrate in this figure. figure 1: document supervision process source: popa and belu (2018) there are many types of documents used in international trade, each serving a particular purpose in the transaction process. documents issued or attested by competent authorities: documents provided by government authorities responsible for regulating foreign trade, like ministries, customs authorities, diplomatic missions, consulates, and chambers of commerce and industry, are included in this category. pa ge 22 4 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 218-233, 2025 documents prepared by the exporter the exporter prepares some of the most important documents, such as pro-forma invoices, commercial invoices, and transport documents. based on the delivery terms, the exporter might also prepare documents for storage of goods, shipping, entering into insurance contracts, and inspection. the exporter’s obligation under the incoterm exw is to make the goods ready at their own premises for delivery. documents prepared by the importer generally, the importer prepares various documents like the application for opening a letter of credit and the import customs declaration. where delivery terms place the responsibility of transportation and insurance on the importer, they also prepare documents like the order note for bill of lading and the application for insurance. these documents are generally forwarded to a shipper who, on behalf of the importer, obtains the bill of lading and the insurance policy. transport documents are produced by the carrier. from among them, the bill of lading relates to sea and inland waterway transport and is important for conveying goods from the exporter to the importer while facilitating payment processing. in alternative modes of transport, equivalent documents include the cim consignment note in the case of rail transport, the air freight consignment note, and the cmr consignment note specified for road transport. while these documents perform roles similar to that of the bill of lading, they are defined as nonnegotiable (moukafi & dafir, 2025). documents issued by banks: in the world of international business, the letter of credit is the most prestigious payment tool. payments are normally made in terms of a predetermined set of documents, which include the commercial invoice, transportation document, insurance policy, and other commercial documents (barelier et al., 2003). use of blockchain technology can revolutionize this process by digitalizing these significant documents, increasing transparency, and making cross-border trade transactions easier. attempts at digitizing export transaction documents through the use of blockchain have already been made. materials and methods to fulfill the aims of this research and gain deeper insights, we chose to carry out a bibliometric analysis reinforced by the methodi ordinatio. this is an approach based on two techniques, one structured and the other systematic, for a rigorous analysis of the existing literature. figure 2: methodological design pa ge 22 5 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 218-233, 2025 this tool helps researchers to create a sophisticated understanding of a particular scientific subject by providing them with a comprehensive overview of relevant perspective on the subject matter (pagani et al., 2015). to ensure the quality of article selection, a panel of expert evaluators was involved in the screening process, as illustrated in figure 2. the scopus database, which was developed by elsevier, was chosen for utilization in this research because it has a very wide multidisciplinary coverage of various academic fields like science, technology, medicine, social sciences, and humanities. the major reason for the utilization of this database was to find both research papers and review papers that correspond to the thematic focus and publication time frame of the research. scopus is identified as one of the two largest abstracts and bibliographic records databases of peer-reviewed scientific literature. its rigorous editorial criteria and international standing ensure that it is a trustworthy authority for upholding academic standards and for tracking the development of scientific thought in most areas, especially in applied and technological research (falagas et al., 2008). additionally, as pointed out by norris and oppenheim (2007), scopus gives strong bibliographic coverage across the social sciences and indexes a broad range of powerful journals. in order to enhance our research collection process, we employed keywords, truncation, and boolean operators, thus we were able to efficiently and precisely collect relevant literature. the process, therefore, resulted in 299 articles, as indicated in figure 2. we used a variety of filters and ranking techniques to identify the most relevant and impactful studies for a comprehensive analysis. we did this because it was not feasible to evaluate all of the papers obtained from the database search, given the limitations of time. these methods allowed us to put all our force on the most significant studies and by that we have initially comprised 299 articles. once the articles and reviews were identified, we proceeded with a filtering process, which allowed us to keep a total of 122 articles in a total. going through this filtering process, we took great care to make sure that we didn’t remove any relevant articles or reviews. this meticulous curation of the records ensures that we have a comprehensive dataset to conduct further analysis. as a result, our study can be more robust and meaningful, as it includes valuable information from a wide range of sources. afterward, after filtering by article title and publication date, 68 records were retained. we used a systematic approach to filter out records that did not align with the topics of interest in our study. we evaluated each record based on three criteria: reading and analyzing the abstracts, assessing the relevance of the problems addressed, and thoroughly examining the selected articles. this meticulous process resulted in a final sample of 42 articles that precisely matched our research criteria. in this context, the methodi ordinatio approach incorporates a specific equation designed to evaluate the relevance of each article by taking into account both the journal’s impact factor (if) and the number of citations received. this allows for a more objective assessment of an article’s academic significance. each selected article was then processed through the inordinatio coefficient formula to determine its relative importance within the literature: inordinatio = (if / 1000) + α * [ 10 (research year publish year) + (σci) in this equation, the impact factor (if) of the journal, taken from the journal citation reports (jcr), reflects the journal’s scientific influence. α is a weight ranging from 1 to 10, chosen by the researcher to indicate the importance of each criterion within the context of the study. the research year refers to the year the research was conducted, while the publish year indicates when the article was actually released. finally, the number of citations, represented as σci, reflects how often the article has been cited. together, these elements make up the inordinatio formula, which is designed to evaluate and rank the relevance and impact of each article in a balanced and thoughtful way. the inordinatio equation has the following dynamics: (a) the impact factor is divided by 1000 (thousand), to normalize its value to the other criteria. (b) within the equation, there’s a parameter denoted as “ α,” which can take values from 1 to 10. a lower value of “ α “ suggests that the year criterion is of lesser importance to the researcher, whereas a higher value of “a” indicates that the year criterion holds more significance. this is particularly relevant in areas like technology transfer, where the number of recent publications plays a critical role. in addition, the time frame should be broader in this case, given that it has been covered in the literature for more than a decade. (c) this criterion is the raw number of citations found in the portfolio construction data. following data analysis, each article is assigned an inordinatio score, allowing for a hierarchy based on scientific relevance. articles with a higher inordinatio value are more essential for possible inclusion in the research portfolio. after this ranking is created, the researcher is able to determine how many high-rank articles to explore in-depth, for example, the top 10, the top 50, or any number that aligns with the research priorities. the methodology uses a coefficient to assess the relevance of the publication year. the researchers have assigned this coefficient a score from 1 to 10, with a higher score indicating a greater emphasis on searching for articles from more recent years. by following this method, we settled the initial set of articles to 68, that require in-depth reading. after meticulous analysis, we finally retained 42 articles that fully met our selection criteria. these exclusion criteria pa ge 22 6 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 218-233, 2025 were rigorously applied and included the following steps in article analysis: (i) complete portfolio = 299; (ii) include just articles and reviews = 299 177 = 122; (iii) exclusion of articles by title and publication date = 122 54 = 68; (iv) exclusion of articles by abstract reading, problem analysis, and full article reading = 68 26 = 42; as a result, the final portfolio included 42 articles related to blockchain and its impact on international trade. a total of 42 high-impact articles were selected for evaluation and discussed in the results section. all references were organized and managed using the mendeley reference management tool. visual co-occurrence maps (figure 3) and bibliographic linkage maps (figure 4) were generated using vosviewer software. these maps were constructed by taking into account article titles and abstracts, using vosviewer’s complete counting method. bibliographic data, citation data, authors of the unit of analysis, and bibliographic linkage were used as analysis criteria for map construction. the full-count method was applied to obtain a complete representation of the relationships between articles. the articles are grouped together based on the number of related documents. this allows us to identify thematic clusters and similarities through bibliographic coupling. we then create visual maps that show the connections and relationships between publications. these maps make it easier to explore research areas, spot emerging trends, and identify significant articles within a specific field. figure 3: co-occurrence of terms – final portfolio the researchers used spreadsheets to calculate the inordinatio coefficient and analyze the results. they considered various characteristics to conduct a comprehensive analysis of the final portfolio that contain more than 40 significant articles, but not all articles were examined for every theme discussed. the researchers also explored and analyzed other aspects, such as the main themes covered, objectives and findings, suggestions for future research, key conclusions, and any additional analysis conducted by the authors. while this research has its limitations, like any scientific study, the authors are confident that it makes a significant contribution to the existing literature on the subject. this is because no other research has been found that delves into the shared context of the topics discussed in this article. this highlights the originality and significance of this study within the research field. the authors acknowledge that the ordinatio method used in this study has some limitations. we point out that the use of weighting factors or coefficients can introduce subjectivity into the analysis, and that the reliability of the results may be influenced by the data selection and the quality of bibliographic information used. we also mention that the scope of the method may be limited, which could potentially lead to an incomplete view of the research topic. however, we stress the need for researchers to fully understand the complexities of applying the method and remain open to various interpretations of the results. ultimately, we suggest that the effectiveness of the method depends on how well it aligns with the specific research context. in summary, this study used a rigorous methodology to analyze the results, taking into account a variety of characteristics and providing valuable insights into the themes addressed. the authors acknowledge the limitations of their research while hoping that this study will contribute to the advancement of knowledge in this field. pa ge 22 7 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 218-233, 2025 results and discussion in this segment, we draw attention to a compilation of articles contained in the final portfolio, consisting of multiple categories of research. using the inordinatio index, we screened the articles according to the procedure stipulated by pagani et al. (2015). table 1 presents the compilation of articles contained in the portfolio. observably, some journals have released studies on how blockchain influences worldwide commerce and affects the global supply chain. authors have listed the journals in the sample in accordance with the number of papers published on the subject, in descending order: international trade trends, artificial intelligence research, supply chain management, and blockchain. interestingly, the trend through the years has been that the journals where most of these publications have appeared have changed. the articles published on the evolution of blockchain are essential for understanding the changing behavior of international trade players such as customs, transport companies, and even governments concerning product prices and trust between suppliers and customers. the analysis of the results was conducted based on the 42 articles selected through the methodi ordinatio, as outlined in the methodology section. for this phase, we created a visual map using textual data, focusing on the title and abstract of the articles. we then moved towards a deeper analysis by reading the full-text articles that had a significant word count. for the visual map, a minimum of 5 occurrences per term was set. this resulted in a total of 33 key terms being identified, as shown in figure 2. additionally, a timeline was created to track the evolution of key themes based on the year of publication and to explore the relationships between these terms. several key terms were identified in the context of blockchain and its implications for international trade, reflecting the broader impact and growing interest in this field. figure 2 presents the terms from a temporal perspective. on the basis of this visual representation, we can say that the terms “”supply chain management,” “world economy,” “cross-border,” “decentralized,” “data transfer and “risk assessment” these are the subjects of the earliest high-impact studies. we can add those keywords such as “blockchain,” “international trade,” “network security,” “technology adoption,” these are more recent approaches, emerging only in the past few years. despite certain limits, we think our bibliometric study provides insightful information about the present status of blockchain and international commerce research. based on the word count of abstracts and keywords, figure 2 shows the findings and results obtained from the articles in our sample. according to this data, there is a notable concentration of research on how blockchain affects global trade and how it interacts with new technology. notably, in 2020, we observed a trend toward studies exploring hardware technologies like blockchain, as well as topics related to sustainable global supply chains and the future involvement of governments and various actors in the regulatory landscape. our research delves into the potential advantages of implementing blockchain-based solutions, such as enhanced transparency, improved traceability, and increased efficiency in global trade operations. these findings highlight the growing interest and potential benefits of blockchain technology in the context of international trade.. based on data from many generations worldwide, the word count also demonstrates that since 2021, research has addressed concerns of trust, blockchain technology, environmental technology, and consumer trust and intention to trade globally. in addition, research was carried out into document management between the two countries and how different contributors play their own roles. figure 4: authors and co-authors according to bibliography data pa ge 22 8 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 218-233, 2025 with experimentation, research changed in 2022, addressing issues like artificial intelligence in global trade. as a result, a number of studies have been conducted to examine how blockchain affects customers’ and suppliers’ intentions to buy items globally, as well as how they handle documents and make payments by air and sea. it seems that there has been a noticeable increase in the number of publications focused on the impact of blockchain on international trade. however, it’s essential to be cautious about drawing definitive conclusions on trends because our research relies on bibliometric analysis. nonetheless, this topic is gaining momentum and is emerging as a crucial area of research with significant potential for development in the coming years. among the 42 articles in the final selection, the study by abidi et al. (2021) stands out with the highest impact factor. their research aims to enhance scm and security through the integration of blockchain technology. the study with the second-highest impact factor is by balci and surucu (2021), which explores the challenges of implementing blockchain in international containerized trade and identifies the key stakeholders involved. the study concludes that the primary obstacles to adoption are the lack of government regulations, insufficient support from major stakeholders, and limited knowledge of blockchain. these findings were derived using interpretive structural modeling and cross-impact matrix multiplication, which were applied to classification analyses (figure 3). figure 4 shows the criteria used to construct the bibliographic linkage map, namely: • bibliographic data; • the full-count method; • bibliographic linkage at the analysis level. the total number of authors and co-authors was 299, with a total of 21 groups, i.e., authors who published the same study. wusk et al. (2018) and berdik et al. (2021) incorporate authors who share similar research interests.whose main research topics are: blokckchain; international trade facilitation; an the ability to improve transparency and traceability. this research examines the use of blockchain technology in information systems and its potential impact on various fields. it highlights the growing interest in blockchain and its potential to transform global trade, supply chain management, logistics, customs procedures, and payment systems. the survey focuses on blockchain’s ability to improve transparency and traceability in international trade by securely recording and verifying transactions. it also discusses the potential for streamlining business processes by automating tasks using smart contracts. in addition, the survey addresses the impact of the technology of blockchain in addressing trust and security concerns in international trade by ensuring data integrity and mitigating risk. overall, the survey provides an overview of the potential benefits and challenges of implementing blockchain in information systems and highlights the need for further research and exploration in this area. (wusk et al., 2018; berdik et al., 2021). table 1: result of the ordinatio analysis n o. t itl e jo ur na l im pa ct fa ct or c ita tio ns ye ar in o rd in at io 1 blockchain-based secure information sharing for supply chain management: optimization assisted data sanitization process international journal of intelligent systems 8,52 30 2021 342,0085 2 blockchain adoption in the maritime supply chain: examining barriers and salient stakeholders in containerized international trade transportation research, part e : logistics and transportation review 11,42 21 2021 261,0114 3 assessing citizens' behavior towards blockchain cryptocurrency adoption in the mano river union states: mediation, moderation role of trust and ethical issues technology in society 10,32 11 2022 160,0103 4 the digital tokenization of property rights, a comparative perspective computer law and security review 2,96 14 2021 154,003 5 blockchain in oil and gas industry: applications, challenges, and future trends technology in society 10,32 8 2022 119,0103 6 a visualized analysis of the research current hotspots and trends on innovation chain based on the knowledge map sustainability 4,39 7 2022 112,0044 7 blockchain‐based information management for supply chain data‐platforms applied sciences 3,1 7 2021 105,0031 pa ge 22 9 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 218-233, 2025 8 the potential of blockchain technology in the procurement of sustainable timber products international wood products journal 1,22 7 2021 105,0012 9 uncovering the potential of blockchain in the agri-food supply chain: an interdisciplinary case study journal of engineering and technology management jet-m 5,64 3 2022 96,00564 10 distributed ledger technology as a catalyst for open innovation adoption among small and medium-sized enterprises journal of high technology management research 4,75 8 2021 96,00475 11 blockchain in international e-government processes: opportunities for recognition of foreign qualifications research in globalization 7,58 5 2021 91,00758 12 block by block: a blockchain-based peer-topeer business transaction for international trade technological forecasting and social change 13,64 8 2022 85,01364 13 optimization model of cross-border e-commerce payment security by blockchain finance wireless communications and mobile computing 2,5 6 2021 84,0025 14 cross-border capacity-building for port ecosystems in small and medium-sized baltic ports baltic journal of european studies 0,71 8 2021 80,00071 15 governance in the era of blockchain technology in qatar: a roadmap and a manual for trade finance journal of banking regulation 2,2 4 2022 78,0022 16 public value creation through voluntary business to government information sharing enabled by digital infrastructure innovations: a framework for analysis government information quarterly 9,37 1 2023 77,00937 17 application of blockchain information technology in ṣukūk trade journal of islamic accounting and business research 2,57 4 2021 72,00257 18 cross-border e-commerce business model based on big data and blockchain mobile information systems 2,41 1 2022 70,00241 19 the nature and sources of international variation in formal institutions related to initial coin offerings: preliminary findings and a research agenda springer science and business media 7,59 1 2023 66,00759 20 using nfts and blockchain for traceability and auctioning of shipping containers and cargo in maritime industry ieee access 4,82 2 2022 66,00482 21 blockchain-based secure and trusted distributed international trade big data management system mobile information systems 2,41 2 2022 66,00241 22 prospects of vat administration improvement in digitalized world: analytical review journal of tax reform 0,56 2 2022 55,00056 23 distributed ledger technology (dlt): a game changer for mnes in emerging markets journal of risk and financial management 2,82 0 2022 54,00282 24 the marketing of cross-border e-commerce enterprises in foreign trade based on the statistics of mathematical probability theory applied mathematics and nonlinear sciences 4,89 1 2022 50,00489 25 an industrial blockchain-based multi-criteria decision framework for global freight management in agricultural supply chains mathematics 2,6 1 2022 50,0026 pa ge 23 0 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 218-233, 2025 26 application of a blockchain model in the energy market for social goodness: a simulator to generate transactions periodica polytechnica electrical engineering and computer science 1,16 0 2023 50,00116 27 study on the intention of foreign trade driven by cross-border e-commerce based on blockchain technology security and communication networks 2,51 4 2021 48,00251 28 pricing and redesign decisions for global supply chain of free trade port based on the complex system aej alexandria engineering journal 8,34 0 2023 40,00834 29 decentralized global copyright system based on consortium blockchain with proof of authority ieee access 4,82 0 2023 40,00482 30 a survey on blockchain for information systems management and security information processing and management 0,67 1 2021 40,00067 31 blockchain for trade: when code needs law ajil unbound 0,57 2 2021 40,00057 32 national blockchain laws as a threat to capital markets integration uniform law review 0,14 2 2021 40,00014 33 impact of covid 19 pandemic and big data on china's international trade: challenges and countermeasures frontiers in public health 5,18 0 2022 36,00518 34 regulation of virtual currencies in the united arab emirates: accounting for the emerging public/private distinction development studies research 2,5 1 2021 36,0025 35 analysis of computer-based blockchain technology in cross-border e-commerce platforms mobile information systems 2,41 0 2022 36,00241 36 research on optimization of steel foreign trade financial transaction based on blockchain technology mobile information systems 2,41 0 2022 36,00241 37 blockchain won’t kill the banks: why disintermediation doesn’t work in international trade finance communications of the association for information systems 2,24 1 2021 36,00224 38 the impact of digital transformation in the accounting system of fuel and energy complex enterprises (international experience) international journal of energy economics and policy 1,57 0 2022 36,00157 39 blockchain-based smart contracts and conflict rules for business-to-business operations revista electronica de estudios internacionales 0,14 2 2021 30,00014 40 big data sharing model and key mechanism of international trade based on blockchain international transactions on electrical energy systems 2,83 0 2022 27,00283 41 research on credit algorithm of international trade enterprises based on blockchain mathematical problems in engineering 2,1 0 2022 27,0021 42 towards a virtual water currency for industrial products using blockchain technology water policy 1,87 0 2022 27,00187 conclusion to sum up, this article has conducted a thorough examination of how blockchain technology is utilized in the field of international trade. by meticulously reviewing existing literature, the study has revealed the core concepts, characteristics, and potential advantages of using blockchain to streamline different trade activities. additionally, the research has utilized vosviewer, a powerful bibliometric analysis tool, to further enrich the analysis and visually display the connections and trends within the research field, offering valuable insights. in this section, the researchers carefully analyzed the findings from the literature review and bibliometric analysis. this allowed for a deeper understanding of the pa ge 23 1 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 218-233, 2025 current state of research on blockchain and international trade. the study also identified gaps in knowledge and potential areas for future research, which can be beneficial for researchers, practitioners, and policymakers. the practical implications of the research contribute to advancing knowledge in this field and provide valuable guidance for future research. this research highlights how blockchain technology could revolutionize international trade. blockchain’s ability to simplify processes, increase transparency, enhance security, and build trust could have a significant impact on supply chain management, cross-border payments, and trade finance. by adopting blockchain solutions, businesses and stakeholders in the international trade sector can improve their operations, navigate the complexities of the global market, and take advantage of exciting opportunities ahead. this article concludes by emphasizing the importance of continued research and exploration in this area. by focusing on the identified gaps and delving deeper into the possibilities of blockchain in international trade, researchers can play a significant role in 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(2021). the healthchain blockchain for electronic health records: development study. journal of medical internet research, 23(1), e13556. https://doi.org/10.2196/13556 pa ge 1 pa ge 20 4 american journal of economics and business innovation (ajebi) the relationship between emotional well-being and academic performance in a university/college setting edelfin p. tan1*, jerick m. quintua1, leonessa j. cortes1 volume 4 issue 2, year 2025 issn: 2831-5588 (online), 2832-4862 (print) doi: https://doi.org/10.54536/ajebi.v4i2.5279 https://journals.e-palli.com/home/index.php/ajebi article information abstract received: may 12, 2025 accepted: june 14, 2025 published: july 04, 2025 this study endeavors to determine the connection between emotional well-being and academic performance among college students at feu roosevelt. using a correlational quantitative research design, the study aims to determine the strength and direction of the correlation between the students’ emotional well-being measured by the warwickedinburgh mental well-being scale (wemwbs), and their academic achievement measured via self-reported grade point average (gpa). the respondents were randomly selected by stratified random sampling from different academic programs, including very competitive ones such as business administration and information technology. an internet-based self-report survey was used for data collection, and descriptive statistics and the pearson product-moment correlation coefficient were used for data analysis using spss. an inverse correlation exhibiting high significance was found between emotional well-being and academic performance; students who study in more demanding programs show lower emotional well-being and poorer academic performance. these results are in line with current literature which identifies stress and emotional tension as contributory factors to academic failure, especially in high-stress academic environments. the research highlights the importance of universities adopting proactive mental health care and providing individualized interventions for high-stress courses, particularly for students enrolled in such courses. this study contributes to the body of knowledge about emotional well-being and academic performance in philippine tertiary institutions. keywords academic performance, correlational study, emotional well-being, mental health, philippines, university students 1 tertiary education division, feu roosevelt, philippines * corresponding author’s e-mail: edelfintan24@gmail.com introduction emotional well-being is identified as a dominant aspect of scholars’ academic achievement in the modern university setting. scholars are exposed to increasing academic pressures that could affect their mental wellbeing as tertiary education keeps evolving, particularly in countries such as the philippines that have witnessed substantial curriculum reforms like the implementation of the k–12 program (david et al., 2019). the reform has heightened the load and expectations imposed on students, particularly in high-stakes, high-level of thinking courses, although its intent was to more effectively prepare them for postsecondary schooling and ultimate employment. emotional mental health challenges such as stress, depression, and anxiety are increasingly prevalent in university students, and these symptoms have been established to inversely correlate with academic achievement in some global settings (beiter et al., 2015). with greater sensitivity, there remains a lack of quantitative, empirical research in the realm of philippine tertiary education that addresses the statistical correlation between students’ emotional well-being and academic achievement. this disproportion necessitates that a correlational study be conducted that can provide objective, fact-based information about how these two variables interact in a post-k–12 educational setting. students in high-demand study fields like health sciences, engineering, or business study fields tend to have stringent study requirements placed upon them, rendering them specifically susceptible to emotional stress (quek et al., 2019). without proper coping strategies or institutional intervention, emotional duress can affect learning, focus, and academic performance. these issues are further compounded by post-pandemic socio-economic challenges, hence the urgency for timely research capable of guiding institutional interventions. research questions 1. how is the emotional well-being level of university students? 1.1. in what ways does emotional well-being differ among high-demand academic program students? 1.2. what are the most common emotional or mental health issues among university students? 2. what is the academic performance level among university students? 2.1. how does academic performance vary among students of different levels of emotional well-being? 3. is there a meaningful relationship between emotional well-being and academic performance among university students? 3.1. what is the strength and direction of correlation between emotional well-being scores and academic performance indicators (e.g., gpa)? pa ge 20 5 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 204-208, 2025 materials and methods research design the study utilized a quantitative correlational research design to establish the correlation of emotional well-being and academic achievement among students at the college level. it is suitable for ascertaining if there is a statistically significant relationship between two measurable variables without altering any conditions. locale of the study the research was carried out at feu roosevelt, which provides a good array of academic programs, such as those characterized by high scholastic expectations, like business administration and information technology. sampling method the study employed a stratified random sampling method to obtain a proportionate representation of respondents from varying year levels and fields of study. this facilitates broader generalizability of findings within the population as well as adjusting for differences in experiences between students enrolled from high-load courses compared to those in less rigorous programs. respondents the respondents were 150 college students who were taking undergraduate courses. demographic information, including age, gender, year level, and program was gathered through a demographic questionnaire. personal identifiers were not collected to ensure confidentiality. data gathering procedure with approval from the university’s research ethics board, data was obtained through an online self-report survey administered through official student communication channels (e.g., university email, lms, or social media groups). participation was voluntary, and informed consent was collected electronically prior to embarking on the survey. instruments emotional well-being scale – the warwick-edinburgh mental well-being scale (wemwbs) was employed to measure students’ emotional well-being. this is a 14-item likert-scale questionnaire created by tennant et al. (2007), with responses given on a 1 (none of the time) to 5 (all of the time) scale. the wemwbs is a validated, widely used index of positive mental health, which has established reliability and internal consistency (cronbach’s alpha > 0.89). academic performance was measured based on respondents’ self-reported grade point average (gpa) from the last completed semester. gpa is a normalized and quantifiable indicator widely employed to indicate students’ academic achievement. both measures pilot tested 10–15 non-participating students to evaluate clarity, response time, and survey flow. required revisions was implemented before full deployment. data analysis quantitative data was coded and analyzed with statistical package for the social sciences (spss). the statistical treatments to be utilized are as follows: descriptive statistics (mean, standard deviation, frequency, and percentage) to describe levels of emotional wellbeing and academic performance. pearson’s correlation coefficient (r) to assess the strength and direction of the relationship between emotional wellbeing and academic performance. whereas, the significance level will be established at p < 0.05. scope and limitations this research targets solely the emotional well-being and academic achievement of college-level students in a single institution. it does not consider external variables such as family, financial, or socio-environmental factors that might affect either construct. furthermore, the use of self-reported gpa can pose the risk of reporting bias. the results may not be generalizable to all universities in the philippines, especially public or vocational universities, because of variations in academic setting and student population. results and discussions table 1: descriptive statistics on emotional well-being and academic performance variable n mean standard deviation minimum maximum emotional well-being 150 47.8 5.46 30 65 grade point average 150 2.9 0.36 1.25 4.0 table 2: emotional well-being by academic program program n mean emotional well-being sd business administration 50 42.69 5.48 information technology 50 45.40 5.36 hospitality management 25 51.43 5.94 education & others 25 51.73 5.06 as shown in table 1, the average emotional well-being score among all respondents was 47.8 (sd = 5.46), and the average gpa was 2.9 (sd = 0.36), with higher gpa scores indicating better academic performance. pa ge 20 6 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 204-208, 2025 table 2 reveals that students in business administration and information technology reported significantly lower emotional well-being compared to other academic programs. table 3: pearson correlation between emotional well-being and gpa by program program pearson r p-value business administration -0.577 <0.001 information technology -0.463 <0.001 hospitality management -0.216 0.299 education & others -0.262 0.205 as indicated by table 3, there existed a high degree of negative correlation between emotional well-being and gpa among business administration (r = -0.577, p < 0.001) and information technology (r = -0.463, p < 0.001) students, suggesting better emotional well-being is highly linked with improved school performance (higher gpa mark). there existed no significant relationship among students who were enrolled in hospitality management or education programs. figure 1: emotional well-being scores by academic program figure 1: scatterplot of emotional well-being and gpa (business administration and information technology) figure 1 illustrates the mean emotional well-being scores across different academic programs. students in business administration and information technology report lower well-being scores compared to those in education and hospitality management. pa ge 20 7 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 204-208, 2025 figure 2 presents a scatterplot showing the relationship between emotional well-being and gpa across academic programs. a negative trend is observed particularly among students in business administration and information technology, indicating that lower emotional well-being scores are associated with lower gpas in these groups. results and discussion the findings of the research show a significant positive relationship between well-being and academic progress, particularly among the most difficult directions of training the business and it specialties. students in this field reported lower well-being scores and a higher negative correlation between well-being and gpa compared to their peers in non-stem majors. this is consistent with prior work indicating that students in competitive academic environments frequently suffer from elevated levels of stress, anxiety, and emotional fatigue, which results from the extremity of academic challenge, competitive atmospheres, and the exceptional amount of workload pressure (altiok & üstün, 2013; beiter et al., 2015). these stressors can compromise cognitive integrity, attention and academic motivation, resulting in underachievement at school (owens et al., 2012). new research backs this up that academic pressure isn’t just tough, it’s actively harming students’ mental health. tamayo (2024) warns that the relentless drive to succeed triggers severe anxiety, ruins sleep, and leads to burnout, especially in high-pressure majors. it’s worse where the stakes feel highest. furthermore, patricio (2024) pushes for schools to spot struggling students early. simple, campus-level support think mindfulness groups or accessible counseling isn’t just feel-good stuff. it’s proven to boost both well-being and grades. as can be observed from figure 1, business administration and information technology students scored markedly lower on the emotional-well-being scale than their peers in hospitality management, education, and other programs, echoing recent philippine data showing that emotionally demanding study arrangements (for instance, juggling work and study loads) suppress emotional-intelligence scores among college cohorts (dulalas et al., 2025). this supports the view that program structure and workload materially shape students’ affective health. consistent with past work, students in stem and allied-health disciplines often report lofty academic aspirations that can go unmet when institutional mental-health supports are insufficient (pascoe et al., 2020). figure 2 depicts a clear negative relationship between emotional well-being and academic performance, indicating that students with better emotional health tend to earn higher grades. a complementary philippine study of online learners found that stronger emotional intelligence, together with sound study habits, significantly boosted learning motivation and ultimately academic success (balano & napil, 2024). this mirrors earlier evidence that mental-health problems predict lower gpa and higher dropout risk (eisenberg et al., 2009; stallman, 2010). interestingly, students in less-intensive programs such as hospitality management and education reported higher emotional well-being, yet no significant link emerged between their well-being and gpa. similar results have been noted in satisfaction-focused research where more relaxed blended-learning schedules improved students’ mood and course satisfaction without automatically lifting grades (hilot et al., 2025), underscoring academic intensity as a key modulator of the emotional–academic nexus. these findings reinforce calls for proactive, program-tailored emotional-health initiatives on campus (keyes et al., 2012). practical implications colleges should: (ito sir pa paragraph nlng po) 1. scale mental-health services – expand counseling capacity and embed mental-health screening in high-stress programs. 2. integrate resilience training – add credit-bearing workshops on coping, self-regulation, and help-seeking to first-year curricula. 3. adopt department-specific supports – for example, peer-mentorship circles for stem/it cohorts facing heavy lab loads, or workload-management seminars for business students during capstone terms. conclusion the results of this study uncovered significant negative correlations between the emotional well-being and academic performance of university or college students, specifically those pursuing highly rigorous programs like business administration and information technology. these students had lower emotional well-being scores and showed greater mental health to academic outcome associations, which indicates that intensive workloads in academic work might jeopardize student performance. the research emphasizes the importance of emotional well-being in academic achievement and highlights the necessity of tackling mental health issues in schools. recommendations given the evidence, it is advocated that institutions of higher education adopt targeted interventions in mental health and support mechanisms, particularly in academically demanding programs. these can take the forms of department-oriented counseling services, stress management workshops, academic advising, and incorporation of wellness education in the curriculum. universities and colleges also need to cultivate a culture that supports emotional well-being as an integral part of academic achievement, with the aim of guaranteeing that students have access to the resources they need to succeed both emotionally and academically. in order to enhance the impact of research and pa ge 20 8 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 204-208, 2025 its generalizability, the future studies will include participants from other institutions in various areas in the philippines. to reduce self-report bias, the authors may be able to introduce hard measures of academic performance (e.g., official gpa records) and supplement with qualitative data such as interviews or focus groups for richer detail. finally, the role of moderator variables such as socio-economic status (ses), social support and mental health services might also explain the relationship between emotional health and academic achievement. compliance to ethical standards the researchers assure that all ethical procedures were strictly adhered to during the conduct of this research. informed consent was properly taken from all the respondents before gathering data, and participants were informed of their right to withdraw at any time without any penalty. anonymity and confidentiality of all answers were maintained, and all data were treated in strict compliance with the data privacy act. the welfare of the participants was taken care of, and no psychological or emotional damage was caused to them due to their involvement. the researchers state that there is no conflict of interest regarding this study. proper citation of all sources was done, and plagiarism was avoided at all costs. data interpretation was done objectively, without academic or personal bias, and the findings of the study were utilized for academic and research purposes only. references altiok, h. o., & üstün, b. 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(2021). education in a post-covid world: nine ideas for public action. united nations educational, scientific and cultural organization. https:// unesdoc.unesco.org/ark:/48223/pf0000375704 pa ge 1 pa ge 1 american journal of economics and business innovation (ajebi) innovative pay methods: addressing compensation challenges in the construction sector in south sudan jackline benjamin libo warille1* volume 4 issue 3, year 2025 issn: 2831-5588 (online), 2832-4862 (print) doi: https://doi.org/10.54536/ajebi.v4i3.5343 https://journals.e-palli.com/home/index.php/ajebi article information abstract received: june 01, 2025 accepted: july 04, 2025 published: august 25, 2025 the protracted civil conflict in south sudan has significantly impeded the development of infrastructure, particularly the road system, which remains inadequate or nonexistent in many rural areas where 80% of the population resides. among the many difficulties faced by construction companies include material delivery delays, a shortage of local skilled labor, disruptions during the rainy season, insecurity, delayed project approvals and payments, and a large number of public holidays. furthermore, culturally motivated employee procrastination has a detrimental impact on output. employee pay usually does not take these difficulties into consideration, which affects business performance. the purpose of this study was to suggest innovative payment strategies suited to the unique construction environment of south sudan. the study employed a mixed-methods approach. data was collected from eight project locations via questionnaires, interviews, and workshops. spss and qualitative content analysis were used to analyze the data. three successful pay models were found: management-driven pay (mdp), shared pay rate (spr), and team-based pay (tbp). these strategies seek to match incentives with actual problems that exist on the ground, such as security and weather. to encourage better labor relations in the industry, the report suggests modifying the labor act of 1997. keywords compensation, construction, innovative, methods, pay, sector 1 school of business management, university of juba, south sudan * corresponding author’s e-mail: oringo.james@ku.ac.ke introduction background due to decades of civil war, south sudan essentially experienced a lack of fundamental infrastructure, which eventually reduced a large portion of its industrial potential. an estimated 80% of the country’s population lives in rural areas, where the road network is appalling and, in some places, nonexistent (adb, 2012). as a key tactic to promote economic growth, the south sudanese government has made road construction investments a top priority. this stance was reaffirmed during the nation’s economic cluster of the council of ministers meeting, which highlighted the urgent need for roads in the nation to facilitate trade and generate employment (unmiss, 2013). however, due to the high cost of developing roads throughout the nation, the government’s and its development partners’ road construction projects have not gone smoothly. inadequate equipment for high-quality road building, insufficient but unskilled human resources paid through haphazard compensation methods, and unfavorable climate variations that cause drought or heavy rainfall to damage unpaved or murram roads, are the main causes of these high costs. according to unicef’s 2011 labour market report, 94% of young people in south sudan enter the workforce without any qualifications. this suggests that workers from neighboring countries fill specialized roles in industries like construction. although this may serve as an explanation for the pay gap between international and domestic workers, unskilled foreign workers occasionally earn more than their domestic counterparts. furthermore, the situation is not improved by the fact that international employees are paid in us dollars (sudan tribune, 2012). even though bad weather, insecurity, and delays in the supply of construction materials and equipment sometimes force road construction to halt, road construction companies still pay their employees their full monthly salaries, which drives up the cost of building a single road in south sudan. it’s also crucial to remember that most local workers do not associate their work performance with their pay because of their cultural background and the detrimental effects of the civil war. for them, simply showing up for work is sufficient reason to be paid. in response to the attitude of local workers, respective construction companies have strengthened their supervisory functions, typically by hiring a foreign expert. this has further increased the already exorbitant cost of road construction (business daily, 2014). one of the main causes of the high cost of building roads is the employment of random compensation techniques in the country. the current pay method in the construction industry in south sudan is not supporting the growth of the companies. the fact that the existing pay structure ignores significant issues that impact the nation’s road construction sector lends credence to this viewpoint. these issues include things like delayed delivery of building materials due to impassable roads, a shortage of skilled local workers, the inability to work during rainy seasons, insecurity brought on by rebels and intertribal pa ge 2 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 1-7, 2025 conflict, the inability to obtain new projects after old ones are finished or suspended, the approval and payment of certificates, and an excessive number of public holidays. procrastination also affects work, which is a product of staff culture and mindset. literature review as stated by zaharie (2013), decisions related to compensation should be approached strategically. this is due to the significant portion of a company’s resources allocated to compensation-related efforts. consequently, it is essential for management and company owners to align compensation strategies with the broader goals and objectives of the organization. in the context of the road construction sector in south sudan, the unpredictable environment in which these companies function limits the ability to take such careful considerations. in this situation, the majority of road construction firms in south sudan have embraced an entitlement compensation philosophy, which zaharie (2013) describes as a philosophy that ensures salaries, benefits, and incentives regardless of the variations in industry or economic conditions. widely used pay models by companies different researchers and dictionaries have recognized distinct pay models. according to the free online dictionary, a fixed monthly salary is the sum of money provided to employees for office or professional labor, usually on a monthly basis. the fee for service (ffs) model is an additional model. employees are compensated according to the number of office visits, tests, and treatments they perform under this approach, which is popular among healthcare practitioners (centre for studying health system change 2008 as cited in greene et al., 2013). merit pay, also known as pay for performance (pfp), has been seen as a successful strategy for encouraging workers to put in more effort (mulvaney et al., 2012; park & sturman, 2012). “forge a link between pay expenditures and individual productivity” is the theory behind this approach (mulvaney et al., 2012, p. 507). a compensation plan known as “team-based performance pay” links financial rewards to a group’s or project team’s performance as opposed to individual work. among its fundamental tenets are responsibility and common objectives (lawler, 1990) group incentives connected to quantifiable results (gomez-mejia & balkin, 1992) and interdependence and cooperation as a means of motivation (hackman, 2002). team based performance (tbp) pay method and compensation challenges in road construction sector in turbulent environments meyer (1994) examined how effective metrics can support teams and identified four key principles: the objective of measurement should be to assist a team; a team ought to establish its own measurement framework; a team should develop metrics that monitor the process for delivering value across multiple functions; and importantly, a team should not implement numerous metrics simultaneously. meyer’s principles will aid a team in collectively reaching a goal. in road construction, a group can set a goal and strive to achieve it together. merriman (2009) argues that incentivizing team performance may be counterproductive, as team members may perceive it as unfair. rewarding teams is a good idea but there should be ways of how to reward individuals within the team or else low performers will get paid for work done by other people. kim et al. (2011) examined the impact of group-based pay for performance and discovered that it improves overall company performance. members are more likely to collaborate as a team rather than focus on individual efforts (ellemers et al., 2004; kim et al. 2011). through this approach, individual objectives are accomplished by aligning them with group goals, which motivates the team to work diligently towards achieving personal aspirations. each team member contributes their unique skills and knowledge, allowing the group to reach its shared objectives. this, in turn, fosters a spirit of teamwork. according to kim et al. (2011), the sustainability of groupbased pay for performance supports empowerment practices, which kirman et al. (2004) defined as ‘an increased task motivation that is due to employees’. if empowered, teams will be able to make decisions that will support their plan to achieve specific set of goals. they are usually satisfied when the outcome shows the impact of their decision. it’s crucial to understand that when employees are driven by their anticipated pay, they may be inclined to overwork machinery and deliver inferior quality output simply to meet their own interests. in the road construction sector of a volatile environment like south sudan, workers often misuse machinery when motivated by promised bonuses, and they rush to complete a section, which results in subpar work. consequently, the consultants brought in to supervise the project often reject that section. as a result, the company is then forced to redo the work, leading to significant expenses on machinery repairs. nonetheless, the communal way of living in south sudan may foster effective teamwork. individualistic lifestyle is not common in south sudan. people live communal life and may support working as a team. shared pay rate (spr) and compensation challenges in road construction sector in turbulent environments the challenging and unproductive circumstances that employees encounter in unpredictable environments are often not represented in conventional compensation models. studies indicate that workers are frequently undercompensated despite their readiness to remain engaged when projects experience delays due to logistical challenges, seasonal weather issues, and safety concerns (mundial, 2017; ahmed & ochieng, 2020). as a result of these shortcomings, researchers and industry professionals are exploring alternative compensation structures that align pay more closely with the actual pa ge 3 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 1-7, 2025 situational conditions. among these options, the shared pay rate (spr) has gained traction as a method that offers employees income stability by designating a portion of their wage that is independent of individual daily performance. this method recognizes the uncontrollable outside influences that prevent consistent labor performance, such as weather extremes, road inaccessibility and civil unrest. the significance of spr becomes particularly evident in volatile environments where traditional “pay-forperformance” approaches fall short. by instilling a sense of job stability and equity, spr boosts employee morale and retention, especially in situations where risks are collective rather than individual (bawole et al., 2021). given that employees often face challenges beyond their control, spr serves as an effective compensation strategy in south sudan by ensuring that 50% of wages are guaranteed regardless of productivity. research indicates that such models also enhance relationships within industries, foster collaboration, and mitigate conflicts between labor and management (ndegwa & wanjiku, 2022). management-driven pay (mdp) and compensation challenges in road construction sector in turbulent environments in unstable regions such as south sudan, challenges like systemic inefficiencies, poor infrastructure, and regular interruptions from conflict and adverse weather conditions often exacerbate compensation problems in the road construction sector. these persistent external factors remain unaddressed by conventional compensation models, which primarily focus on direct labor output. consequently, these issues often lead to worker dissatisfaction, reduced productivity, and strained relationships within the industry (gollin, 2019; ali & kamau, 2021). the increasing research on compensation reform in fragile states highlights the necessity for adaptable pay models that account for local contextual factors. the management-driven pay (mdp) framework introduces a shift in accountability by empowering management to actively tackle site-level challenges such as material delays, security issues, and work interruptions due to weather. mdp fosters enhanced strategic planning and coordination among clients, contractors, and employees by making management accountable for establishing conditions that allow work to continue smoothly. the foundations of mdp are based on institutional and contingency theories, which assert that efficient compensation structures must consider both organizational capabilities and external conditions. to shield employees from unjust penalties, managers implementing mdp should not only ensure work readiness but also discuss non-performance factors with clients, such as inclement weather, conflicts, or inaccessible roads (omwenga & abebe, 2020). research indicates that this approach mitigates blame-shifting and labor disputes by aligning accountability with decisionmaking authority, thereby enhancing fairness and performance (ndegwa, 2022). nonetheless, effective leadership, clear contractual agreements, and supportive labor policies are essential for the successful execution of mdp. as a result, connecting pay results to managerial performance and project execution that considers the context, mdp provides a viable yet management-heavy approach to addressing compensation issues in delicate construction settings. compensation challenges faced by road construction companies in turbulent environments construction companies operating in unstable regions deal with challenges such as political instability, conflict, poor infrastructure, and extreme weather conditions. these companies encounter significant problems related to compensation, which ultimately impacts employee morale and the completion of projects. traditional performance-based compensation models often fall short in these contexts because they fail to account for uncontrollable delays such as supply chain disruptions, flooding, or insecurity (ali & kamau, 2021). although external disruptions frequently hinder employees from fulfilling their duties, they are often penalized for not performing. this has been linked to ongoing labor conflicts, decreased motivation, and elevated employee turnover (gollin, 2019). in addition, inconsistent project financing and delayed client payments hinder construction companies from providing competitive salaries, particularly in public sector contracts. the absence of a legislative framework that can adjust to these unpredictable working conditions further complicates the provision of fair and prompt compensation (omwenga & abebe, 2020). insufficient labor regulations, informal employment agreements, and inconsistent enforcement strategies exacerbate compensation issues and erode employee trust. to avoid navigating complex labor laws, companies often resort to informal hiring practices, which later results in conflicts over wages and benefits (ilo, 2018). moreover, social fragmentation plays a significant role because ethnic factors can influence perceptions of pay equity, potentially causing clashes among local labor organizations (saferworld, 2019). in addition, many road projects in south sudan rely on funding from the government or donors, and delays in payments frequently impact worker morale and project timelines (norwegian refugee council, 2022). overall, these factors highlight the need for compensation strategies that are transparent, flexible, and tailored to the realities of fragile states. materials and methods research approach and strategies the research employed a mixed-method approach, integrating both quantitative and qualitative techniques as a research strategy. the goal was to enhance triangulation by complementing action research with diverse forms of quantitative and qualitative information. as noted by pa ge 4 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 1-7, 2025 denzin (1978), triangulation in action research involves gathering various types of data, utilizing different sources, and collecting information at multiple points in time. this approach ensures a comprehensive and credible understanding of the situation. data was gathered from workshops, interviews, and questionnaires. study population at the time of this research, there were only three local firms engaged in bridge and road construction: payii, markeric, and tumu. consequently, a decision was made to draw study samples from all members of the population. as noted by babbie (2007), researchers should ensure that, when possible, every element that meets the theoretical criteria has an opportunity to be included in the sample. this approach allows researchers to maintain the representativeness and generalizability of their results. study sample size the group of participants for payii consisted of 7 staff members from each of the 4 projects, resulting in a total of 28 field participants and 7 management staff. therefore, the overall population for payii was 35. tumu had 2 projects, each with 7 staff members, leading to a total of 14 field participants and 3 management staff. hence, the total population for tumu was 17. markeric also had the same total population of 17. when it came to the actual distribution of interview questionnaires, payii had 29 individuals who collected the questionnaires, while both mutu and markeric had 17 each. this resulted in a questionnaire distribution rate of 83% for payii and 100% for both mutu and markeric. additionally, qualitative data were gathered from the workshops. data analysis the gathered data was reviewed for any errors resulting from either omission or misrepresentation. frequency analysis of both the interview and survey data was conducted using the statistical package for social sciences (spss). the data collected from workshop minutes was analyzed through qualitative content analysis. hsieh and shannon (2005) identify three types of content analysis: conventional, directed, and summative. qualitative content analysis involves identifying underlying themes within the materials under examination. the researcher utilized both personal interview data and workshop minutes to derive meaning from the texts for better understanding. the frequency with which items appeared in the texts significantly contributed to the study’s findings. hsieh and shannon (2005) referred to this as summative content analysis. this method involves counting and comparing keywords or content, along with interpreting the deeper context. results and discussions questionnaire return rate as depicted in figure 1, 29 employees from payii completed and submitted the questionnaires, while tumu and markeric each had 15 employees who completed and returned theirs. this resulted in a 100% return rate for payii and an 88% return rate for both tumu and markeric. figure 1: questionnaire return rate figure 2: employees’ understanding of pay employees’ understanding of pay as illustrated in figure 2 above, employees typically show a strong interest in understanding the factors related to their compensation. concerns like the criteria for salary increases and types of bonus payments are highly prioritized by these workers. figure 3: knowledge of pay components knowledge of pay components figure 3 above indicates that 29% of employees are aware of the components of their compensation, while 71% are not informed. many individuals lack knowledge about what constitutes their compensation. if only employees understand what they are entitled to in terms of overall pay, they will actively seek those benefits. pa ge 5 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 1-7, 2025 employees should insist on being informed of all their entitled compensation before starting their job. from the researcher’s observations, when prospective candidates in south sudan are queried during interviews about their expected salary, they tend to hesitate. figure 4: reaction to the introduction of a new system views on the introduction of a new system based on the individuals who completed the surveys, the responses to the implementation of a new pay structure are illustrated in the figure above. based on figure 4 above, 87% of individuals are likely to embrace a new system, while only 1% will oppose it, and approximately 12% remain uncertain about their response. it’s likely that the 12% unsure about the new pay system feel apprehensive due to the fear of the unknown. the 87% who are willing to accept the new system are characterized as risk-takers, indicating that these employees are open to exploring opportunities that could be advantageous for them. this presents an opportunity for employers to implement innovative approaches that could be mutually beneficial for both employees and the organization. as a result of the selected sample, 87% are open to accepting modifications that would include the compensation elements they have been lacking. concerns regarding the sustainability of the payment methods were raised during the interviews. the participants recognized that maintaining a consistent monthly salary is challenging due to various unforeseen circumstances. the preferred pay methods the research performed a comparative evaluation of how employees are compensated through three interactive workshops: workshop 1, workshop 2, and workshop 3. these workshops gathered participants from payii, tumu, and markeric, which are three construction firms operating in south sudan. the structure of these workshops was based on agenda topics that were previously formulated from insights gained from comprehensive questionnaires and interviews with employees, managers, and site supervisors. the payment methods assessed during the workshops included pay for performance (pfp), teambased pay (tbp), management-driven pay (mdp), special team-based pay (stbp), and skill-based pay (sbp). throughout all three workshops, discussions consistently indicated that pay for performance (pfp), team-based pay (tbp), and management-driven pay (mdp) were the most favored compensation strategies. participants noted that pfp incentivizes individual effort and accountability, figure 5: preferred employee payee method pa ge 6 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 1-7, 2025 especially during work periods when conditions regarding environment and security are optimal. tbp was preferred for fostering collaboration and shared accountability, particularly in scenarios where teams must seize fleeting opportunities to complete tasks amidst unstable circumstances. mdp received strong support as it places the onus on management to manage external disruptions—such as delayed supplies, insecurity, or severe weather—thereby shielding employees from being penalized for factors outside their influence. the combination of these three approaches was deemed especially appropriate for implementation by payii, tumu, and markeric, all of which function within the unstable construction sector in south sudan. considering the country’s persistent political unrest, insecurity, and logistical difficulties, a hybrid compensation framework grounded in pfp, tbp, and mdp would provide a balanced solution. pfp can incentivize top performers when work opportunities arise, tbp fosters team collaboration during joint endeavors, and mdp guarantees fairness by holding management responsible for creating supportive conditions. together, these models offer adaptability and equity, aligning compensation with both effort and situational context. their implementation would not only boost productivity and motivation but also enhance labor relations in a conflict-sensitive setting where inflexible pay systems have traditionally fallen short in addressing workers’ issues. figure 5 presented above shows the distribution of employee preferences regarding pay methods, derived from the outcomes of workshops 1, 2, and 3. the three most favored methods are pay for performance (pfp), team-based pay (tbp), and management-driven pay (mdp). together, these three account for 75% of the overall preference, highlighting their appropriateness for construction companies in south sudan to implement. conclusion this study investigated the potential of innovative compensation strategies to address pay-related challenges in south sudan’s construction sector. the high survey response rates of 100% from payii and 88% from tumu and markeric reflect strong employee engagement, especially in matters concerning bonuses and salary adjustments. however, the research revealed a significant knowledge gap, with 71% of employees lacking awareness of the components of their compensation packages. based on data triangulation and workshop feedback, three strategies which include pay for performance (pfp), team-based pay (tbp), and management-driven pay (mdp), were identified as the most relevant and feasible. mdp emphasizes managerial accountability in influencing productivity, tbp promotes teamwork in unpredictable construction environments, and pfp motivates individual performance. together, these strategies provide a balanced framework that aligns with the region’s complex economic and social dynamics. notably, 87% of employees expressed readiness to adopt a revised compensation system. the study concludes that a blended pay model incorporating these approaches could enhance transparency, motivation, and adaptability in south sudan’s fragile construction industry. implementing such a system may not only improve employee satisfaction and performance but also contribute to long-term organizational resilience and growth in a challenging post-conflict context. recommendations adopt a hybrid pay model payii, tumu, and markeric should test a payment system that integrates mdp, tbp, and pfp. this will ensure a fair framework that motivates hard work, promotes collaboration, and makes management accountable for outside constraints. increase employee pay awareness transparent and candid discussions about salary elements should be a primary focus for organizations. by offering orientation programs and ongoing education about compensation frameworks, employees can better understand and champion equitable pay. institutionalization of feedback mechanisms to monitor the effectiveness of adopted compensation strategies and ensure continuous improvement, it is essential to create consistent feedback channels between management and employees (such as suggestion platforms or quarterly workshops). policy reform and advocacy employers, representatives from various sectors, and lawmakers should support reforms to south sudan’s labor laws that include adaptable and context-aware compensation systems reflecting the challenges of unstable conditions. mitigate sustainability risks organizations ought to develop contingency plans, such as standby pay systems or contracts adjusted for weather conditions, to ensure that employee wages remain stable despite unexpected events. suggested areas for further research longitudinal impact of hybrid pay models future research should assess the long-term impact of integrated compensation systems (pfp, tbp, mdp) on employee retention, productivity, and industrial harmony in conflict zones. gender dynamics in pay preferences investigate how compensation preferences and experiences differ between male and female employees in the construction sector, especially in fragile contexts like south sudan. client role in compensation sustainability explore how donor agencies, government entities, and pa ge 7 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 1-7, 2025 private sector clients influence the financial viability and sustainability of pay structures in conflict-prone construction projects. technology in compensation management assess the potential of digital tools (e.g., payroll apps, mobile-based tracking systems) to improve compensation transparency and delivery in hard-to-reach project sites. references ali, r., & kamau, j. (2021). challenges of compensation systems in post-conflict construction environments: a case study of east africa. journal of construction management and economics, 39(4), 225–239. bawole, j. n., osei-kyei, r., & chan, a. p. c. (2021). compensation strategies and labor motivation in conflict-prone construction zones. international journal of human resource management, 32(12), 2450–2472. gollin, d. (2019). infrastructure gaps and labor market dynamics in fragile states. african development review, 31(s1), 76–89. greene, j., hibbard, j. h., & overton, v. (2014). a case study of a team-based, quality-focused compensation model for primary care providers. medical care research and review, 71(3), 207–223. hackman, j. r. (2002). leading teams: setting the stage for great performances. harvard business press. international labour organization. (2018). employment and decent work in situations of fragility, conflict and disaster. ilo. kim, h., sutton, k. l., & gong, y. (2011). group-based pay-for-performance plans and firm performance: the moderating role of empowerment practices. asia pacific journal of management, 30, 31–52. lawler, e. e. (1990). strategic pay. jossey-bass. merriman, k. k. (2009). on the folly of rewarding team performance while hoping for teamwork. compensation & benefits review, 41(3), 61–67. meyer, c. (1994). how the right measures help teams to excel in performance measurement. harvard business review, 72(3), 95–103. mulvaney, m. a., mckinney, w. r., & grodsky, r. (2013). the development of a pay-for-performance appraisal system for municipal agencies: a case study. public personnel management, 41(3), 505–533. mundial, b. (2017). infrastructure for resilience: a framework for fragile and conflict-affected countries (world bank policy paper series, no. 98234). world bank. ndegwa, p. (2022). innovative compensation models in unstable construction environments: lessons from south sudan. african journal of labor and industrial relations, 14(2), 55–70. pa ge 1 pa ge 13 1 american journal of economics and business innovation (ajebi) the influence of online sales promotion on impulsive buying behavior among gen z consumers shenna marrie obiso1, cheryl balala1, elvan klien samson1, albert a. alonzo1*, djannez m. dadole1, heidie amor a. parcia1 volume 4 issue 2, year 2025 issn: 2831-5588 (online), 2832-4862 (print) doi: https://doi.org/10.54536/ajebi.v4i2.4799 https://journals.e-palli.com/home/index.php/ajebi article information abstract received: march 15, 2025 accepted: april 24, 2025 published: may 31, 2025 this study investigated the influence of online sales promotions on impulsive buying behavior among gen z consumers in naawan, misamis oriental, philippines. leveraging hawkins stern’s impulse buying theory, the research examined how specific promotions, including online coupons, price discounts, buy-one-get-one, and free shipping, influenced purchasing decisions. a descriptive-correlational design was employed, utilizing purposive sampling of 300 gen z consumers with experience in online shopping applications. findings revealed that there were statistically significant differences in the impulsive buying behavior of gen z consumers depending on the type of online sales promotion they preferred. among the four promotional strategies examined, price discounts and free shipping stood out as the most influential. these two promotions were found to significantly predict impulsive buying behavior, indicating that when gen z consumers are offered a direct reduction in price or the added convenience of not having to pay for shipping, they are more likely to make unplanned purchases. this suggests that perceived value and ease of transaction are key drivers of impulsivity in online shopping among this demographic. in contrast, online coupons did not exhibit a significant effect on impulsive buying behavior. this may be attributed to the extra steps often required to redeem such coupons, which could reduce the spontaneity of the purchase decision. additionally, the buy-one-get-one-free (bogo) strategy, while initially included in the analysis, was excluded from the regression model due to multicollinearity. this means that bogo offers were too closely related to one or more of the other promotional strategies, making it difficult to isolate their unique effect. these findings indicate that for brands that want to help push a gen z consumer to purchase impulsively, they should lead with promotions that simply cut the cost of the purchase or provide a high perceived value in exchange for that purchase keywords buy-one-get-one-free, free shipping, impulsive buying behavior, online coupon, online sales promotion, price discount 1 department of accountancy and business management, mindanao state university at naawan, philippines * corresponding author’s e-mail: imadbiotechnology@gmail.com introduction the internet era has transformed consumer purchasing behavior, particularly among the younger generations. tech culture has greatly influenced the consumption patterns for gen z. similarly, it has laid the foundation for well-accepted marketplaces through e-commerce platforms, where customers can easily access a wide variety of products and services. in addition to online sales, internet retail operations also involve things like online sales promotions, which usually use persuasive marketing techniques. the digital age has changed how consumers behave, especially for the younger generations. gen z, are digital natives and tend to seek out online platforms to do everything from shopping to social interactions. impulse buying, where people make unplanned purchases without prior thought or consideration, has long intrigued the attention of marketers and researchers alike. individual personality traits, emotional state, and external environmental triggers influence this behavior. as per indeed (2023), the typical sales promotions include online coupons, discounts for products, buy-one-getone-free deals, and free shipping. additionally, marketers and companies can also modify their marketing strategy so they can appeal more to the population that will ultimately improve their marketing visibility, awareness to their brand, and be more competitive (nyagah, 2023). utilizing promotional methods is among the most critical components of any good marketing strategy. sales promotion– one of the promotional strategy’s components has gained huge popularity in the digital age, as companies leverage multiple platforms and techniques to reach and engage with customers. all companies rely on their customers to keep coming back over and over again. the continuing diversity of the marketplace has resulted in increasing needs for sales promotion even the culture of sales promotion has been so common in a technology-driven society. as stated by sloovi (2023), every business entity should have a directory of strategies for sales promotions. and discount coupons on request have become a substantial weapon of businesses craving for additional revenue, cultivate customer loyalty and stimulate sales (agarwal et al., 2024). historically, sales promotions mainly took place through offline platforms like print media, airwaves and in-store displays. but with the rise of e-commerce has come the rise of online sales promotions. digital transformation became an essential survival strategy, allowing businesses to leverage e-commerce platforms, implement digital marketing methods, and adopt innovative pricing approaches to maintain their operations (abellana & alonzo, 2025). promotion tactics used by businesses have become more sophisticated, pa ge 13 2 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 131-138, 2025 using data analytics and personalization to reach specific consumer segments effectively. thus, this has made gen z consumers to buy impulsively thanks to the ubiquity of online shopping and aggressive marketing tactics. some unplanned purchases, usually caused by sales promotions and can be a trap that costs you a debt and financial stress. although existing literature implies an overall increase in impulsive buying through promotional strategies (karim et al., 2021), there is still a need to consider such specifically the gen z of naawan, misamis oriental. this study examines the influence of selected sales promotions on the impulsive buying behavior of this population. by delving into the multifaceted nature of these factors, this study aims to provide a deeper understanding of how gen z navigates the challenges of online promotion. literature review theory of impulsive buying the research is grounded in the theory of impulse buying proposed by hawkins stern (1954). he introduced the impulse buying theory challenging the assumption that all buying decisions are made after though and detailed planning by the consumer. impulse buying theory asserts that external stimuli make consumers more inclined to impulse purchase (agarwal & chetty, 2019). also, the theory suggests that when a consumer goes shopping, they are bombarded by outside stimuli, like sales, which urge them to make a spontaneous purchase that they did not plan to buy beforehand. moreover, the theory sheds light on the cognitive and emotional factors that drive impulsive buying behavior, and how sales promotions influence consumer choice. although all impulse purchases can be considered unplanned, but sohn and ko (2021) argue that not all unplanned purchases are impulse. a customer feels the need to purchase but has not included a functional product in their shopping list beforehand for some reason so it may lead to unplanned purchase. this means that the strong want that typically comes with impulse purchases may not always accompany unanticipated purchases. additionally, ismail and siddiqui (2019) noted that the advantage of sales promotion offers could attract many customers to deal with level of comfort, time, and money preservation, thus consumers enjoy much better sense between hopeless and positivity. this holds true regardless of age, gender, income, or employment. promotional events and discount also stimulate impulsive buying behavior particularly among younger consumers (santini et al., 2019). it can even be argued that gen z makes spur of the moment purchases because of their engagement with digital marketing techniques that promote instant gratification and rarity, both of which have been discovered to drive impulsive buying action, as also simplicity and speed is one of the keys to impulsive buying decision (chetioui et al., 2023). online sales promotion online sales promotion is a marketing strategy that businesses employ as a short-term promotion or offer to boost interest in and demand for their goods and services. according to kelwig (2022), a business may decide to utilize a sales promotion, or “promo,” for a variety of reasons, but the main one is to boost sales. ismail and siddiqui (2019) emphasize that promotion is essential for any business to preserve market share and grow more efficiently. sales promotion is one strategy that can help achieve this. during shopping, these offerings influence how customers act or think, persuading potential customers to buy a brand or product. keenan (2024) defines sales promotion as a marketing activity that can increase sales, encourage repeat purchases, create brand awareness. usually, this means offering a discount or some other form of incentive to encourage people to interact with the brand or purchase the products. sales promotions are some of the most tried-and-true marketing techniques in business — and with good reason. approximately 88% of consumers use a coupon or discount code at least yearly. from business point of view, sales promotions develop to high revenue while from customers point of view, it gets special offer. a promotional event that requires consumers to put in more effort or to make more of a commitment produces a somewhat lower impulsive reaction than a promotion whose role is simply to get people shopping online. this is probably because they require a deeper level of involvement, which may delay the urgency of the buying decision (luo et al., 2021). in the top websites in the philippines, the most popular marketplace in march 2024 was shopee, which was rated first and followed by lazada. according to the statista research department, as of the second quarter of 2022, shopee was the most well-known b2c e-commerce website in the philippines with around seventy-two million (72 million) monthly web visitors. tools that shopee offers include bundle deals, which give customers better value for their money while increasing average order spend, add-on deals, which encourage a guaranteed minimum spend through free gifts or additional discounts, shipping fee promotion, which encourages purchases with free shipping or discounted shipping fees, and shop follow prizes, which use vouchers to entice new shop followers. these tools highlight the unique selling point and enhance interest in the shop or products, encouraging customers to take immediate action. trailing closely behind in second place was lazada, boasting over thirty-seven million (37 million) monthly visitors. lazada empowers sellers with a suite of tools called the power of five (5). these tools include seller picks, lorikeet, chat, promotional tools, and store builder. by utilizing these key tools, lazada sellers can effortlessly boost their sales. the influence of online coupon on impulsive buying behavior according to nejako (2023), in this highly competitive market, acquiring new customers and retaining current customers are paramount. one way in which businesses can increase sales, create customer loyalty, pa ge 13 3 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 131-138, 2025 and engage customers all at the same time is by using online coupons. not only does this strategy incentivize customer purchases, it also encourages repeat business with special offers for loyal customers. atkins (2024) mentions that a large pool of customers is likely to be noticed when businesses present online coupons, as the audience searching for online shopping is ready to spend. customers frequently search for deals while they make a purchase, with recent studies finding that ninety-two percent (92%) of customers actively search for coupons and discount codes to get great deals. this behavior is fueled by the nature of online retail, where customers know they have many options at their disposal. besharat et al. (2021) stated that you can help gen z buy your products by appealing to them with discounts, but gen z is not only motivated by discounts; there are other factors that they take into consideration. coupons can also build customer loyalty, leading to repeat purchases, as customers will repeatedly take advantage out of deals and special offers, specifically when coupons are attached to customer loyalty programs. keep in mind that discounted items attract more sales than full-priced ones, and coupons make the chances of conversions more likely. h1 online coupon significantly influence impulsive buying behavior the influence of price discount on impulsive buying behavior the use of price discounts has been identified as one of the most effective marketing tactics used to bring consumers into the store and to encourage immediate purchases by creating the perception of a limited-time purchase trigger, with the consequence being to spur purchases by consumers immediately to avoid miss out on buying (santini et al., 2019). presents research suggests discounts affect consumer purchasing behavior and discounts can easily convince consumers, attract new customers, increase sales, and boost customer loyalty chaddock (2024). they also influence purchase behavior and may lead to higher sales conversion rates. price discounts make customers happy and excited as they discover a good deal, which creates a positive association between customers and the retailer, leading to an increased likelihood of future purchases (kathir and amirtharaj, 2023). also, when customers see other people taking the same offer, it increases their likelihood of a purchase via social proof. huang and sarigöllü’s (2021) research reinforce the idea that promotional strategies, most significantly in the form of discounts, may create higher perceived value for young globe consumers, leading to effective purchasing behavior. kumar and singh (2020) similarly found that price promotions have a higher precedence for gen z shoppers, especially when they operate within competitive markets, whereas wang et al. (2022) noted that gen zs are driven by the perception of savings, and these impulses lead them to buy the products. h2 price discount significantly influence impulsive buying behavior the influence of buy-one-get-one free on impulsive buying behavior buy-one-get-one free is a type of promotion is often used to increase sales volume, clear out excess inventory, or introduce new products to the market. the buy one, get one (bogo) sales campaign is a well-known and widely used marketing tactic (kelwig, 2022). the main goal of bogo marketing is to increase consumer awareness of the product. by spreading the word about their excess goods, customers can increase their customer base by referring friends and relatives. according to said et al. (2023), bogo promotions create a perception of greater value and encourage trial purchases, particularly among younger shoppers. according to dawal (2023) it is a sales promotion where customers who purchase one product of equal or greater value are given the option to receive a free product or discounted goods (for example, paying only half price). this promotion has its roots in the early days of retail and e-commerce, when businesses would give away a free item to consumers who purchased another. commonly employed to promote new products or during slow times, these kinds of promotions worked very well to persuade people to buy more items by providing a second unit of the same product free of charge or at a substantial discount (suhag, 2023). h3 buy-one-get-one free significantly influence impulsive buying behavior the influence of free shipping on impulsive buying behavior customers who buy online are increasingly opting for free shipping when they do not wish to spend an extra cost on shipping. free shipping is palatable to clients with an eye for simple pricing plans, which may provide online merchants a reasonable advantage. according to yang et al. (2005), free shipping is crucial in attracting customers and expanding sales as the shipping costs prevent most online buyers and around sixty percent of online retailers from purchasing more. some customers are deterred by shipping costs, so free shipping is a strong selling point (detweiler, 2023). free shipping is perceived as a strong incentive to make an online purchase, allowing the removal of barriers to purchase and promoting a sense of provides savings (macdonald, 2023). businesses can offer free shipping if the order is over a certain amount or during a specified time. this sort of promotion is especially effective for lowering shopping cart abandonment rates since excessive shipping rates can prevent a client from finalizing their purchase. free shipping is a sales and marketing strategy that is targeted primarily at internet shoppers. in order to persuade customers to buy qualifying products, online retailers will often waive delivery expenses (heegaard, 2022). gen z shoppers are especially impacted by free shipping, given that they respond well to digital marketing that pa ge 13 4 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 131-138, 2025 highlights immediate rewards and minimizes perceived risks (shankar et al., 2020). for gen z, free shipping is less a perk than it is an expectation, and a major one at that (faber, 2024). free shipping contributes to frugal and pleasurable shopping journeys for younger demographics, therefore fostering repeat orders (raye, 2019). previous studies showed where gen z believes free shipping plays an important role in buying decisions (reynolds, 2023; pérez-cabañero, 2020). yendola et al. (2022) showed that beneficial conditions of free shipping increased hedonic motivation and positive feelings which resulted in more impulsive purchasing decisions. with free shipping being a strong customer satisfaction associated attribute along with a bait for impulse purchase behavior for younger audience therefore, implementing free shipping facility is one solution to implement which will not only improve customer satisfaction level but also greatly profit impulsive buy behavior. pramesti et al. (2022) further supports this by confirming that free shipping lowers perceived costs, triggering impulsive purchasing behaviors and compelling online shoppers to do so. h4 free shipping significantly influence impulsive buying behavior. materials and methods this study used quantitative method. it also employed descriptive and correlational design provide thorough and accurate interpretations of findings. this study was conducted at naawan, misamis oriental. the respondents belonged to generation z, encompassing individuals born between 1997 and 2012. furthermore, participants had practical experience using online shopping applications and engaged with online sales promotion tools, including online coupons, product discounts, buyone-get-one-free offers, and free shipping services. the researchers used a purposive sampling procedure to select respondents for this study. purposive sampling involves selecting participants based on specific criteria relevant to the research objectives (nikolopoulou, 2022). this method ensures the relevance and complexity of the data gathered by allowing researchers to select individuals with qualities or experiences pertinent to the study. in this type of non-probability sampling, the researchers selected participants based on their judgment and specific criteria, aiming to recruit 300 respondents. the research instrument was adapted and modified from various questionnaires used in prior studies (ismail & siddiqui, 2019; yendola & windasari, 2022; rani, 2023) to ensure relevance to the research objectives. an online survey form via google forms was chosen for convenience in accessing respondents. results and discussion the demographic profile of respondents indicates most are female participants, with 210 out of 300 respondents (70%) identifying as female, while 90 respondents (30%) were male. this finding aligns with narciso (2020), who noted that females are more inclined to use coupons and view shopping as a rewarding activity and they also tend table 1: demographic profile of respondent description criteria frequency ( f ) percentage ( % ) age 17 20 years old 127 42.3 21 24 years old 154 51.3 25 27 years old 19 6.3 total 300 100% sex female 210 70 male 90 30 total 300 100% table 2: constructs constructs cronbach alpha no. of items remarks online coupons 0.923 5 excellent price discount 0.919 5 excellent buy-one-get-one free 0.917 5 excellent free shipping 0.919 5 excellent impulsive buying behavior 0.853 5 good overall 0.888 30 good to appreciate discounts offered for purchasing products online. in terms of age distribution, most respondents were between 21 and 24 years old, comprising 154 respondents (51.3%), while those aged 17 to 20 made up 127 respondents (42.3%), and only 19 respondents (6.3%) were between 25 and 27 years old. this shows that pa ge 13 5 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 131-138, 2025 young adults aged 21-24 are the most engaged in online shopping. table 2 presents the cronbach’s alpha coefficients corresponding to each construct. the overall cronbach’s alpha value of 0.888 indicates a high level of internal consistency among the survey items. this value aligns with the widely recognized standards for reliability in empirical research. consequently, the items within the questionnaire demonstrate strong internal coherence, suggesting that they reliably measure a common underlying construct. table 3 presents the mean scores and standard deviations concerning the influencing effect of online sales promotional strategies and impulsive buying behavior among generation z. it was revealed that the mean table 3: level of influence of the following online sales promotion strategies and impulsive buying behavior constructs mean standard deviation interpretation online coupons 3.10 .52 moderate influence price discount 3.19 .50 moderate influence buy-one-get-one free 3.17 .55 moderate influence free shipping 3.46 .50 high influence impulsive buying behavior 3.08 .50 high impulsivity overall 0.888 30 good table 4: test of difference of impulsive buying behavior when grouped according to the preferred online sales promotion online sales promotion impulsive buying behavior df kruskal-wallis h p-value online coupons 3 40.936*** .000 price discounts 3 54.586*** .000 buy-one-get-one free 3 40.371*** .000 free shipping 3 80.330*** .000 note: *** significant at 0.001 level score for the online coupons construct was 3.10 (sd = 0.52), showing moderate influence. this means that these types of offers can be a huge push for gen z students to interact with brands they may not have previously associated with. as noted by said et al., (2023), when generation z consumers make purchasing choices, they often favor promotions based on pricing, especially in competitive retail consumption settings. in a similar pattern, price discounts showed moderate power, with an overall mean of 3.19 (sd = 0.50). this backs up the claim made by said et al., (2023) and price sensitivity is the most important predictor of purchase behavior of younger consumers. the buy-one-getone free promotional strategy demonstrated a similar effect (m = 3.17, sd = 0.55), also affording further credence to gen z consumers consumer sensitive. on the other hand, free shipping showed a comparatively greater level of impact with an average score of 3.46 (sd = 0.50). as raye (2019) suggest, free shipping incentives are part of positive consumers experience by lowering the overall perceived costs of a transaction, which drives more recurrence. as observed by shankar et al., (2020), it is possible that these promotional strategies have exerted a salient influence on gen z due to their cumulative exposure to digital marketing approaches that foster immediacy and accessibility, thereby increasing insider risk, and framing rapid rewarding under direct provision as the end goal. in addition, data display average scores on and standard deviations of impulsive buying behavior of gen z students, proving the tendency of this group to be prone to high impulsivity. the overall mean of the construct was 3.08 (sd = 0.50). this is in accordance with the results of santini et al. (2019) who noted that pricebased promotions and other time-limited offers trigger impulsivity, particularly in young adults. as discussed by chetioui et al. (2023) suggests that the impetuous purchasing inclination of generation z may be mediated through digital marketing tactics that exploit the concepts of scarcity and urgency, which are both known to amplify impulsive reactions during consumer decisions. table 4 shows the results of the kruskal-wallis h test analyzed to identify the significant difference of impulsive buying behavior groups based on the preferred type of online sales promotion among z generation consumers. as displayed in the table above, all four promotional strategies—online coupons, price discounts, buy-one-getone-free offers, and free shipping—yielded statistically significant results at the 0.001 level. in particular, online coupons demonstrated an h value of 40.936 (p =. 000), signifying those respondents who preferred the subject of the promotion exhibited significant differences in impulsive buying. in the same way, price discounts had an h value of 54.586 (p =. 000) which means that price-based incentives have an especially high incentive shed on impulsive buying tendency. buy-one-get-onefree promotions exerted a strong effect, too, with an h value of 40.371 (p =. 000), but this behavioral tilt was compounded by the increase in added-value deals. pa ge 13 6 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 131-138, 2025 free shipping had the greatest impact ((h = 80.330; p =. 000), suggesting that this strategy is most effective in distinguishing impulsive buying behaviors between the gen z consumers. according to chetioui et al. such behaviors, according to (2023), can be explained by gen z’s improved attentiveness to digital marketing strategies which are related to immediate indulgence and decreased perceived hazards. as observed by santini et al. (2019) marketing stimulation frequently leads to impulsive behavior particularly in the younger demographics. in general, the findings provide evidence that the type of online marketing strategy has a significant impact on the impulsive buying behavior of gen z consumer. table 5: regression analysis of online sales promotional strategy and level of impulsive buying behavior among gen z respondents model unstandardized coefficients t-value p-value remark b s. e. (constant) .560 .192 2.919 .004 significant online coupons (x1) .129 .088 1.467ns .143 not significant price discounts (x2) .253 .101 2.500* .013 significant free shipping (x3) .372 .087 4.275*** .000 significant note: r2 = .375, anova for regression: f=44.305**, p=.000 excluded variable: buy one get one free (collinearity statistics tolerance = 0.000) ***-significant at .001 level, *-significant at .05 level dependent variable (y) = level of impulsive buying behavior fitted regression model: y = .560 + .253x2 + 0.372x3 table 5 presents the results of the regression analysis which were carried out to examine the influence of online sales promotional strategies on gen z respondents impulsive buying behavior. to construct the model, three promotional strategies are included—namely, online coupons (x1), price discounts (x2), and free shipping (x3); the buy-one-get-one free strategy was excluded due to perfect multicollinearity (tolerance = 0.000). the anova (f = 44.305, p = .000) suggests that the overall regression model was statistically significant (p=.000), and accounts for 37.5% of the variance in the impulsive buying behavior (r² = 0.375). the equation for the fitted regression is: y = 0.560 + 0.253x2 + 0.372x3 regarding the significant factors, price discount (x2) is statistically significant as a positive factor influencing impulsive buying behavior (β = 0.253 p =. 013), indicating that a one-unit increase in price discounts leads to a 0.253 increase in the level of impulsive buying. this result is in line with said et al., (2023), which found that purchase decisions among gen z are particularly swayed by price discounts. moreover, the ability to offer free shipping (x3), proves to be the most powerful predictor (b = 0.372, p = .000), aligning with earlier research (raye, 2019) that depicted free shipping as an antecedent of repeat purchasing due to its perceived value and convenience. in comparison, online coupons (x1) have a statistically non-significant effect (b = 0.129, p = .143), which suggests that this approach might not be one of the effective strategies for reducing impulse buying behavior for gen z consumers within this context. the other constant of b=0.560 performed with indicator significance (p =. 004), which indicates the average level of impulsive buying behavior when no promotional strategies were applied. all in all, the findings highlight that, of all the promotional tools investigated, price discounts and free shipping are significantly predictive of the extent of impulsive buying behavior, while electronic coupons do not show a significant effect. these findings indicate that for brands that want to help push a gen z consumer to purchase impulsively, they should lead with promotions that simply cut the cost of the purchase or provide a high perceived value in exchange for that purchase. conclusion the results reveal that online sales promotions, such as free shipping and price discount promotions, have a strong effect on gen z’s impulsive purchasing behavior in naawan. these marketing gameplans significantly influence their spending patterns, as they tend to spend impulsively without over-zealous considerations. they have a significant influence on their expenditure patterns, frequently resulting in unanticipated and impulsive buys. this finding is consistent with one of the constructs of hawkins stern’s impulse buying theory, which claims that impulse-buying patterns of consumer behavior are often provoked by external stimuli. promotional strategies like discounts and shipping incentives have been shown to trigger impulsions in the digital marketplace, confirming the relevance of the theory in the context of online shopping thus, the study provides evidence that businesses can strategically use the more impulsive behavior of gen z by tailoring online promotional effort particularly those that highlight features of cost savings (e.g., free shipping and discounts). additionally, marketers are advised to create campaigns focusing on convenience and instant gratification, as they have proven appealing to this pa ge 13 7 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 131-138, 2025 consumer audience. gen z appreciates efficiency and responsiveness in their online shopping journeys. as a result, buyers may be more responsive to promotional messages focused on immediate rewards, thus increasing sales effectiveness. not only does this align with gen z behavioral tendencies, but it also cements the necessity of digital promotions in their purchasing decisions. references abellana, j. j., & alonzo, a. 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(2023). role of threshold of free shipping promotion and product type on impulsive buying behaviour in e-commerce platforms. the winners, 23(2), 161–171. https://doi. org/10.21512/tw.v23i2.8140 pa ge 1 pa ge 13 9 american journal of economics and business innovation (ajebi) assessing the correlation between gamification intensity and brand loyalty in young adult demographics stephen d. mitra1, hailey chaze r. bueno1, nash g. dela cruz1, lebron kyle g. concon1, erika f. bacay1* volume 4 issue 2, year 2025 issn: 2831-5588 (online), 2832-4862 (print) doi: https://doi.org/10.54536/ajebi.v4i2.4944 https://journals.e-palli.com/home/index.php/ajebi article information abstract received: april 05, 2025 accepted: may 08, 2025 published: june 04, 2025 as the marketplace goes digital and competition intensifies, gamification has become a tactic for diverting people’s interest and brand loyalty. the research examines the intensity, complexity, frequency, and immersiveness of specific gamified brand experiences, as well as their relationship to brand loyalty among respondents aged 18-35 in the philippines. a quantitative correlational research design was employed in this study to collect data from 201 respondents via structured online surveys. the study measured perceived gamification intensity as well as indicators of brand loyalty such as repurchase intention, emotional attachment, and brand advocacy. the results established a strong positive correlation (r = 0.81) between the increased levels of gamification intensity and the decreased purchase intention. it was concluded that the youth are the most attracted to scores; collect, badges, and regular content updates particularly points collection, badges, and the regular content updates. the insights derived from this emphasize the power of game of designs that incorporate both behavioral and attitudinal loyalty. this research gives practical recommendations to marketers for the use of digital contexts to achieve optimization of consumer engagement and loyalty, while it also adds the empirical data necessary for the development of gamification discussions in emerging markets. keywords attitudinal loyalty, behavioral loyalty, brand loyalty, consumer engagement, digital marketing, gamification intensity, gamified experiences, reward systems 1 tertiary education department, far eastern university roosevelt, marikina, philippines * corresponding author’s e-mail: ebacay@feuroosevelt.edu.ph introduction background of the study the philippines is witnessing a deep digital transformation that is mainly driven by an increase in smartphone users, the cheap availability of mobile data, and the push of e-commerce ecosystems. the economy is expected to switch to a digital one, and the latest statistics suggest just that. as of 2024, the digital economy of the area is now ₱2.25 trillion with an 8.5% contribution to the national gdp from the previous year, where the amount was only ₱1.87 trillion, representing a significant leap (cordero, 2025). this revelatory increase was largely due to the fast gain of the e-commerce industry by 19.6% in 2024 alone, which was valued at roughly ₱1.3 trillion (blakey & blakey, 2024). the philippines is one of the leading digital-adoption countries in asean region as of now. the total users of the internet have reached a saturation of 73.6% or approximately 86.98 million individuals (howe, 2024). the boom in connections has changed the dynamics between brands and consumers, mainly in urban areas, and adolescent-run segments. generation z is among the major factors pushing this total operation to the digital space. the population of these people is around 30% of the totality of the nation, namely, those who were born in the period from 1997 to 2012 in the philippines. this demographic has been brought up in a digital world fully furnished with what the modern man needs. being easily available to them, digital contents and applications have made them highly receptive to them. in the philippines, the average gen z consumer makes about six online purchases per month and some of them buy even more-up to ten (liamzon & liamzon, 2024). psychological pleasure and the phenomenon of self-gratification are in the forefront guiding the consumers. hence, 75% of the surveyed gen z people reported that they shop online to “treat themselves” (mioten, 2024). moreover, this generation persuasively is spending about 5.5 hours per day on social media platforms with interactive, visually happy and personalized content (purple bug, 2024). this is different than the product-oriented utility that the self-expression factor brings; this is a consumer outlook, which is experiential and additive at the same time. therefore, it’s clear that they are not only pragmatic but also hedonistic when it comes to their forethought. brands, on the other hand, are responding to these newform trends through the implementation of gamification strategies for the purpose of having an increase in customer engagement, loyalty, and long product lifetimes (tran, 2024). gamification is the phenomenon of applying the same principles in the game as in a different context such as a business. it exploits the inner needs of individuals divided into three, namely, achievement, competition, and reward. this model has its predominant example in the e-commerce sector, while fintech, and loyalty programs, have also been used avowedly in promoting it. to illustrate, cashback platforms have carried out gamification of challenges and daily streaks to persuade users to spend more and keep using the platform. apps like shopee and gcash are offering games like “spin-thewheel,” “check-in bonuses,” and “reward trees,” which in turn will not only increase the app engagement but also pa ge 14 0 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 139-156, 2025 deepen the user-brand interaction. evidence from various studies, for example the investigation of caponpon et al. (2023), has confirmed that the presence of gamified elements leads to a major uplift in user experience, which ultimately brings more sales and brand advocacy. nonetheless, even if gamification has gained widespread traction, there is still a notable shortfall in the understanding of its impact on brand loyalty, especially within the philippine market. the attention of most of the studies is focused on the existing gamification just in terms of the presence or absence of modes, thus, the intensity, complexity, and immersiveness are not analyzed. the interrelation between dimensions like the ones above and the other aspects of brand loyalty like repurchase behavior, emotional attachment, and brand advocacy are not explored sufficiently either, especially in the case of the gen z consumers. a question arises whether the shift towards increased technology immersion in this particular generation will create differences in relation to the execution of such schemes, hence, it should be analyzed that, whether by presenting deeper and more dynamic gamification viewers form a bond over time. the present paper is intended to be a fill-up for these explorations by the study of the relation between the gamification intensity and brand loyalty of the young filipino adults and the issuance of practical proofs for the academic and real market use. statement of the problem incorporating gamification in marketing strategies has turned into popular practice, and brands have started to apply game elements technically to develop consumer engagement and retention. nonetheless, in spite of its high popularity, there are only a few studies dealing with the empirical proof for the direct interplay between gamification intensity---which means the amount of the user’s choice of game is gamified because it has elements of the game and the user experiences it---and brand loyalty, primarily that of the youth. most of the previous investigations have covered gamification as a general solution; however, the matter of finding out how the degree or intensity of gamification contributes to long-term consumer loyalty has been largely neglected. there is a pivotal question, whether by increasing the gaps, the perception of higher gamified materials is more favorable and leads to growth in stockholder prosperity or, on the contrary, the initial assertion of impairing the technology prevails. furthermore, there remains an issue of identifying the specific game elements (e.g., rewards, competition, challenges) that really help build strong brand loyalty. thus, this study aims to address the following research questions: 1. do demographic factors influence the correlation between gamification intensity and brand loyalty? 2. what specific gamification features are most effective in fostering brand loyalty? 3. is there a threshold or diminishing return where excessive gamification reduces its effectiveness in maintaining consumer engagement? 4. does gamification intensity impact brand loyalty among young adults? significance of the study this research provides valuable insights into the correlation between gamification intensity and brand loyalty among young adults. the findings of this study have significance for the following: consumers. the studied results are valuable for young adult consumers since they state how gamification touches their relations (engagement and loyalty) to brands. getting acquainted with the effects will help consumers to make correct decisions about brands with which they will interact and support. marketers and businesses. people whose work is closely connected with the marketing field, as well as the ones who own a business will be able to take the data in the research to improvise their gamification strategies. the knowledge of the most influential game cards that are making a brand stick in customers’ minds could help ventures develop their engagement, upgrade loyalty schemes, and boost the overall corporate image. academia and scholars. the academic world and the students who are interested in marketing, consumer behavior, or digital engagement, can get reference points from this study for further studies. the research, which has added some more to the literature on gamification, presents factual proof regarding the support of this practice in the development of brand loyalty, especially for the youth. future researchers. the study acts as an inspiration for future researchers who want to expand their ventures on game strategies and how they affect customer behavior. the findings will be used as lessons for comparative studies, experimental research, or more detailed and complex analyses in other populace and industry sectors. scope and delimitation the present study will be aiming at the exploration of the relationship between gamification intensity and brand loyalty in the context of young adults in the philippines. its primary goal will be to explore how different levels of gamification in brand engagement affect consumer loyalty as well as which gamification elements are most effective in establishing a long-term emotional connection with the brand. the study will particularly focus on the demographic group of young adults, fallings in age by 18-35, who are the main recipients of gamified brand experiences and digital marketing strategies. for this research, a quantitative approach will be applied through an online survey which will be distributed to the filipino respondents who have interacted with gamified brand experiences, such as loyalty programs, reward systems, and mobile applications that feature game-like elements. the study will investigate on the consumer perceptions, engagement levels, and purchasing behaviors pa ge 14 1 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 139-156, 2025 along with the gamification strategies that have been discussed in the previous chapter. in spite of the above provisions, a number of delimitations exist in the present study: first, the research is confined to respondents located in the philippines, thus, the results may not be applicable to other countries, where the cultures and economies differ significantly. also, it is worth noting that just young adults aged 18 to 35 will be participating in the study, while other age groups that may view gamification and brand loyalty differently will be left out. furthermore, the project will be centered on the gamification of consumer brands marketing strategies, i.e. in retail, online shopping, and mobile apps, and will not include gamification applied in education, workplace, or non-commercial uses. the study also relies on selfreported survey responses which are prone to some biases like social desirability bias and recall inaccuracies. despite the limitations, the study aims at providing insightful inputs to marketers, business people, and researchers as to the effectiveness of gamification strategies in attaining brand allegiance in young adults in the philippines. literature review marketing through gamification is the intentional implementation of particular game mechanics—like points, badges, leaderboards, and challenges—in nongame settings to promote customer engagement and motivation . the strategy relies on principles of behavioral psychology, which facilitate brand interaction, loyalty, and conversion by making marketing experience more fun and rewarding (santos et al., 2024). in the last decade, gamification has been a key instrument in digital marketing, especially for the brands that want to capture the attention of the young, tech-driven consumers. global players have managed to assimilate gamification into their marketing approach. to illustrate, nike’s run club app is popular with features like achievement badges, leaderboards, and social challenges that hikers are motivated by and they are also the causes of a fitness community (steele, 2023). in a similar trend, starbucks incorporated gamification into its rewards program through the innovative games such as “starbucks pairs” and “starbucks bingo,” which the company believes will increase repurchase and customer loyalty (mathilde, 2023). in the philippines, the increasing acceptance of gamification is evident in most flagship brands. shopee, the most prominent e-commerce player, on the one hand, has positioned itself by deploying an in-app game, “shopee shake”, and “shopee farm” to elevate users’ engagement and sales (affifa, 2024). the sm advantage card (smac), a sm retail loyalty program, offers customers points for purchases that could be redeemed for discounts and exclusive offers, promoting customer retention (bilyonaryo, 2023). gcash, the number one mobile wallet in the philippines, introduced the gamified scheme of “gcash forest,” where users earn points for every eco-friendly transaction which promotes user engagement and environmental consciousness at once (brandrap team, 2024). besides that, lazada, another famous e-commerce platform, also applied gamification through features including daily check-ins, mini-games, and collectible vouchers which encourage frequent app usage and customer loyalty (mcdowell, 2023). figure 1: conceptual framework theoretical foundations of gamification and brand loyalty the foundation of self-determination theory (sdt) is by deci and ryan, which states that human wants are driven by the fulfillment of the three basic psychological needs, namely, autonomy, competence, and relatedness. pa ge 14 2 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 139-156, 2025 in marketing, sdt has played a vital influential position in understanding how customers behave, especially in terms of intrinsic and extrinsic motivations that will guide customers on which purchases to make. zeroing in on the western studies, the sdt has been used as a framework to inquire into consumer engagement and the like, which is human-centered, paradigm distribution marketing strategies of psychologically aligned marketing (cassia & magno, 2023). flow theory elucidates an ideal state of optimal functioning and complete absorption in an activity (csikszentmihalyi, 1990), as in the case of marketing, flow state induction can lead to higher levels of customer involvement and retention. globally, this is true because brands have managed to use this flow theory in a clever way by creating engaging loyalty programs which , in turn, enthrall customers. nike run club app offers real-time tracking and community challenges to the participants of squats which makes it possible for the people to introduce themselves to the flow state during their fitness journey eventually, thereby becoming loyal to the brand. oliver’s model of brand loyalty is characteristically twofold, involving behavioral loyalty and attitudinal loyalty as its respective components. behavioral loyalty refers to a repeated purchasing pattern, while attitudinal loyalty is the emotional bond and consumers’ level of commitment to a brand. this kind of distinction is essential in the analysis of the extent of customer loyalty. behavioral loyalty can appear because of convenience or habit but attitudinal loyalty suggests a stronger, and more, long-lasting bond with respect to the brand (erdoğmuş & çiçek, 2012). gamification strategies and their components gamification mechanics are the basic architectures that transmute the non-game space into a game-like environment by adding a system of games. these mechanics are proposed to be persuasive, reward targeted behavior, and improve the overall experience. mechanics of gamification, adjustments of rewards, and the acquisition of resources such as turning in a ticket and winning are some of the major tools that can motivate customers to talk about it (kanazawa, 2022). in the western markets, gamification strategies frequently take the competition approach to drive user engagement. fitness applications like strava, fitbit, and peloton add leaderboards and competitive challenges to drive users to be better than their friends . social comparison theory and the competitive instinct have been employed by these platforms to acertain that users continue with their service for a longer time (insighttrendsworld, 2025). for instance, the fact that peloton comes with live classes showing real-time leaderboards, users will be encouraged to struggle harder thus they can improve their data and at the same time increased intensity in workout frequency. this use of competition as a motivational factor is only possible where the desire for social recognition and achievement is one of the most effective motivators in individualistic cultures (frederick, 2023). in contrast, southeast asian markets, including the philippines, have been observed to be fans of gamification strategies that evolve around rewards and are simple. e-commerce platforms like shopee and lazada apply features such as “spin the wheel” games, daily checkins, and straightforward point-accumulation systems to engage users (kedia, 2025). with these gamified elements, the players can avail of the immediate gratification and they are conceivably easy to use because of the lack of technicalities, thus they can be accessible to a wider user population. to exemplify, in the case of the “shopee shake” game, this platform allows people to earn coins by simply shaking their phones during a specific time, and those coins can then be redeemed for discounts. this type of feature is important when the users are more for cash incentives or when it needs to be convenient for the user to adopt it (bulu & natalia, 2024). the importance of cultural differences is highlighted by the design and the effectiveness of gamification strategies. in the case of western consumers who are typically known for their individualism culture, they are more prone to being motivated by personal achievement, competition, and status recognition. for this reason, the gamification elements that focus on individual performance, such as leaderboards and badges, prove to be particularly effective in these markets. on the contrary, southeast asian consumers, including filipinos, tend to exhibit collectivist cultural traits that value community, harmony, and group achievements more. this is why the gamified tools in these areas are more effective if they lean toward bringing to life the collaborative elements, the communal of the reward and the social sharing features . furthermore, the inclination towards simplicity long with the instant reward of simplicity is in tune with the cultural pre-eminence of the practical benefits and user-friendliness. conceptual gap in gamification intensity gamification is indeed a concept that has been embraced in different sectors, but the phrase “gamification intensity” is one that has not been sufficiently explored. gamification intensity concerns the level of game mechanics embedded in a system, determining such aspects as, for example, light, moderate, or heavy game element exposure, simple versus complex gaming mechanics, and the fun and wide-ranging experience of the game. this dimension is pertinent since it introduces a new aspect that differs from the mere presence of game elements, thus reflecting the user’s experiences of interacting with game-like features or fiction machinery catches the user’s attention; some might have mystical qualities or special effects that are considered appealing to users (krath et al., 2021). the current body of research on gamification is mostly about the presence or absence of gamified elements, treating gamification rather like a binary variable. thus, it ignores the myriad interactions that different levels of gamification can cause. one study that has really pa ge 14 3 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 139-156, 2025 shed the light on this topic is a research work done by bohné et al. (2023), which is focused on the different intensities of gamification in virtual training. specifically, the presence of a high gamification intensity corresponds to the learning results being better while the complexity and, therefore, depth of gamified elements become a significant factor in user engagement and effectiveness. however, there is the necessity of applying wellstructured plans for examining and assessing the intensity of gamification. the coalescence of different levels of gamification intensity along with users’ behavior and outcomes in different contexts merits more empirical scrutiny. as for the philippines, gamification has been adopted heavily in e-commerce, banking, and education. shopee and gcash are examples of platforms that have integrated gamification as a technique to sustain customer engagement. nonetheless, there seems to be no local studies that look at the thickness of these gamified elements. in particular, the literature is sparse on issuing a summary about the interplay between the frequency of gamified interactions, the complexity of game mechanics, and the immersiveness of the user experience concerning consumer behavior and brand loyalty among filipino users. gamification and consumer behavior gamification can now be used to develop consumer behavior by improving engagement, making consumers feel they are taking part in the decision-making process, and even through the evocation of some type of emotion. by imbuing gameful elements to experience outside of everyday life, businesses want to convey an impression of liveliness and sense of achivement to customers. furthermore, gamified systems fulfill basic psychological needs—competence, autonomy, and relatedness—thus increasing user engagement. for instance, if any one of the functions of challenges, feedback mechanisms, and rewards causes an increase in user satisfaction then high levels of user engagement will be sustained such as the platform (bitrián et al., 2021). additionally, the emotions of the consumers also improve as a result of gamification which has a say in their decisions. the presence of perks and symbolism of success can steer customers in the right direction, such as to buy a product or to try something new (tobon et al., 2019). gamified that kind of product features can create enjoyable and exciting experiences which, in turn, are essential to positive attitudes’ development toward the brand. these emotional reactions can, as a result, change the customers’ view of the brand positively and increase their chances of returning (habachi et al., 2023). in the philippines, the customers are more attracted to the gamification strategies that are simple yet offer more value. like shopee that has very nice implementation of gamified features including “shopee shake” and “shopee farm” that users liked as they get rewards and incentives right away. a research study on the “shopee cocoki” game found that a higher intensity of gamification had a strong positive effect on customer engagement and loyalty (putri & rinova, 2024). on a global scale, the association of gamification with impulse buying has been a remarkable one, particularly in e-commerce settings. the elements of games such as point systems, limited-time offers, and interactive challenges produce a sense of both urgency and excitement, making people buy things they did not originally plan on purchasing. the literature has demonstrated that immersive activities, through gamification, promote perceived enjoyment and boost socialization, which in turn are both positively related to impulse buying behavior. furthermore, in their findings, the researchers include the idea that the immersive experience due to gamified environments shifts the target focus from unplanned distributions to consumer promotion (gao & zhao, 2023). brand loyalty outcomes from gamification gamification is a known approach that is effective to positively impact the major brand loyalty variables such as net promoter score (nps), intention for repeat purchases, and emotional commitment. therefore, integrating game-like elements into a marketing plan is a way for brands to approach customer engagement and deepening relationships effectively. among other things, the most important net promoter score (nps), a metric that indicates a customer’s satisfaction and loyalty by asking customers how likely they are to recommend a brand, is positively affected by the experiences that are gamified. gamification strategies that utilize challenges, rewards, and the interactive elements can facilitate positive customer experiences and in this way, increase nps rankings. for example, a research result by harwood and garry (2015) showed that the gamification of elements is the stimulus for positive emotions, and as a result, it increases brand engagement and loyalty. the repurchase intentions are also influenced by gamification. engaging with customers and offering attractive rewards, is one way for gamified marketing to stimulate repeat purchases. a study shows that gamification in loyalty schemes has a significant positive impact on e-customer loyalty and the perceived value which in turn affects the repurchase behavior. emotional commitment to a brand can be stiffer through the creation of gamification of the brand by playful and interactive experiences that customers admire. the excitement of completing the level and joining a group are the outcomes of gamified elements that will increase the bond between the customer and the brand at the emotional level. a research study on the relationship between gamification and brand equity, found that nonlinear brand engagement is positively related to the brand equity (xi & hamari, 2020). in the philippines, the episode of gamification through the variables focus on the short term of engagement pa ge 14 4 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 139-156, 2025 and transactional loyalty. e-commerce and payment platforms such as shopee and gcash, have adopted gamified features such as daily check-ins and mini-games to increase user engagement. these strategies are very effective in increasing user activity and purchases but they focus mainly on immediate rewards rather than on long-term brand loyalty. this implies that although shortterm engagement can be boosted by gamification, more strategies would be needed to shape consumers’ longstanding emotional commitment of filipinos. focus on young adults as digital natives millennials (1981–1996) and generation z (1997–2012) are predominantly characterized as digital natives based on their technology upbringing and environmental interaction. the presence of the internet and mobile technology was alongside the common use of digital technologies by millennials as they were growing and learning. gen z, on the other hand, was surrounded by digital technology starting from the moment they were born and they have a more intuitive integrated approach to utilizing digital platforms. the millennials and generation z have great digital literacy skills, but the latter stands out with their engagement with visual and interactive content, thus preferring platforms such as tiktok and instagram to traditional media. this shift demands corresponding marketing strategies that would be based on interactive and gamified content that could catch the attention of these particular audiences (mss media, inc, 2023). across the globe, young adults have different digital behaviors shaped by cultural and economic factors. gen z in the philippines is a more mobile-oriented generation that mainly uses their smartphones for access to the internet. this mobile-first approach reinforces the need to optimize digital content for mobile platforms when targeting the audience. in addition, the young filipino gen z consumers are very price-conscious and they often opt for cheap yet value-for-money choices, which becomes their priority in product buying. this is different from their counterparts worldwide, some of whom might focus on brand prestige or exclusivity most of the time. hence, the students’ understanding of their peers’ preferences can lead to the development of effective marketing strategies by promoting businesses that sell affordable products (thim, 2025). the cultural dimensions are also important regarding the effectiveness of gamified marketing. in countries that belong to a collectivist culture like the philippines, it is common for consumers to prioritize community involvement and harmony. therefore, gamification elements that support collaboration and collective success are more likely adopted than those that are revolving around competition among individuals. conversely, individualistic cultures can resonate better with gamification that concerns one’s achievement and rivalry. acknowledgment and adoption of these issues in gamified marketing can be a great instrument for increasing consumers’ engagement together with their brand loyalty in different markets (wu et al., 2022). research gap despite the fact that an increasing number of academic works on gamification and its impact on consumer behavior are published and that they are gaining popularity, research works expressing the relationship between the length of gamification and the consequent brand loyalty are being overlooked, especially among young adult consumers in emerging markets like the philippines. the prevant studies mostly do not perform an in-depth exploration of gamification in a particular way, where it is, either available or not; without discussing how different degrees of gamification of complexity, frequency, and immersiveness affect the consumer loyalty outcomes (bohné et al., 2023; krath et al., 2021). furthermore, most of the empirical studies have been performed in western countries where the purchasing behavior and cultural impulses are really different from those in southeast asia. in the philippine market however; there are several brands including shopee, gcash, and lazada that have successfully adopted gamification strategies, but their issues of local academic inquiries remain slight especially those with measures like the intensity of gamification across the behavioral (e.g., repurchase) and the attitudinal (e.g., emotional connection) loyalty indicators. there is still the need for an exploration of the impact of the gamification saturation or fatigue, which poses the question of the actual point where gamification is no longer effective. this study is going to fill in those gaps since it is going to supply quantitative evidence on the effects of the different intensities of gamification on brand loyalty in a young filipino adults population as digital natives who are particularly value-conscious i.e. people aged 18-35. materials and methods research design this study was structured as a correlational research study utilizing a quantitative research design. the objective was to explore the relationship between the level of gamification and brand loyalty among young adults in the philippines. the quantitative method allowed for the objective measurement and statistical analysis of numerical data, enabling identification of patterns and correlations between variables. a correlational design was appropriate for this study because it aimed to evaluate both the strength and direction of the relationship between gamification intensity and consumer brand loyalty. data was collected using a structured online questionnaire targeting filipino consumers aged 18–35 years who had experience with gamified brand programs. the instrument measured gamification-related variables— such as engagement frequency, perceived enjoyment, and immersion—alongside brand loyalty indicators, including repurchase intentions, advocacy, and emotional attachment. the use of online surveys facilitated a wider reach within the target demographic, ensured efficient data collection, and provided a practical method for analyzing consumer behavior in a digital context. pa ge 14 5 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 139-156, 2025 the respondents the target population for this study consisted of young adults aged 18 to 35 residing in the philippines who have previously interacted with gamified brand experiences. this demographic was selected due to their high engagement with digital platforms and relevance to gamified marketing strategies. to identify and recruit appropriate participants, the study employed a purposive random sampling technique. this method allowed researchers to intentionally select individuals who met key inclusion criteria—specifically, those who fell within the age bracket and had prior exposure to gamified brand programs—while incorporating random distribution in the online invitation process to reduce selection bias. given the strong digital presence of young filipinos, social media platforms such as facebook and online communities relevant to consumer brands were utilized as primary channels for distributing the survey. this approach ensured access to a concentrated population of tech-savvy individuals, increasing the likelihood of capturing responses from participants familiar with gamification in brand engagement. the instrument to get the relevant data, this research will undertake the use of structured survey questionnaires that would be composed of four parts: section 1 demographic information. this part will cover demographic data such as: age, gender, location, occupation. section 2 engagement with gamified brand experiences. the purpose of this section is to ascertain the degree of interaction the respondents had with the brand elements in the process of gamification, particularly focusing on: the frequency of participation, types, and duration of gamified elements experienced. section 3 perceived gamification intensity. this section will measure the respondents’ assessments of the strength of the gamification in their brand interactions for example: how complex the gamified features are, the immersiveness of their experience, the frequency of updates and the introduction of new challenges. section 4 brand loyalty indicators. the brand loyalty indicators such as: repurchase intentions, willingness to recommend, emotional attachment are the measures of the level of loyalty that the respondents feel to the brands that have used gamification. a 5-point likert scale will be utilized throughout sections 2 to 4, allowing respondents to indicate their level of agreement or frequency, ranging from “strongly disagree” (1) to “strongly agree” (5) or “never” (1) to “always” (5). this scaling method provides a quantitative measure to analyze the relationship between the intensity of gamification and brand loyalty. the questionnaire will be framed on existing validated instruments and modified to reflect the specific context of gamification and brand loyalty. a pilot test will be conducted to ensure the clarity, reliability, and validity of the questions prior to their distribution. data collection procedure for this study, the data collection will be done through a structured online survey aimed at young adults aged 18 to 35 who have engaged with gamified brand experiences. the survey will be conducted through a reputable online survey platform so as to ensure the availability of the survey and the ease of use for the respondents. to reach the broad range and to have a representative sample, different digital channels like social media, email lists, and online communities where the likely target demographic resides, will be used to invite people to participate. the survey will undergo a pilot test wherein a small number of the target population will be asked to fill it to identify and fix any issues related with question clarity, technical functionality and overall user experience. feedback arising from the pilot phase will be instrumental for effecting the necessary adjustments to the survey instrument. the administration of the structured online survey will take place on a trusted platform, which will be straightforward and user-friendly for the subjects. once the questionnaire is finalized, due to the timeframe, the data collection will be finished on the specified period during which all responses will be checked for the quality and completeness of data. furthermore, the survey process will be improved by reminders which will target those who have not yet completed the survey. participation will be voluntary, and all respondents will be assured of anonymity and confidentiality. the collected data will be secured and will undergo the preliminary check for completeness and consistency. any incomplete or inconsistent responses wil be excluded from the analysis in order to maintain the integrity of the data. the systematic approach in data collection will ensure that the data obtained are reliable and valid concerning the association between gamification intensity and brand loyalty among the young adults in the philippines. table 1: likert scale chart scale 1 2 3 4 5 verbal interpretation strongly agree agree neither disagree strongly disagree range 4.21-5.00 3.41-4.20 2.61-3.40 1.81-2.60 1.00-1.80 pa ge 14 6 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 139-156, 2025 additionally, a likert scale was administered in the survey to capture respondents’ attitudes, as presented in table 1. the assembled data provided a basis to find the statistical significance of relationships between certain variables. the results from the analysis were fundamental in discriminating whether any of the variables under scrutiny had substantial associations or were intertwined. the use of descriptive statistics and analyses of the overall data allowed the investigation to display a full picture of respondents’ opinions, and to discover possible relationships that may exist. data analysis plan the study will be analyzing the data collected through a series of clearly structured steps designed to assess the relationship between gamification intensity and brand loyalty among young adults in the philippines. the first stage will involve the use of descriptive statistics to summarize the respondents’ demographic characteristics while providing a snapshot of their experience with gamified brand experiences. this summary will include standard measures of central tendency and dispersion such as means, frequencies, and standard deviations. the next stage will see the study using correlational analysis to determine both the intensity and the brand loyalty correlate. the pearson correlation coefficient will be utilized to find out the extent of linear correlation of the two variable which is this analysis is useful for. understanding how the respondents’ changes in gamification intensity is reflected in brand loyalty levels is the goal of this statistical method. in order to find out if gamification intensity is a predictor of brand loyalty, a regression analysis will be carried out. this statistical technique facilitates the estimation of the joint effect of the variables on brand loyalty including the effect of gamification intensity. the regression allows the introduction of covariates to account for potential confounding variables so that the effect of gamification intensity on brand loyalty can be isolated. all data analysis procedures will be performed with spss (statistical package for the social sciences) software program that provides a wide collection of tools required for managing and handling complex datasets. the actual data analysis will first involve data cleansing which will be carefully done by addressing potential issues related to missing cases and outliers. normality, linearity, and homoscedasticity are the assumptions of each statistical test; thus these will be evaluated in order to establish the accuracy of the findings. results and discussion results research problem no.1: do demographic factors influence the correlation between gamification intensity and brand loyalty? understanding the demographics is key because it sheds light on the findings and shows whether the insights can be generalized to the whole young adult population. as illustrated in table 2, males were more prevalent in the sample of 201 participants as they account for 137 (68.2% of the sample) while 62 females (30.8%), and 2 (1%) did not specify their gender. the result shows that males are more represented than females in the study, which might be the case we see gender differences in accessibility to the interactive in-brand marketing. this observation notwithstanding-female respondents also represented a sizeable part of the group and have contributed valuable insights for gender-based comparisons. table 2: distribution of respondents according to sex sex frequency percentage rank male 137 68.2% 1 female 62 30.8% 2 prefer not to say 2 1% 3 table 3: distribution of respondents according to age age frequency percentage rank 18-22 121 60.2% 1 23-27 29 14.4% 3 28-32 10 5% 4 33-35 41 20.4% 2 table 4: distribution of respondents according to location location frequency percentage rank metro manila (ncr) 188 93.5% 1 luzon (outside ncr) 11 5.5% 2 visayas 1 0.5% 3 mindanao 1 0.5% 3 table 3 indicates that most of the respondents (121 out of 201, 60.2%) belong to the age group of 18-22 years, followed by 33-35 years (41 respondents, 20.4%), 23-27 years (14.4%), and 28-32 (5%). thus, the result shows that not only are young adults the primary participants in games but they also feel somewhat less qualified and outdated compared to the transitory adolecesents. the presence of older ages makes it possible to get a wider insight on how preferences could change within the range of young adults. table 4 shows that the majority of the respondents (188; 93.5%) are from metro manila (ncr), with only 11 (5.5%) from other parts of luzon and 3 respondents from visayas and mindanao. this implies that gamified brand experiences are more common and accessible in metropolitan areas rather than in less populated regions, which is what the data suggests. future studies should explore alternative regional patterns to understand and compare this phenomenon better. table 5 shows that 127 participants (63.2%) are students while 32 (15.9%) were self-employed, 31 (15.4%) are pa ge 14 7 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 139-156, 2025 table 5: distribution of respondents according to employment status employment status frequency percentage rank student 127 63.2% 1 employed (fulltime) 31 15.4% 3 employed (parttime) 3 1.5% 5 selfemployed 32 15.9% 2 unemployed 8 4% 4 table 6: distribution of respondents according to their industry industry frequency percentage rank retail/ e-commerce 35 17.9% 2 it/ technology 12 6.1% 6 banking/ finance 18 9.2% 5 media/ marketing 24 12.2% 4 education 30 15.3% 3 other industries 77 39.3% 1 employed full time, and the rest either part time or unemployed. the predominance of students suggests the data has been collected from a digital-native, costconscious group that is highly interested in rewarddriven activities. employed individuals’ presence further provides diversity by demonstrating that purchasing power holders also tend to participate in rewarding behaviors of the brand. table 6 indicates that out of 77 respondents (39.3%) who represent different industries, retail/e-commerce was the second most (17.9.) and education (15.3%) respectively. the connection between retail, media and gamification is obvious, so these findings are specifically relevant. the different sectors ensure that the results are useful for a broad spectrum of the market. research problem no.2: what specific gamification features are most effective in fostering brand loyalty? in this section, we will see how abdominal respondents are with gamification to track their involvement and loyalty subsequent. table 7 shows that more than half of the respondents 117 (58.2%) are “always” partakers in the gamified brand experiences while 49 (24.4%) of them “often” do so and only few below 5% of them are rarely or never participating. this reveals a strong sincere interest in gamification among the young adults, and even the majority of them make such experiences a part of their ordinary shopping. the minor number of people who seldom or practically do not use brands could be table 7: distribution of respondents according to how often they participate in gamified brand experiences participation frequency percentage rank always 117 58.2% 1 often 49 24.4% 2 sometimes 25 12.4% 3 rare 7 3.5% 4 never 3 1.5% 5 in respect of limited accessibility and preference for the usual brand interactions. table 8 illustrates that 136 respondents (67.7%) use points collection, the most widespread gamification item while badges/achievements (34.3%) and spinthe-wheel (29.4%) are the other favorites. this reveals that the simplest and essentially reward-driven systems are most appealing to customers, perhaps due to their simplicity and direct gratification. leaderboards, more advanced gamification features (15.9%) reported less activity, which indicates a preference for less competitive forms of gamification. table 8: distribution of respondents according to the gamification elements they typically engage with participation frequency percentage rank points collection 136 67.7% 1 badges/ achievements 69 34.3% 2 leaderboards 32 15.9% 6 referral or invite bonuses 40 19.9% 5 challenges/ competitions 45 22.4% 4 spin-the-wheel or lucky draws 59 29.4% 3 table 9: distribution of respondents according to how long they have been engaging with gamified brand programs engagement frequency percentage rank less than 3 months 70 34.8% 1 3 to 6 months 30 14.9% 4 7 months to 1 year 39 19.4% 3 more than 1 year 62 30.8% 2 according to table 9, 70 respondents (34.8%) had gamified programs for less than 3 months, while 62 (30.8%) had them for more than a year. this makes it clear that taking part in the gamified programs is something which both new users and long-term users appreciate, pa ge 14 8 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 139-156, 2025 with many of them showing a continued interest. the differences in the periods of engagement suggest there table 10: distribution of respondents according to how long they have been engaging with gamified brand programs participation frequency percentage rank very likely 65 32.3% 2 likely 95 47.3% 1 neutral 32 15.9% 3 unlikely 8 4% 4 very unlikely 1 0.5% 5 are ways for brands to keep and attract both phrases of customers. table 10 reveals 95 respondents (47.3%) saying that they are “likely” and 65 respondents (32.3%) stating that they will be “very likely” to join the new gamified programs, whereas only 9 respondents (4.5%) were found to show a negative attitude. the overall affirmative attitude which nearly every respondent has shown indicates that gamification is one of the major determinants of the consumer’s decision, which suggests that brands can take further steps to implement the process confidently. research problem no.3: is there a threshold or diminishing return where excessive gamification reduces its effectiveness in maintaining consumer engagement? table 11: respondent’s weighted mean in terms of perceived gamification intensity perceived gamification intensity mean sd interpretation the gamified programs i engage with frequently offer new challenges and updates. 4.32 0.72 strongly agree i find the gamification features highly immersive and engaging. 4.27 0.72 strongly agree the gamified activities feel increasingly complex and rewarding over time. 4.23 0.83 strongly agree gamified brand experiences influence how often i interact with the brand. 4.31 0.75 strongly agree i actively seek out brands that offer gamified experiences. 4.24 0.82 strongly agree the gamification features motivate me to complete tasks or goals. 4.23 0.73 strongly agree i feel challenged in a fun way by the gamified activities. 4.31 0.78 strongly agree overall mean 4.27 0.77 strongly agree (very high) scale: 4.21-5.00 (sa: strongly agree), 3.41-4.20 (a: agree), 2.61-3.40 (n: neutral), 1.81-2.60 (d: disagree), 1.00-1.80 (sd: strongly disagree) table 11 indicates a mean of 4.27 (sd = 0.77) on the item perceived gamification intensity, with individual item means ranging from 4.23 to 4.32 all in the “strongly agree” category which is an aggregate of the respondents’ perception of gamification programs as fulfilling dynamical and motivational. this is underlined by the item “frequent updates and challenges” which the respondents rarely answered with a mean of 4.32, showing that bringing in fresh updates keeps the content interesting. the items collectively achieved high scores reflecting the effectiveness of gamified tools in improving users’ interactivity. research problem no.4: does gamification intensity impact brand loyalty among young adults? table 12: respondent’s weighted mean in terms of brand loyalty indicators brand loyalty indicators mean sd interpretation i am more likely to repurchase from brands with engaging gamification features. 4.29 0.76 strongly agree gamification makes me feel emotionally connected to the brand. 4.13 0.81 agree i am more likely to recommend brands with fun gamification features to friends. 4.26 0.81 strongly agree i feel rewarded and valued by brands with well-designed gamification programs. 4.25 0.75 strongly agree gamified experiences make me prefer one brand over others, even if competitors offer similar products. 4.27 0.71 strongly agree i follow or subscribe to brands that use gamified programs. 4.33 0.75 strongly agree i feel disappointed when a brand removes gamification features i enjoy. 3.98 0.95 agree overall mean 4.22 0.80 strongly agree (very high) scale: 4.21-5.00 (sa: strongly agree), 3.41-4.20 (a: agree), 2.61-3.40 (n: neutral), 1.81-2.60 (d: disagree), 1.00-1.80 (sd: strongly disagree) pa ge 14 9 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 139-156, 2025 table 12 also provides brand loyalty with an overall mean of 4.22 (sd = 0.80), indicating a very high level of loyalty associated with the gamified experiences. the respondents are the most likely group of people to follow or subscribe to a brand (mean = 4.33) and make repurchases (mean = 4.29) thereby showing that gamification naturally leads to recycling of behavior. moods like feeling connected (mean = 4.13) and disappointment when gamification is turned off (3.98) are slightly weaker but still good thus indicating emotive branding strategies can be deeper. correlation between gamification intensity and brand loyalty figure 2: scatter plot of gamification intensity vs. brand loyalty figure 2 presents a scatter plot depicting the relationship between gamification intensity and brand loyalty among the study’s respondents. each dot represents an individual participant’s average rating for both variables, based on their survey responses. the plot demonstrates a clear upward trend, as illustrated by the red regression line, indicating a strong positive linear relationship. this relationship is quantified by a pearson correlation coefficient of r = 0.81, which suggests that higher levels of perceived gamification intensity are strongly associated with increased brand loyalty. in essence, respondents who engage more deeply with gamified brand experiences tend to show stronger loyalty behaviors, including repurchase intentions and brand advocacy. discussion this study investigates the correlation of gamification intensity and brand loyalty among young adults in the philippines. the discussion is a detailed account of the main findings concerning their relationship with previous research, and how those findings propose theory and practice. demographic factors and the gamification–loyalty link the results clearly show that the overall positive correlation of gamification intensity and brand loyalty is held broadly with respect to the different categories of young adults examined. the sample respondents were mostly male (68.2% male, whereas 30.8% female), yet both genders reported relatively equal rates of engaging in gamified brand experiences and showing loyalty to brands. this indicates that gender did not have a significant moderating effect on the gamification-loyalty relationship in our sample. likewise, even though the age range was from 18 to 35, the majority of participants were gen z (60.2% were from 18 to 22 years of age). these younger adults, who were born into the digital era, were the most active in gamifying apps but, importantly, the small group of older people (the case of millennials) also reacted positively. age subgroups did not differ much with respect to the correlation’s strength, which indicates that the impact of gamification intensity on loyalty is persistently positive for both gen z and younger millennials. this identical pattern of results conforms to the observation that both generations are very digital natives. gen z, in particular, is a strong advocate of interactive content and instantaneous applications on digital platforms. the urban-centric sample (93.5% from metro manila) further clarifies the scope of this finding – in the highly connected metropolitan areas of the philippines, the use of gamified brand applications pa ge 15 0 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 139-156, 2025 is commonplace, which is why young consumers from all walks of life seem to be accepting these apps in equal measure. even sectors like students versus the full-time employee (who comprised 63.2% and 15.4% of the sample, respectively) did not show divergent outcomes in terms of loyalty; the strong gamification–loyalty link was sustained regardless of occupation or industry. to sum up, our data imply that in this young filipino population, the demographic factors (gender, age, location, and status) have no significant effect on the positive influence of gamification on the brand’s loyalty. this broad appeal strongly hints that gamified experiences created correctly have the potential to hook a large section of young target groups, a notion that is consistent with previous research that found gamification to be efficient across different user groups. it is worth mentioning that the high baseline engagement with gamified content across the sample may reflect the culture of digital devices in the philippines, especially the always-active of social media, and the wide use of apps. over 93% of respondents participate in gamified brand activities sometimes or even all the time (58.2% “always,” 24.4% “often”), which leads us to the conclusion that the youngsters regard these interactive brand promotions as an ordinary part of their day-to-day life. this widespread exposure has made it possible for both men and women, and both gen z, and younger millennials, to be susceptible to gamification influences. the fact that there were no significant demographic differences in the loyalty outcomes perfectly fits the notion that younger filipino consumers collectively are very well inclined towards using interactive platforms. as digital natives, they are more selective in their choice of brands by concentrating on experiential and enjoyable brand interactions as compared to just simple reading, a trend that is seen in both gender differences and across age groups. the positive, strong correlations between the gamification intensity and the loyalty is thus a general factor for the urban demographic aged 18-35 years rather than a special case situation. the factors in this study did not offset or elevate the effects; what they did was instead a blanket good response to gamification, which reflects the crosscutting influence of digital culture shared by a community throughout the philippines. effectiveness of specific gamification features on brand loyalty our findings highlight that certain gamification features are much more effective in the engagement and loyalty of young adults. particularly, the preference was mainly for simple reward-based mechanics: points collection was the feature that the most users had (utilized by 67.7% of respondents) followed by badges/achievements (34.3%) and “spin-the-wheel” luck games (29.4%). these most used elements have a common feature of providing immediate rewards, or tangible progress, which means they are relating to consumers’ quick gratification and a sense of achievement. the prominence of points and badges is consistent with classic gamification models, which posit that points, badges, and leaderboards (pbl) are the essential drivers of engagement (werbach & hunter, 2012, as cited in kanazawa, 2022). in our study, however, competitive features like leaderboards were among the least engaged (only 15.9% participation). this gap represents a clear-cut proclivity for rewards that are not competitive but self-progressed rather than in opposition to others. the information hints that filipino youth’s loyalty is mainly enhanced by gamified features that make them feel competent and rewarded rather than those that place them in competition with other users. when viewed through the lens of self-determination theory (sdt), this is consistent: points and badges fulfill the need for competence (by highlighting achieved and total progress), and they can also enhance autonomy by allowing users to proceed at their pace. these features offer positive feedbacks and a sense of achieving what was set, which essentially feed the intrinsic motivation, and the outcome is enjoyment. in contrast, leaderboards emphasize social comparison and competition which may not actually address the more collectivistic attitudes and harmony-seeking manifestations of this group. studies have proven this cultural divergence to be correct – the western audience seems to be favorable to competitive gamification, but artificial southeast asia consumers are in a preference mainly for the cooperative and rewardcentric schemes. our findings indeed show such a cultural trend – the infrequent usage of leaderboards and instead preference to the simple points system and luck-based rewards shows a shift away from the collaborative play to a more overtly participatory game type that is seen as fun, entertaining, and easy to follow. how these gamification features are involved in consumer loyalty is clearly proven by the translation of these features to consumer attitudes and behaviors. the predominance of points (ranked #1) indicates that systems that turn engagement into immediate and concrete benefits (for instance, redeemable points or discounts) are particularly successful in boosting loyalty probably because they resonate well with the value-seeking mentality of filipino youth. this is in line with the findings of caponpon et al. (2023), who noted that gamified features (like reward points and cashback challenges) on e-commerce increased user satisfaction and repeat purchase intentions. respondents in our research showed that the preference to points and badges corresponds with them regarding themselves as people who, with the implementation of good gamification, are given rewards and brand respect by brands and, as a result, they would prefer those brands to other brands. these markers of attitudinal loyalty were very high (with means of roughly 4.2-4.3 on a fivepoint scale), pointing strongly to the fact that the features mentioned are able to create real brand loyalty, and not just a temporary user engagement. besides, the referral bonuses and challenges/competitions had average participation (each around 20%), which showed that social-sharing incentives and skill-based challenges do pa ge 15 1 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 139-156, 2025 have a small but significant impact. users who are more socially oriented or those who are looking for a higher level of engagement may find them more appealing, but they are not as effective as points in general for this demographic. if we link this to flow theory, components like challenges may serve as flow experiences for some users by providing the right amount of challenge and clear objectives, thus increasing commitment and loyalty. certainly, the respondents agreed with the notion that gamified activities become more and more complex and rewarding over time (mean = 4.23), which suggests that a well-designed difficulty curve helps to sustain attention over the longrun – a central aspect of keeping flow in an experience. however, the broad conclusion is that reward-focused gamification (points, badges, luck-based games) is the most effective in our context, likely because it achieves a perfect ratio between extrinsic rewards and intrinsic enjoyment. these elements offer life quality (solving the extrinsic, economic motives) while being entertaining and easy to grasp, thus they contribute to both the behavioral loyalty (by the means of rewards to keep using the brand) and attitudinal loyalty (by creating fun and positive experiences). this finding supports the successful gamified programs in the philippines, where simple mechanics like daily check-ins, spins, and point accumulation are widely used for driving engagement. our study empirically confirms that those very features correlate with higher brand loyalty in young consumers, thus validity is given to strategies by platforms like shopee and gcash that focus on easy rewards and fun frequent interactions. impact of gamification intensity on brand loyalty the main finding of this research is a very strong positive link between the level of gamification and brand loyalty among young adults. on a statistical basis, this association is extremely solid (pearson r = 0.81), which shows that the perceived higher levels of gamification intensity are directly coupled with higher loyalty values. this scenario was depicted in the scatter plot (figure 2) which indicated an obvious upward trend – individuals who are more involved in gamified brand experiences indeed show more inclination to behave loyally such as repurchasing and brand advocacy. in more practical terms, those who mentioned that the brands they use have highly immersive, frequently updated, and challenging gamification (high intensity) also were strong believers that they stay loyal to those brands, for example, by repurchasing and recommending them. in our sample, the average perceived gamification intensity was 4.27 (on a 5-point scale), which is within the “very high” range, whereas brand loyalty score also was similarly high, as it was 4.22. the parallel status reinforces that the respondents who are taking the pleasure of overwhelming gamification are also almost equally well feeling loyal. in the instance, the specific loyalty indicators with the highest agreements were following/subscribing to gamified brands (mean = 4.33) and likelihood to repurchase from those brands (4.29). thus, it looks as if gamified loyalty affects directly on repurchase the users not only interact more, but they reward the brand by coming back for more. the current information fits very well with oliver’s model of brand loyalty which explains the difference between behavioral loyalty (in terms of repeat purchases) and attitudinal loyalty (emotional attachment and advocacy). our findings indicate that gamification can tempt up both of these types: respondents exhibited strong behavioral loyalty (high repurchase intentions and advocacy) along with notable attitudinal loyalty, like feeling emotionally connected to the brand (mean = 4.13). the slightly lower score for emotional connection, while still positive, indicates that the attitudinal component, though boosted by gamification, leaves some room for further growth. however, the overall very high loyalty levels observed provide clear evidence that as gamification intensity increases, so does the loyalty of young adult consumers to the brand. the robust connection of our results with the existing studies and theories enhances the credibility of this observed relationship. positive impacts of gamification on engagement and loyalty outcomes have been reported in earlier studies worldwide. for instance, it was found by xi and hamari (2020) that gamification has a positive influence on brand engagement which in turn affects the overall brand equity. our study expands on this knowledge by showing that the gamification is not only the possession of it but also the scale of it is a key factor thus it tackles a gap in literature where gamification was often treated as a binary condition. in a similar spirit, harwood and garry (2015) reported that gamified loyalty programs were significant in increasing e-loyalty and repurchase behavior which was also the trend observed in the case of young adults in the philippines: stronger gamification was associated with higher intent to repurchase and recommend. the data we provide strongly support the propositions of caponpon et al. (2023) that gamified elements are influential in raising the frequency of purchases and brand advocacy in e-commerce, thus generalizing their findings also to other types of brand experiences. theoretical explanations can be based on self-determination theory and flow theory. the high level of gamification would probably mean that the experience is richer and more intrinsic boredom-free indeed, the respondents showed that they find the gamification measures to be “highly immersive and engaging” (mean ~4.27) and such features encourage them to do tasks. thus, the heavily intense gamification (with elements such as constant challenges and dynamic content) fulfills users’ intrinsic needs of competence and stimulation, respectively thereby giving the empowerment to them for the voluntary interaction with the brand. as long an activity is internally enjoyable, consumers are more likely to form a stable loyalty because their engagement is not always driven only by external rewards. flow theory also gives an explanation to this: a gamified environment which is engrossing and continues to give optimally pa ge 15 2 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 139-156, 2025 challenging tasks can create a flow state. consequently, in such a state, the users lose time, have fun with the activity, and establish a good association with the source of that experience in this case, the brand. our participants’ firm consensus that gamified programs are bringing on the frequent new challenges and are fun and interesting along the time (means ~4.3) indicates to us that they do so flow often. as a result, the brand giving that experience will be the one that feels the impact of it through the increased loyalty, consequently. in sum, the literature and data all align for the assertion that increasing the scale of gamification is a very effective way to build the behavioral and emotional fronts of brand loyalty in the market for the young. this addresses the research gap identified by scholars like bohné et al. (2023) as it provides quantitative evidence showing that different degrees of gamification significantly influence loyalty, especially in a digitally oriented emerging market demographic. thresholds of gamification intensity and diminishing returns the fundamental question raised in this registration was whether or not a point in which increasing gamification intensity would yield no additional benefits and maybe even model-back consumer engagement (i.e., a diminishing return). from our findings, there is no clear evidence of a downturn or saturating effect within the range of observed gamification intensity. unlike this, the participants` answers suggest that multi-gamification is usually what improves or just remediows their loyalty. principally, a big majority showed a readiness to get on board with even more gamified experiences: 79.6% said that they were “likely” or “very likely” to take part in the new gamified brand program. this excitement for additional gamifying signifies that respondents didn’t experience being“over-gamified” or burnt out; if “fatigue” had been there we should have seen reluctance towards joining new programs. moreover, the respondents who had been engaging with gamified brand programs for lengthy periods have shown a high level of engagement and loyalty. about a third of the sample population had been deliberated to be long-term users. their loyalty levels were just as high as those of new users, even though they had participated for just over a year. this extended stay of mindfulness has been mainly due to the absence of gamification fatigue appearing, even among the longterm users. the scatterplot of intensity and loyalty relationships also presented a positive linear correlation with no evident saturation effect in the highest intensity levels even the participants with the most intense game ratings displayed high loyalty scores. focusing back on these points, we did not observe a threshold beyond which the intensity of gamification started eroding effectiveness. our findings are somewhat in contrast with a concern laid out in the literature about potential gamification saturation. some scholars have hypothesized that there might be a point at which too many game elements or too intense of a gamification could overwhelm users or look fake, thus reduce its efficiency. however, in this research, the levels of gamification as implemented by popular brands and experienced by our respondents were on the positive range. the users kept on reacting positively until the highest reported intensity, with no significant abandonment in loyalty metrics. there are multiple possible causes of no observed diminishing returns. primarily, the gamified experiences of the respondents may be impeccably designed and command a balance of rewards and challenges without causing frustration or boredom. the survey items represent that users see themselves funnily challenged and interestingly motivated by these features, suggesting that gamification hits a “sweet spot”. as per flow theory, if the challenge level gets to adjust with the user’s skills and does not get too easy or too difficult, the user remains in flow and does not get disengaged. the accompanying assertion of high enjoyment reported indicates that the gamified apps have largely accomplished such balance thus ensuring that there is no user burnout. secondly, viewing this through the lens of self-determination theory, it seems as if the gamification elements are being the biggest supporters of the intrinsic motivation than being the underminers of it. the significant danger of heavy gamification is the potential of it turning the user’s attention to extrinsic (points, prizes) rewards to such extent that the intrinsic joy decreases – a phenomenon referred to as the overjustification effect (deci & ryan, 1985). nonetheless, our respondents have once again confirmed their opinion that the experiences are immersive and fun just the way they are, hence, the intrinsic motivation is still high. the extrinsic rewards (points, badges) given are possibly the factors that keep supporting the joy of the experience without entirely hindering the intrinsic grade. in this way, users are not pushed back; they do not feel fooled or tired by gamification, but in contrast, rather find it as a facilitator to their brand interaction. further evidence comes from the emotional indicator referring to the removal of gamification: respondents moderately agreed that they would feel disappointed if a brand removed gamification features (mean = 3.98). despite being slightly below other loyalty measures, this stillpositive value shows that the consumers started to regard gamification as an integral part of the brand experience. furthermore, the withdrawal of it would decrease their satisfaction, but since this score isn’t higher, it supports that the game features are not the only factor for their loyalty. to put it differently, they appreciate gamification but have not reached a state of being depleted or completely driven by it yet. their point of view is consistent with the literature, which points out that, within markets like the philippines, gamification tends to lead not so much to heightened emotional attachment but to short-term behavior change (e.g., more repeat purchases and increased activity) more readily. it is that buyers need emotional connection, but that connection is not only based on the game. also, it might be that additional relationship building is required. therefore, we pa ge 15 3 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 139-156, 2025 didn’t find any threshold effects, but the quality of loyalty (transactional vs. emotional) should be closely monitored. also, brands should combine gamification with other strategies (value alignment, building a community) to ensure the customer loyalty remains long-lasting and is not only temporarily depending on rewards. the study intra-empirically watches “more gamification” as the better technique for loyalty with no signs of diminished returns in user engagement or loyalty metrics at any point. this finding essentially counterpoints the theoretical risk of gamification fatigue – at least for the young filipino consumer gamification remains a welcome and effective tool for engaging. it looks like the market has not yet reached the point where users get tired of the gamified experiences. on the contrary, the appetite for gamification is still very healthy, as seen by the fact that they are the ones requesting for the most new gamified programs to join. undoubtedly, this does not exclude the possibility of a saturation threshold being present in other contexts or if the tactics of gamification are misapplied. our findings suggest that as long as the design of the gamification concentrates on joy, on a balanced challenge, on meaningful rewards (which thereby cause intrinsic motivations), this can be intensified without ostracizing users. the philippine setting, with its expanding digital ecosystem, might further signify that gamification is still perceived as something novel and fun, thus prolonging any onset of fatigue typical to mature markets. philippine digital landscape and generational context this observation is particularly true in the case of gen z and millennial consumers. as stated in the introduction, the digital proficiency of filipino young adults is amazing; they are among world’s top digital users, spending on average 5.5 hours on social media daily and searching for the interactive and visually rich content. this inclination towards interactivity has created a new form of market for gamification. our sample’s lively reaction to gamified brand strategies can be taken as proof of this vicinity. the gamified features employed by leading philippine brands (for example, shopee’s coin rewards, gcash’s games, and various shopping “luck draws”) have conditioned the consumers to the fact that brand engagement should be both entertaining and lucrative. this attitude appears to be evident in the data: most of the respondents not only participate in this type of activity frequently, but they even look for brands which have such promotional offers. culturally, young filipinos tend to be collectivist and value harmony, which correlates with our finding that competitive gamification (like leaderboards) was less effective. instead, the strategies that help users to enjoy the rewards without directly competing are better suited to local preferences. the predominance of spinthe-wheel games and redemption points in our survey outcomes brings forth the notion that filipino consumers show increased responsiveness to direct rewards and a sense of “community win” where everyone benefits rather than a sole victor which is more typical of a competitive environment. furthermore, according to the literature, filipino generation z and millennials are very price-oriented while also being value-driven in their purchasing decisions. gamification taps into this by offering perceived added value (discounts, bonuses, exclusive perks) for engagement. thus, the good return for gamification rebated in part because of the addition of the peripherals in a price-sensitive market making the brand more attractive. the exposure of the new feature economics clearly shows why points collection was the no.1 feature since it speaks directly to savings/freebies which resonates the most values. the freshness factor and the fast-paced digital journey are other aspects of the local context. the philippines’ digital economy has been among the most promising in recent times, brands have been shifting to digital marketing and gamified marketing. young consumers, for their part, have been adorable observers in this process such as a massive uptake of the gamified platforms in e-commerce and fintech. as the trend is pretty much new, gamification remains to be a vibrant tool that displays novelty and attracts customers. many respondents declared they had lately only started using gamified programs for a few months up to a year, which is representative of a big group of the population, as these are common experiences not yet daily and habitual for them. this could be a potential reason for the uniformly positive reception – the sector hasn’t had gamification long enough to permit significant fatigue to take place. besides, the urban concentration of our sample which predominantly comprises metro manila residents has already exposed them to a hypercompetitive brand marketplace with companies rolling out new gamified campaigns in an attempt to divert attention. this competition not only enriches the quality of gamification (brands are iterating and investing in better game designs to distinguish themselves), but also results the strong loyalty outcomes we observed. urban gen z and millennials possibly now see gamification as a standard feature in brand interaction. for them, a brand without any interactive or gamified element can feel less engaging or just plain stagnant. this mainstreaming shift in expectation that engagement should be enjoyable and participatory further amplifies the role of gamification in loyalty. if done well, it satisfies the expectations of young consumers, it entertains them, increases the gratification and gratitude of the brand. on the other hand, our findings have a minor caveat (emotional loyalty being slightly lower than behavior loyalty), which suggests that even though gamification is a strong brand tool, perhaps filipino companies still require to build deeper narratives or a community around their products. filipinos are youthful and want to play but they are also the ones that connect with brands that match their values and provide social interaction. gamification can be the key to increase engagement, but in this context, the long-term loyalty will also be built by factors like brand authenticity, community belonging (perhaps through social gamification features), and stable value. pa ge 15 4 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 139-156, 2025 overall, our study confirms that the philippine gen z and millennial audience is very open to gamification and the contextual effect of the local digital landscape is to magnify the impact. the cultural gear for fun, rewards, and social sharing line up with gamified marketing to produce a strong payoff in brand loyalty when these strategies are in place. these findings can not only validate the theories globally in the country settings but also give the practitioners insights: entering investment in gamification especially the kind that brings enjoyable challenges and immediate rewards can substantially boost the loyalty of young consumers. brands must note cultural preferences (for example, collaborative games over competitive ones) and continue to innovate gamification features to keep the experience novel. in this way, they can sustain the high levels of engagement and loyalty shown in our results, while at the same time work on converting that engagement into emotional commitment that lasts with their filipino millennial and gen z customers. conclusion our research has quite clearly evidenced a strong positive correlation with the gamification intensity and the brand loyalty of the young adults in the philippines, with a corresponding pearson correlation coefficient of r = 0.81 which redistributes the doubt of the null hypothesis. one of the main arguments of this study is that properly gamified experiences, which include a lot of elements such as constant updates, immersive participation, and a simple but effective reward scheme, are the major drivers of the brand loyalty both in behavioral and attitudinal terms. the reported gamification features in the various young adult groups studied which collected points, badges, and finally the interactive mini-games proved to be the most efficient drivers of user engagement. they are the ones giving the energy to psychological needs such as competence and autonomy, which were indicated in the self-determination theory, and at the same time, they are playthings of consumers’ desire for entertainment, ease, and instant gratification. this kind of combination between the motivations from outside the self and enjoyment from within oneself makes the implementation of gamification a special marketing tool. besides, the argument to support that the intensity of the game not just being present but also active is essential in fostering consumer loyalty is hard to be beaten at all. the level of gamification chalking out the cyclonic course, i.e., throwing in more of the complexity, less of the organization, and more of the design, emotional loyalty grows through this high rate of repurchase, customer’s product recommendation, and emotional bonding. yet, it is worth mentioning that no tangible returns have been observed because of the high level of the game played in the area. hence, it is implied that gamification fatigue and oversaturation have not been identified as serious threats among the young individuals of the philippines during the levels studied. the exploration also emphasizes the effect of contextual settings and customers’ psychology on the efficiency of gamification techniques. being deeply influenced by collective but digital natives cultures, filipino young adults proved a substantial tendency towards gamified systems that provide cooperative or non-competitive rewards. this cultural interpretation is vital for marketing specialists trying to effectively localize strategies within the southeast asian region. to put it in very simple terms, from the examination, gamification does not just shine as a short-term as a marketing gimmick but it is coming out as a framework that is in sync with the growth of digital space and the cultural propensity that comes with it. for companies desiring to further strengthen the consumer bond, especially in the philippines, a market that is still growing, the development of variable, engaging, and cultureoriented games will for sure have a very positive effect on customer loyalty and the brand’s value. recommendations for consumers. young adults should be aware of how gamification influences their brand perceptions. being mindful of reward-based strategies can help them make more informed, value-driven purchasing decisions, and avoid manipulative marketing tactics. for marketers and businesses. enhance participation and loyalty through the application of properly planned gamification techniques including points, badges, and non-competitive rewards. prioritize personalization, regular updates, and simplicity, primarily directed at the urban and student sectors. be vigilant for strains of fatigue in user interactions, and apply the conforming adjustments. for academia and scholars. this research is a demonstration of the capacity of gamification in the marketing sector, and a means of propelling new theoretical models of development. subsequent studies would involve tapping into and expanding the different psychological constructs involved, as well as the use of technology such as artificial intelligence and augmented reality in gamified branding. for future researchers. expand studies to include broader demographics and regions outside metro manila. use experimental designs to isolate the effects of specific gamification elements and assess industry-specific applications beyond e-commerce. compliance with ethical standards this research is ethically compliant as it was based on ethical principles that were strictly followed in the entire research process. this principle is mainly focused on the respect for persons, justice, and beneficence. the study was conducted on voluntarily basis. the participants received an invitation to participate that was sent through an online survey with an explicit and cordial cover letter presenting the design and objective of the research. the researchers provided the students with the information that the research was about examining the pa ge 15 5 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 139-156, 2025 correlation between gamification intensity and young adults’ brand loyalty. therefore, only individuals who have already tried gamified elements of the brand such as loyalty programs, branded mobile app challenges, or online rewards systems were encouraged to participate. the research group made sure that the data collection process was in full compliance with the data privacy act of 2012 (ra 10173) of the philippines and the general data protection regulation (gdpr) of the european union. no personally identifiable information was collected. the responses were anonymous and were safely kept, the only ones to get access were the research team. the information gathered will be used only for research and will not be shared with anybody else or for any merchandizing activities. acknowledgements the researchers would like to acknowledge the following who gave their utmost contributions in the successful writing of this research paper. erika f. bacay. the business administration professor in far eastern university roosevelt for her utmost guidance and technical expertise in the conduct of the study. sheila d. mitra. the quality assurance manager of bonchon chicken philippines, scottland food group corporation. for her utmost support and technical inputs in the conduct of the study. reginald p. arimado. statistician in san beda university for his expertise in editing the statistical structures of the research paper. far eastern university roosevelt. for supporting and giving support and the opportunity to conduct the study. references affifa. 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(2020). does gamification affect brand engagement and equity? journal of business research, 109, 449–460. https://doi.org/10.1016/j. jbusres.2019.11.058 pa ge 1 pa ge 15 7 american journal of economics and business innovation (ajebi) scarcity marketing: the role of consumer behavior in the rise of the “anik-anik” trend of pop mart’s collectible blind box figurines erika f. bacay1*, jericho s. angangan1, margotte lyra t. fernes1, jed joseph a. francisco1, francine mhay d. g. ricohermoso1 volume 4 issue 2, year 2025 issn: 2831-5588 (online), 2832-4862 (print) doi: https://doi.org/10.54536/ajebi.v4i2.4949 https://journals.e-palli.com/home/index.php/ajebi article information abstract received: april 05, 2025 accepted: may 08, 2025 published: june 13, 2025 this study analyzes the effect of scarcity marketing in the rise of the “anik-anik” trend through consumer behavior toward pop mart’s collectible blind box figurines. the researchers utilized a mixed-method approach through a semi-structured survey, in which data were collected from 100 active pop mart buyers in marikina city, particularly senior high school and college students. the quantitative data revealed that while some consumers were neutral, the overall mean score indicates that scarcity marketing has significantly affected their purchasing behavior which resulted in the “anik-anik” trend. the qualitative findings further support and justify the results in quantitative data where responses show significant reactions and expressions through self-identity and culture. results show that scarcity marketing significantly affects the rise of the “anik-anik” trend by triggering consumer behavior, particularly through psychological and behavioral responses: fomo, impulsivity, overconsumption, hoarding, word of mouth, and social media trends. lastly, the researchers of this study recommend responsible marketing, especially to gen z, broaden the scope of the study, particularly its respondents, and conduct the study on a longer time frame to thoroughly analyze the effect of scarcity marketing on consumer behavior over a long time. keywords collectible blind box figurines, consumer behavior, fomo (fear of missing out), hoarding, impulsivity, limited-edition, overconsumption, pop mart, scarcity marketing, the “anikanik” trend 1 business administration, feu roosevelt, marikina city, philippines * corresponding author’s e-mail: ebacay@feuroosevelt.edu.ph introduction pop mart was founded by wang ning in 2010 and started as a small gift shop in beijing china that sells vinyl toy products and special gifts. however, the company faced challenges with their traditional toys which led them to the innovation of “art toy” or “toy in a blind box” (prasertsri, 2024). in 2016, pop mart launched their first blind box toy series designed by kenny wong called “molly” which boosted and made the company known globally, particularly in asia. according to parcinq magazine (2025), pop mart’s growth of 62% in 2024 has caused global recognition, especially with the fashion industries, pop culture, and generational z as the company continuously expands its collaboration with famous artists, designers, and brands like lisa from blackpink, skullpanda, and walt disney. the idea of a blind box and limited-edition collection of pop mart has generated excitement and suspense for collectors and even for first-time consumers (de asis, 2025), and this is where pop mart’s marketing strategy “scarcity marketing” plays a vital role in their worldwide success. as pop mart’s collectible figurines are released depending on the themes and collection, it generates a sense of fomo or fear of missing out on customers resulting in a greater demand even with a limited amount of supply available because collectors are targeting to either complete or get the rarest toy. the psychological effect and drive for motivation on consumer behavior because of their desire to join the trend has made the chase to scarcity valuable to pop mart (hoai & phan, 2025). with pop mart’s global success, the company was also able to penetrate different social media platforms particularly tiktok where their collectible blind box figurines were made as a statement of one’s culture and artistic expression; the rise of the anikanik trend to filipino culture (singh, 2024). “anik-anik” is a tagalog word for “anoano” which reflects the culture of many filipinos to store sentimental items and utilize them to celebrate, remember, and tell stories that hold close to their hearts. while the “anik-anik” trend became a staple item in fashion it also created communities that buy, sell, and trade pop mart’s collectibles. meaning, pop mart was able to foster a movement where consumers were motivated to buy toys in collectible markets because of their emotional impact on their customers’ lives. pop mart’s strategic approach demonstrates how success is fueled by understanding consumer behavior and the emotional impact of limited-edition products. in this study, the researchers would be able to provide new and existing companies with useful understanding of how scarcity marketing affects customer satisfaction and profitability by analyzing how scarcity marketing affects consumer behavior at pop mart that contributed to the emergence of the “anik-anik” trend and how the trend continues to grow in a scarce market. furthermore, only one hundred active pop mart buyers in senior high school and college students at marikina, city, philippines would participate in this study. pa ge 15 8 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 157-167, 2025 literature review the relationship between scarcity cues, fear of missing out (fomo), consumer impulsivity, and overconsumption scarcity cues are an indication that something or a certain product is limited or difficult to buy (dahmiri et al., 2023). this cue can trigger fear of missing out or fomo as the customer may feel that they need to take immediate action before the product runs out. according to zhang (2022), the emotion “fomo” is defined as a person’s fear of losing or missing an opportunity that most people experience. this relationship is called the theory of motivation which states that when people see others or their closest ones, they become easily interested because of the psychological desire for recognition and belongingness in a group. therefore, scarcity cues result in consumers’ fomo because of the dread it creates and the feeling of needing to experience limited things. pop mart’s knock-up marketing strategy led to many controversies such as hoarding and impulsive buying. the strategy that stands out from pop mart’s ability to effectively sell blind boxes to consumers is devising a sense of curiosity and uncertainty to a mystery subject (diokno et al., 2024). the temptation to make known something that is unknown makes up an interesting trajectory in driving the thrill consumers to impulsively purchase a blind box. according to diokno et al. (2024), this analysis shows that wealthier consumers indulge in impulsive buying, while the lower income would rather prioritize affordability when making choices. however, it still leads to a consumer impulsively purchasing a blind box to satisfy their desire regardless of their essential differences. hence, consumers develop a confusing point in their purchase decision which makes it complicated for them to decide whether it’s a need or a want. the rise of the “anik-anik” trend can be directed to scarcity marketing as it conveys a significant effect on the responses of consumers (sun et al., 2022). the analysis cultural dynamics of dewan (2025), argues that the “anik-anik” trend transcend mere consumer behavior and becomes an important part of one’s identity, historically, scarcity engages to not having enough of an individual’s needs. in a scarce market, it strategizes to seemingly attract consumers to purchase products before the discount, promo, or even the product itself goes away. by limiting stock availability and offering time-sensitive discounts, scarcity marketing encourages consumers to purchase impulsively, leading to increased sales and the rise of collectible trends. this strategy fosters a cycle of continuous demand, where consumers feel compelled to collect and showcase limited-edition items, further reinforcing the market’s success. thus, drawing attention to a certain product can lead to an increase the sales in the market through limiting the stocks. h1: scarcity marketing has a direct impact on consumer psychological responses through the emotion “fomo” or fear of missing out and impulsivity. the influence of scarcity marketing on the maximalist hoarding and notes on filipino culture “anik-anik” discourse has come a long way that binds to a pattern of overconsumption of “little nothings” among consumers (pontejos et al., 2024). scarcity marketing strategically encourages consumers to compulsively purchase “anik-anik” driven by the desire to hoard and over-consume a product. the impulse to fill an entire space with random little things is the motive force of maximalism. according to japutra et al. (2025), the dark side of jumping into the scarcity market leads to negative outcomes such as anxiety and obsessive-compulsive behaviors but for the business, it results in an increase in sales and profit. thus, scarcity marketing significantly raises the maximalist trend of hoarding and filling up a clear space with “anik-anik” to collect and showcase it to the public creating an influencing interest. bundang and simangan (2024) explored the evolving meaning of “anik-anik” within filipino culture, focusing on its connection to sentimentality, maximalism, and socioeconomic context. it found that “anikanik” referred to more than just random objects; it encompassed items imbued with personal meaning and memories, often passed down through generations. the online discourse surrounding “anik-anik girlies” revealed a tension between appreciating the sentimental value of diverse collections and recognizing how some collections, particularly of trendy or expensive items, could become markers of social class. preview magazine’s 2024 article talks about the filipino trend of collecting “anik-anik,” which refers to small trinkets, charms, and cute little items. this explains that filipinos love to collect these items because they allow them to express their creativity, tell personal stories, and showcase their style while holding sentimental value and memories. according to singh (2024), the “anik-anik” trend is a form of sentimental maximalism that transcends cultures rather than a mere accessory. it signifies filipino culture to hold onto random items that signify an important story of their individuality. thus, the “anik-anik” trend is a cultural connection to remnants of the past, heritage, and the impalpable dimension of the self. h2: scarcity-driven trends reinforce hoarding and overconsumption to fill vacant spaces. the impact of scarcity marketing on pop mart’s business growth guanhua (2024) explored the reasons why people are drawn to buy pop-mart’s blind box collectible figurines, focusing on 200 pop-mart consumers in shanghai, most of whom were white-collar workers. the emotional excitement of opening a blind box without knowing what’s inside triggers a psychological response similar to the thrill of gambling: happy, curious, and tempting. this results in uncertainty and anticipation which creates a rush of dopamine or feel-good hormones, making the experience addictive for some consumers. when addiction pa ge 15 9 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 157-167, 2025 happens, the strong desire to complete a collection comes quickly. since some figurines are rare, collectors feel motivated to keep purchasing them until they find the ones they’re missing. this taps into the human need for a sense of accomplishment and fulfillment, as completing a set provides a feeling of satisfaction and pride. ma (2022) highlights that scarcity marketing not only increases immediate sales and customer’s repeat purchase but also helps build a strong brand image which creates hype or trend. products become more desirable because they are seen as rare and exclusive. this makes consumers feel proud to own them, which adds emotional value to the purchase. additionally, scarcity marketing helps pop mart maintain higher prices because people are willing to pay more for items they believe are special or hard to find. from a business perspective, this strategy helps pop mart manage its inventory more efficiently. since products are produced in limited quantities, there’s less risk of unsold stock, which saves costs. according to hasan (2025), adopting digital transformation such as social media platforms, enhances performance and competitive advantage in the market. the excitement around rare items also generates free publicity through word-of-mouth and social media, as customers love sharing their collections and experiences online. this creates a continuous buzz around the brand without spending much on traditional advertising. overall, scarcity marketing has helped pop mart grow rapidly, expand globally, and maintain a loyal customer base. h3: scarcity marketing positively impacts pop mart by increasing product demand. conceptual framework figure 1: the mediation model a conceptual framework is a visual representation that guides researchers in illustrating the cause and effect of a complex phenomenon (salomao, 2023). according to aas and melle (2017), the mediation model identifies the mechanism between the two variables and how the independent variable affects dependent variable through a mediating variable. the researchers want to provide a clearer explanation of the effect of scarcity marketing on the “anik-anik” trend by analyzing and showing the mediator variable as consumer behavior. in this way, the study could analyze and answer the statement of the problem “how” regarding the relationship between scarcity marketing, consumer behavior, and the rise of the “anik-anik” trend rather than testing if scarcity marketing affects the “anik-anik” trend by a simple “yes” or “no” answer. the independent variable is scarcity marketing as it is the key variable examined in this study, which affects both consumer responses and the rise of the “anik-anik” trend. furthermore, although the researchers will focus on scarcity marketing and the rise of the “anik-anik” trend, analyzing the mediating variables of consumers’ responses will allow the researchers to understand how the independent variable influences the dependent variable. lastly, the control variables are age, gender, location, product, types of buyers, and social media community groups to be kept constant as it will not just reduce biases in this study but also avoid affecting or changing the focus of the study. research questions this study aims to analyze the effect of scarcity marketing on the rise of the “anikanik” trend of pop pa ge 16 0 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 157-167, 2025 mart’s collectible blind box figurines through consumer behavior. 1. how does scarcity marketing affect consumer behavior toward pop mart’s collectible blind box figurines? 2. how does scarcity marketing raise the “anik-anik” trend? 3. how does the “anik-anik” trend continuously grow in a scarce market? materials and methods research locale this study will be conducted in marikina city, philippines. marikina city is recognized as a growing urban center characterized by a mixed demographic of middle-class to upper-class families. according to the schools division office of marikina city, there are 39 schools in the city as of 2024 which allows the researchers to target respondents, particularly senior high school and college students aged between 1624 years old, who are active pop mart buyers. furthermore, marikina city consists of a diverse gender population, making it an ideal location for examining the effects of scarcity marketing on a broad demographic. sampling method the researchers will utilize purposive sampling, a nonprobability sampling where survey respondents will be selected based on the criteria to provide relevant answers to the study’s objectives without limiting representation and to reduce selection bias. the study will be paired with a descriptive research design to provide accurate description, results, and analysis on the phenomena. the respondents will first answer the pre-assessment criteria: has purchased pop mart collectible blind box figurines whether it is from labubu, crybaby, molly, hirono, and skullpanda collection from previous years and during this year, type of buyers such as casual, regular, or hardcore buyers, and the respondents must be aware of the limited-edition or scarcity marketing strategy of pop mart. thus, the respondents will be 100 active pop mart buyers from senior high schools and college students in marikina city aged between 16-24 years old. the researchers will identify respondents through social media platforms, particularly facebook groups where pop mart collectors interact. additionally, physical surveying will be conducted in the schools within marikina city to identify students who can participate in this. the researchers will provide a consent form to ensure participants that the data collected will only be used for the significance of this study. data gathering procedure the researchers will conduct and gather data through semi-structured surveys which include pre-screening criteria, likert scale, and open-ended questions to identify patterns, and trends, and understand the decision behind the responses of the one hundred senior high school and college students active pop mart buyers aged 16-24 years old in gender diverse population at marikina city, philippines. the researchers would first identify the active pop mart buyers through social media platforms, particularly facebook collector groups, and physical surveying of schools in marikina city which will be answered via google forms. the one hundred active pop mart buyer respondents would be given a brief discussion regarding the survey and would be given a consent form to ensure confidentiality and ethical concern of data. the survey would be conducted with a maximum period of two weeks to allow researchers to analyze data behind numbers, specifically the effect of scarcity marketing on consumer behavior, how it results in a trend, and how the trend is growing in a scarce-driven market. the study will utilize a mixed-method approach which allows for quantitative and qualitative analysis of responses. the quantitative data analysis includes closed-ended questions and likert scale items to be calculated through calculation of mean and standard deviation answers of the respondents. additionally, the researchers will utilize qualitative data analysis, particularly open-ended questions through thematic analysis to look for key insights and understand the responses behind numerical data. instrument the instrument to be utilized in this study will be a semi-structured survey questionnaire though google forms survey that contains likert scale and open-ended questions to collect both quantitative and qualitative data. the study will have prescreening criteria and demographics to be followed by the likert-scale items to assess the psychological and behavioral responses of respondents regarding their perception of the “anikanik” trend. lastly, to provide reliable and detailed explanations of respondents’ insights into why and how pop mart’s scarcity marketing affects their consumer behavior resulting in the rise of the “anik-anik” trend. statistical treatment of data the data analysis of this study will be conducted through an approach of both quantitative and qualitative analysis. the quantitative analysis will consist of responses from likert-scale items which will be calculated through calculation of mean and standard deviation of ungrouped formula to analyze similarities, patterns, frequency of responses, and how strongly scarcity marketing affects consumer behavior. on the other hand, the responses to open-ended questions will be done through thematic analysis to further analyze the influences behind consumer behavior which increases the growing popularity of the “anik-anik” trend. scope and limitations the researchers targeted 100 active pop-mart buyers from senior high schools and college students in marikina city aged between 16-24 years old which will be conducted with a maximum period of two weeks. the study focuses on how scarcity marketing affects the rise of the pa ge 16 1 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 157-167, 2025 “anik-anik” trend among these students. additionally, the study will provide mediating variables to analyze consumer psychological and behavioral responses which relate both to scarcity marketing and the “anik-anik” trend. although this study is limited by its one hundred respondents, biases in survey responses, and short time frame, the findings would still be relevant because of the specified sample surveyed. this will allow the researchers to analyze data behind numbers relevantly, specifically the effect of scarcity marketing on consumer behavior, how it results in a trend, and how the trend is growing in a scarce-driven market. through the combined findings, the researchers would be able to analyze how scarcity marketing strategy affects consumer behavior resulting in the rise of the “anik-anik” trend. results and discussion results the researchers focused on analyzing the effect of scarcity marketing on the rise of the “anikanik” trend of pop mart’s collectible blind box figurines through consumer behavior. this study utilized a mixed-method approach, consisting of quantitative and qualitative data to analyze key insights and understand the responses behind numerical data. a total of 100 active pop mart buyers in marikina city were surveyed using purposive sampling to ensure that the data are relevant and accurate. the following table, graph, and analysis present the key results observed: respondents the study was composed of 100% active pop mart buyers from marikina city. type of buyers casual buyers comprise 71%, regular buyers with 22%, and hardcore buyers with 7%. figure 2: active pop mart buyers product types most of the respondents are hirono buyers, comprising 43%, followed by labubu buyers at 26%, crybaby at 13%, skullpanda at 8%, molly at 7%, and others at 3%. figure 3: purchased pop mart collectibles figure 4: type of buyers age age 16-18 consists of 11% and age 19-24 consists of 89%. figure 5: age academic level college students consist of 90% and senior high school students have 10%. figure 6: academic level quantitative data table 1 shows how does scarcity marketing affects consumer behavior, with an overall mean of 3.39 and a standard deviation of 1.18, resulting to a neutral interpretation. table 2 shows how scarcity marketing raises the “anikanik” trend, with an overall mean of 3.80 and a standard deviation of 0.96, resulting in an agreed interpretation. pa ge 16 2 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 157-167, 2025 table 3 shows how the “anik-anik” trend continuously grows in a scarce market, with an overall mean of 3.61 and a standard deviation of 1.16, resulting in an agreed interpretation. qualitative data theme 1: the consumer behavior to scarcity marketing emotionally intense reactions were common among respondents encountering limited edition pop mart figurines such as feelings of urgency, anxiety, and a fear of missing out (fomo). respondent 17 stated that “when i see it’s limited, i feel like i have to buy it immediately,” and respondent 14 also said that “i have a fear of missing out, so i usually tend to buy the limited edition one.” these reactions show how scarcity marketing triggers emotional urgency and impulsivity among consumers as most of the responses reflected impulsive buying behaviors like “i panic buy” and “i don’t think, i just buy.” that is why after buying, most respondents felt satisfaction and pride, while a smaller portion felt regret with the respondents table 1: marketing affects on consumer behavior part i mean sd interpretation i have purchased multiple pop mart blind boxes at once impulsively to increase my chances of getting a rare figurine. 3.28 1.15 neutral i have spent more money than expected on pop mart collectibles due to their limited availability. 3.43 1.10 agree the fear of missing out (fomo) makes me check for new pop mart releases more frequently. 3.09 1.23 neutral i sometimes buy pop mart collectibles even if i do not really need them. 3.55 1.09 agree i feel anxious or pressured to buy pop mart blind boxes when i see others purchasing them due to their limited availability. 2.92 1.24 neutral seeing pop mart collectibles featured in social media trends (e.g., unboxing videos, viral posts) by influencers or celebrities increases my desire to buy them. 4.05 0.93 agree overall mean 3.39 1.18 neutral table 2: marketing raises the “anik-anik” trend part ii mean sd interpretation the idea of limited supply or scarcity marketing directly affects my consuming behavior. 3.69 1.00 agree my consuming behavior aids the rise of the "anik-anik" trend. 3.84 0.95 agree limited availability and exclusivity of the "anik-anik" items encourage me to buy more. 3.77 1.03 agree the "anik-anik" trend is not just toys for me they are also a representation of my personal style and culture. 4.04 0.84 agree rare and time-limited collectibles make me participate in the "anik-anik" trend even more. 3.68 0.99 agree the rise of the "anik-anik" trend has greatly affected my purchasing behavior. 3.75 0.91 agree overall mean 3.80 0.96 agree table 3: the “anik-anik” trend part iii mean sd interpretation pop mart's marketing strategy contributes to the growing popularity of the "anik-anik" trend. 4.12 0.86 agree i have joined online communities (e.g., facebook groups, tiktok trends) to stay updated on pop mart collectibles. 3.43 1.21 agree seeing others collect pop mart figurines encourages me to buy more for myself. 3.75 0.99 agree the excitement of unboxing a pop mart blind box makes me want to buy more even if l am not sure of what is inside. 4.02 0.93 agree i prefer buying pop mart blind boxes in bulk to increase my chances of getting rare items. 3.13 1.23 neutral i am willing to spend extra money to get a rare pop mart figure from resellers. 3.22 1.30 neutral overall mean 3.61 1.16 agree pa ge 16 3 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 157-167, 2025 stating positive and negative emotions particularly: “i’m happy i got it,” “i’m proud of my collection,” “i spent too much,” and “i didn’t need it, but i bought it anyway.” this shows that the utilization of scarcity marketing techniques successfully creates fomo and impulse buying among customers of pop mart which increases the psychological perception of value and the propelling force to take actions, such as making purchases, even when not contemplating actual usage or consumption. theme 2: scarcity marketing raise the “anik-anik” trend pop mart figurines in blind boxes evoke an emotional response tendency in the consumer, especially inclination towards such behaviors which include “impulsive buying”, “fear of missing out (fomo)” like attitudes, with “urgency”, and even “excitement”. such crowd moves tend to cause a demand upsurge and enhance its trend as respondent 23 expressed, “every time i see that there are few stocks left, i panic and feel like i need to buy immediately,” and respondent 67 shared, “knowing that it’s limited makes it more valuable. i feel proud when i complete my collection.” this means buyers act fast and spontaneously purchase that rare item to meet such demands. under the “anik-anik” trend, buyers go on to fashion collections that express emotional elements of nostalgia, individuality, and belongingness. most of the respondents answered that their “anik-anik” are reflection of themselves and identity, particularly respondent 94 which said, “i choose figurines that remind me of my childhood. it feels personal.” hence, scarcity marketing drive sales and at the same time strengthens emotional bond and makes this collection meaningful rather than material through self-identity and emotional expression. theme 3: scarcity marketing in a scarce market most participants believe the “anik-anik” trend will continue growing due to market visibility and active online engagement which was seen through respondent 67 “i think it will keep growing because there are always new designs.” although a few respondents anticipate eventual decline, respondent 72 said, “trends don’t last forever, maybe after a few years it will disappear too.” the visual appeal and artistic design of figurines capture collectors’ interests. people are attracted by beauty, uniqueness, and the decorative function of pop mart items, respondent 59 stated “i love the story behind the designs; they’re art pieces to me.” this affects consumers behavior to explore brands and respond to hype which will motivate filipinos to engage in the “anik-anik” trend since it fuels the desire to collect and keep seeking more items, resulting to its continuous growth as respondent 58 clearly stated that “it’s part of our culture now, not just a hobby.” discussion the findings of this study indicate that scarcity marketing significantly affects consumer behavior, particularly on pop mart’s collectible blind boxes, which resulted in the “anik-anik” trend in marikina city. the researchers utilized a mixed-method approach which reveals that psychological and behavioral responses to scarcity are major drivers of consumer behavior in this niche market. the demographic data displayed that many of the respondents are college students aged 19–24, suggesting that the anik-anik trend is predominantly embraced by the youth who are likely influenced by social media, particularly facebook and tiktok, and peer trends. most of the buyers identified themselves as casual buyers, which has a percentage of 71%, which means that they may not be deeply invested, indicating that while they may not be deeply invested and committed to collecting, they are still highly influenced by pop mart’s scarcity marketing strategies and influencer promotions. in terms of active pop mart buyers’ product preference, the collection, hirono, with 46% and labubu with 23%, dominate among the collectible figurines, which means that specific characters and collections may carry greater psychological, behavioral, and aesthetic appeal to produce and grow a trend such as the “anik-anik.” the findings in table 1 of quantitative data indicate that scarcity marketing has a moderate influence on pop mart’s consumer behavior since it has an overall mean of 3.39 and a standard deviation of 1.18, which can be interpreted as neutral. this means that while some pop mart consumers are affected by the scarcity marketing strategies, the effect is not fully intense on all the respondents. the highest mean score was the sixth statement, “seeing pop mart collectibles featured in social media trends by influencers or celebrities increases my desire to buy them,” which has a mean of 4.05 and a standard deviation of 0.93, which was interpreted as agree. this suggests that social media platforms, particularly facebook and tiktok, play a significant role in affecting consumers’ behavior, especially when figurines are visibly seen as limited-edition. this supports the study’s claims that social media strengthens the effect of scarcity marketing strategies on consumers. the fourth statement, “i sometimes buy pop mart collectibles even if i do not really need them,” was the second with a high mean of 3.55 and a standard deviation of 1.09, interpreted as agree, further supports that scarcity marketing causes impulsivity. the second statement, “i have spent more money than expected on pop mart collectibles due to their limited availability,” with a mean of 3.43 and a standard deviation of 1.10, indicates agree, which means that consumers spent more money than they had planned to result in overconsumption. the first, third, and fifth statement all indicates neutral, “i have purchased multiple pop mart blind boxes at once impulsively to increase my chances of getting a rare figurine,” has a mean of 3.28 and a standard deviation of 1.15, “the fear of missing out (fomo) makes me check for new pop mart releases more frequently.” has a mean of 3.09 and a standard deviation of 1.23,” and i feel anxious or pressured to buy pop mart blind boxes when i see others purchasing them pa ge 16 4 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 157-167, 2025 due to their limited availability,” has a mean of 2.92 and a standard deviation of 1.24. this means that although impulsivity, overconsumption, hoarding, fomo, word of mouth, and social media trends affect consumer behavior towards pop mart’s “anik-anik” trend, consumers are neutral or moderately affected by scarcity marketing, depending on the psychological and behavioral responses they generate while buying. table 2 demonstrates that scarcity marketing raises the “anik-anik” trend, with an overall mean of 3.80 and a standard deviation of 0.96, interpreted as agree. this means that participants agreed that scarcity marketing affects the consumer behavior that resulted in the rise of the “anik-anik” trend. item number four has the highest mean which states the following, “the “anikanik” trends are not just toys for me; they represent a fashion and culture of which i am a part,” with a mean of 4.04 and standard deviation of 0.84, interpreted as agree. this emphasizes the view of the consumers that these collectibles become a way of self-expression and personal identification, which further supports the hypothesis that scarcity marketing results in emotional attachment to the products. next is the second highest of the above, which is the following statement: “my consuming behavior aids the rise of the “anik-anik” trend.” the mean score is 3.84 with a standard deviation of 0.95, interpreted as agree. this actually means that buyers realize their actions in purchasing pop mart’s collectibles as contributing to the popularization of the trend. the third statement, “the limited availability and exclusivity of the “anik-anik” items encourage me to buy more,” got a mean of 3.77 and a standard deviation of 1.03, interpreted as agree. this, therefore, explains that scarcity encourages more fear of lost purchases such as fomo which results in overconsumption and impulsivity. with a mean score of 3.75, derived from a standard deviation of 0.91, interpreted as agree. the fifth statement says, “the emergence of an “anik-anik” trend has affected my purchasing behavior quite a lot,” which further supports the idea that scarcity marketing strategies affects consumer behavior. furthermore, the very first statement, “the thought of limited supply or scarcity marketing really impacts my consuming behavior,” got an average score of 3.69 and a standard deviation of 1.00, interpreted as agree; thus, the principle of scarcity is said to affect the behavioral patterns and decisions of consumers. lastly, the sixth statement is that “rare and time-constrained collectibles make me participate more in the “anik-anik” trend”. it has the lowest mean at 3.68 and a standard deviation of 0.99 but is interpreted to agree, strengthening the point that scarcity marketing is still a motivation to participate. table 3 shows how the “anik-anik” trend continuously grows in a scarce market, with an overall mean of 3.61 and a standard deviation of 1.16, resulting in an agree interpretation. this suggests that respondents may not be strongly favorable, but the scarcity marketing strategy of pop mart was still effective in growing the “anikanik” trend with an opportunity for improvement. the highest mean score is found in the first statement, “pop mart’s marketing strategy contributes to the growing popularity of the “anik-anik” trend with a mean of 4.12 and a standard deviation of 0.86, interpreted as agree. this underscores the significant influence of scarcity marketing strategies to affect the behavior of the consumer leading to the “anik-anik” trend. next is the fourth statement, “the excitement of unboxing a pop mart blind box makes me want to buy more even if i am not sure of what is inside,” with a mean of 4.02 and standard deviation of 0.93, interpreted as agree. this indicates that the strong appeal of mystery and emotional thrill encourages repeated purchases due to the element of surprise which reinforced consumers behavior to buy the product. the third highest is the third statement “seeing others collect pop mart figurines encourages me to buy more for myself,” with a mean of 3.75 and standard deviation of 0.99, interpreted as agree. this shows that peer influence plays a role in stimulating consumers’ purchasing behavior, driven by social and shared interests which also influence “anik-anik” trend, though it is not a primary factor in influencing this behavior. following this is the second statement, “i have joined online communities (e.g., facebook groups, tiktok trends) to stay updated on pop mart collectibles,” with a mean of 3.43 and standard deviation of 1.21, interpreted as agree. this implies that digital engagement supports the development of consumer communities which may contribute to purchasing a pop mart blind box collectible, but it is not the primary factor influencing “anik-anik” trend. the fifth and sixth statement was interpreted as neutral: “i am willing to spend extra money to get a rare pop mart figure from resellers,” received a mean score of 3.22 and standard deviation of 1.30 and “i prefer buying pop mart blind boxes in bulk to increase my chances of getting rare items,” got the lowest mean of 3.13 with a standard deviation of 1.23. this displays a neutral observation which may be due to consumers’ selectiveness and approach in the way they purchase pop mart collectibles in line with their customer category. on the other hand, for the first part of the qualitative analysis, the common theme of the respondent’s response is that their consumer behavior is intense, specifically, feelings of urgency, anxiety, and a fear of missing out (fomo). more than 60% of the respondents said that they tend to buy quickly or even make impulse purchases when they know that a pop mart figurine is a limitededition collectible. responses such as “i panic buy”, “i don’t think, i just buy”, and “i buy even if i don’t need it yet” show a great deal of impulsivity. notably, fomo or fear of missing out was directly mentioned by many, stating that “i’m afraid they’ll run out,” “i don’t want to miss a chance,” “knowing it’s rare makes me want it more.” this result aligns with the 20% responses of feeling pressure to act fast or spend money which they did not initially plan to; implies an emotional urgency because of scarcity marketing strategies. there is also an emotional pa ge 16 5 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 157-167, 2025 reaction after their purchase, majority reported positive emotional payoffs, such as: “satisfied and happy,” “proud of my collection,” “i feel like i accomplished something.” but of course, there is also a negative reaction stated by the respondents: “i spent too much,” “i didn’t really need it,” “i bought it just to avoid missing out.” active pop mart consumers are clearly motivated by the fear that items will run out or become unavailable, which leads to quick, emotionally driven decisions. the spontaneous and often unplanned nature of purchases shows that scarcity effectively shortens the decision-making process, leading consumers to buy before they fully reflect. and because of these responses, the study has a strong qualitative support for hypothesis 1, revealing that scarcity-based decisions are emotionally charged; that scarcity marketing has a direct impact on consumer psychological responses through the emotion “fomo” or fear of missing out and impulsivity. for part 2 of the qualitative analysis, the common themes from the 100 active pop mart buyers are “hype,” “thrill,” “want,” “people,” “anik-anik,” “represent,” and “personality.” respondents generally agree that there is a sense of excitement between urgency and a sense of being caught up with others due to the scarcity and of course, because of the power of influencers and social media platforms to make a trend. many also agreed that limited supply makes these seem much more desirable, which attracts more people into compulsiveness, causes people to buy in bulk, or even to jump into the hype without even knowing what it is all about and what will they get if they purchase a blind box. for many respondents, they felt that the trend indeed reflects what and who they are, stating that “it shows my personality,” which further supports that the “anik-anik” trend is meaningful rather than a mere material. this indicates that scarcity marketing affects the consumer behavior and identity expression of young pop mart buyers. such limited availability of pop mart blind box figures triggers a psychological and behavioral reaction such as urgency or excitement, fear of missing out (fomo) which then leads to overconsumption, hoarding, and impulsivity to fill vacant spaces. but at this point, the “anik-anik” trend becomes an identity formation of consumers as they connect their purchases to their personal preferences; mirroring their unique personality. the cultural value attached to the figurines serves as symbols of filipino individualism, fashion, social belonging, and our tendency to hold onto things such as “ano-ano” or “anik-anik” and thus support that scarcity marketing raise the “anikanik” trend through the limited nature of the strategy and by creating a cultural movement that empowers identities and communities. the last part of the qualitative analysis displays the common theme of the respondents such as their psychological and behavioral drivers, aesthetic value, trend dynamics, and cultural representation. these relate to how and why people buy as their primary reason under consumer behavior and motivation is because of the hype, which is the effect of curiosity in the presence of a rising trend. collections such as labubu, hirono, and molly were mentioned as some of the most common collectibles being explored by collectors, influencers, and even well-known artists today. many respondents mentioned impulse buying often in a negative light as they felt “budol”, a filipino casual term for being persuaded to buy something due to marketing, peer pressure, and social media trends. these motivators reflect internal feelings such as excitement, curiosity, satisfaction, and psychological and behavioral responses that affect the consumer behavior of an individual. the growth of the “anik-anik” trend in a scarce market reflects a form of sentimental maximalism that transcends a mere accessory to a cultural connection to heritage, memory, and personal identity which is very common to many filipinos, as stated by the respondent a couple of times “it’s part of our culture now, not just a hobby.” this reflects the importance of pop mart’s product value as people buy products that they can relate to. this is the main reason why the “anik-anik” trend is continuously growing in a scarce market because of the internal responses it evokes to consumers: fomo, impulsivity, overconsumption, hoarding, word of mouth, and social media trend. thus, these are the main factors that fuels demand and contribute to pop mart’s growth in the long run. conclusion this study analyzes the effect of scarcity marketing on the rise of the “anik-anik” trend of pop mart’s collectible blind box figurines through the consumer behavior of 100 active pop mart buyers in marikina city. this study draws its results by using a mixed-method approach of both quantitative and qualitative findings which concludes that scarcity marketing significantly affects the rise of the “anik-anik” trend by triggering consumer behavior, particularly through psychological and behavioral responses: fomo, impulsivity, overconsumption, hoarding, word of mouth, and social media trends, aligning directly with hypothesis 1 which states that “scarcity marketing has a direct impact on consumer psychological responses through the emotion “fomo” or fear of missing out and impulsivity.” the study also concludes that scarcity marketing has significantly contributed to the rise of the “anik-anik” trend by making pop mart collectible blind box figurines a symbol of personal and cultural identity, particularly filipino culture to hold onto random items that signify an important story of their individuality. this results in consumers hoarding or keeping their “anik-anik” even if they no longer need it, and overconsuming more than they need, which affirms hypothesis 2 “scarcity-driven trends reinforce hoarding and overconsumption to fill vacant spaces.” additionally, the study shows that pop mart’s scarcity marketing strategy, specifically its limitededition nature has significantly increased product demand which helps sustain the continuous growth of the “anikanik” trend in a scarce market. this supports hypothesis pa ge 16 6 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 157-167, 2025 3 which states “scarcity marketing positively impacts pop mart by increasing product demand.” despite a neutral interpretation in table 1 of quantitative data, the overall mean, recurring themes, and patterns on both quantitative and qualitative responses have dominantly agreed that scarcity marketing has a significant effect on the rise of the “anik-anik” trend through affecting consumer behavior. recommendations the study analyzes how scarcity marketing strategies, particularly pop mart affect consumer behavior and create cultural phenomena like the “anik-anik” trend. the results give an in-depth understanding of consumer psychological and behavioral responses such as fear of missing out (fomo), impulsiveness, overconsumption, word of mouth, social media trends, and hoarding that motivate consumers’ purchasing decisions. based on the results and conclusions drawn, it is recommended that businesses and marketers must responsibly exploit scarcity marketing by balancing exclusivity with ethical marketing practices, especially when pop mart targets the youth. second, pop mart should continue with limited edition launches while maintaining a strong online community engagement, such as facebook groups and tiktok trends to maintain momentum in collectible markets. they could also work towards enhancing collaborations with local and international artists to strengthen the sentimental and cultural appeal of collectible items, particularly for markets such as the philippines, where sentimental maximalism is a strong cultural factor. for future researchers, a long-term study should be conducted to further understand how prolonged exposure to scarcity marketing can impact consumer behavior in the long run, as well as the mental health effects, since, based on the results of this study, it drives psychological and behavioral responses. furthermore, the sample demographic should be expanded outside marikina city to explore the differences across regions, students, and income groups, which will help in validating and increasing the generalizability of the findings. additionally, a longer time frame is highly recommended to seek active pop mart buyers and thoroughly analyze the effect of scarcity marketing on these consumers, which resulted in a trend. lastly, a consumer education program must be made to raise awareness among young consumers regarding the psychological and behavioral effects of scarcity marketing to induce mindful and informed purchasing decisions. compliance with ethical standards the researchers conducted this study in full compliance with established ethical research standards to ensure the credibility, integrity, and transparency of the research process. participation in the study was strictly voluntary with a pre-assessment criterion to ensure the relevance of the responses, and the respondents were informed about the purpose, scope, and nature of the research before providing their consent. throughout the study, the utmost care was taken to ensure the confidentiality and anonymity of the respondents. no personally identifiable information (pii) was captured unless consent was given through explicit agreement. data collected as part of this research study was managed with due regard to the privacy act of 2012 (ra 10173) to ensure adequate control, protection, and confidentiality of the personal details of the respondents. the plagiarism policy was closely monitored by the researchers in terms of proper citation to all quotation texts and providing due attribution. in the collection, analysis, and reporting processes, the researchers maintained the highest levels of integrity and accountability. the researchers were honest that there would be no outcome misrepresentation or manipulation deceit, ethical conduct, allowed others to build upon, and could be validated through follow-up studies. lastly, verifiable professional standards were honored in all aspects including the subjects and the field. acknowledgements the researchers sincerely express their gratitude to those who generously shared their knowledge, expertise, and extended their support throughout the course of this study as without their proper guidance this study will not have been possible. first and foremost, to almighty god, for granting the strength and wisdom needed to overcome every obstacle faced during this journey. to the researchers’ families, whose unwavering emotional and financial support served as the foundation to complete this study. to far eastern university roosevelt – marikina, headed by mr. juan miguel montinola, for without the institution’s support, the researchers would not be able to experience all the things that molded the researchers to become goal-oriented and resilient individuals. to the department of business administration, including dean mr. victor tabuzo, the college staff, department heads, and professors, thank you for your trust and encouragement. to the participants of the study, for truthfully and willingly lending their time, experiences, and insights, which were crucial in achieving the objectives of the study. to research validators, for their immediate and critical evaluation of the research questions and data that helped the researchers obtain relevant information. finally, ms. erika bacay, the researcher’s thesis adviser, for her expertise, valuable feedback, kindness, motivation, and patience, all of which were crucial to the successful completion of this study and to the overall health of the researchers. references bundang, b., & simangan, j. t. e. (2024, may 28). ang dami mong kung ano-ano: ‘an inquiry into the anik-anik girlie. the guidon. https://theguidon.com/2024/05/ ang-dami-mong-kung-ano-ano-an-inquiry-into-theanik-anik-girlie/ chen, x. (2021). research on blind boxes consumers—taking pop mart as an example. de asis, c. (2025, january 10). pop mart is latest craze among pa ge 16 7 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 157-167, 2025 millennials and gen zs; here’s why. inquirer.net. https://business.inquirer.net/500573/pop-mart-islatest-craze-among-millennials-and-gen-zs-heres-why diokno, c. j., & ramilo, l. r. (2024). from pop mart to consumer carts: understanding the consumer behavior of filipino consumers. international journal of future marketing research, 6. https://www.ijfmr.com/ papers/2024/6/33665.pdf japutra, a., gordon-wilson, s., ekinci, y., & adam, e. d. 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(2024). charmed life: an ode to the filipino ‘anik-anik’ culture. preview.ph. https://www. preview.ph schools division office marikina city. (n.d.). public schools. https://depedmarikina.ph/main/aboutus/ publicschools?utm_source sun, h., & teichert, t. (2022). scarcity in today’s consumer markets: scoping the research landscape by author keywords. research gate. https://doi.org/10.1007/ s11301--00295-4 zhan, h. (2024). research on the impact of blind box on consumers and marketing strategies. shs web of conferences, 207. https://doi.org/10.1051/ shsconf/20200 pa ge 1 pa ge 12 5 american journal of economics and business innovation (ajebi) big data and esg (environmental, social, governance) reporting in finance waqas ahmed1* volume 4 issue 3, year 2025 issn: 2831-5588 (online), 2832-4862 (print) doi: https://doi.org/10.54536/ajebi.v4i3.6055 https://journals.e-palli.com/home/index.php/ajebi article information abstract received: september 02, 2025 accepted: october 05, 2025 published: october 24, 2025 the increasing trends of transparency, accountability, and sustainability have placed environmental, social and governance (esg) reporting at the centre of the global financial markets. nevertheless, the swift proliferation of esg frameworks has shown that it has serious issues, such as uneven metrics, a lack of cross-regional comparability, and the concern of greenwashing. new opportunities of big data analytics are emerging in the area of improving esg reporting through real-time monitoring, predictive insights, and datadriven transparency. this paper discusses how big data has transformed esg reporting in the financial sector and specifically how the emerging technologies can help to transform disclosures to become more credible, standardized, and investor-relevant. the article based on the recent literature examines how financial institutions utilize the big data tools, including artificial intelligence, blockchain, and natural language processing, to enhance esg measurement, risk management, and sustainable investment decisions. both developed and developing market case studies are taken into account to illustrate the practical implications of the big data-powered esg practices. the results imply that the inclusion of big data into esg reporting raises the level of credibility, helps in streamlining portfolios, and establishes a relationship between financial markets and long-term sustainability objectives. however, the paper also points to current obstacles, including barriers to data integration, high costs to implement and ethical issues in algorithmic decision-making. the research finds that, although big data provides a route to more effective esg reporting, its effectiveness still requires more effective regulatory frameworks, cross-industry cooperation, and adoption of the technology, especially in emerging economies. the study becomes part of the emerging literature on sustainable finance and will serve as a basis on which policymakers, investors, and financial institutions can ensure profitability and sustainability are consistent with each other. keywords artificial intelligence, big data, blockchain, esg reporting, finance, risk management, sustainable investment, transparency 1 first entertainment holding company, saudi arabia * corresponding author’s e-mail: waqas.kmh@gmail.com introduction over the last few years, the environmental, social, and governance (esg) perspective has come to occupy the centre stage of the world financial arena as it shapes investment approaches, corporate governance and regulatory policies. shareholders, regulators and other interested parties are putting great pressure on firms to show accountability and responsibility in responding to climate risks, social equity and ethical governance. due to this, esg reporting has become an essential tool to evaluate a firm’s sustainability profile and its long-term financial sustainability. though quick to adopt, esg reporting, however, still has issues of standardization, transparency, and comparability, especially in a variety of financial markets. these deficiencies make the inconsistencies in such cases, and this limits the dependability of esg disclosures and subject investors to risks of greenwashing and selective reporting (chopra et al., 2024; bătae et al., 2020). simultaneously, the rapid increase in data during the digital age both puts pressure and offers opportunities to the field of finance. the use of big data analytics, which includes the latest computational methods, including machine learning, artificial intelligence, blockchain, and natural language processing, has changed the way financial organizations gather, process, and process data (saxena et al., 2022). in the framework of esg reporting, big data has the capacity to eliminate chronic constraints because of the ability to monitor real-time, predictive modeling, and greater transparency. as an illustration, big data applications can monitor the performance of the environment via satellite imaging, read consumer sentiment concerning social issues using social media, and assess the risk of governance by crawling corporate disclosures and financial statements (liu et al., 2023). combining these tools, investors and regulators will be able to gain a more detailed and precise evaluation of esg performance of a company. the economic cost of the esg reporting that is made possible by big data is massive. research has also indicated that companies with good esg performance have, in the long run, better financial performance, partly due to superior risk management, higher stakeholder trust, and the capacity to endure environmental and social shocks (li et al., 2024; bătae et al., 2020). big data enables such results as it produces actionable information capable of enabling financial institutions to reconcile investment portfolio to sustainability objectives in addition to pa ge 12 6 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 125-133, 2025 minimizing the exposure to reputational and regulatory risk. in developing economies with potentially low levels of data infrastructure, big data creates an opportunity to fill information gaps, thereby enabling investors to use sustainable finance practices (faruq & chowdhury, 2025; ibrahim et al., 2025). however, there are challenges to the incorporation of big data into the esg reporting. there are still concerns over data integration, high costs of implementation, and ethical concerns with regard to the use of algorithms to make decisions. indicatively, the use of automated data collection and analysis may unintentionally bring biases that weaken the integrity and validity of esg assessments (wei & zeng, 2025). moreover, the dashed state of esg standards in various jurisdictions makes it difficult to create a common model on the use of the big data in financial reporting. these constraints reveal the necessity of the strong regulatory frameworks, cross-industry cooperation, and innovations in the field of data governance. this article aims to give an in-depth analysis of how big data is transforming esg reporting in finance. it starts with a literature review of the current state of knowledge about esg performance and the application of big data to financial markets, with its opportunities and challenges. the section of the research methodology is the description of the research method which is founded on the synthesis of academic research and reports of various industries and case examples of various regions. later paragraphs discuss the present issues of esg reporting, how big data can positively influence esg activities, and the implications of esg reporting to the financial markets in general. the article ends by offering suggestions to policymakers, investors, and corporate leaders to enhance the inclusion of big data in esg reporting systems to make sure that the financial markets do not only seek profitability, but also play a vital role in sustainable development. this study helps to enhance sustainable investment strategies and financial innovation because it places big data in the context of an expanding body of literature on esg finance. it stresses the idea that big data analytics can bring revolutionary opportunities to esg reporting, but its application requires a balance between the potential of the technological options and ethical, regulatory, and social considerations. with the global financial systems shifting to sustainability, the intersection of big data and esg reporting is going to be central to the future of responsible finance. literature review maturation and problems esg reporting status of esg reporting as of now the reporting of esg has become much more of a compulsory and data-driven focus than a discretionary corporate social responsibility (csr) report. the introduction of standards such as gri, sasb, and tcfd have led to increased standardization but esg disclosures continue to be inconsistent. the use of esg standards around the world is very uneven. africa and latin america are other regions of the world that have weak regulatory frameworks and are highly exposed to infrastructure and regulatory risk, resulting in data inconsistency and unreliable disclosures. the uses of big data to improve esg reporting the tools offered by big data technologies like blockchain, ai, iot, machine learning can address the significant gaps of traditional esg reporting, such as real-time tracking, predictive data analysis, and data transparency. the ability of the blockchain to track and validate the authenticity of esg data reduces greenwashing. the ai is used to analyze the sentiment and predict risks, and the iot is used to monitor the environment. recent trends in esg reporting • predictive analytics: with the growing use of machine learning and ai in esg reporting, it has contributed to the ability to predict financial performance through esg metrics. it further stated that having a high esg rating means that the company is not as susceptible to financial risks associated with fines and reputational damage as a company with a poor esg score (li et al., 2024). • real-time tracking: the internet of things will enable real-time, dynamic tracking of environmental impact that will comprise both carbon emissions and water consumption. these technologies have transformed esg reporting into dynamic streams of data rather than the traditional annual reports. • automation and reporting: esg reporting and analysis can be automated using the big data technology, thereby improving the efficiency and consistency of the reporting and analysis. accessibility to information on automated dashboards and reporting systems in real-time has promoted transparency. new technology in the esg reporting • ai and machine learning: although ai has already been applied in forecasting esg risks, there is increasing interest in explainable ai (xai), which is a form of ai transparency that explains how certain algorithms work. this will be essential in preventing bias in assessing esg (wei & zeng, 2025). • blockchain: blockchain is already being considered to protect esg data, which is in essence immutable. it applies particularly to any company which is involved in a global supply chain, in which it may be quite difficult to prove or disprove the morality of sourcing (zhao, 2024). • iot and environmental monitoring: iot technologies are also finding application in real-time monitoring of environmental factors such as air quality and energy use. this technology is needed to help companies trace the impact they make on the environment and correct it in real-time (omirali & akylzhanova, 2024). research gaps minimized attention to smes in the esg reporting • gap identified: the majority of literature addresses large companies, and little attention is paid to small and pa ge 12 7 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 125-133, 2025 medium-sized enterprises (smes), which have other issues related to the adoption of big data to esg reporting. • solution: it should conduct research on how to come up with low-cost big data solutions specific to smes, especially those in developing economies. this can be cloud services or open source software that is affordable to enable smes to monitor and report on esg. • sample solution: multi-stakeholder programs that collect esg information on several smes within one area may be used to reduce the cost of individual reporting and enhance comparability across companies. absence of international comparability • gap identified: esg information cannot be compared internationally, especially between regions that do not have the same regulatory framework (e.g., europe and africa). • conclusion: it is recommended that the current researchers conduct research on how to incorporate the global esg standards into the local regulations. this may be done through big data to develop an interactive global esg database where cross-region comparisons can be made. • example solution: integrate esg data by setting international standards on esg reporting and standardizing globally how data is collected, analyzed, and reported through ai-driven tools. excessive focus on environmental data • gap identified: most studies have concentrated on the environmental elements of the esg (e.g. carbon emissions, energy consumption) and little has been done regarding the social and governance elements. • solution: a more balanced approach to esg reporting that incorporates social (e.g., labor rights, community impacts) and governance (e.g., corruption, board diversity) elements should be incorporated into the literature. these aspects can be tracked in real-time with the help of big data tools like social media sentiment analysis and ai-driven governance tools. • example solution: monitor employee satisfaction, diversity, or the opinion of the public about a governance issue using social media analytics. poorly integrated qualitative data • gap identified: big data tools are good at quantitative processing data but not qualitative esg variables, such as corporate culture and ethical leadership. • solution: future studies are needed to understand how to combine qualitative data with quantitative esg measures. qualitative esg aspects can offer more information with methods such as sentiment analysis on social media and employee surveys. • example solution: train an artificial intelligence model that converts qualitative data (e.g., news articles, interviews, social media posts) into a single quantitative esg metric and uses it in conjunction with quantitative data to create a more detailed assessment of esg. dearth of longitudinal esg studies • gap identified: most of the studies are done on a short-term basis and no research has been done on the long-term implications of esg reporting on financial performance. • solution: longitudinal studies that monitor the effectiveness of esg practices in a few years should be incorporated in future research. this would shed light on whether long-term financial gains or risk reduction would be achieved in esg reporting by using big data. • example solution: there is a need to conduct long-term studies that would compare the financial performance of the companies that have already implemented big datadriven esg practices and the ones that have not. summary of polished literature search and research holes edited literature review literature discusses the esg reporting status quo, the utility of big data technologies, and challenges related to the implementation of esg reporting. addressing research gaps • target small businesses by offering low cost big data services. • solve the problem of unequal esg data between regions.strike a balance between environmental information and social and governance issues. • combine qualitative and quantitative esg information. • introduce longitudinal studies of the long-term impact of big data on esg. challenges in big data-driven esg reporting although there are evident benefits to the adoption of big data in esg reporting, there are a number of challenges that prevent its successful application. such challenges are both organizational and technical, as it is rather complicated to align the goals of sustainability with sophisticated data analytics. data quality and reliability accuracy, consistency, and comparability of esg data are one of the most important challenges. unlike standard financial data, esg indicators are typically disparate, unstandardised and are sourced across a wide range of different sources including social media, supplier reports and regulatory reporting. the heterogeneity complicates the creation of a common structure of analysis. lowquality data may result in biased interpretation and reduce the trust of stakeholders in esg reports. lack of standardization despite guidelines that are offered by esg frameworks like the global reporting initiative (gri), the sustainability accounting standards board (sasb) and the task force on climate-related financial disclosures (tcfd), pa ge 12 8 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 125-133, 2025 there is no universal standard. various rating agencies and analytics providers have a dissimilar methodology and this may lead to different esg scores of the same company. this disintegration of harmonization makes it hard to decide on both firms and investors. high implementation costs big data technologies demand substantial investments of infrastructure, software and human resources. these costs would be acceptable in the case of large corporations, whereas in small and medium-sized enterprises (smes), they represent a significant obstacle due to financial implications. the entry barrier may increase inequalities, because smaller companies might not be able to pass reporting requirements, or appeal to investors with a desire to invest in a more sustainable company. data privacy and ethical concerns big data analytics applied to esg reporting create problems of privacy and ethics. in this instance, the sentiment analysis of social media in order to assess the popular opinion about a company can be handled with sensitive personal information. failure to adhere to the laws of data protection can cost firms fines and reputation. besides, overdependence on algorithms can form prejudices, continuing the unfair or discriminatory results. complexity of esg dimensions esg is a complex and contextual area that involves diverse topics of environmental, social and governance issues. on the one hand, big data is a good tool to achieve measurable indicators (e.g., carbon emissions), whereas on the other hand, it fails to be qualitative, i.e. corporate culture, ethical leadership, or community relations. the over-use of measurable indicators can simplify the esg performance, neglecting important intangible aspects. skills gap another barrier is a lack of professionals who have a background in sustainability and data science. good big data-driven esg reporting needs interdisciplinary expertise, comprised of financial analysis, environmental science, and sophisticated analytics. such hybrid skill sets prove to be a challenge to many organizations in terms of hiring and training people. risk of greenwashing ironically, more advanced versions of greenwashing might also be enabled by the rising dependability on the big data. businesses may choose what to disclose and how to distort data to show a false image of their esg areas. there is a risk that stakeholders will continue to fall prey to fraudulent reporting unless stringent outside verification and methodology transparency is achieved. altogether, big data improves the capabilities and deepen the nature of esg reporting, but such issues indicate that it is essential to create unified frameworks, enhance the regulatory control system, and make sure that the data is used in an ethical manner. it is critical to address them in developing trust, comparability, and accountability in esg disclosures. research gaps in current literature there is increasing literature on big data and esg. yet, several gaps remain limited focus on smes majority of the studies analyze big companies. there is little research on smes and their esg reporting. lack of global comparability a large number of papers concentrate on individual areas. few explore cross-country esg data challenges. overemphasis on environmental data studies often stress carbon and energy. less covered are the social and governance. weak integration of qualitative data big data does numbers quite easily. however esg esg factors such as cultural and ethical are neglected. few longitudinal studies short timeframes are common in studies. the effects of long-term esg reporting are unclear. limited exploration of ai bias ai tools drive esg analysis. nonetheless, research on bias and fairness is scarcely available. gap in regulatory perspectives big data esg is not associated with changing global regulations and policy shifts in the few works. lack of developed stakeholder focus there are rare studies of the utilization of esg big data by investors, workers, and communities. sealing these gaps can drive credible esg reporting. it is also capable of leading practices that are more fair. materials and methods systematic literature review (slr) method the study involves the systematic literature review (slr) methodology, which is a highly structured method to collect, assess and summarize existing literature regarding the intersection of big data and esg reporting. this will ensure the review is complete, objective and gives a general map of the research. phases of the methodology identification of studies keywords, including big data and esg reporting, sustainability analytics, ai in esg disclosure, corporate sustainability data management were used in databases scopus, web of science, google scholar, and ieee xplore. pa ge 12 9 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 125-133, 2025 the literature under consideration will be discussed within the scope of 2015-2025 and most recent research will be comprised. screening and eligibility the screening stage was done through deletion of duplicates, non-english articles and inappropriate titles/abstracts. the eligibility phase used the inclusion realization to select the most suitable papers on the thematic analysis. inclusion & analysis a total of 60 studies were selected on relevance and contribution to the empirical evidence and their area of interest in using big data in esg reporting. the thematic analysis was conducted on the studies in order to determine trends, issues, and gaps in the current literature. research framework the research framework is as follows, in brief as illustrated in table 1: • identification: 220 studies have been identified in different databases. • screening: one hundred and forty-six studies were left after the extraction of the irrelevant ones. • eligibility: 95 studies were reviewed in the full-text. • inclusion & analysis: the final set of 60 articles that directly lead to the interpretation of the role of big data in esg reporting. difficulties with big data-based esg reporting although it is evident that big data has tremendous potential in terms of improving esg reporting, there are challenges that can accompany its integration. some of the key challenges are: quality and reliability of data issue: esg data are often not consistent, unstandardized, and multi-source and are therefore difficult to ensure accuracy and comparability. the quality of the information may lead to biased meanings and reduce the degree of trust of esg reporting. solution: the problem of data quality improvement through improved data validation methods and standard reporting model should be paid more attention. lack of standardization • problem: no universal standard exists on reporting esg data regardless of the available frameworks such as gri and sasb. such nonstandardization complicates the comparison of the esg performance of companies and regions. • solution: consistency and comparability: the harmonization of metrics and the standardization of globally applicable esg standards will provide consistency and comparability. already efforts such as eu taxonomy and tcfd have made some moves in this direction, but further effort is required. high implementation costs • problem: big data technologies in esg reporting are expensive to implement in terms of infrastructure, software, and human resources. these high costs are especially disadvantageous to small and medium-sized enterprises (smes). • resolution: governments/financial institutions may offer incentives, grants or tax relief to smes who adopt big data in reporting esg. moreover, due to the opensource tools and cloud-based solutions, it is possible to save money. data privacy/ethical concerns • problem: social media data and other sources of unstructured data raise the privacy issue when individual information is used without their explicit consent. also, inappropriate use of algorithms may result in unbiased or biased results. • solution: regulatory bodies should create stricter laws regarding data security and develop more transparent and accountable regulations related to algorithms. ethical principles should be established to safeguard the privacy of individuals and to create fairness in use of big data. complicated esg dimensions • problem: esg is a multidimensional area which includes environmental and social as well as governance dimensions, most of which are qualitative and hard to measure. big data technologies are good at dealing with quantitative information but cannot deal with the qualitative nature of esg, including corporate culture or ethical leadership. • resolution: sentiment analysis, social media monitoring, and employee feedback can help us obtain a more vivid picture of esg performance and add the corresponding qualitative data. skills gap • problem: the skills required to implement big data in esg reporting are a mixture of specific skills, including data science skills, sustainability skills, and financial analysis skills. a significant problem is that a large number of organizations cannot find professionals who have the required interdisciplinary skills. • solution: firms must invest in training and crossdisciplinary education to enable their teams with knowledge and skills to utilize big data to report on esg. risk of greenwashing • problem: it is possible that as big data increasingly becomes part of esg reporting, some companies will find it easy to include favorable information and conceal certain negative factors in their esg reporting, resulting in greenwashing. • solution: to avert the risk of greenwashing, external auditing, third-party verification, and compulsory disclosure could help to ensure that esg reports are both sincere and transparent. pa ge 13 0 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 125-133, 2025 case study 1: patagonia (developed market) creative industry: green solutions use of big data patagonia applies the use of blockchain technology in its supply chain to achieve both ethical sourcing and supply chain transparency. the system will trace the products and raw materials through production to consumer and check claims like fair labor practices and sustainable sourcing. impact increased transparency: it will make more information available to the stakeholders and consumers regarding the sustainability of products. investor confidence: due to the traceability that blockchain provides, patagonia has gained interest among ethical investors who want reliable sustainability statements. result: this will strengthen the image of patagonia as a sustainable brand, thereby leading to increased brand loyalty and expansion in the market. case study 2: kenya commercial bank (kcb) (developing market) industry: social and governance sustainability. big data implementation: kcb has been applying ai and machine learning algorithms in social risk predictions. the bank measures the social media sentiment on financial inclusivity, customer satisfaction, and social governance in the region. impact risk mitigation: kcb can reduce the risk of underbanking by doing more to reach out to underbanked communities and reduce the reputational risk. governance improvements: predictive analytics contribute to improved regulatory compliance and transparency as well as helping to identify governance problems before the problems increase. deliverable: the bank will increase financial inclusion, public confidence and inclusive financial system in kenya recommended framework: framework model of esg reporting on big data it is an integrated framework of how the big data technologies (including artificial intelligence (ai), blockchain, and internet of things (iot) and machine learning) can become part of the esg reporting and how the old fashioned, manual, and quite often overly inconsistent esg information can be turned into real time, standardized, and believable information. framework overview the esg reporting model is a big data-driven model, which is divided into three parts: • data sources & technologies: the base that gathers raw esg data through many sources. • data processing and analysis data processing, analysis and modeling of esg data. • reporting & decision-making the end product to be used in making decisions, communicating with stakeholders, and regulatory compliance. first of all, data sources and technologies big data technologies gather esg information of all kinds, both structured and unstructured. some of the important technologies during this stage are: • iot sensors: collect live data on the environment (e.g. emissions, water use) of industrial plants. • blockchain: ensures that esg data remains unaltered as it is impossible to modify it. • social media analytics: this involves applying ai-based sentiment analysis to understand social attitudes relating to social matters such as labor practices or governance. • satellite imaging: the real information of deforestation or carbon footprint can be disseminated to the industrial sectors, especially the agricultural sector and energy sector. • corporate reporting: sustainability reporting and annual report. step 2 data processing and analysis after data collection, it must be processed and analyzed to give recommendations. this step involves: • data integration: data integration refers to a summary of structured (financial report, esg rating) and unstructured (social media post, news article) data. • predictive analytics: predictive analytics is the use of machine learning algorithms to predict esg risks, including climate change effects or governance collapse. • sentiment analysis: ai applications can read social media sentiment to understand how people feel about the social and governance actions of a company. • risk analysis models: the ai models compare the governance risks (fraud or corruption) against historical and real-time trends. • transparency and accuracy: blockchain helps all processed data to be accurate and traceable and reduce greenwashing issues. table 1: research methodology framework stage description outcome identification database search using selected keywords (2015–2025) 220 studies identified screening removal of duplicates, non-english papers, and irrelevant titles/abstracts 140 studies remained eligibility full-text review applying inclusion/exclusion criteria 95 studies considered inclusion & analysis final selection of relevant studies for thematic review 60 studies included in final analysis pa ge 13 1 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 125-133, 2025 step 3: notes and the decision making the last step of the framework is the delivery of the processed data in a form that action-takers can use. this step also helps to make sure that regulations are adhered to. key components: • real-time dashboards: the esg performance information is presented in real-time, and investors, regulators, and stakeholders can make decisions based on the latest information. • automated reports: big data solutions create automated esg reports which comply with international guidelines (e.g., tcfd, gri). these are consistent, comparative and regulatory-compliant reports. • regulatory compliance: the framework ensures that all esg information is in line with both transparency requirements and accuracy requirements in regulations (e.g. eu taxonomy, sustainable development goals (sdgs)). • stakeholder communication: data visualization, predictive models will help explain to the stake holders more effectively how the firm is working to mitigate the sustainability risks and opportunities. the essential advantages of the esg reporting model based on big data are: enhanced credibility the technology that ensures the integrity of the data, reduces greenwashing, and makes all disclosures verifiable and factual is the blockchain. improved transparency the environmental impact of operations can easily be monitored in real-time using iot sensors and satellite imaging. predictive insights predictive analytics can be used to support companies in making evidence-based decisions to prevent risks (e.g., climate-related events). the structure of the standardization and comparability the framework also standardizes esg metrics, so that where companies are compared, they can equally be judged, even when the reporting standards vary according to the region. cost efficiency the data analysis and report creation are automated and do not require any manual procedures, which saves time and resources. visualizing the framework we can develop a flow chart or diagram that will indicate the framework visually: • step 1 data sources and technologies (iot, blockchain, figure 1: framework for integrating big data into esg reporting social media, satellite imaging, corporate disclosures). • step 2 data processing and analysis (data integration, predictive analytics, sentiment analysis, risk models) • step 3 reporting / decision-making (regulatory compliance, automated reports, real time dashboards). results and discussion the analysis of 60 chosen works identified some important trends in using big data in the esg reporting. publication trend (2015–2025) publications have a gradual and steady increase, and the attention on them grows around the world. table 2: publication distribution by year year no. of publications 2015–2017 5 2018–2019 10 2020–2021 15 2022–2023 18 2024–2025 12 total 60 table 3: regional focus of esg big data research region no. of studies % of total europe 20 33% north america 15 25% asia-pacific 18 30% africa 4 7% latin america 3 5% total 60 100% regional distribution of studies pa ge 13 2 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 125-133, 2025 discussion this systematic literature review indicates that the contribution of big data in influencing esg reporting in 2015-2025 is on the increase. the overall increase in publications (table 2) reflects a certain acknowledgment of the necessity to incorporate the advanced data analytics into the sustainability and governance practice. the highest level in 20222023 is associated with more worldwide policies being dedicated to sustainable development, including the sustainable development goals (sdgs) of the united nations and the european union corporate sustainability reporting directive (csrd). this implies that research development in this area is greatly affected by the regulatory frameworks. regionally, europe and asia-pacific are the major contributors to the literature as they constituted more than 60% of the reviewed literature (table 3). strict esg reporting requirements and well-developed data governance frameworks can explain why europe is a leader in the area, whereas asia-pacific currently presents a significant interest because of its accelerated digital transformation and newly developed sustainability agendas. in comparison, africa and latin america are underrepresented, which is a sign of weaker institutional frameworks, less developed infrastructure in the context of big data, and less funding of research. this inequity highlights the necessity of more comprehensive international studies which take into account the regional difference in technological potential and esg issues. with respect to thematic coverage, the review indicates that, environmental dimensions are covered most with over fifty percent of the studies (table 4). this emphasis is aligned with the international acuity of climate change, carbon emission, and renewable energy shift. nonetheless, the relatively small focus on social and governance points out a disconnection in overall esg research. social concerns like labor rights, diversity and community impacts are getting more and more topical to the stakeholders, but are not studied properly. similarly, governance-related big data applications—such as fraud detection, transparency, and compliance monitoring— deserve greater emphasis in future research. methodological trends are also pointed out in the results. a substantial number of studies use structured datasets (e.g., emissions record, financial disclosures), whereas less are based on unstructured big data (e.g., social media, satellite images, iot-generated data). this indicates a possibility of further research to take advantage of more varied and real-time data streams to enhance the granularity and timeliness of esg reporting. further, although machine learning and natural language processing are often implemented, methods like deep learning, graph analytics, and explainable ai have not been fully used. this adoption may enhance predictive capacities and transparency in esg assessment to great lengths. on the whole, the discussion highlights that big data is transforming esg reporting by improving transparency, accountability and decision-making. nevertheless, regional asymmetries, thematic and methodological shortcomings are still impediments to the realization of holistic esb integration. to close these gaps, the world needs to come together on research, the wider uptake of sophisticated approaches to data, and measures to foster standardized and transparent esg reporting systems. conclusion the review confirms that big data has demonstrated its capability to become a potent instrument of esg reporting improvement from 2015 to 2025. its adoption significantly increases transparency, accuracy, and stakeholder engagement in sustainability practices. however, the analysis highlights critical areas for future focus: • regional imbalance: research and uptake of technologies are heavily concentrated in europe and asia-pacific, leaving africa and latin america underrepresented. • thematic gaps: most studies are themed around the aspect of environment, and specifically climate change and carbon emissions, but social and governance aspects are relatively unexplored • methodological limitations: although conventional machine learning techniques and structured datasets enjoy significant dominance, new methods including deep 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(2020). greenwashing in environmental, social and governance disclosures. research in international business and finance, 52, 101192. https://doi.org/10.1016/j. ribaf.2020.101192 pa ge 1 pa ge 61 american journal of economics and business innovation (ajebi) online advertisement and online purchase intention among bangladeshi domestic tourists: trust as a moderator lima aktar1*, reynaldo gacho segumpan1 volume 4 issue 3, year 2025 issn: 2831-5588 (online), 2832-4862 (print) doi: https://doi.org/10.54536/ajebi.v4i3.5720 https://journals.e-palli.com/home/index.php/ajebi article information abstract received: july 12, 2025 accepted: august 14, 2025 published: september 26, 2025 this study investigated between online advertisement and online purchase intention among bangladesh domestic tourists, especially the moderating effect of trust. the study was based on theory of planned behavior (tpb) framework, and the aim of the study evaluated consumer behavioral intention with regard to domestic tourism. the study was a quantitative and a cross-sectional research design. the results were obtained by conducting a structured questionnaire handed out among 390 domestic tourists whose sample was taken using simple random sampling. the spss and smartpls statistics were used where the study hypotheses were sore tested by the structural equation model (sem). the results showed that there was a significant positive correlation between online advertisement and purchase intention online. in addition, the level of trust did not contribute significantly to this relationship, meaning that familiarity with digital devices decreases the level of trust in the context of online purchases made by domestic tourists. the study contributes theoretically by demonstrating that, in emerging markets such as bangladesh, effective online advertising can directly drive consumer purchase intention. practically, the results suggest that marketers should pay more attention to the quality and creativity of the advertisement instead of focusing merely on establishing trust. the study provides limitations and future research. keywords domestic tourists, online advertisement, online purchase intention, trust 1 city university malaysia, malaysia * corresponding author’s e-mail: limaakter4583@gmail.com introduction over the last few years, online advertisement has become a universal tool that exhibits the ability to drive consumer behavior and this is more so in the travel and tourism segment. online platforms like facebook, you tube and travel websites have seen wide spread use by businesses targeting local tourists in bangladesh, which is rapidly being turned into a digital landscape. studies on online advertisement could demonstrate to the marketers how to create adverts that could be perceived as relevant and hugely cultural to the locals in bangladesh. bangladesh is very beautiful due to the history of the country and the culturally inherited traditions of the nation. as a multidimensional destination bangladesh appeals to the people due to the beautiful natural landscape, historical and heritage places, cultural diversity, and interesting lifestyle. the scenery of this country has made it attractive to people over the years. in the 14th century, ibn battuta considered beauty on the river as he traveled in a boat between sonargaon and sylhet. this sector should receive planning in every aspect in order to develop it. tourism activities here involve visiting heritage site, old buildings, bungalows, international beach resorts, leisure and sports grounds, woods, tribes and a wide range of wild animals. there are over 4 million who demand and work in and around the tourism industry in bangladesh. direct engagement is undertaken by around 1.5 million individuals and indirect engagement by 2.3 million people (mazed, 2024). in the period of fiscal year 2022-2023, tourists spent approximately 16.9 million us dollars in bangladesh. this implies that it contributes 0.059 percent of the nation total economic output and about 2 percent of money that the region got because of foreign tourists. there is an increasing focus among domestic tourists on online advertisement to buy all products and services online. in the present case, they are experiencing a huge problem in obtaining real products and services against fake online advertisements on online spaces. the intention to purchase online has remained a considerable obstacle in different industries of bangladesh (rana & abir, 2022; sikder et al., 2023). another important factor in the present study is online purchase intention especially among the domestic tourist of bangladesh. the online purchase intention can be described as the possibility or readiness of a customer to invest in a service or good on an online medium (santo & marques, 2022). even plain internet shopping experiences like layout of the shopping web page, helping the customer during the purchase process, and after-purchase aftercare could affect the intention of purchase quite profoundly (doan, 2020; song et al., 2022). online advertisement entails the process of conducting a marketing exercise on brands, products or services through the internet (shameem et al., 2023). good advertising may make individuals have a greater level of trust towards the tourist locations and also affect their decision in making the purchase decision (chu et al., 2020; manzoor et al., 2020). online advertising has a significant effect on the purchase behavior of consumers (holm, 2023). the quality of internet advertising can make the consumers keener in purchasing through their websites. trust is the fundamental ingredient of any relationship, be it personal or professional one (alshurideh et al., 2022). pa ge 62 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 61-68, 2025 trust-basing, improving user experience, and maintaining secure transactions are prior moves that have to be taken to increase online purchase intention in an industry. trust has been defined as the belief or confidence that a person may be relied upon to do something which is honest and ethical as well as being reliable. trust entails a feeling of protection and the confidence that the fellow individual will not breach their word, nor will they tell anyone and will act in the best interest (siegrist, 2021). one should take note that individuals hold firm beliefs in terms of the association of the elements and the desire to buy via the internet. the trust factor enhances the presence of userfriendliness, online advertisements and security of being online transactions to the potential tourists. a reputable e-service makes tourists believe that it is user-friendly and reliable, and has no abnormal risks, therefore, they decide to purchase goods on it. according to the above research, online advertisement affected online purchase intentions in disciplines in bangladesh (mustafi & hosain, 2020; ghosh, 2024; sultana et al., 2024). although online advertising in the tourism industry of bangladesh is becoming increasingly more active, the local tourists still have reservations about making online purchasing solutions because of the lack of trust. whereas adverts can effectively attract attention and make people focus on the advert, attracting the interest may not necessarily result to a purchase intention. available literature has failed to adequately provide the degree to which trust moderated the effect of online advertisements in influencing the purchase behavior of the domestic tourist. the said gap restrains the capacity of both marketers and tourism platforms to develop more effective digital strategy that would result in real bookings and customer loyalty. the study aims and objectives are as follows: (1) to affect online advertisement on online consumers purchase intentions and consumer behavior through trust (2) to make a framework of consumer online purchase intentions and (3) to identify further research areas on this subject. literature review theory of planned behavior ajzen (1991) build upon tra theory that was formulated by (fishbein & ajzen, 1977). the theory of planned behavior (tpb) has been a well-used model when it comes to predicting behavior and modifying it in the context of social psychology (ajzen, 2020). it holds that the attitudes, subjective norms and perception of behavioral control can predict behaviors better and they explain a considerable amount of variance in the actual behavior (duan & wen, 2008). nevertheless, this increase in explanatory variance by measuring intentions does not exhaust the explanation of behavior findings on the one hand; and the variance cannot be explained entirely by intention on the other hand hence prompting theories to moderate the intention measurement (hohmann & garza, 2022). other works have added more variables to the tpb or combined it with other theories to overcome the shortcomings in describing the impulsive behavior and situational circumstances (zulfikar et al., 2023). one of the previous authors postulated that tpb theory is good compared to tra in explaining the behavior of people especially in ethical intentions (chang, 1998). with regard to the theory of planned behavior (tpb) as developed by ajzen (1991), the intention of the bangladeshi domestic tourists to buy online is influenced by the attitude towards the behavior, and subjective norms and the perceived behavioral control. in a tpb prospective, the antecedent role of trust is to reinforce or enhance positive attitudes and to increase the perceived control and indirectly contributes to mediate social norm influence hence exerting paramount influences of the assimilation of advertising effectiveness into behavioral intentions in the bangladesh domestic tourism setting. hypotheses development online advertisement and online purchase intention according to theory of planned behavior (tpb), the behavioral intention depends on the attitude, subjective norms and the perceived behavioral control. in this regard, it is argued that online advertisement will affect the attitude of the tourists and consequently their online purchase intention regarding the travel services. apply the theory of online advertisement and online purchase intention wherein people decipher online advertisements and how they modify their minds to buy online. internet advertisement ensures consumers know what options they have. consumers can only develop an interest in the product after getting to know about it. in most cases, advertisements inform the consumer of the capabilities of the product, what it will do, its price and any promotion packages available. such content enables consumers to make informed and prudent decisions and this can alleviate their concerns, which redefine intentions of consumers on how to purchase. an effective and inspiring ad may enhance the opinion of the consumer about the product and lead to his/her willingness to buy it. increasing number of research works are employing the objective of the social exchange theory to investigate the effects of online advertising on online buying choice by a potential buyer. even in the online world where the initial purpose of ads has been compromised, the user-brand familiarity can have a positive impact on user intent to purchase as the study notes when online ads are deemed relevant, useful, and credible (mo et al., 2023). as the tpb implies, the majority of individuals respond positively to the advertisements when they contain beneficial information and credibility generated in them. in addition, the researchers discovered that individuals are more likely to purchase an item since they observe that online advertising allows them to keep in contact with friends and obtain recommendations of community members (kim et al., 2010). consequently, this would mean that relations and interactions have a significant role to play in determining how people respond to advertisements as well as purchase. in a number of aspects, online pa ge 63 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 61-68, 2025 advertising can have powerful impact on the choice of individuals whether to purchase a given product or not. in frequent studies in the philippines, malaysia, jordan, and indonesia, online advertising illustrated the positive change in people when making their purchasing decisions (cabigting et al., 2022; jerome et al., 2010; mohammed & alkubise, 2012; haloho & parahyanti, 2020). it has been found out that in the case of advertisements, people are mostly influenced in their intent to purchase by images (jerome et al., 2010). user-matched advertisements also gain value, and this is the means of enhancing the user intention to purchase (haloho & parahyanti, 2020). the other key component in shaping our actions is our salary, internet abilities, the frequency of current internet utilization, advertisement content, and location that advertisement is displayed (mohammed & alkubise, 2012). in addition, the involvement in online communities and electronic word-of-mouth significantly influences the desire of a person to purchase a product and remain committed to a brand (cabigting et al., 2022). the results justify the reason as to why companies ought to consider online advertising to affect customer decisions in various nations. after the study, the hypothesis is proposed to be the following: h1: online advertisement has impact on the online purchase intention of tourists. the moderating effect of trust the concept of trust is critical to online buying since it assists in allaying the doubts of consumers and minimizing the risks of purchasing products online through web-based vendors (mcknight et al., 2002). therefore, the trust-related behavioral accumulation is the first step that can be taken by the web vendors and consumers. past research findings revealed that consumers develop more openness to give information, buy products, and connect with others in situations where they got convinced to trust a particular internet store (lim et al., 2006). rehman et al. (2019) and other scholars have concluded that trust significantly moderated relationships between consumer purchase intention and online shopping behavior with a positive relationship determined. certain researchers have been examining the role that trust can play in a person making the decision to buy goods online, including environmentally friendly ones. the greater the reliance reflects on refreshing the urge of people to use social media influencers and social network sites, the stronger the intention to buy (khan et al., 2024; aloqool & alsmairat, 2022). the management of customer relationships (crm) indicates the mutual influence of digital marketing, the real trust in these customers, and the desire to make purchases (yunus et al., 2022). the strength between the trustor on the influencers and the level of credibility of a post based on homophily (khan et al., 2024). under the condition of considering the products sustainable, the increased reliance on e-commerce due to its low risk and privacy leads to the increased willingness of customers to buy the products via online shops (rizomyliotis, 2024). the faith in the social network site establishes a connection between social commerce and internet-purchase purpose (aloqool & alsmairat, 2022). online marketing and e-commerce are dependent on trust, and therefore, in such business models the enterprises ought to attempt to evoke trust to increase the probability of engaging in an online purchase. according to the framework of the social exchange theory, human beings develop a connection with each other primarily by means of acts of mutual support and reciprocity (chernyakhai & rabenu, 2018). with respect to online advertising, the social exchange theory can be used to demonstrate how consumers and brands are connected because they believe in one another after spending time sharing ideas and activities online, which influence the mind of national tourists in bangladesh. in case an individual perceives the message and the details in a web-based advertisement as credible and trustworthy, he/she is likely to be more attentive to it. the consumers are not as reluctant to listen to the advertisement and due to this trust will weigh up on whether to buy, which will come later. the fact that tourists believe what they see in a commercial lead to the creation of their inner belief that the message is accurate and encourages them to buy services more readily (brinson & lemon, 2023). faith in a business can improve it only when it is directed by the honesty of its business dealings, good level of customer service and highlevel data protection. the firms that pay attention to such strategies can make people more confident travelling, reduce the distance between online promotion and purchase, and strengthen the local tourist business. the hypothesis of the study was the following one: h2: trust moderates on the relationship between online advertisement and the online purchase intention of tourists. conceptual farmwork figure 1: conceptual model pa ge 64 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 61-68, 2025 materials and methods the quantitative research design was employed in the study to study the influence of online advertisement on online purchase intention of bangladesh domestic tourists with trust as a moderating variable. the primary data were collected using cross-sectional survey approach at one moment in time. the desired population was domestic tourists in bangladesh with the history of the online purchases of purchases or promotions relative to travel. the sampling frame for this study comprised domestic tourists identified through the bangladesh tourism board and other tourism-related organizations operating in bangladesh (e.g., tour operators, travel agencies, online booking platforms, and hospitality associations). the 390 valid responses gathered were more than the recommended 384 minimum size of the sample size collected as shown in the krejcie and morgan (1970) sample size determination table. the primary tool of collecting the data was a structured questionnaire that included closed-ended questions with a five-point likert scale. the constructs used in the questionnaire were the constructs associated with online advertisement and trust and online purchase intention. the spss and smartpls were used to explain the data through descriptive analysis, reliability analysis, and structural equation modeling (sem) where hypothesis testing was applied. measures this study looks at the three following variables; online advertisement, trust and online purchase intention. six items were adapted based on the research of ducoffe (1995), izquierdo-yusta et al. (2015), and liu et al. (2012) to gauge online advertisement with respect to adding information, entertainment, credibility, and irritation. the evaluation of trust was done through five items by gefen & straub (2004) and edwards et al. (2009) as well as lim (2015), which distinguish the confidence of consumers in the safety, integrity, and trustworthiness of online websites. the measure of online purchase intention employs 7 items originally developed by wu et al. (2021) and topalo (2012), which measure the intention and likelihood of the consumer to purchase online. results and discussion demographic analysis there were 390 respondents overall, 55.6 (n = 217) of whom were male, and 44.4 (n = 173) were women, with the slight predominance of males. in the age distribution, the highest numbers were users aged between 31 and 40 years (37.1%, n = 145) and age 30 years and under (36.6%, n = 143), which contributed to almost threefourth of the entire sample. the 41 50 and above 50 years old respondents had an average of 19.4 percent (n = 76) table 1: demographic profile variables category frequency percent (%) gender male 217 55.6 female 173 44.4 age 30 years and below 143 36.6 31-40 years 145 37.1 41-50 years 76 19.4 above 50 years 27 6.9 education associate degree 59 15.1 high school/ secondary school certificate 49 12.5 bachelors’ degree 155 39.7 graduate degree (master's degree, ph.d., etc.) 128 32.8 less than 1 year 99 25.4 experience (tourists) 1-5 years 170 43.5 6-10 years 94 24.1 above 10 years 27 6.9 and 6.9 percent (n = 27) respectively, and this reveals that the domestic tourism market comprises dominantly of younger and mid-age people. as far as educational background is concerned, most had a bachelor degree (39.7%, n = 155), whereas the rest was in possession of graduate degree like a master or ph.d. (32.8%, n = 128). the participants (n = 59) who had an associate degree represented 15.1 percent and those who had only a high school or secondary school certificate were 12.5 percent (n = 49). this spread spells out a fairly educated base of respondents. regarding the tourism experience, 43.5% of respondents (n =170) had tourism experience of 1-5 years with less than one year taking up a percentage share of 25.4 (n=99). the group of tourists with 6-10 years’ experience had 24.1 % (n = 94), and the larger group of 6.9% (n = 27) had above 10 years of experience. reliability test the factor loadings, composite reliability (cr), and average variance extracted (ave) were relied upon to assess the pa ge 65 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 61-68, 2025 construct validity and reliability in this research, so the measurement model is reliable and valid. the loadings of all items in the constructs online advertisement (oa), trust (tr), and online purchase intention (opi) were between 0.732 and 0.841 and, as such, were beyond the accepted minimum value of 0.70 which is advisable to establish that the indicator reliability is satisfactory (hair et al., 2022). it means that every item plays a significant role towards its construct. values of the composite reliability of oa (0.917), tr (0.908), opi (0.919) were all found to exceed the recommended cut-off value of 0.70 thus indicating good internal consistency of the items (hair et al., 2022). in addition, the average variance extracted (ave) levels of constructs oa (0.649), tr (0.663), and opi (0.621) exceeded the criterion (0.50), which means that more than 50 percent of the variance in the indicators is explained by constructs, proving to be convergent validity. the findings confirm that the measurement model is reliable and valid and can be used as firm grounds on further analysis of structural model. table 2: reliability test constructs items loadings composite reliability average variance extracted (ave) online advertisement (oa) oa1 0.791 0.917 0.649 oa2 0.778 oa3 0.837 oa4 0.779 oa5 0.836 oa6 0.808 trust (tr) tr1 0.804 0.908 0.663 tr2 0.809 tr3 0.841 tr4 0.828 tr5 0.787 online purchase intention (opi) opi1 0.751 0.919 0.621 opi2 0.830 opi3 0.830 opi4 0.840 opi5 0.817 opi6 0.732 hypotheses analysis the findings reveal the fact that online advertisement (oa) impacts significantly and positively on online purchase intention (opi) (β = 0.724, t = 2.759, p = 0.012). both the t-value is above the minimum value of (1.96) and the p-value is below 0.05, attesting to the fact that the relationship is statistically significant. this relationship is also affirmed by the fact that the 95% confidence interval (ci) does not contain zero (ci: 0.242 to 0.630). on the other hand, trust (tr) did not turn out to be a significant moderator of the mutual interaction of online advertisement and online purchase intention (β = 0.122, t = 0.861, p = 0.060). the t-value is less than sufficient at 1.96 and the result is p-value which is greater than the significance level of 0.05 which means that there is no significant lack or addition of meaning or direction in the specific relationship by the interaction term (tr x oa). also, the 95 percent confidence interval (ci: -0.191 to 0.291) has a numerical range that contains 0 so it shows sufficient evidence that trust does not moderately influence the impact of online advertisement on purchase intention, in this case. table 3: hypotheses analysis relationships beta (β) stdv t values p values 2.5% 97.5% decision oa -> opi 0.724 0.097 2.759 0.012 0.242 0.630 supported tr x oa -> opi 0.122 0.104 0.861 0.060 0.191 0.291 not supported discussion the findings of the current research establish that online advertisement (oa) and online purchase intention (opi) are positively significant among bangladeshi domestic tourists. the study has revealed that online advertisements in bangladesh manipulate consumers and create their interest in making purchases on e-commerce websites. in a research study, social media advertisements proved to have a huge influence on the purchasing pattern of the respondents (saha et al., 2024). it is indicated by mustafi pa ge 66 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 61-68, 2025 and hosain (2020) that such valuable, entertaining, and informative online ads make bangladesh agree to buy mobile phones more often. moreover, ismael et al. (2025) stated that attractive content and influencer advertisements make more youths interested in purchasing anything online via social media. accordingly, the issue of online predisposition in the shopping behavior of people in bangladesh is explicitly evident in this study. the findings show that the relationship between the linkage between online advertisement and online purchase intentions is not highly influenced by trust in the case of domestic tourists in bangladesh. the interactional effect of trust on the relationship between oa and opi proved to be non-significant, however. this implies that achieving the relationship between online advertisement and purchase intentions is not as strong when trust is factored in and vice versa. it could be assumed that domestic tourists in bangladesh might already have a certain minimum level of trust in the online environment, probably as a result of growing internet penetration, digital literacy, and adherence to e-commerce practices. sadiq et al. (2022) cautioned that the factor of trust also plays a significant role in influencing the decision of one person to travel in the case of uncertainty or traveling abroad, but not as much with local travel. acharjee and ahmed (2023) found that those visitors who represent the market of bangladesh do appreciate social media, comments of people, and images in advertisements much more than the reputation of company or the web. when it comes to younger individuals, they are likely to select messages that have a certain sense of adventure, can capture their emotions, and provide them with a good bargain as opposed to those that concentrate on trust. as demonstrated by karamchandani et al. (2025), individuals do not trust ads a lot to purchase them, unless the image of the individual causing influence is also attractive. theoretical implications the study can add value to the theory of planned behavior (tpb) given that the study has been able to surpass the speculative existent literature by empirically proclaiming that the direct and significant influence of online advertisement on online purchase intention among domestic tourists in bangladesh has been found to be accurate. the results confirm the tpb position that outside influences like persuasive communication (online advertisements) may have an impact on the attitude of an individual as it can also influence the tendency to perform an action in the given case buying travel services online. the importance of online adverts is consistent with the attitudinal aspect of tpb implying that effective online advertisements influence the attitudes of tourists positively on a transaction to book domestic travel online. this is given the fact that the level of insight on how digital marketing stimuli can act as antecedents of behavior in the tpb model is higher in a developing country environment. practical implications results of the present study provide some viable recommendations to tourism marketers, travel agencies as well as policymakers in bangladesh. this is because the linkage between online advertisement and online purchase intention is significant to the point of indicating that tourism businesses must seek to create engaging, informative, and visually appealing digital advertisement campaigns. these results also point out the possibility of off-season and less-visited-destination-specific promotion campaigns towards the development of domestic tourism in the country and resulting in the balanced development of tourism nationwide. moreover, data analytics allows marketers to attain such data as the segmentation and retargeting of interested tourists to enhance the worth of investments in campaigns. limitations and future study there are a few limitations that can be described to this study. first, it has a cross-sectional design, which restricts the possibility of interpreting the causality. second, the decision to investigate bangladeshi domestic tourists limits its applicability to other situations. third, response bias could be present based on the self-reported data. fourth, the author considered as moderating variables (only) trust but did not include others and possible moderators (such as perceived risk, or the aspect of digital literacy). finally, it did not distinguish between the types of online advertisement platforms, which may be taken into account the effectiveness. in future studies, the design by which causality is supposed to be established by longitudinal designs would likely be used to monitor the change in behavior over a period. it would be more insightful to analyze more moderators and mediators like perceived risk, digital literacy, and past experience. research can also be related to effectiveness of certain advertising platforms, segment-based or cross-cultural analysis, and qualitative approach aimed at determining the reasons why an element of trust might not be a meaningful element influencing online purchase behavior of domestic tourists in bangladesh any more. conclusion this paper examined the interconnection between online advertisement and online purchase intentions of bangladesh domestic tourists and concentrated on the mediating effect of trust in the scope of the theory of planned behavior (tpb). it was concluded that online advertisement impacted positively on the purchase intentions of the tourists and this proves that the online marketing work is very essential in influencing buyer behavior and motivating online purchase of tourism products. the moderator effects of trust were however found to be insignificant, claiming that although trust is usually relevant in e-commerce, it does not change significantly or influence online advertisement in the case. this may point towards a change in behavior amongst consumers with growing familiarity to the digital realms, pa ge 67 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 61-68, 2025 the barrier of trust has been lowered particularly when it comes to domestic travelling decision. this study can be useful in the field of entertainment and education as it can be recommended to academics, marketers and policy makers that may be interested in turning on domestic tourism through effective online promotions. references acharjee, s. k., & ahmed, t. 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(2023). penggunaan theory of planned behavior dalam kajian perilaku konsumen hijau. jkbm (jurnal konsep bisnis dan manajemen), 10(1), 28-41. pa ge 1 pa ge 80 american journal of economics and business innovation (ajebi) maternal mortality in nigeria and implications for economic development adeniyi idowu okeowo1*, abayomi oluwaseun japinye2, segun amos adewale1 volume 4 issue 3, year 2025 issn: 2831-5588 (online), 2832-4862 (print) doi: https://doi.org/10.54536/ajebi.v4i3.5545 https://journals.e-palli.com/home/index.php/ajebi article information abstract received: june 20, 2025 accepted: july 24, 2025 published: october 07, 2025 the study examined maternal mortality in nigeria and its implications for economic development, and it considered the impacts of the maternal mortality ratio on economic growth. the study uses annual time series data spanning 33 observations from 1989 to 2022. thus, the data’s primary sources are the world health organization and the world bank development indicators, 2022. gross domestic product (gdp) serves as the proxy for economic growth, which is the dependent variable, while fertility rate (ferate), health expenditure (heaexp), and maternal mortality rate (mmr) serve as the exogenous variables. augmented dickey-fuller (adf) test was utilised to determine the stationarity level of the variables. the bound and co-integration tests show that there exists a long-run relationship among the variables and fullymodified ols (fols) was used to analyse the maternal mortality in nigeria and implications for economic development from 1989 to 2022 using the e-views 10 statistical software. in contrast to mmr and ferate, which have negative relationships with the dependent variable (gross domestic product), heaexp has a positive relationship with the dependent variable. the following recommendations were made: nigeria should increase access to family planning, enhance maternal health services, and provide incentives for smaller families to spur economic growth. public-private partnerships and open budgeting combined with efficient health spending can improve productivity and healthcare. lastly, cross-sector cooperation integrating health and economic policies would promote sustainable growth and higher living standards nationwide. keywords fertility rate, health expenditure, maternal mortality, race 1 department of economics, caleb university, imota, lagos, nigeria 2 central bank of nigeria, nigeria * corresponding author’s e-mail: adeniyi.okeowo@calebuniversity.edu.ng introduction the high maternal mortality figures in nigeria are not just a serious public health issue, but a pressing concern that demands immediate attention. nigeria, with one of the highest rates of maternal mortality in the world, records 59,000 maternal deaths every year. the ongoing effort to reduce these figures is hindered by challenges such as poverty, cultural values, and poor healthcare infrastructure. these factors limit women’s access to essential maternal health services, leading to high rates of maternal mortality and morbidity. the complex relationship between maternal mortality and economic development is a call for urgent action. high maternal mortality does not only reflect the quality of healthcare service provided but also perpetuates the cycle of poverty, hindering the nation’s ability to develop and grow sustainably. the need for a different socio-economic trajectory becomes even more apparent considering the high rate of maternal mortality that weakens nigeria’s rate of the labour force and intensifies health care costs. when we critically analyse the persistent incidences of maternal deaths, we indeed observe that these deaths entail human losses that reverberate not only in small circles of families but also in a complex way that impacts national economic viability. crucially, it is worth noting that such economic losses incur whenever a maternal death occurs because it contributes to reductions in the workforce and increases the care burden with a subsequent likelihood of entrenching poverty cycles (ogunjimi & adebayo, 2019). importantly, high-quality health services are needed not just as a ‘luxury’ but as a fundamental. it will likely make economic sense for countries to pump more money into their health sectors because there are positive correlations between higher health spending and gdp growth (nwankwo et al., 2022). critically, we must reconsider the state’s role and the private role in shaping health and socio-economic outcomes by recognising that investing in rural maternal health services will avert maternal deaths, and this will perhaps achieve a dual health and economic impact in terms of addressing health and poverty. at last, we must ask to what extent maternal health successes bring about broader socio-economic improvements. overall, we must critically think through the prospects of maternal health interventions succeeding in the long term so that they can help bring sustainable development and ensure the sustainability development goals (sdgs) are met (liadi et al., 2024). nearly 59,000 women die each year due to complications of pregnancy and childbirth in a population of 200 million, which makes it a major public health crisis and also contributes to the loss of a significant amount of economic productivity. with all its possible repercussions for the future, this crisis is also an opportunity for immense positive change. the contributing factors include a fragile health system that was not able to scale up access to skilled birth attendance, weak social protective measures, and socio-cultural factors such as stigma, lack of awareness, and poor uptake of care, which still discourage women from seeking proper medical care in time. pa ge 81 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 80-89, 2025 the maternal mortality ratio, at about 540 deaths per 100,000 live births, illustrates the need to focus on the immediate health risks as well as how maternal deaths affect the productivity of the economy and cause increased expenses on health systems, thus creating costs that the country’s overall economic growth cannot sustain. investing in maternal health care programs and removing barriers leads to fewer maternal deaths. in fact, the state of maternal deaths in nigeria has been linked to an equivalent lack of investments in maternal health programs by successive governments. when less government money is forthcoming, maternal mortality ratios increase, and the economy contracts. the challenge of maternal mortality is multifactorial, with both access to health care and socio-economic reforms critical to solving the crisis. this is where the audience’s role becomes crucial. nigeria must improve women’s education and economic position, and the audience, including policymakers, researchers, and stakeholders, is essential to this process. the more educated and empowered women are, the more likely they are to receive care. a trajectory of improved health, prosperity, and development is one upon which the audience can act to effect reforms. the audience is important and integral to the country’s brighter future. a straightforward research program needs to be established to show how maternal mortality undermines economic development as it relates to the socio-economic dynamics of nigeria. the main objectives include assessing the relationship between maternal mortality and government health expenditure. lack of investment in health has been identified as the cause of higher mortality that affects economic productivity (gao et al., 2023). also, the research objective is to evaluate the socioeconomic determinants of maternal health, focusing on education and employment opportunities for women, as they have been proven to be the main determinants of maternal mortality (osemwengie & shaibu, 2020). these relationships between the social determinants and maternal mortality must be understood to formulate policies that will reduce maternal deaths while general economic health is improved (dias et al., 2015). overall, the research aims to give the required actionable guidelines that inform government policies and activities to ensure that nigeria realises sustainable development while achieving better maternal health outcomes. the findings of this research can potentially inform and shape policies and practices in the fields of public health, economics, and social development, leading to improved maternal health outcomes and sustainable development in nigeria. apart from the central argument in the study, there should be a succinct formulation of the research questions to provide an anchor for exploring the problem within its broader socio-economic context. these questions are essential to gripping current problems and shaping targeted reform agendas and a deeper understanding of the dynamics of socio-economic issues. for instance, the question ‘how do specific socio-economic determinants, such as the proportion of women with at least secondary education and the proportion of women using informal community health workers, influence maternal mortality rates in nigeria?’ is a sign of a whole other set of complicated questions to unpack. as igboanugo and marynwakeze (2023) stress: ‘the economic determinants of maternal mortality in nigeria is an extremely multifactorial question that is influenced by employment, health spending, and women’s education (as a driver of economic growth and development).’ as vincent (2021) rightly asks: ‘when there is adequate government spending on maternal healthcare, will there be any systemic effects on mortality rates or growth?’ this question becomes a critical concern given that ‘an estimated 59,000 women die annually from causes related to pregnancy and childbirth’ (olonade et al., 2019). this study examines the relationship between maternal mortality and economic growth in nigeria, emphasising the most important hypotheses. it is hypothesised that the extension of the government’s fiscal expenditure on health reduces maternal mortality rates, and improvement in female education lowers the mortality rate considerably because of better health knowledge and access to health services. also, socio-economic factors such as poverty reduction and healthcare access will likely mediate the relationship between maternal health and economic productivity. testing these hypotheses will be a highly effective method to separate these connections and clarify the nature of direct policy action. as such, this research is important to health policies and broader economic planning, including efforts to achieve a viable and forward-looking african country such as nigeria: ‘maternal mortality affects productivity and the workforce.’ economic planning at all levels would benefit from stronger health systems and increased investment in maternal health services. the findings provide data that informs policymakers on developing a comprehensive set of processes to tackle maternal health. currently, approximately 59,000 women die yearly from pregnancy-related complications, a startlingly high rate for a nation with 200 million inhabitants. this alarming statistic represents one of the leading public health crises and a substantial loss of economic productivity. however, it also presents an opportunity for significant positive change. factors contributing to this crisis include a fragile healthcare system that has not been able to scale up access to skilled birth attendance, poor social protective measures, and persisting socio-cultural barriers such as stigma and poor awareness, which discourage women from seeking appropriate medical care on time. overcoming these challenges reduces families’ financial burden and improves social and economic resilience. literature review global overview of maternal mortality and economic development the relationship between economic development in pa ge 82 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 80-89, 2025 nigeria and maternal mortality has received significant attention. researchers have closely examined the link between economic progress and maternal health due to the widespread impact of high maternal mortality rates (dias et al., 2015). evidence from the literature indicates that there is a clear correlation between the financial burden of maternal death, especially in regions characterised by severe social disparities, and the amount of money spent on healthcare and the availability of high-quality medical services (nwankwo et al., 2022). this requires a deeper analysis of the claimed returns on public health investments. gendered inequalities, deeply rooted in socio-cultural factors, significantly limit women’s access to health resources and jeopardise maternal health outcomes. these inequalities, often perpetuated by entrenched cultural ideologies, underscore the need for gender-sensitive policies and interventions (ogunjimi & adebayo, 2019). the literature shows that improving female education and access to health care is not just a health intervention. instead, it is a direct economic intervention that materially reduces maternal mortality while creating the conditions for further economic growth by producing a healthier workforce (olonade et al., 2019). taking deliberate policy steps to address these multiple challenges and engaging communities through community health literacy programmes can help nigeria reach some of the sustainable development goals – goals that promote better maternal health outcomes (van niel et al., 2020; olonade et al., 2019). reimagining a new economic future will require critically interrogating the relationship between economic development and maternal morbidity and mortality. it is crucial to consider new liberatory economic interventions that work not just at the level of material resources but also with social and cultural factors. a comprehensive approach that addresses all these factors is essential for significant change. a side-by-side comparison of nigeria’s maternal mortality rates with those in other african countries strongly demonstrates that these are unjustifiable. these reasons are not evident and will take another paper to address. however, it is sufficient to state that the health infrastructure is poor, the society is not sufficiently equitable, and the health sector is grossly underfunded. these factors and others contributed to nigeria having 19 per cent of the world’s maternal mortality in 2017. however, we should insist on knowing why maternal mortality in nigeria remains at a concerning figure of 917 per 100,000 live births despite some positive trends that occurred over the years. in 2017, it was 26 per cent higher than the regional average of 546 per 100,000 live births (dauda, 2023). by contrast, south africa did much better: 120 maternal deaths per 100,000 in the same year (nwankwo et al., 2022). this stark contrast underscores the urgent need for societal change to address inequity. an important question to ask is: what are the specific health policies being implemented by south africa that are different from what nigeria does? moreover, rwanda presents a rare opportunity for innovative research and practice. between 1990 and 2017, rwanda improved several critical health indicators and maternal mortality tremendously: the maternal mortality ratio (mmr) decreased from 1,100/100,000 live births in 1990 to 350/100,000 in 2017 (jaiswal et al., 2024). the rate is now almost identical to the regional average.’ an important question is: what are the specific health policies being implemented in rwanda, and can these be adapted for nigeria’s context? on the other hand, there are broader problems, such as inadequate healthcare infrastructure, consistent underinvestment, and social-cultural practices, that could explain why nigeria’s maternal mortality rates are not too different from other african countries on average. these include the fact that ‘many women in nigeria still travel long distances to access routine care, with approximately 20-35 percent of women having to travel more than 20 km from their homes to the nearest healthcare facility’ at any given time (osemwengie & shaibu, 2020). there is undoubtedly a need for the nigerian government to make focused policy reforms to equip the healthcare system to address the issues at the root cause. strategic investments in healthcare, inspired by successful models in other african countries, will help nigeria to better aligned with what other african countries have done (odey et al., 2024; jaiswal et al., 2024). through this holistic view of the issues, stakeholders can begin to address the bigger picture and ultimately drive improvement. causes of maternal mortality for all the progress achieved in other endeavours, nigerian maternal mortality shows no signs of abatement. understanding the systemic factors in play requires navigating a complex web of governmental and non-governmental stakeholders. first, access to essential healthcare is gravely impaired in rural areas, where facilities are under-resourced more than in urban centers. these limiting conditions not only hinder a woman’s access to appropriate care, often a lifeline for her during pregnancy and childbirth, but also provide a considerable springboard as to how systemic inequalities within the system are sustained (nwankwo et al., 2022). in a study examining health investment determinants in nigeria, the authors found that maternal education, access to healthcare, and poverty were key deciding factors in health outcomes, including maternal mortality (meroyi, 2018). poverty compounds the barrier not only because of the apparent effect of financial exclusion among many women, who consequently lack the medical care they need, but are pushed into birthing at home, often with callous traditional birth attendants with no medical supervision. research indicates that lower levels of education are linked to higher maternal mortality rates. educated women are significantly more likely to effectively access healthcare services and navigate complex health systems, which can be challenging for those who are less informed (salisu & hamza, 2024). health infrastructure is dismal, pa ge 83 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 80-89, 2025 characterised by the absence of critical services, such as skilled birth attendance, emergency obstetric care, and basic maternal health supplies, which not only results in high incidences of preventable maternal deaths but should pointer in studying what health systems are required care, educational outreach not be viewed as isolated responses seeking to tackle the crisis. rather, each intervention is as important as the other, understanding that what each can achieve when used in concert is more effective than working in isolation. ensuring no woman should be unable to access care should be seen as a non-negotiable, with an understanding that women’s health must become a national imperative (dias et al., 2015; meroyi, 2018). this can be achieved only by ensuring that all stakeholders and actors explore and identify critical issues in the system, from how maternal education and poverty, for example, have historically stunted progress in these areas. role of healthcare infrastructure in maternal health a good healthcare infrastructure is crucial for cutting down on the high incidences of maternal deaths in nigeria, whose weak system forms a significant barrier to women’s access to medical services during pregnancy and childbirth. the glaring shortcomings in facilities, especially in the rural areas, aside from severely reducing the number of skilled birth attendants (with an annual estimate of over 59,000 deaths resulting from preventable complications, also raise some serious concerns about the apportionment of resources in the sector and whether the sector’s policy priority is distinct (olonade et al., 2019). aside from exposing women to immediate dangers, the high prevalence of maternal deaths in nigeria serves as a testimony to the lingering effects of these deaths on bereaved families and the wider community. while there have been some positive developments on the sector’s front, such as the increase in the percentage of women accessing antenatal care from 38.2 percent to 42.6 percent in the sdg era (tolossa, 2024), there remains a wide gap in the access and affordability of healthcare. this is evidenced in the lack of trained human resources for quality healthcare, adequately equipped medical facilities to cope with the high-risk deliveries, lack of government funds for health, and dilapidated hospital structures coupled with poor bed space. in nigeria, maternal mortality, which is the second highest in the world, exemplifies the calamitous repercussions of defective healthcare facilities where socio-economic inequalities and economic productivity are heightened (salisu & hamza, 2024; olufadewa et al., 2024). relevantly, tackling these challenges in healthcare delivery does not merely involve an exercise in health equity but is also fundamentally a pivotal strategy to break poverty cycles and provide the bedrock for enhanced educational outcomes in the future. sound policy programs must, therefore, involve an improved healthcare delivery system, increased government funding for healthcare, and heightened provision of education and resources towards sustainable development (dias et al., 2015). maternal deaths can be averted, and this will go a long way in creating a healthy future for mothers and babies and, indeed, the well-being of the entire community. impact of healthcare policies on maternal mortality healthcare policy is a key aspect in combating the high figures of maternal mortality that are having a severe cost on nigeria’s economic development. various policies promoting investment in maternal health services – such as the free maternal and child health care programme of the federal ministry of health – are helping to make a difference. however, a closer look at the evidence shows that, due to unstable funding and poor implementation, their proven potential to change maternal outcomes is severely limited (ogu & ephraim-emmanuel, 2018). inadequate healthcare infrastructure, coupled with the lackluster implementation of healthcare policies and socio-economic barriers, drive the need for informal healthcare systems that lack the training and supervision of standard healthcare practice. this creates an undue risk to the care of expectant mothers. for example, although the nigerian government has made several commitments to improving maternal health, data from studies show that occurrences of intimate partner violence and low socio-economic status have continued to fuel barriers to accessing quality care (liadi et al., 2024; adetutu et al., 2024). this illustrates the need to examine the link between these socio-cultural dynamics and policy efficacy. consequently, robust healthcare reforms – improved financing, increased training of healthcare personnel, and targeted public awareness initiatives – are good for maternal and foetal outcomes and vital in mitigating maternal mortality, thereby creating a healthier workforce that fuels economic growth in nigeria. this shows the interplay between health and economic policies. maternal mortality and economic development the link between maternal mortality and economic development outcomes is long-established. this is because of the wealth of literature establishing the impact of health on labor productivity, human capital development, and economic development outcomes generally. maternal mortality affects labour productivity. healthier women are more likely to be in the workforce, especially in developing nations where women dominate labor both in the formal and informal sectors. much research, such as the studies by okwan and kovacs (2020), has shown that improved maternal mortality can reduce absenteeism and improve the quality and productivity of the female workforce. the former can lead to better economic outcomes. maternal health is also crucial for human capital development. the mortality of mothers can have long-lasting negative impacts on families by hampering children’s educational attainment and, as a result, weakening the future workingage population. according to the research by ogunjimi and adebayo (2019), investment in maternal health can have long-term economic benefits because of the reduction in the cost to families and the improvement pa ge 84 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 80-89, 2025 of intergenerational productivity. this argues the case for maternal mortality not only as a health issue but as an economic development strategy. theoretical framework linking health to economic growth the theoretical framework that links health to economic growth argues that health improvements, especially maternal health, act as a catalyst for the sustainable economic development of nations. from the perspective of human capital theory, a healthier population leads to a more productive workforce and a more significant contribution to economic output (bosworth et al., 2021). in particular, when survival also means reducing maternal mortality rates, women emerge fully into the labor market, where they could contribute substantially to aggregate productivity. this is consistent with the solow growth model, according to which a health improvement determines a more efficient use of labour and capital (the solow growth model, 2024), as well as with the endogenous growth theory, according to which the investment in maternal health determines the growth of persons’ skills and level of education, thereby adding a ‘human capital’ contribution to economic growth (salvatore, 2023). in the empirical literature, we see that the increase in health expenditure determines a reduction in maternal mortality, and through this mechanism, an investment-growth feedback loop is produced; that is, the improvement in economic growth determines the increase in health investments, which in turn determine better results (raghupathi & raghupathi, 2020). this conjecture is additionally supported by the healthled growth hypothesis: maternal health is fundamental to macroeconomic stabilisation over the long term (erdogan & erdogan, 2024). for instance, as maternal deaths are still high in countries such as nigeria, lowering the deaths not only increases the labor force but also lowers the pressure on the health system, which may free up the resources that can be used in other economic development policies. evidence shows that better maternal care can lead to increased labour productivity, especially in those sectors where the demand for labour is exceptionally high for women. this, in turn, provides an argument for even more targeted healthcare interventions. the economic impact of maternal mortality thus further illustrates the essential role of health in labour and economic policymaking. the connection between the productivity of female labour and maternal health has medical policy implications (piabuo & tieguhong, 2017). further theoretical frameworks include the social determinants of health and the demographic transition theory, which highlight other pathways by which maternal health impacts broader economic outcomes (wang, 2013). social determinants of health, such as poverty and education, directly affect health outcomes and are also proxies for economic outcomes; maternal health is directly linked to improving such social determinants of health, which, for example, leads to increased labour force participation and can have long-term benefits for the economy (who, 2019). the demographic transition theory links falling maternal mortality to demographic change, which, in turn, is linked to economic growth. this growth is often experienced as a period of rapid expansion in a country’s economy, known as demographic dividends. these dividends are a direct result of demographic changes, such as the lowering of fertility (wang, 2013). the cost of illness framework shows how the loss of workforce participation and increased healthcare costs contribute to reduced productivity. together, these theories draw our attention to the long-term importance of investing in maternal health to reap economic stability and growth (hamal et al., 2020). government policies and initiatives although several international programs like millennium development goals (mdgs) and sustainable development goals (sdgs) have been launched by united nations organisations to curtail maternal mortality and sustainably develop health, and nigeria has benefited from these global partnerships, nigeria failed to reduce maternal mortality neither in mdgs nor in sdgs. however, this review is proof of the burden of increasing attention to this issue. the mdgs (2000-2015) were eight international development goals thataimed to reduce global poverty. in overview, mdgs aimed at reducing maternal mortality by 75 percent from a baseline in 1990. by the end of 2015, barely half (50%) of the target was achieved in nigeria (nwankwo et al., 2022). the failure was due to the financial constraints to build a robust health system badly needed; poor training of healthcare workers that ensured bad clinical skills and low system efficiency; and sometimes essential services to women and children such as antenatal care, delivery, and tertiary care were unavailable even in some villages. sdgs aim to build the future we want, a sustainable and better world for everyone and were launched in 2016. aimed at reducing maternal mortality to below 70 per 100,000 live births by 2030, its target is more ambitious than mdgs as it encourages member states to ensure that all (everyone) has access to reproductive health services (olonade et al., 2019). another reason sdgs encouraged nigeria may be because it affords her the benefit of 30 years (2016-2030) to improve her systematic structural problems slow socio-economic development and cultural barriers that hinder natural progression. in all, government policies and initiatives are the bedrock for national development, not only in the health sector but also in general macroeconomic development (okeowo et al., 2024; okeowo, 2023). socioeconomic implications the high maternal mortality rate has severe economic consequences as it worsens inter-generational cycles of poverty and inequality in the country. maternal mortality pa ge 85 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 80-89, 2025 significantly affects the economy because women are primary caregivers and income earners within their households. among other things, the lack of maternal health services adds to catastrophic health expenditures, which have a negative impact on the household economy as well (taiwo et al., 2023). furthermore, culturally induced educational barriers for women have also limited their access to comprehensive maternal health services. the high mortality rates are most likely the result of gender-based violence and restricted access to maternal health services in nigeria. these issues also contribute to reducing national productivity and lifespan. it is critical for any nation to invest in mothers’ health care, which can solve the issue of maternal mortality, which is, in turn, beneficial for long-term socio-economic stability. according to world health organization (who) reports, nations that are more concerned about maternal health care can provide better health care to all citizens, eventually saving lives and improving long-term socioeconomic stability. long-term economic consequences of maternal mortality beyond individual families, maternal mortality has longterm consequences for national economic stability. each maternal death represents lost human capital, worsening the odds of productivity and stability by unsettling communities and burdening the developing country with poverty (ogunjimi & adebayo, 2019). high death rates among mothers lead to less healthy or educated children, who, in turn, produce less productive workers in the future. it also decreases investment in health care and businesses, slowing economic growth and inventions. in sum, if nigeria wants to reduce maternal mortality rates, enhancing social outcomes and building a sustainable future for its people are equally important goals. materials and methods the methodology to deploy in empirical analysis depend on the data characteristics (okeowo, 2023; okeowo & awotade, 2024; okeowo & japinye, 2025). having observe the data characteristics, this study evaluates maternal mortality in nigeria and implications for economic development using time series data and econometric techniques. maternal mortality rate, health expenses and fertility rates are the exogenous factors, or independent variables. gross domestic product acts as the dependent variable’s stand-in. to accomplish this objective, the study incorporates all of these measures. the study uses annual time series data that span 33 observations from 1989 to 2022. thus, the data’s primary sources are the world health organization and the world bank development indicators, 2022. model specification in order to show the relationship between maternal mortality in nigeria and implications for economic development, this article developed an econometric model. gdp = f(mmr, heaexp, ferate) ....(1) where, gdp-gross domestic product mmr-maternal mortality rate heaexphealth expenditure ferate-fertility rate where all variables are as earlier defined. in the fully modified ols (fols) form the model is specified as: results and discussion analysis of unit root test the unit root test was performed to ascertain the stationarity of the time series data under study to avoid running a spurious regression. table 1: augmented dickey fuller unit root test results level first difference variables t-stat critical values 5% p-values t-stat critical values 5% p-values order of integration gdp 1.0131 3.5529 0.9998 4.0878 3.5578 0.0155 i(1) mmr 2.3463 3.6584 0.3931 3.4448 3.0299 0.0221 i(1) heaexp 2.8941 3.0124 0.0629 5.5107 3.0207 0.0003 i(1) ferate 1.7893 2.9604 0.9996 3.2649 3.2152 0.090 i(1) source: author`s computation (2024) the findings of the augmented dickey fuller unit root test, with a t-statistic of 4.0878, show that the gdp is stationary at first difference because the t-statistic is higher than the 5% threshold values and the probability value is less than 5%, or 0.0155. mmr is not stationary at level since the t-statistics is less than the critical values and the probability values are greater than 0.05, but it is stationary at first difference because the t-statistic of 3.448 is greater than the critical value at 5% of 3.0299 with 0.0221 as the probability values. heaexp is stationary at first difference because the t-statistic of 5.5107 is more than the 5% critical value of 3.0207 with the probability value of 0.0003, but it is not stationary at level because the t-statistic is less than the 5% critical value. however, with a 0.0193 probability value, the ferate is not stationary at level since the t-statistics are smaller than the critical value of 5%, which is 1.7893 and 2.9604, respectively. but ferate is stationary at first difference as the t-statistics of 3.2649 is greater than the 10% critical value of 3.2152. however, the probability value is slightly stationary at 5% pa ge 86 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 80-89, 2025 the unit roots examine the stationarity of the variables, as was previously discussed, to avoid erroneous findings. the variables are stationary at the first difference of analysis, according to the results, fully-modified ordinary least square fmols will be used for econometric analysis. cointegration and bound test on the effects of maternal mortality in nigeria and its implications for economic development the results of the bound co-integration test verified that there is an equilibrium long-run relationship between the independent variables—maternal mortality rate, fertility rate, heath expenditure and the dependent variable, gross domestic product, since the f-statistic for the equation is higher than the i(0) and i(1) bounds. an overview of the f-statistic results and approximated boundaries is also given in table 2. the determined f-statistic value of 5.401157, which is based on the data, shows that the dependent variable, sustainable economic development, and other independent factors have a clear co-integration connection. at the 5% significance level, it exceeds the upper and lower bound critical values of 2.37 and 3.2, respectively. as a result of the present of co-integration, this study shall deploy the use of fully modified ols (fols) for analysis. table 2: f-bound test and co-integration test f-bounds test null hypothesis: no levels relationship test statistic value signif. i(0) i(1) asymptotic: n=1000 f-statistic 5.401157 10% 2.37 3.2 k 3 5% 2.79 3.67 2.5% 3.15 4.08 1% 3.65 4.66 source: author`s computation (2024) table 3: fullymodified ordinary least squares (fols) the effects of maternal mortality in nigeria and its implications for economic development dependent variable: gdp method: fully modified least squares (fmols) variable coefficient std. error t-statistic prob. mmr -1161102 584663.6 -1.98593 0.0645 heaexp -71821.5 85946.03 -0.83566 0.4157 ferate -746671 45926.96 -16.2578 0 c 12951308 4176522 3.100979 0.0069 r-squared 0.946168 mean dependent var 370583 adjusted r-squared 0.936075 s.d. dependent var 214598.6 there exist a cointegration and long-run relationships between the variables, this justifies the use of fully modified ordinary least squares for analysis. fullymodified ordinary least squares (fols) on the effects of maternal mortality in nigeria and its implications for economic development the fully-modified ols (fols) table below uses maternal mortality rate, fertility rate, and health expenditure as explanatory variables and gross domestic product as the dependent variable. first, there is a significant negative correlation between the dependent variable and the maternal mortality rate (mmr) and fertility rate (ferate), with respective co-efficients of -11611 and -74667. this indicates that the dependent variable, gross domestic product, falls when the rates of maternal death and fertility rise. because the p-value of 0.06 slightly (above 0.05) indicates that the maternal mortality rate significantly contributes to the dependent variable, the t-statistic (1.98593) indicates a moderate relationship with the dependent variable, but it is statistically insignificant at the 5% level. however, the probability value of 0 indicates a statistical relationship that indicates fertility rate is one of the variables that negatively contributed to the dependent variable, and the ferate t-statistic of -16.2578 has a high value (in absolute terms) that indicates a very strong relationship with the dependent variable. furthermore, with a co-efficient of -746671, the health expenditure and the gdp, which acts as a stand-in for the dependent variable, have a negative relationship. this suggests that raising health spending will undoubtedly don’t have significant impact on the growth in the gdp. with a probability value of 0.4157, health spending is statistically negligible in relation to the dependent variable. in short, the effect of health spending on gdp, which is used as a stand-in for the dependent variable, is not statistically significant and is negligible in this model. pa ge 87 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 80-89, 2025 s.e. of regression 54257.92 sum squared resid 4.71e+10 long-run variance 2.79e+09 source: author`s computation (2024) substituted coefficients gdp = 1295-1161*mmr -71821.5 * heaexp 746671 * ferate the r-squared is 0.94, the adjusted r-squared is 0.93, indicating that 93% of the total variation in the dependent variable is explained by variations in the regressors of the model. figure 1 displays the results of the cusum stability figure 1: cusum stability test and cusum squared test for effects of maternal mortality in nigeria and its implications for economic development test and cusum squared test on the recursive estimates for effects of maternal mortality in nigeria and its implications for economic development. the test results show that the cusum stability test and cusum squared test are stable at the same level of significance as the model, even if the model is stable at the cusum test level at the 0.05 percent level of significance. summary of the result the high incidence of maternal deaths in nigeria, particularly in rural and impoverished areas, is a result of issues with access, quality, and infrastructure of healthcare. a high maternal death rate indirectly limits gdp growth since it has an impact on workforce development, productivity, and population health. the modest significance explained by various confounding variables in gdp that mask the indirect influence of maternal mortality. for instance, the predominance of macroeconomic factors like commerce and oil revenue may mask the true impact of maternal health on gdp. determining the precise impact on gdp may be challenging due to the limited significance caused by problems with data quality or uneven reporting of maternal mortality. in nigeria, health investment may not always result in positive effects because of inefficiencies, corruption, or inadequate resource allocation, even though it should theoretically increase productivity and gdp by improving workforce health. the low importance may suggest that a significant amount of health spending is not directly allocated to rural areas or effective programs, restricting its ability to contribute significantly to gdp growth. furthermore, nigeria’s health spending as a percentage of gdp is still low by international standards, which could account for its limited impact on gdp growth. high fertility rates in nigeria are associated with higher dependence ratios (more dependents per working adult), which might strain resources and result in lower gdp per capita. savings and investments may decrease due to funds being taken away from lucrative endeavors to meet the needs of a growing population. moreover, high fertility rates are often linked to poor female labor force participation, which could limit the economy’s overall productivity and growth potential. the substantial negative impact can also indicate that nigeria’s economic infrastructure and resources are not keeping pace with the nation’s rapid population growth, which would lessen the benefits of gdp per capita. conclusion this study examines the impact of maternal mortality on nigeria’s economic development, using maternal mortality rate, fertility rate, and health expenditure as independent variables, with gdp as the dependent variable. based on the findings, several key recommendations are proposed. first, nigeria should scale up maternal health programs by improving access to quality prenatal and postnatal care, especially in rural areas. training medical personnel, enhancing infrastructure, and raising public awareness are essential steps toward reducing maternal deaths and promoting healthier communities, which ultimately support economic productivity. second, lowering the fertility rate can reduce the dependency burden and promote female workforce pa ge 88 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 80-89, 2025 participation. this can be achieved through widespread reproductive health education and better access to family planning services. incentives like tax relief or subsidies may also encourage smaller family sizes. third, the government should improve the effectiveness and transparency of health spending. allocating funds directly to health facilities, adopting performance-based budgeting, and encouraging private sector investment through public-private partnerships can strengthen service delivery. finally, integrating health and economic policies—by aligning healthcare initiatives with sectors like education and agriculture—can amplify development outcomes. collectively, these strategies will enhance population health and foster inclusive, long-term economic growth in nigeria. references adetutu, o. m., oyinlola, f. f., oyelakin, t. e., & ofili, f. l. 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(2013). the impact of social and economic indicators on maternal and child health. social indicators research, 116(3), 935–957. https://doi.org/10.1007/ s11205-013-0330-y world health organization (2019). social determinants of health. https://www.who.int/health-topics/socialdeterminants-of-health#tab=tab_1 pa ge 1 pa ge 23 4 american journal of economics and business innovation (ajebi) the intersection of green ai, digital advertising, and corporate sustainability: a systematic review ogechukwu t. ibeama1, rebecca o. alabi2, lydia a. dampare addo1, levi ijebor1, arinze e. anaege3* volume 4 issue 2, year 2025 issn: 2831-5588 (online), 2832-4862 (print) doi: https://doi.org/10.54536/ajebi.v4i2.5373 https://journals.e-palli.com/home/index.php/ajebi article information abstract received: april 02, 2025 accepted: may 08, 2025 published: july 26, 2025 the growing intersection of digital advertising, corporate sustainability, and artificial intelligence (ai) is reshaping how organizations engage with consumers and communicate their environmental and social commitments. this study conducts a prisma-guided systematic review of peer-reviewed literature published between 2015 and 2025, with the objective of understanding how ai, particularly sustainable or “green ai”, is influencing digital advertising strategies aligned with environmental, social, and governance (esg) goals. a total of 19 articles were included based on clear inclusion criteria: english-language, peerreviewed empirical or conceptual studies addressing ai, sustainability, and digital advertising. articles were excluded if they lacked relevance to the intersection of these domains or did not meet minimum methodological standards. five key themes emerged: ai’s transformative role in green marketing, the integration of sustainability into advertising strategy, risks such as greenwashing and ethical concerns, personalization’s influence on consumer trust and behavior, and the theoretical frameworks shaping the field. while ai enhances targeting and sustainability messaging, it also introduces challenges, such as energy consumption, ethical trade-offs, and strategic misalignment. drawing on stakeholder theory and the triple bottom line, this review provides a structured lens for understanding these tensions. limitations include the novelty of the topic, limited geographic diversity, and a concentration of studies in consumer-facing sectors. practical implications include the need for firms to align ai use with authentic sustainability commitments and for policymakers to strengthen digital esg accountability frameworks. keywords corporate sustainability, digital advertising, green ai, green marketing, stakeholder theory, triple bottom line 1 d’amore-mckim school of business, northeastern university, boston, ma, united states 2 department of advertising, public relations & social media, suffolk university, boston, ma, united states 3 department of accounting, kingsley ozumba mbadiwe university, ideato, nigeria, * corresponding author’s e-mail: arinze.anaege@komu.edu.ng introduction the growth in artificial intelligence (ai) has revolutionized the way businesses operate, communicate, and compete (haleem et al., 2022). aldoseri et al. (2023) noted that technologies in ai, including machine learning, natural language processing, and predictive analytics, are widely implemented in industries such as marketing, finance, and healthcare, among others. this growth, however, has not been without pitfalls. among the greatest concerns is the power consumption and environmental footprint created by large-scale ai models. for instance, training large language models can generate multiple tons of carbon footprint, and this has raised questions surrounding the sustainability of ai innovation (iqbal et al., 2025; schwartz et al., 2020). sustainability has emerged as a business’s fundamental issue, for governments, as well as for consumers. younas et al. (2023) revealed that companies are increasingly being called upon to conduct business in a manner that is environmentally friendly, socially inclusive, and economically viable. these demands paved the path toward corporate sustainability strategy, which seeks to balance profit with the demands of society and the environment (barbosa et al., 2023). incorporating sustainability within business processes is no longer a choice. it is currently a strategic imperative for long-term success and trust from stakeholders. digital advertising has become a part of modern business strategy. using digital media including social media, search engines, and websites, help companies generate visibility in a global audience with targeted and data-based content (dwivedi et al., 2021). the digital advertising industry is projected to grow to over $600 billion by 2027 (statista, 2025), reflecting the prominence of digital advertising in corporate communications. pärssinen et al. (2018) also observed, however, that the digital advertising sector is also energy-intensive, notably in data storage facilities, tracking mechanisms, and real-time bidding software. with businesses utilizing ai-powered ad-targeting and optimization technology, the environmental impact of digital advertising is mounting (le poidevin, 2025). this developing contradiction between digital innovation and sustainability has led to the concept of “green ai.” green ai is the application and creation of ai technologies that are both efficient and eco-friendly. the aim is to decrease the environmental footprint of ai systems without compromising or even enhancing effectiveness (bolóncanedo et al., 2024). green ai is particularly applicable in digital advertising, where energy-hogging ai algorithms help gather, analyze, and act on consumer information (schwartz et al., 2020). integrating green ai in advertising strategy can assist companies in reducing environmental degradation, achieving sustainability targets, and evading reputational hazards like greenwashing. despite increasing demand for green ai and sustainability, scholarly research that bridges the two with digital advertising is, as yet, largely underexplored. pa ge 23 5 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 234-244, 2025 research tends to address either ai and sustainability or ai in advertising, but not the triad of green ai, digital advertising, and corporate sustainability. this gap in the extant literature hinders understanding by scholars and practitioners of opportunities, challenges, and best practices for this intersection point. it also constrains companies from formulating clear-cut strategies that can leverage digital innovation with environmental and social responsibility. a systematic review can help bridge the gap. a systematic review is a scientific approach for collating, summarizing, and synthesizing evidence on a targeted topic (avenali et al., 2023). objectives of the study 1. to examine how green ai is being adopted in digital advertising for corporate sustainability. 2. to determine the benefits and risks of adopting green ai for marketing efforts. 3. to explore theoretical and practical models that promote sustainable digital advertising. table 1: summary of key terms and definitions term definition source / notes artificial intelligence (ai) the simulation of human intelligence processes by machines, particularly computer systems, including learning (machine learning), reasoning, and self-correction. maguire & white (2025) green ai a subfield of ai that emphasizes energy-efficient, environmentally responsible approaches to ai model training and deployment, balancing performance with ecological impact. yigitcanlar et al. (2021) digital advertising the use of digital channels (e.g., search engines, social media, email, and websites) to promote products and services through targeted, data-driven campaigns. dwivedi et al. (2021) sustainability meeting the needs of the present without compromising the ability of future generations to meet their own needs, encompassing environmental, social, and economic dimensions. kuhlman and farrington (2010) sustainable marketing marketing that not only meets organizational goals but also promotes environmental and social well-being, aligning brand and product strategies with sustainability principles. jia et al. (2023) greenwashing the act of misleading consumers regarding the environmental practices of a company or the environmental benefits of a product or service. dalhoum et al. (2024) theoretical framework this review is guided by two theoretical frameworks: the triple bottom line (tbl) and stakeholder theory. these provide a perspective on how organizations can make sustainability central to digital and ai-based business activities without compromising on responsibility to multiple stakeholders. triple bottom line (tbl) the triple bottom line concept, developed by elkington (1997), suggests that companies measure not just economic returns, but also environmental and social performance. these dimensions (people, planet, and profit) are the basis for sustainable business practices (nogueira et al., 2025). in digital advertising and the use of ai, tbl considers whether the application of cuttingedge technologies supports or negates sustainability. for instance, advertising applications that use ai can maximize the efficiency of marketing and customer access (profit), but must also be assessed for climate impact (planet) and proper use of personal data (people). some studies covered in this review indicate that companies are using ai for promoting green products and raising awareness for sustainability (e.g., salehzadeh et al., 2024; bashynska, 2023). others identify worries relating to over-reliance on customer data, transparency, and the energy consumption of machine learning models (rathore, 2018; hammami, 2025). the system encourages companies to implement green ai that reduces environmental degradation alongside fulfilling economic and social objectives. it also encourages digital marketers to prioritize longer-term strategy sustainability, and not just performance in the short term. stakeholder theory stakeholder theory, as established by freeman (1984), highlights that organizations owe a responsibility to all parties who are affected by their actions. these include shareholders, customers, workers, society, and the environment (awa et al., 2024). the theory particularly comes into relevance in sustainability-oriented digital marketing, where transparency, trust, and interaction are paramount. research has documented how digital advertisements can help connect to customers with a sense of ethical and environmental cause (e.g., winarto & wisesa, 2024; gündüzyeli, 2024). ai facilitates targeted pa ge 23 6 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 234-244, 2025 messaging that can directly address such concerns. to illustrate, personalized ads showing cruelty-free, lowcarbon, or recyclable goods prove particularly influential with gen z and value-oriented audiences. stakeholder theory explains such trends through the lens of inclusivity as well as accountability. it lends support to the notion that advertising with digital media not only sell goods but also represents and respects stakeholder expectations. this theory also supports the desirability of organizational alignment, so that internal actions as well as external communication match. if a firm tells a story of sustainability in advertisements but engages in questionable ai methods or conceals excessive emissions, it stands to misplace stakeholder trust. in addition, stakeholder theory underpins ethical debates surrounding the use of ai. it highlights concerns such as data privacy, algorithmic fairness, and the digital divide (miller, 2022; radanliev, 2025). these concerns become even more critical as business increases the use of ai to collect insight as well as automate advertising functions. these two theories lend a robust conceptual basis to the evaluation in the studies reviewed. tbl informs the evaluation of environmental and social impacts, and stakeholder theory ensures that the interests and rights of interested groups are taken into account. these frameworks enable researchers and practitioners not only to examine if ai-based digital advertising is successful, but also whether it is sustainable, ethical, and inclusive. as demonstrated by this review, the intersection of green ai, digital advertising, and sustainability is in a developmental stage. these theories offer both a diagnostic tool as well as a strategic guide, allowing organizations to match digital innovations with appropriate business approaches. materials and methods the current study applied a systematic review in accordance with the preferred reporting items for systematic reviews and meta-analyses (prisma) guidelines (page et al., 2021). prisma is a system that provides a structured protocol for executing systematic reviews with comprehensive coverage and methodologic rigor. it guides the systematic search, analysis, and synthesis of the literature, providing a transparent and clear approach for summarizing earlier studies (moher et al., 2010). systematic review protocol the prisma protocol was followed in the systematic review, involving the following four steps: • identification: searching relevant academic databases using predefined keywords. • screening: removing duplicate records and screening titles and abstracts. • eligibility: assessing full-text articles against inclusion and exclusion criteria. • inclusion: selecting final studies that matched all criteria for detailed analysis. the results section is accompanied by a prisma 2020 flow diagram, summarizing the process. databases searched the databases selected for the search for this study included the well-known and highly cited databases (google scholar, scopus, and web of science). these databases were selected given that they comprehensively cover peer-reviewed scholarly articles in a broad array of disciplines (martín-martín et al., 2018). inclusion and exclusion criteria to ensure the quality and relevance of selected studies, the following criteria were applied: inclusion criteria • published between 2015 and 2025 • written in english • peer-reviewed articles, conference papers, or book chapters • focused on at least two of the following: green ai, digital advertising, corporate sustainability • empirical or conceptual studies with clear applicability to sustainable marketing practices exclusion criteria • non-english publications • studies unrelated to ai, sustainability, or digital advertising • articles lacking abstract or full text • editorials, opinion pieces, or non-academic sources • studies focused purely on technical ai performance with no sustainability or marketing implications search strategy and keywords a systematic keyword strategy was developed and applied across all three databases. boolean operators (and, or) and truncation techniques were used to capture variations in terminology. search strings used included • “green ai” and “digital marketing” and “sustainability” • “artificial intelligence” and “corporate sustainability” and “advertising” • “energy-efficient ai” or “low-carbon ai” and “marketing strategy” • “sustainable advertising” and “ai tools” • “responsible ai” and “brand communication” keywords were adapted slightly based on the syntax and advanced search functions available in each database. filters were applied to limit results to the publication period of 2015 to 2025 and to english-language publications. screening process a total of 324 records were initially identified from three academic databases: scopus (n = 103), web of science (n = 87), and google scholar (n = 134). after removing 47 pa ge 23 7 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 234-244, 2025 duplicate entries and 4 non-english papers, 273 records remained for title and abstract screening. from these, 197 were excluded due to irrelevance. of the remaining 76 reports sought for retrieval, 5 could not be accessed. the remaining 71 full-text articles were assessed for eligibility, out of which 52 were excluded. finally, 19 studies were included in the final synthesis. the study selection process is summarized in figure 1. quality assessment a quality appraisal was carried out for all 19 included studies to ensure academic rigor and relevance. the appraisal followed a structured checklist based on criteria adapted from tranfield et al. (2003) and the joanna briggs institute (jbi). to ensure the academic rigor and relevance of the included studies, a structured quality assessment was conducted using five criteria: clarity of research aim, appropriateness of methodology, relevance to the review themes, transparency in data collection and analysis, and theoretical or practical contribution. out of the 19 studies, 15 had a rating as high quality, and 4 had a rating as moderate quality. this step ensured that the reliability of the findings from the review was reinforced and that only conceptually and methodologically sound studies guided the thematic synthesis. data extraction and synthesis table 2: quality assessment of included studies no. study clear research aim appropriate methodology relevance transparency contribution overall quality 1 akshita et al. (2024) ✔ ✔ ✔ ✔ ✔ high 2 kumar et al. (2025) ✔ ✔ ✔ ✔ ✔ high 3 baruno & indrasari (2025) ✔ ✔ ✔ ✔ ✔ high 4 nianko & andrushkevych (2025) ✔ ✔ ✔ ✔ ✔ moderate 5 emon & khan (2025) ✔ ✔ ✔ ✔ ✔ high 6 saadi & azdimousa (2024) ✔ ✔ ✔ ✔ ✔ moderate 7 dalhoum et al. (2024) ✔ ✔ ✔ ✔ ✔ high 8 hammami (2025) ✔ ✔ ✔ ✔ ✔ high 9 salehzadeh et al. (2024) ✔ ✔ ✔ ✔ ✔ high 10 keke (2023) ✔ ✔ ✔ ✔ ✔ moderate 11 ahn (2025) ✔ ✔ ✔ ✔ ✔ high 12 hamamah et al. (2024) ✔ ✔ ✔ ✔ ✔ high 13 gündüzyeli (2024) ✔ ✔ ✔ ✔ ✔ high 14 alkhatib et al. (2023) ✔ ✔ ✔ ✔ ✔ high 15 boza et al. (2025) ✔ ✔ ✔ ✔ ✔ high 16 rai & pandey (2025) ✔ ✔ ✔ ✔ ✔ high 17 rathore (2018) ✔ ✔ ✔ ✔ ✔ moderate 18 bashynska (2023) ✔ ✔ ✔ ✔ ✔ high 19 winarto & wisesa (2024) ✔ ✔ ✔ ✔ ✔ high pa ge 23 8 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 234-244, 2025 the data from the included studies were systematically extracted using a standard data extraction form. for every article, essential details were captured, including the year, author(s), study title, journal or source, objectives and questions stated, approach taken, and main findings as presented in table 3. particular attention was given to the study’s relevance to the three core domains of this review. this extracted information was organized into a structured matrix to enable effective cross-study comparison and thematic grouping. the synthesis process followed an inductive approach, allowing themes to emerge naturally from the data as patterns and relationships across the studies were identified. thematic synthesis approach this thematic structure was developed iteratively as patterns emerged from the extracted data. an inductive thematic analysis was used to categorize the studies into five major themes: • ai-driven transformation of green marketing • strategic integration of sustainability into digital advertising • challenges and risks in ai-supported sustainable marketing • consumer engagement, brand trust, and personalization • theoretical models and frameworks guiding the field ethical considerations the study is solely based on published secondary data. personal data and participants were not included. all the sources used are referenced appropriately. hence, no ethical approval was necessary. findings and thematic synthesis figure 1: prisma flow diagram source: page et al. (2021) table 3: summary of included studies author(s) year methodology focus area key findings / contribution akshita et al. 2024 review & conceptual model green marketing & digital branding highlights the importance of integrating green values in brand positioning and digital marketing strategies. kumar et al. 2025 systematic literature review + topic modeling (lda) green ai, sustainable marketing identifies key themes in sustainable digital marketing and proposes a tcm framework for future research. baruno & indrasari 2025 case study ai-driven advertising shows how ai improves advertising effectiveness and contributes to green strategy in consumer campaigns. pa ge 23 9 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 234-244, 2025 nianko & andrushkevych 2025 conceptual analysis ai tools in marketing discusses the role of green ai tools in achieving environmental goals through data efficiency. emon & khan 2025 systematic review sustainability + ai in marketing intelligence explores the dual role of ai in enhancing marketing efficiency and addressing ethical sustainability goals. saadi & azdimousa 2024 case-based study digital advertising and green branding discusses the role of ai-driven content in promoting sustainable brand images. dalhoum et al. 2024 mixed methods green digital marketing evaluates how digital marketing campaigns influence consumer behavior toward green consumption. hammami 2025 theoretical discussion green marketing + organizational change emphasizes the need for holistic integration of sustainability in digital strategies to avoid greenwashing. salehzadeh et al. 2024 survey (quantitative) sustainable brand equity demonstrates that digital sustainability initiatives strengthen brand equity among environmentally conscious consumers. keke 2023 qualitative analysis ethical advertising & environmental impact discusses the relationship between ethical marketing strategies and environmental awareness. ahn 2025 conceptual framework ai & consumer engagement proposes a digital engagement model incorporating sustainability values through personalized ai marketing. hamamah et al. 2024 empirical analysis smart city sustainability & digital tools examines smart technologies in digital urban marketing and their role in public sustainability communication. gündüzyeli 2024 mixed methods esg & green digital policy evaluates how digital tools support corporate esg communication and performance monitoring. alkhatib et al. 2023 conceptual + content analysis digital and green marketing synergy highlights the emerging convergence of green and digital marketing as a strategic business opportunity. boza et al. 2025 systematic review (prisma) sustainability & digital strategy analyzes how digital marketing aligns (or fails to align) with corporate sustainability and organizational culture. rai & pandey 2025 conceptual ai in sustainable ad campaigns discusses the use of ai for targeting sustainability-focused consumer segments. rathore 2018 theoretical ai, sustainability & metaverse explores the convergence of ai and green marketing in the metaverse as a future business frontier. bashynska 2023 mixed methods ai personalization & circular economy evaluates ai-driven personalization in advertising and its link to sustainable consumer behavior. winarto & wisesa 2024 survey (quantitative) gen z, ai & sustainability assesses how ai and eco-practices affect gen z's purchase intention in the cosmetics sector. this section offers a synthesis of the identified themes that emerge from the intersection of green ai, digital advertising, and corporate sustainability. the thematic synthesis reveals five main themes: ai-powered green marketing transformation, strategic integration of sustainability in digital advertising, challenges and pitfalls in ai-assisted sustainable marketing, consumer trust and brand involvement, and developing theoretical and strategic frameworks. these themes reflect the promise and challenges in relating ai technologies to environmental and ethical marketing goals. ai-driven transformation of green marketing artificial intelligence (ai) is revolutionizing the practice of green advertising through increased automation, personalization, and optimization of data. ai facilitates pa ge 24 0 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 234-244, 2025 green messaging with unparalleled accuracy and scale, as well as enhancing campaign performance. ai technologies like machine learning, natural language processing, and predictive analytics allow for the segmentation of greenoriented customers in real-time. this enable companies to customize messaging by environmental values and attitudes (baruno & indrasari, 2025). ai functions aid in optimizing resources by eliminating ad waste and guaranteeing best targets hit, aligning performance with sustainability objectives. the literature points to ai as a central enabler for green content personalization for sustainability-seeking consumers. saadi and azdimousa (2024), for example, illustrated how content facilitated by ai can help enable green positioning for a brand by reflecting green values in promotional content as well as in customer experience. bashynska (2023) also illustrated that ai personalization helps in sustainability not through improved customer engagement, but also by facilitating consumption behavior in conformity with the circular approach to the economy. ai-based systems can leverage behavior data to determine eco-aware consumers and provide them with goods or services that help in waste reduction, emission reduction, or reduced consumption. in addition, kumar et al. (2025) pointed out that ai facilitates large-scale marketer insight through green consumer trend identification. using 2,061 publications on a topic modeling application, they illustrated that aibased marketing is moving toward a central enabling role for corporate sustainability strategies. environmental, social, and corporate governance (esg) data processing in real time also enables marketers to directly incorporate sustainability metrics in digital campaign planning. this opens doors for increased visibility and data-informed sustainability narratives that increase credibility and trust with stakeholders. the role of ai in green marketing also goes beyond the optimization of campaigns. algorithmic adjustments in digital advertising placement occur in real-time. this can be user feedback, device power consumption, or local environmental regulations. for example, rathore (2018) suggested that prescriptive ai can customize promotional content in emerging digital spaces such as the metaverse in a manner that sustainability is a primary element even in simulated environments. this point indicates that green marketing transformation by ai is not merely technical but strategic. it contributes to companies moving away from symbolic green messaging to measurable environmental contributions. adding intelligence to environmental practice integrates awareness into sustainability, allowing organizations to translate digital performance into ecological responsibility. this is value for environmental, economic, and consumer stakeholders. integrating sustainability strategically into online advertising the embedding of sustainability in digital advertising requires a long-term cultural transformation in the organization, a buy-in by the leadership, and policy alignment. boza et al. (2025) believe that digital sustainability needs to be incorporated into the central strategy of a business. they established that numerous businesses acknowledge the value of sustainability, but in practice, the integration is usually shallow. inconsistent messaging and greenwashing could result from a lack of alignment between digital advertising practices and wider corporate sustainability objectives. organisational culture, especially leadership direction and staff involvement, should focus on making digital sustainability a lived experience and not a branding initiative. akshita et al. (2024) validate this viewpoint with supporting evidence that brand identity is being shaped by digital marketing practices centered on environmental responsibility. the study finds that sustainability must be woven into brand narratives through intentional and repetitive efforts with a long-term strategic vision. sustainable values can be propagated through digital channels, but they need to be integrated into the business framework, not done for the sake of consumer acceptance. hammami (2025) also explores how internal reform can help make digital changes sustainable. the study believes that integrating sustainability into digital strategy is a multi-level approach. this involves picturing a different infrastructure, investing in low-carbon technologies, and cultivating a mindset change among marketers. the study underlines that sustainability integration cannot be done from outside; it needs to be part of a grander vision with leadership and cross-functional coordination. in another similar discovery, gündüzyeli (2024) explores the realization and communication of corporate esg strategy through digital media. the study finds that various organizations make use of dashboards, social media, and reporting websites to align digital marketing with esg disclosures. it also finds that in the absence of policy coordination and a system for internal responsibility, the digital media can become mere signaling devices. ai-supported sustainable marketing: challenges and risks despite ai being a promising instrument for encouraging sustainability through digital advertising, there are several risks confronting it. using ai for greenwashing is one such risk. dalhoum et al. (2024) discuss that as digital advertising goes on to become even bigger, so does the risk of making false statements about sustainability. these authors mention in a study that when organizations take up ai-powered campaigns that promise a green image without supporting it with real practice, consumer trust is lost. discrepancy between promise and practice can cause loss of reputation as well as a backlash from regulations, undermining actual sustainability efforts. gündüzyeli (2024) continues by spelling out the ethical dilemmas in esg policy driven by digitalization. the article highlights that there are companies that apply ai-based solutions such as dashboards and reporting systems that leverage the use of automation to present pa ge 24 1 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 234-244, 2025 esg performance, yet with weak internal controls in place, such systems may be able to cover up performance vulnerabilities. the digital divide, where some companies may be able to leverage powerful ai solutions but others cannot, is also a concern for equity in sustainability reporting. the study also identifies a lack of transparency in algorithmic logic and procurement as a barrier to ethical communication. another central problem is energy consumption. rathore (2018) raises the environmental costs imposed by adopting ai for green marketing. the article cites that the solutions may streamline message delivery and personalization. this will support hardware such as cloud servers and gpu-based processes, which commonly consume a lot of power. this is a paradox as the solutions that promote sustainability end up having a large carbon footprint, particularly when applied in immersive environments such as the metaverse. in addition to environmental and ethical difficulties, cultural or functional resistance is another strategic hindrance. hammami (2025) observes that organizations often make green ai solutions without addressing underlying cultural or functional inertia. without buy-in from top leadership and from the employees, ai deployment can be cosmetic and ineffective in generating meaningful sustainability outcomes. consumer engagement, brand trust, and personalization ai-powered digital advertising is a prime mechanism for consumer engagement and building brand equity in sustainability-oriented markets. various studies examine and describe the impact of ai and sustainability practices on consumer attitudes, behavior, and long-term trust. winarto and wisesa (2024), in a case study among gen z consumers in indonesia’s cosmetics industry, established that ai-powered technologies substantially augment hedonic and utilitarian value with personalized, green experiences. these results validate that sustainabilityoriented ai applications not only enable purchase intent but also enhance brand credibility and loyalty among young, sustainability-oriented consumers. bashynska (2023) also points to ai personalization as a catalyst for consumer sustainability. the results prove that personalization at scale through advertisements driven by ai can align product supplies with those of a circular economy. by showcasing content that aligns with consumer values (e.g., less-wasteful packaging, ethical sourcing), brands can gain a higher emotional connection and position themselves as credible actors for sustainability. this personalization is not even limited to convenience but includes educational as well as advocacy components, allowing consumers to make well-informed, responsible shopping decisions. salehzadeh et al. (2024) also state further that digital sustainability strengthens brand equity. through their empirical evidence, they illustrate that with companies including environmental responsibility in ad content backed by transparent, ai-derived metrics, consumers see such brands as more reputable and trustworthy. this trust further promotes emotional bonds and advocacy behaviors. ahn (2025) offers a theoretical approach, suggesting a model that coordinates ai-facilitated digital experience with consumer identity and eco-brand fit. the argument is that by integrating sustainability into the tailored digital experience, it becomes a part of the lifestyle of the consumer, strengthening both short-term conversions and long-term loyalty. theoretical and strategic frameworks guiding the field there has emerged an increasing volume of scholarship that defines theoretical and strategic models to explain and facilitate the integration of green ai, esg goals, and digital advertising. among these is the effort by kumar et al. (2025), who leveraged latent dirichlet allocation (lda) topic model over 2,061 papers to create a thematic-consolidated model (tcm). this model categorizes the emerging discipline of green digital marketing into thematic pillars such as green innovation, ethical application of ai, consumer ethics, and corporate transparency. this framework offers a guide for scholars and practitioners to map ai-powered advertising practices to long-term sustainability goals. this is expanded upon by ahn (2025) through a proposed conceptual framework linking digital consumer interaction directly with ai personalization and sustainability values. in the model, it is suggested that when ai technology is applied not just for commercial personalization, but also for advancing eco-friendly decision making, they form a “green engagement loop.” this incorporates brand messaging with personal consumer identities, building long-term brand sustainability and consumer loyalty alignment. here, personalization is not merely a promotional instrument, but also a behavior change medium for promoting green consumption. emon and khan (2025) take a wider strategic perspective in their systematic review of sustainability and ai in marketing intelligence. they offer no specific named model, but in synthesis they highlight the need for the application of ai to be aligned with sdgs and ethical governance standards. they advocate a far more cohesive, cross-functional approach that incorporates data ethics, energy efficiency, consumer trust, and long-term brand strategy in one sustainability-oriented ai paradigm. these studies form the basis for theory-informed knowledge on sustainable digital marketing. they provide frameworks that consolidate disparate activities in sustainability, ai, and marketing, steering future corporate and scholarly action toward coherent, quantifiable objectives. results and discussion the results from this review indicate that, whilst the use of ai in sustainable digital marketing is increasing, efforts has been inconsistent and evolving. the two theoretical pa ge 24 2 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 234-244, 2025 perspectives: triple bottom line (tbl) and stakeholder theory provide a framework for understanding how companies are navigating the intersection between green ai, advertising, and sustainability. in line with the tbl approach, ai enhances economic efficiency (e.g., campaign optimization), but environmental gains are less evident due to the carbon footprint of ai systems (rathore, 2018). social performance, exemplified by ai-driven personalization in sync with environmentally aware consumer values, is promising (bashynska, 2023; winarto & wisesa, 2024), but raises questions around privacy (dalhoum et al., 2024). stakeholder theory highlights that organizations leverage ai to connect with a greener consumer base, but they fail to track internal misalignments between sustainability messaging and business practice (boza et al., 2025). compared to previous literature, this review provides a more targeted focus on green ai and its link to digital advertising. earlier reviews, such as those by dangelico and vocalelli (2017) and tuz and sertyeşilışık (2022) on green branding, rarely consider ai’s strategic role. likewise, the broader field of ai ethics often omits digital marketing’s environmental dimension. this review bridges that gap by focusing on how ai tools enable, and sometimes undermine, credible sustainability messaging. practically, the findings suggest that digital marketers must do more than adopt sustainable messaging. they must embed sustainability into data strategies, platform selection, and content personalization. firms should apply green computing principles and invest in energyefficient ai models. policymakers must regulate digital green claims to avoid misleading practices and incentivize low-carbon digital technologies. however, organizations face trade-offs. ai offers marketing efficiency but may increase emissions unless properly managed. highly personalized sustainability content may boost engagement but raise privacy risks if not governed by transparent data ethics policies (gündüzyeli, 2024). balancing these goals requires crossfunctional leadership and investment in infrastructure that supports both marketing effectiveness and environmental responsibility. gaps in literature and future research directions the reviewed literature highlights several important gaps that limit current understanding of ai-driven sustainable advertising. first, methodological diversity is limited. many studies are conceptual or based on single-case analyses, with few using longitudinal or multi-country datasets (winarto & wisesa, 2024). future research should use mixed methods and longitudinal designs to assess how consumer trust and brand loyalty evolve in response to sustained ai-led sustainability strategies. secondly, most research is concentrated in specific sectors like cosmetics (winarto & wisesa, 2024) or consumer goods. there is minimal exploration of ai-led sustainable advertising in b2b sectors, public institutions, or energyintensive industries like manufacturing or logistics, where sustainability messaging is complex but equally essential. thirdly, very few studies examine how emerging ai technologies such as generative ai (e.g., chatgpt), digital twins, or blockchain-based advertising—intersect with sustainability communication. these technologies are already shaping digital engagement and content creation but have yet to be studied for their environmental or ethical impacts in advertising. another noticeable gap is regional imbalance. while some papers examine southeast asia (e.g., winarto & wisesa, 2024), most insights come from western or global contexts. there is a lack of research on africa, south america, or the middle east, despite growing ai adoption and pressing sustainability challenges in these regions. addressing these gaps will not only improve academic robustness but also help companies design sustainable ai strategies that are regionally relevant, ethically grounded, and scalable. conclusion this systematic review examined the intersection of green ai, digital advertising, and corporate sustainability using 19 scholarly articles. the findings show that ai has the potential to optimize sustainable marketing by enabling personalization, efficiency, and data-driven insights. however, challenges such as greenwashing, energy consumption, and internal misalignment hinder its impact. the review identified five key themes: ai’s transformative role in green marketing, strategic integration of sustainability, risks in aisupported messaging, consumer engagement through personalization, and emerging theoretical frameworks. theoretically, the study contributes by applying the triple bottom line and stakeholder theory to interpret the complexities of ai-driven sustainability communication. practically, it urges firms to embed sustainability not just in messaging but in operations, data ethics, and platform design. for policymakers, it highlights the need for stricter regulation of digital green claims and greater support for low-carbon ai infrastructure. references ahn, h. j. 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(2023). green shared vision: a bridge between responsible leadership and green behavior under individual green values. heliyon, 9(11), e21511. https://doi.org/10.1016/j. heliyon.2023.e21511 pa ge 1 pa ge 69 american journal of economics and business innovation (ajebi) circular economy in action: a systems thinking analysis of chicken production and consumption in the philippines qiarrah syrah a. chavez1*, van olem e. benitez1, kyle russelle p. paredes1, elijah jeremiah c. abad1, cedrick john v. alejandrino1, ernie c. avila1, rupert jeremiah a. bustamante1, emerson g. cabudol1, merryrose r. palma1, margaret r. tadeja1 volume 4 issue 3, year 2025 issn: 2831-5588 (online), 2832-4862 (print) doi: https://doi.org/10.54536/ajebi.v4i3.5616 https://journals.e-palli.com/home/index.php/ajebi article information abstract received: july 07, 2025 accepted: august 11, 2025 published: september 26, 2025 this research examines the sustainability of chicken production and consumption in the philippines through a systems-thinking perspective with the integration of the circular economy principles. chicken is a vital protein source in filipino diets and with its growing demand, comes the intricate challenges within the environmental, economic, and social sustainability dimensions. the study utilized a qualitative analytical approach, employing the use of swot and strategic factor analysis, to evaluate the current status of both the industrial and backyard poultry settings. crucial findings emphasize the following factors: the level of dependency on imported feed, improper waste management, erratic animal welfare practices, and constrained support for organic production as major barriers to sustainability. the report prescribes multifaceted and systems-based solutions such as investing in sustainable feed alternatives like insect protein, upcycling chicken wastes into organic fertilizers, augmenting animal welfare situations, and empowering small farmers through financial, knowledge and, methodological support. the research proposes the mobilization of the community through educational campaign mechanisms and reinforcement of sound policy frameworks to uphold responsible consumption and improve stakeholder accountability. highlighting the importance of an encompassing, collaborative and compelling stakeholder approach to address the challenges emerging from both the production and consumption dimensions, the study provided recommendations to synergistically implement initiatives that are crucial in creating a more resilient, equitable and sustainable philippine chicken industry. keywords circular economy, consumption, production, systems thinking 1 university of the philippines open university, los banos, philippines * corresponding author’s e-mail: qiarrah.chavez@gmail.com introduction in the filipino culinary setting, food is perceived as a nurturing experience and an avenue to express art. chicken, more than being a vital ingredient to elevate gastronomic experience, is also a medium for culinary art expression. being regarded as a vital dietary staple for its affordability, accessibility and versatility by both the commercial and consumer viewpoints, escalates the demand for this poultry. this primary protein-source, provides not only nutritional needs but also promotes cultural identity by making its presence known from daily meals to celebratory cuisines. the poultry’s popularity is evidence of its massive contribution to meeting dietary requirements, ensuring food security, and exhibiting tradition across diverse socioeconomic demographics. consumers want chicken meat and the demand for it is constantly rising. factors influencing this phenomenon are urbanization, increasing income, and growing population. moreso, the preparation and cooking of chicken is preferred mostly by consumers due to its convenience that fits the modern lifestyle. these reasons pose a significant threat to the equilibrium in the demand and supply curve of chicken. hence, the adoption of sustainable strategies in the production of poultry products is now timely and relevant. this study illustrates a comprehensive understanding of the chicken industry that deviates from mere linear, reductionist approaches. it employs a systems-thinking approach as it offers an analytical framework for examining complex, interconnected systems such as chicken production and consumption (system thinking, 2023). this approach posits that each component within a system is not isolated and that they interact dynamically, influencing and being influenced by one another. in the context of chicken production and consumption systems, it can be illustrated that decisions made in one component, for instance production of feeds, can have cascading effects to the entire system that can affect consumer access, pricing, farming practices, and environmental outcomes. this paper examines the chicken industry of the philippines using the systems thinking to dive into the complicated web of interactions that mold its sustainability. it primarily analyzes the current condition of chicken production and consumption including various factors like feed production and sourcing, farming methodology and animal welfare, waste management, and consumption patterns. the analysis also identifies challenges related to sustainability in terms of environmental impacts, social development, and economic growth, and proposes concrete and strategic data-based solutions grounded on the available data from the secondary sources and in systems thinking and circular economy principles. with this, the paper aims to offer a holistic view to enhancing the philippine chicken industry making sure it contributes to the economic development and food security while also minimizing the possible negative environmental impacts. pa ge 70 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 69-79, 2025 literature review the philippine chicken industry operates within a dual structure, commercial and backyard sectors, making it a component in the country’s economy and food security. this dual structure presents opportunities and challenges concerning sustainability and emerging circular economy concepts. commercial sector and backyard sector the commercial sector is large-scale, vertically integrated firms that operate using advanced technology and farming practices to meet the increasing demands of chicken from the urban consumers. although these enterprises achieve efficiency, scale, and profitability, they also have environmental challenges. robetson et al. (2000) documented that commercial sectors contribute to the increasing greenhouse gas emissions and landused degradation that were linked to intensive farming. in addition, these firms also contribute to antibiotic resistance as a result of the heavy reliance on antibiotics both in feed and management of bird diseases (kelbrick et al., 2023). another issue as identified by iheanacho et al. (2024) is the excessive fat deposition in poultry which is generally undesirable for both producers and consumers. it wastes dietary energy and results in waste products with low market value. all these can contribute to various health issues including diseases linked to fat such as atherosclerosis. thus, innovative approaches within circular economy principles are needed to mitigate these negative impacts. on the other hand, backyard sectors are small-scale producers who usually operate within the rural areas. these small companies contribute to rural income and food security as they utilize locally available sources (silva et al., 2024) for feeds, jobs, and among others. however, the potential of this sector is challenged by limited access to financial resources and education that make them vulnerable to changes in market conditions and macro-economic forces. hernandez et al. (2022) indicated that these challenges can be mitigated if these farmers are given training and access to sustainable farming practices. regardless of whether large or small, both sectors are contributing to the national economy and this illuminates that both should be considered in making action towards a circular economy. feed production and farming methods just like any other sector, feed production is a critical challenge in chicken production even up to this date. these sectors are heavily reliant on global sourced ingredients that are susceptible to price changes and also exacerbates the carbon footprint due to supply chain activities such as transportation. producers and farmers often resort to locally sourced feeds in order to reduce the costs which compromise the nutritional quality of chicken meat and productivity (kpomasse et al., 2023). hence, malenica et al. (2022) suggested that the promotion of regionally available and sustainable feed alternatives could enhance chicken health and contribute to the circulation of the chicken production system. farming methods and animal welfare are interconnected issues within chicken production sectors. their operations, for instance in the commercial sector, prioritize output through intensive systems that often lead to severe welfare concerns including confinement stress and disease issues due to overcrowding. a system-level analysis is necessary to develop practices that balance efficiency and welfare for chicken farming methodologies. moreover, markos et al. (2024) emphasized that importance of targeted training in the construction of housing facilities as well as in the management of feeding, watering, cleaning, and disinfection procedures for feeders and waterers, to effectively mitigate the risk of waterborne diseases. waste management in the context of waste management practices, chicken farms generate substantial quantities of manure that can adversely affect local environments and producers often have inadequate waste management strategies leading to soil and water degradation. implementing effective waste management solutions such as composting and biogas production presents an opportunity for the sectors to minimize their environmental impacts and enhance resource reuse aligning closely with the circular economy principles (palese et al., 2020; cha et al., 2020). this perspective is supported by sharmin et al. (2025) who highlighted that transitioning to a circular economy framework can be transformative for sustainable waste management practices. developed countries have already made considerable advancement in adopting circular economy principles into the systems of waste management. on the other hand, developing countries like the philippines are still in the early stages of adoption. as sharmin et al. (2025) study results, the adoption of a circular economy in developing countries is barred by problems with infrastructures, limited education, and political instability. yet, these disparities can be addressed through policy interventions, innovation investments, and multi-sectoral participation. consumer demand espino and bellotindos (2020) reveal that the current chicken consumption in the philippines is strongly upward trajectory. this is due to the influence of growth in population, urbanization, and changes in food preferences. tariga et al. (2021) then stressed that sustainable consumption methods should be now put in place to continually meet consumer demand while also minimizing the existing environmental issues. the role of consumer behavior further complicates this problem suggesting a more integrated approach to production and consumption adopting the principles of circular economy (romana & leonardo, 2015). materials and methods research design this study employed a qualitative research design, pa ge 71 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 69-79, 2025 specifically a case study to investigate the current status, challenges, and opportunities in chicken production and consumption in the philippines, with distinct focus on sustainability. case studies are most typically-employed when there exists an identifiable problem validated through research, as is this context, for integrative, sustainability-centered studies in the poultry industry. the design warrants the researchers to utilize a theory-bound approach drawn from multiple sources (e.g observation, interviews and document analysis) to gather preliminary insights and build a groundwork for further studies related to circular economy practices and systems-level mechanisms within the poultry industry. this design is particularly relevant given the two-fold structure of the chicken industry in the philippines (commercial and backyard sectors), and the underexplored interrelations of environmental impact, animal welfare, feed dependency, and consumer behavior. sampling technique the study utilized a criterion-based sampling technique, a form of purposive sampling that efficiently scrutinizes through document contents and selects those that qualifies with specific and pre-established criteria to arrive at the research objectives. in this case, to expand on the knowledge of the philippine poultry industry. the inclusion criteria dictates the focus and direction of the research while extracting meaningful insights and vital understanding along the way. this criteria were connected to several important factors such as: relevance (e.g documents that are directly related to the chicken production policies, programs and organizations); credibility (include government published works, institutional reports and other peer reviewed studies that discusses the integrative implementation of systems-thinking and circular economy approaches); timeliness (e.g the publication period of study, specifically its temporal dimension), and accessibility (to ensure verifiability of the study). research instrument the primary instrument used was a systematic literature review anchored on the criterion-based sampling technique and integrated with self-developed assessment matrix in the form of strengths, weaknesses, opportunities and threats (swot) and strategic factor analysis summary (sfas) matrices. the analysis was crafted around significant domains such as production methods, feed sourcing, waste management, market access, regulatory challenges, and perceptions of sustainability. the matrices systematicallyenhanced the organization and evaluation of stakeholder responses, enabling deeper investigation of sector-specific issues. for triangulation, document analysis of secondary sources such as policy papers, national statistics, industry reports, and peer-reviewed studies was also conducted. validity and reliability of the instrument to ensure validity, two qualitative validity instruments were employed namely: triangulation and peer debriefing. the triangulation method synergized findings from swot/sfas matrices, literature reviews and document analysis altogether and ascertain the points where integrative knowledge congregates. this happens when multiple sources are used as a basis to validate findings and establish a conclusive insight. peer debriefing a.k.a “member-checking” engages multiple researchers, subject experts and/or stakeholders to deliberate interpretations drawn from either the analyses or matrices. this discusses the process taken and analysis arrived at by colleagues as a form of check and balance of logic execution, immensely reducing the emergence of researcher biases. both instruments are qualitative in nature. the researchers conducted the data collection in two key phases: document review a review of existing literature, reports from the department of agriculture, and publications from academic journals such as the asian journal of agriculture and development and philippine journal of veterinary and animal sciences was undertaken. strategic factors factors were validated and rated using crucial industry factors identified in the swot and sfas matrices. their inputs were quantified using a an sfas rating scale for weighting and scoring in the final matrix synthesis. data analysis quantitative data derived from the swot and sfas assessments were tabulated and scored to identify strategic priorities, threats, and opportunities. the overall weighted score of 3.00 indicated a moderate industry position, balancing both risk and opportunity. scaling and interpretation of strategic factors the sfas matrix employed a rating scale where ● 4.00 = very high influence/impact ● 3.00 = high influence/impact ● 2.00 = moderate influence/impact ● 1.00 = low influence/impact ethical considerations this study adheres to the ethical principles of qualitative research. it respects the intellectual property of credible sources by attributing them in the paper. there was no direct human participation as the research primarily employed document analysis, literature reviews, and strategic matrix development. in addition, policy documents, journal articles, government and company reports, and other organization records were obtained from the global and local sources with full attribution given to the original authors following the apa 7th edition format. those sources were used for the study’s purpose only. data triangulation was utilized as well to enhance the pa ge 72 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 69-79, 2025 credibility of this research. this was done by corroborating the findings of the study from multiple sources that would help the researchers understand the examined chicken production and consumption phenomena. a memberchecking was done through soliciting feedback from experts on the interpretation of the data to strengthen the validity of the conclusions drawn. documentation and monitoring since the study’s methodology primarily starts with extensive literature review, a search strategy was employed where documents to be included in the analysis were carefully selected from the databases of scopus, web of science, google scholar, and some peer-reviewed journals. the document to be considered was published from 2014 to 2025 to synthesize findings that show the latest development in the chicken industry. the paper applied swot and sfas matrices to help visualize and prioritize the strengths, weaknesses, opportunities, threats, and other critical factors that affect the chicken industry within the circular economy framework. this way, the researchers were able to apply systems thinking specifically when interconnecting various dimensions in chicken production such as policy, market, and production. the study’s monitoring procedures were periodically cross-checking the entries in the matrix against the documented original source just to maintain consistency and accuracy. results and discussions examining consumption patterns and trend analysis the philippines’ increasing demand for chicken products is attributed to the steady growth in consumption, catalyzed by expanding population, rapid industrialization and dynamics in dietary preferences. processed chicken for instance is the main ingredient being served in fastfood restaurants and ready-to-eat meals making it a popular choice among city-dwellers. its easy, relatively healthy and quick preparation and cooking time earned the favor of the busy and modern lifestyle. these trends establish the future demand for chicken products, which is crucial in dictating the production and consumption sustainability strategies. sharma et al. (2018) explains how consumption patterns are determined by price, availability, cultural preferences, and health concerns moreover, the in-depth understanding of how consumer behaviors aid in crafting targeted interventions to promote sustainable and logical consumption choices. evaluating the impact of rising incomes, purchasing capabilities of the middle class, the inclination towards more convenient food options (alam et al., 2020) and how it easily fits in the contemporary lifestyle are vital contributory factors justifying the increase in demand for chicken meat products. furthermore, the impact of marketing, advertising, and evolving lifestyle preferences offers valuable insights from which policy creation and creation of a more sustainable chicken consumption model could leverage on. mapping the risks and prospects in chicken production and consumption the chicken production and consumption pattern requires a crucial balance between overcoming the demand challenges without compromising the sustainability of the industry. the increasing demand for chicken due to rising incomes creates an opportunity for industry expansion but also necessitates careful consideration of environmental and social impacts (gomez 2024). if the demand for chicken meat cannot be addressed by local production, imports come into the picture. however, overreliance on imported products to solve shortage issues increases strain on the ability to see through supply and demand which poses a threat on food security and long-term sustainability. table 1: strengths, weaknesses, opportunities and threats (swot) matrix strengths weaknesses 1. backyard production of native chickens continues to contribute to the poultry industry even through broiler inventory shortfalls during the pandemic (briones and espineli 2022). 2. new markets for the industry emerge as the philippines begins to export small volumes of chicken to other asian countries like japan and south korea (domingo and olaguera 2017). 3. value of production has, for the most part, been increasing in the last decade. (domingo et al. 2022). 4. government agencies like dost and da support the poultry sector waste and promote environmental protection. (dili et al., 2022) through project and programs e.g. dost established egg innovation hubs. (dayo, 2022; the philippine poultry layer industry roadmap 2020-2040). 1. the rising cost of inputs like feeds, medications, and labor impacts profit margins for producers (gomez, 2024). 2. lack of registration among producers, especially backyard and smallholder farms, risks the violation of health and safety standards in the production of chicken (domingo et al. 2022). 3. there has been a decline production of chicken eggs e.g. 4.5% decrease in the cordillera region (alibuyog, 2024) 4. there is limited awareness and support for organic chicken production (pantoja et al., 2023) 5. the lack of rde investment to enhance productivity and sustainability of chicken production, especially for backyard farmers, has been noted by numerous studies (gomez, 2024; domingo et al. 2022). pa ge 73 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 69-79, 2025 1. there are existing poultry waste management practices among producers in some areas of the philippines like san jose, batangas. (medina et al., 2019; dili et al., 2022) 2. there are established ordinances and resolutions to regulate poultry 1.there is limited awareness and implementation of regulations among some poultry owners (dili et al., 2022). opportunities threats 1. technological advancements within the industry (poultry genetics, breeding, feeding, and disease management) can help increased productivity, efficiency, and overall sustainability in the poultry industry (gomez, 2024). 2. compost from the broiler production chain for chicken can be used as agricultural input, a strategy for closing the circular economy loop, but only if technologies for proper nitrogen-treating are made more easily accessible (chiarletto et al., 2021). 3. food waste can be feasibly recycled and transformed into chicken feed of equal quality to those available in the market if proper household food waste collection, segregation, and treatment systems were developed (siddiqui et al., 2021). 4. growing demand for chicken products due to rising income of the domestic market (gomez, 2024). this can lead to increased domestic production and value-added processing. 1. there have been numerous disease outbreaks like avian influenza and newcastle disease disrupt the production leading to shortages and instability of chicken prices (denr, n.d.) 2. high certification costs and inadequate access to organic input plague the industry (pantoja et al., 2023). 3. lack of government support and communication in the collection and release of official data on production as well as policymaking (domingo et al., 2022). consumption 4. the demand for chicken meat exceeds domestic supply requiring imports to meet the shortage (gomez, 2024; fsa manila, 2024). 5. innovations in substitute food technologies will soon affect the demand for chicken, just as it has already done so in developed countries (espino and bellotindos 2020). 6. improper poultry waste disposal poses threat to animal health, food security, water sanitation, environment, and public well-being (dili et al., 2022; inciner8, 2024) table 2: internal factor analysis summary (ifas) matrix on chicken production and consumption internal factors weight rating weighted score remarks strengths backyard production of native chickens 0.15 4 0.60 longevity of production and maintained supply amidst pandemic new market emergence for the industry 0.11 3 0.33 key export indicator continuous increase in the value of production 0.1 2 0.20 employment and company empowerment support from government agencies through agricultural projects and programs 0.09 2.5 0.23 enhanced productivity and promotion of innovation implementation of waste disposal and management practices 0.08 1.5 0.12 improved environmental sustainability and reduced health risks this is worsened by outbreaks such as avian influenza and newcastle diseases leading to further strain in supply and instability of chicken prices as elaborated by the department of agriculture philippine roadmap poultry layer industry 2022-2040 (denr, n.d.).additionally, the rising cost of input like feeds, medications, and labor impacts profit margins for producers (gomez, 2024). another concern is the limited awareness and support for organic chicken production which faces challenges like high certification costs and inadequate access to organic inputs (pantoja, 2023). an insufficient amount of research and development (rde) investment increasingly hampers the industry’s ability to craft and employ innovative solutions to enhance productivity and sustainability (gomez, 2024). moreover, the lack of technical education and support to organic chicken production underpins the importance of consumer awareness and the impact of government efforts in promoting equitable practices (pantoja et al., 2023). these issues are made even more highlighted when shifts from commercial to backyard production, only encompasses roughly 20% of the industry contribution and aggravated by relatively lower levels of registration and regulation (domingo et al. 2022). pa ge 74 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 69-79, 2025 weaknesses the rising cost of inputs 0.13 4 0.52 rising prices for feeds, medications and labor lack of technical knowledge among producers 0.11 3 0.33 consider mainstream media exposure decline of chicken egg production 0.07 3.75 0.26 specific regions reported dramatic decline in production limited awareness and support for organic production 0.05 3.5 0.18 relative lack of available & implementable knowledge on organic production lack of rde investment 0.04 2 0.08 lack of research and development on how to increase productivity among backyard farmers limited awareness and implementation of waste management regulations 0.07 2.5 0.18 unsustainable methods of waste disposal increasing risks of diseases total 1.00 3.00 table 3: external factor analysis summary (ifas) matrix on chicken production and consumption external factors weight rating weighted score remarks opportunities technological advancements within the industry 0.15 2.5 0.53 longevity of production and maintained supply amidst pandemic composting from the broiler production 0.11 3 0.33 key export indicator recycling of food wastes 0.1 1.75 0.20 employment and company empowerment growing demand for chicken products due to rising purchasing power 0.2 2.5 0.6 increased pressure on production systems to scale sustainably threats outbreaks 0.3 3.25 1.13 increased disease outbreaks, which can compromise animal and human health cost of licensing and certification 0.09 1.25 0.27 consider mainstream media exposure insufficient government support 0.06 3 0.21 specific regions reported dramatic decline in production demand for chicken products exceeds supply 0.04 2.75 0.06 increased pressure on producers to boost output access to available substitute innovative food technologies 0.1 2 0.23 potential shift in consumer behavior and market dynamics (adapt innovation) persisting traditional poultry production 0.05 2.15 0.10 potential hindrances in productivity, and competitiveness total 1.00 3.00 table 4: strategic factor analysis summary (sfas) matrix on chicken production and consumption no. strategic factor weight rating weighted score short intermediate longterm remarks/ influential factor/s o1 technological advancements within the industry 0.09 4 0.36 x research and development pa ge 75 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 69-79, 2025 o2 composting from the broiler production 0.085 2.2 0.187 x regulatory guidelines and farmer technical awareness t1 disease outbreaks 0.3 3.25 0.975 x prevention and recovery strategies t2 cost of licensing and certification 0.075 1.75 0.13125 x regulatory requirements, complexity of compliance standards t5 availability of substitute food technologies 0.1 2 0.2 x advancements in food science and innovation s1 backyard production of native chickens 0.075 3.5 0.2625 x food security and supplemental income. s2 new market emergence for the industry 0.1 3 0.3 x changing consumer preferences w1 the rising cost of inputs 0.1 3.5 0.35 x supply chain disruptions w2 lack of technical knowledge among producers 0.08 3 0.24 x constrained access to extension services and training programs total 1.00 3.00 the strategic factor analysis summary (sfas) matrix of the chicken production and consumption is shown in table 2. the industry’s overall weighted score is 3.00, which is considered within the industry threshold (wheelen & hunger, 2012). the matrix shows a well rounded perspective with reasonable considerations for advantages and risks. the industry must concentrate on managing disease outbreaks as the t1 scores can be interpreted as being a significant threat; however, the industry is under recovery after bouts of incidences relating to disease threats. on the other hand, given the o1 scores, utilizing technology breakthroughs is expected to have a positive impact with continuous advancements within the industry, while tackling financial and regulatory obstacles, as can be derived from t2 and w2, is a moderate concern. growth is a result of expanding into new markets (t5) and by supporting backyard production (s1), but the sector must put in efforts in overcoming constraints in rising input costs and burdens with producer registration (w1 and w2, respectively) the philippines can achieve a sustainable chicken industry if the government and producers invest in collaborative research and development efforts to: a) enhance production, b) explore alternative feed sources, c) develop innovative production methods, d)amplify disease surveillance, and d) encourage responsible consumption habits. a holistic approach that engages stakeholders, from producers to consumers, can establish resiliency and sustainability of the chicken industry in the country. applying the concept of circular economy to address sustainable production and consumption of chicken, certain opportunities are already available through international best practices that need only be adopted locally (of course, after the conduct and validation of participatory studies for localizing these technologies and strategies). these include strategies such as using the treated compost of organic waste from chicken production as agricultural input, the recycling of household waste into chicken feed given properly instituted collection, transportation, storage, and processing systems, among others (chiarletto et al., 2021; siddiqui et al., 2021). applying systems thinking for sustainable solutions investing in research and development of sustainable feed alternatives such as insect-based feeds. in different sources, insects have consistently been described to compose the majority of all living things. according to britton (2020), 75% of all named and described animal species are insects while the royal entomological society uk (n.d.) says it is around 90%. edible insects are good potential sources of proteins, amino acids, and lipids (lucas et al., 2020). lucas et al. (2020)also stated that insect farming uses less water and space, and produces fewer greenhouse gas, making it a sustainable choice. birds and poultry, such as chickens, naturally feed on insects making them a prime candidate as alternative feeds. from a practical standpoint, the acceptance of insect-based food is very low (giotis, 2021). there are also health hazards related to insectbased foods as contaminant transfer may come from substrates, like kitchen waste and manure, to the insects (european food safety authority scientific committee, 2015). pa ge 76 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 69-79, 2025 implementing circular economy principles for waste management by recycling chicken manure as an organic fertilizer to improve soil productivity and crop production (dikinya, 2010). verma et al. (2020) listed multiple benefits of utilizing chicken manure as an organic fertilizer including high nitrogen, phosphorus, and potassium content, less salt and free of weed seeds, and not having any harsh chemicals that may enter the ground. with the increasing demand for chicken, an abundance of chicken manure will be available for use. chicken production is significant agricultural activity and one of the major potential drawbacks of using chicken manure is its contribution to air pollution. according to fakkaew et al. (2022), there is a diverse range of chemicals found in chicken manure wastewater, which can constitute health risks. the importance of effective air pollution measures couldn’tbe more reiterated to minimize the adverse impact on human health. prioritization of overall well-being, health, and natural behaviors of animals in order to improve animal welfare is also a key aspect of sustainability. this entails creating an environment that regards animal welfare. for example, chickens given more space for mobility and in engaging in natural activities (roaming and foraging) are essential as it lessens their stress levels making them more resilient. this results in yielding better growth rates due to lower rates of disease and injury (rodenburg et al., 2005). this can also be a predictive indicator for higher egg production and improved feed conversion ratios. having healthier chickens would also mean fewer veterinary costs in the long term. ensuring that poultry are raised in humane conditions equate to abiding by the ethical concerns about animal welfare while adopting higher standards from consumers that are concerned with animal rights (pakseresht et al., 2022). advocacy, communication and mobilization (acsm) campaigns in the form of public awareness initiatives, sound government policies, and incentivization mechanisms for sustainable purchasing practices, increases inclination towards responsible consumption. manifestations of heightened awareness on the environmental and health impacts of certain food choices is evident in practices such as reducing food wastes, choosing ethically produced meat, and supporting sustainable brands. changing consumer behavior is similar to transforming a pre-existing culture and perceiving it as a challenge would be an understatement, for everyone has their own habits and preferences that lead to unsustainable consumption patterns. sending the message of responsible consumption is essential as it greatly reduces customer demand for environmentally harmful practices. this motivates people to look at the health benefits of responsible consumption as it is often aligned with healthier eating habits. nevertheless, changes in consumer behavior is not enough to resolve sustainability industry challenges. it also demands for structural changes within the food industry. policies that make sustainable products more affordable and accessible for example, can help trigger a normalized integration of sustainability practices in the individual’s daily life. tilman and clark (2014), explains how the economy could transition toward more sustainable and resilient food systems by focusing on waste reduction, enforcing government regulations, and increasing ownership of the concept within the communities in their own production and consumption causes. conclusions the philippine poultry sector plays a critical role in ensuring national food security while encouraging economic growth, but is continuously in competition with interwoven social, economic and environmental challenges. heavy dependence of farmers to imported feeds puts the sector to vulnerable position in facing highly-volatile global market prices, driving up consumer expenses and reducing producer profit margins. moreover, inefficient waste management habits of both large-scale and backyard operations are great contributors to water and soil contamination exacerbating ecological degradation. limited access to resources and technical expertise among smallholders result to suboptimal poultry management and reduced overall product quality. the limited public awareness about sustainable habits intensifies the adverse effects of production and consumption. the industry’s dual structure of operating in commercial and backyard setting, requires tailor-fitted strategies that motivates collaboration across the value chain. systems-thinking and circular economic approaches in poultry-farming can achieve the transformative shift needed by the poultry industry to minimize wastes and optimize resource efficiency. the study recommends designing a waste conversion facility, turning chicken manure to organic fertilizers or biogas, developing local insect-based feed substitutes, and incentivizing eco-friendly feed adoption. reinforcing vigorous waste management regulations to ensure humane animal treatment and boosting small-scale farmer education are prioritized. additionally, the establishment of a national and regional sustainable poultry council can bridge the gaps and drive change in terms of policy-making, infrastructure investment, upholding global standards and fostering resilient, lucrative and environmentallysustainable poultry sector. references alam, s. s., ahmad, m., ho, y., omar, n. a., & lin, c. 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(2020). poultry manure and poultry waste management: a review. international journal of current microbiology and applied sciences, 9(6), 3483-3495. https://doi. org/10.20546/ijcmas.2020.906.410 pa ge 1 pa ge 21 3 american journal of economics and business innovation (ajebi) a multiple case study on challenges and strategies of sari-sari stores bernalyn mae c. caunan1*, rolando h. basoy jr.1, chyna fe c. benigay1, vergil m. escat1, dessairel o. pensahan1 volume 4 issue 3, year 2025 issn: 2831-5588 (online), 2832-4862 (print) doi: https://doi.org/10.54536/ajebi.v4i3.6209 https://journals.e-palli.com/home/index.php/ajebi article information abstract received: september 25, 2025 accepted: october 29, 2025 published: december 18, 2025 sari-sari stores are very important in filipino communities, yet their sustainability is challenged by intense competition, financial constraints, and operational hurdles. despite large scale quantitative research, there is limited qualitative understanding of the lived experiences and adaptive strategies of store owners in rural areas such as cabanglasan, bukidnon. to address this gap, the present study used a qualitative multiple-case design involving ten registered sari-sari store owners operating for over a year in poblacion, cabanglasan. data were collected through semi-structured interviews and analyzed using deductive thematic analysis. findings revealed key challenges: 100% of participants faced daily competition and pricing pressures from neighboring stores and large retail chains; 80% struggled with limited capital, inconsistent cash flow, and damaged goods; and 90% reported difficulties in inventory management and customer debt. despite these obstacles, owners used adaptive strategies such as competitive pricing (applied by 9 out of 10 stores), sourcing from lower-cost suppliers, and personalized customer service, which fostered high rates of customer retention and regular sales. especially, owners’ resilience revealed through consistent product availability and strong community relationships was essential to their operational success. these insights emphasize the need for targeted financial literacy programs and policy support to strengthen the resilience and competitiveness of sari-sari stores in rural economies. the research contributes actionable best practices for microbusiness and policymakers, emphasizing the importance of context-sensitive strategies and strong social capital for business sustainability. keywords challenges, customer relationship, financial management, inventory management, operational management, sari-sari store, strategies 1 bukidnon state university, cabanglasan campus, philippines * corresponding author’s e-mail: 2203100029@sc.buksu.edu.ph introduction sari-sari stores are small, neighborhood retail shops that play a vital role in filipino communities by offering daily necessities at affordable prices and in small quantities. typically, family-run, these stores are deeply embedded in the social and economic fabric of local areas, providing convenience and fostering a sense of community (aguilar, 2018). however, despite their importance, sarisari stores face numerous challenges that threaten their sustainability and growth, such as financial constraints limiting product variety, difficulties in budgeting and inventory management, and poor working conditions that lead to owner burnout (mendoza, 2015; figueroa et al., 2024; santos, 2019). competition is another major issue, with many stores located close together leading to price wars and reduced profit margins (fabillar, 2018). the rise of larger convenience stores and supermarkets adds further pressure, making it harder for sari-sari stores to attract and retain customers (reyes, 2016). in addition, theft and unpaid debts from customers negatively impact the stores’ small profits (lorenzo, 2018). strategies recommended in prior research include improving financial literacy, adopting differentiation through unique products or better customer service, sharing family responsibilities, and investing in better equipment to enhance efficiency (gano-an, 2020; villanueva, 2019; thomas, 2021). adoption of digital payment systems is also emerging as a modernization strategy, offering faster transactions and increased income, though challenges like technological literacy and internet access remain (pascual & medina, 2022; alvarez, 2021). most existing studies either use quantitative data or focus on single cases, often overlooking the diverse experiences of different sari-sari store owners, especially in rural or less-studied areas (mendoza, 2015; fabillar, 2018). this research addresses these gaps by using a multiple-case study approach to provide a richer understanding of the challenges faced by sari-sari store owners and the strategies they use. by examining multiple cases, the study identifies patterns and unique solutions that may be missed in single-case or purely quantitative studies. the goal is to offer practical insights that can help sari-sari store owners, policymakers, and community leaders support the sustainability of these essential local businesses. literature review common challenges of sari-sari stores sari-sari store owners face significant financial challenges that hinder business growth. limited funds prevent owners from maintaining fully stocked shelves, leading customers to shop elsewhere and reducing sales (trailblazer, 2024). many rely on personal savings, leaving little for emergencies or upgrades, which affects their ability to expand or improve their stores (richest philippines, 2025). pa ge 21 4 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 213-224, 2025 inventory management and access to capital remain major hurdles. sari-sari stores often struggle with limited storage, inefficient stock practices, and difficulty securing a consistent, affordable supply of goods. smith (2021) highlights that financial constraints and barriers to growth are critical obstacles for micro-businesses like sari-sari stores, preventing them from expanding product lines, investing in infrastructure, or adopting new technologies (margaux zumbano, 2023). keeping track of inventory is a widespread challenge. many owners find it hard to monitor stock levels and determine what needs to be ordered. supply chain disruptions and unreliable supplier performance are common issues that directly impact their ability to meet customer demand and sustain steady sales (junnel, 2024). sari-sari store owners face financial challenges including pricing, matching competitors’ prices, and maintaining consistent daily sales. intense local competition forces them to keep prices low, reducing profitability (staff, 2025). rising inflation increases costs, creating a dilemma between absorbing expenses and risking losing pricesensitive customers (junnel, 2024). operational problems include fluctuating sales, inconsistent income, limited capital and storage, managing credit (“utang”), and demanding family labor. these issues stem from changing customer demand, competition, and limited purchasing power, threatening business sustainability (junnel, 2024). sales are also affected by a small, price-sensitive customer base, credit complexities (quintana et al., 2024), changing preferences, seasonal demand, and inflation pressures (staff, 2025). competition is heightened by numerous nearby stores and growing threats from large retailers and e-commerce, leading to price wars and thin profit margins for small stores (funahashi, 2023; tan et al., 2022). strategies for overcoming challenges of sari-sari stores to survive these challenges, sari-sari store owners use different strategies. many improve their financial management by carefully tracking their sales and expenses. some also take small loans to buy more products and increase their stock (trailblazer, 2024; louella, 2025). keeping good records helps owners plan better and avoid running out of money. competitive pricing, combined with attentive customer service, helps small retailers build trust and sustain steady sales in highly competitive markets (gano-an, 2020). by skipping rental costs, they’re able to put more money into stocking up on products and keeping their daily operations running smoothly. this practical approach not only keeps their expenses low but also gives them more flexibility, especially during slow sales periods. in fact, recent research shows that home-based microretailers in the philippines are better able to weather financial setbacks compared to those who pay rent for commercial spaces (anoos, 2020). also, credit extension to known community members (“suki”) necessitates careful monitoring and staggered collection schedules to balance customer loyalty with cash flow maintenance (pagara, 2022). according to the department of trade and industry (2024), effective inventory management, such as regularly monitoring stock and replenishing supplies on time, is key to the long-term success of small retail businesses. likewise, according to anoos (2020) notes that maintaining operational efficiency through proper inventory practices enables sari-sari stores to remain competitive in their local markets. also, the technology is becoming an important tool for sari-sari stores. some owners use a mobile app like sari.ph proto tracks inventory and sales, making store management easier. digital payment methods like gcash enable faster, safer transactions, which many customers prefer (louella, 2025; montiel, 2024). these technologies help stores operate more efficiently and attract more customers. building strong relationships with the community is another key strategy. store owners often give credit to trusted customers or deliver goods to regular buyers; these actions build trust and encourage customers to keep coming back (aaresearchindex, 2023). furthermore, smart pricing helps stores attract customers while maintaining financial health. furthermore, sari-sari stores are vulnerable to economic fluctuations and changes in their local communities. the role of sari-sari store in the economy sari-sari store owners, operating with limited resources, necessitate stringent expense management to ensure profitability and business survival. as highlighted by phuong et al. (2021), while their study primarily focused on entrepreneurial and market orientation, it implicitly underscores the critical role of cost efficiency as a fundamental component of competitive advantage. according to mojica (2024), “the sari-sari store is an integral part of the philippines’ retail landscape”, providing convenient access to essential goods and services for millions of filipinos, especially in underserved communities. these small, family-owned businesses serve as lifelines for many filipino families, providing convenient access to daily essentials like rice, cooking oil, and basic toiletries. one of the key benefits of sarisari stores is their role in providing affordable and easily accessible goods. reyes (2022) explains that these stores often sell products in small sachets, allowing low-income families to purchase necessities without spending too much at once. this pricing model makes sari-sari stores essential, especially in rural and low-income communities. best practices in sari-sari stores competitive strategies for sari-sari stores in the philippines must capitalize on their unique strengths while effectively mitigating the challenges posed by larger competitors. recognizing their deep-rooted presence within communities, sari-sari stores can differentiate themselves through personalized service, fostering stronger customer relationships, and enhancing customer satisfaction, as emphasized by sai teja boppiniti (2022). operational efficiency is also crucial, with owners pa ge 21 5 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 213-224, 2025 ensuring consistent product availability and adequate stock levels to avoid lost sales and meet community needs. the research from the department of trade and industry (2024) and anoos (2024) affirms that these combined approaches foster resilience, sustainability, and competitiveness among small retail businesses. to enhance their competitiveness, many sari-sari stores are also adopting innovative strategies (gesta et al., 2025). they’re not just sticking to the old ways of selling. one big change is using technology, like mobile payments. more stores are accepting payments through apps like gcash and paymaya. this makes it easier for customers to pay and can bring in more business (moghavvemi et al., 2021). some stores are also adding new services to make more money and attract more people. they’re letting people pay their bills there, add credit to their phones, or pick up packages from online stores. according to quijano (2024b), pricing can make or break your sari-sari store. keep your rates comparable to or slightly lower than your competitors’ by researching what they charge. the pricing strategy, segmentation, capabilities, and their competitive pricing response strategy can help the sari-sari store win against its competitors (pinoy, 2024). materials and methods this qualitative multiple-case study explored the challenges and strategies of sari-sari store owners in cabanglasan, bukidnon. this study was selected 10 registered store owners with at least one year of operation using convenience sampling. this limited sample size was justified by the achievement of data saturation, where no new information emerged from the interviews. semi-structured interviews served as the primary data collection method, allowing in-depth exploration of participants’ experiences. interview guides were validated by experts and community stakeholders to ensure relevance and clarity. before data collection, participants received full briefing and provided informed consent. the interviews were audio recorded and transcribed verbatim to enhance accuracy. trustworthiness was strengthened by applying deductive thematic analysis, involving systematic coding and theme development. to ensure reliability and validity, participant verification of preliminary themes and compliance to credibility, transferability, dependability, and confirmability principles were observed. this detailed and transparent procedure addressed data collection, validation, participant selection purpose, and detailed thematic analysis to enhance the study’s methodological clarity and strength. results and discussion table 1 presents the challenges faced by the owner. the participant highlights that the most challenging aspect was effectively entertaining the customer to earn loyalty. the store owner, in this case, said their biggest problems are taking care of customers to keep them loyal and dealing with competition. the owner knows that if they don’t treat customers well, those customers will go to a different store. they also said that because other stores are very close by, they are forced to match competitors’ prices. if they sell something for a higher price, customers will just go to the next door. this shows how hard it is to run a business when there’s so much competition right in your own neighborhood. case 1 challenges faced by sari-sari store owners table 1: presents the challenges faced by sari-sari store owners supporting quotes cluster themes “… kanang unsay presyo sa pikas tindahan mao poy imong eh presyo dayon.” “the price at the other store is the same price as yours” matching price “… ang mga customer atimanon ug tarong, tarongon ug pansin para imong customer mo purchase jud sa imoha ug loyal jod” “the customer will be taken care of a given proper attention so that your customer well purchase from you and be loyal” entertaining the customer effectively number 1 jod na siya samot nang tapad-tapad ang tindahan, kay sa negosyo number 1 jud ang competensiya….” “that's really the number one challenge, especially when the stores are close to each other, because in business, competition is truly number one” competition table 2: presents the second case on the challenges of sari-sari store owners in running their business supporting quotes cluster themes “ng lisud ko sa pag compete sa uban na store kay nag tapad tapad ra ang among mga tindahan” “it’s hard for me to compete with the other stores because our stores are right next to each other” competition case 2 table 2 of the case presents competition as a challenge for the participant. the participant case sees competition as a problem because the stores are right next to each other. it said it’s difficult to compete with the stores nearby. despite this, the participants have a good attitude and don’t let the competition bring them down. this shows that the biggest problem for them is the market itself, but they try to handle it by staying positive. challenges faced by sari-sari store owners pa ge 21 6 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 213-224, 2025 case 3 challenges faced by sari-sari store owners table 3 highlighted the pricing challenge the participant faced, given that the customer is seeking a lower price. they have to constantly balance their need to make a profit with the customer’s desire for low prices. this can be difficult, especially since sari-sari stores often buy their goods from local wholesalers or distributors at prices that may not allow for a large profit margin. if they set their prices too high, they risk losing customers to competitors, including other sari-sari stores, bigger convenience stores, or even supermarkets. this intense competition forces owners to keep their prices low, which can cut into their earnings and make it harder to sustain the business over time. it’s a constant tightrope walk between staying competitive and staying profitable. table 3: presents the challenges faced by sari-sari store owners supporting quotes cluster themes “pricing kay nangita jod ang customer kong asa ang barato” “pricing is important because the customer is really looking for what is cheap/affordable” pricing case 4 challenges faced by sari-sari store owners furthermore, table 4 presents the challenges faced by the participants, including setting goals and maintaining consistent stock availability by fulfilling unmet product needs through products or services customers are looking for. the participant also faced challenges in posting on social media to attract customers. one participant said there is no competition if you just focus on growing your store. this means having a strong goal helps the owner stay motivated and keep the business moving forward. another challenge is using social media to attract customers. posting online can help bring more people to the store, but it requires effort and creativity. table 4: presents the challenges faced by sari-sari store owners in their business supporting quotes cluster themes “para sa akoa walay competition, focus ka sa goal para jod mulago” “for me, there’s no competition. just focus on your goal so it will truly grow” setting goal “magdiskarte para mahalin, more posting on social media para maka kuha kog customer” “it needs to be resourceful to make a sale, i do more posting on social media to get customers” posting in social media “mag on hand jod sa mga stocks kung unsay wala sa imoha pangitaon man to sa customer kinanahanglan by next saturday naa nakay stocks para katong gipangita nil ana stock is wala sa lain, so ma palit nila sa akoa” “you really need to have stocks on hand. what the customer is looking for that you don’t have, they will search for it. you need to have those stocks by next saturday so that what they are looking for, which is not available in other stores, they can buy from you” consistent stock availability table 5: presents the challenges faced by sari-sari store owners supporting quotes cluster themes “una is crisis man karon, bisan basic commodities…” “first, there’s a crisis right now, even for basic commodities...” crisis “…competensya na mga tindahan na mu offer sad sila na ma baba nga price…” “…competition from stores that also offer lower prices” competition “…depende man gud sa atoa supplier, ang mga tindahan draris sa cabanglasan, nay uban tindahan nga lahi ug supplier so maka less sila, din ako sad lahi ug supplier dili same sa akoa nga lahi” “...it really depends on our supplier. the other stores here in cabanglasan have a different supplier, so they can offer a lower price. then i also have a different supplier, not the same as the others” supplier lastly, stores must have enough stock available. if customers are looking for something and the store does not have it, they will go somewhere else. so, it is important to always have products ready to meet customer needs. these challenges show that store owners must be goaloriented, active in marketing, and good at keeping products available if they want their business to succeed. case 5 challenges faced by sari-sari store owners table 5, presents the challenges the participant faced in running the store, including crises and supplier issues. the participant stated that the crisis makes it hard to get basic goods and that prices are increasing. competition means other stores sell items at lower prices, making it hard to keep customers. different suppliers give different prices, so the store owners cannot always offer the lowest price. these problems make running the store very tough. case 6 challenges faced by sari-sari store owners pa ge 21 7 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 213-224, 2025 furthermore, table 6 presents the challenges faced, including operational consistency and competition. the participant was challenged to sell goods daily to earn money and keep the business operation. at the same time, many other sellers make it hard to sell their items. these problems make running the store difficult. the store owners need to work hard to attract customers and make sure they always have products to sell. if they fail to do this, their business may lose customers and income. table 7 presents the challenges emphasized by the crisis leading to a small income. the participant also faced competition because of the large number of the same business. the crisis means fewer customers come, so sales and income are low. many stores sell the same things, so owners must be clever to sell their goods. these problems make it hard to keep the business going. case 7 challenges faced by sari-sari store owners table 6: presents the challenges faced by sari-sari store owners supporting quotes cluster themes “… isa sa mga challenge is ang pagpadayon sa pagpaninda adlaw-adlaw sa mga pagpaninda..” "…one of the challenges is continuing to sell every day" consistency of operation “…ang pagsiguro nga dili mahalinan ka tungod kay daghan mo ang gapaninda, mga competinsiya” "…making sure that your goods still sell even if there are a lot of vendors, the competition" competition table 7: presents the challenges faced by sari-sari store owners supporting quotes cluster themes “sa akong pagpaninda daghan pagsulay, sama sa crisis, kay gamay ra ang customer so gamay rang halin…” “in my business, there are many challenges, like the crisis, because there are only a few customers, so sales are low...” crisis “…daghan sad ang tindahan nga namaigya so diskarte jod para maka halin...” “…there are also many stores that are selling, so you really have to be resourceful to make a sale…” competition table 8: presents the challenges faced by sari-sari store owners in their business supporting quotes cluster themes “una is ang mahalinan adlaw-adlaw kay syempre pag walay halin wala koy income. dapat mahalinan jod...” “the first thing is to have sales every day, because of course, if there are no sales, i have no income. i really need to have sales...” consistent daily sales “..usa pod sa akong gaka atubang nga problema is kanang nay ma damage nga baligya like kanang kaonon sa ilaga or mahulog tas ma daot so dili nana pwede ibaligya kay daot nato siya” “..one of the problems i face is when goods get damaged, like being eaten by rats or falling and getting spoiled, so they can no longer be sold because they are damaged” damage goods “…if dili mahatag nako mu balhin mana sa lain tindahan..” “…if i can’t provide it, they will just go to another store..” competition “ang usa sa kinahanglan if mamaligya ka is dapat dali ka e approach, kanang ma comfortable ang customer sa tindera or sa imoha nga gabaligya…” “one of the things you need to do when you sell is to be approachable, so the customer feels comfortable with the vendor or with you as the one selling” you are easy to talk to “… maningkamot ko nga complete akong baligya samot natong kanang kinahanglan kaayo sa customer…” “…i try hard to make sure my goods are complete, especially with what customers really need…” consistent stock availability furthermore, the participant highlights challenges, including consistent daily sales, damaged goods, competition, and that you are easy to talk to. also, to work on consistent stock availability to meet customer needs. owners must provide what customers need or risk losing to other stores. being friendly and easy to talk to helps keep customers coming back. keeping enough stock of important items is also crucial to maintain steady sales and a successful business. case 8 challenges faced by sari-sari store owners pa ge 21 8 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 213-224, 2025 case 9 alternatively, table 9 presents the challenges faced by sari-sari stores, highlighting the role of debtor customers in running the business. when customers don’t pay right away, it delays cash receipt, making it hard for owners to manage their cash. without timely payments, store owners may struggle to restock the goods or pay their suppliers. keeping track of who owes money and collecting debts can be difficult and stressful. this challenge shows that store owners must carefully balance trusting customers with protecting their business’s financial health. challenges faced by sari-sari store owners similar to table 8, table 10 of case ten presents the table 9: presents the challenges faced by sari-sari store owners in their business supporting quotes cluster themes “ang mga hagit nga akong na atubang sapag padagan sa among tindahan is isa gyud ana ang ga pangutang…” “one of the challenges i face in running our store is customers who buy on credit/loan” debtor customers table 10: challenges faced by sari-sari store owners supporting quotes cluster themes “…sulod sa mga isa ka tuig sa akong tinda medyo nilago nani siya gamay and ang challenge gyud kaayo is unsaon nimo para maka padayon ka sa imong pagpaninda adlaw-adlaw…” “...within about a year of having my store, it has grown a little bit, and the real challenge is how you can continue with your daily selling...” consistent daily operation “…daghan pod baya ang ga tinda” “...there are also a lot of competition” other competitors table 11: theme: challenges faced cluster themes (ct) themes matching price, pricing; consistent daily sales, crisis financial challenges entertaining the customer effectively; you are easy to talk to customer related challenges competition; other competitors market competition challenges setting goal; consistent daily operation; consistency of operation operational challenges consistent stock availability, supplier, damage goods inventory management challenges challenges faced by the participant, highlighting consistent daily operation and ensuring daily operation. the participant said that after about a year, the store grew a little, but it was hard to keep selling every day without buying. this means they had to work hard and remain consistent to keep the business afloat. another pig problem was the many other sari-sari stores nearby, which made competition tough. with many stores selling similar things, it was harder to get customers to choose their store. these challenges are common because running a store daily needs careful management of products and money. also, owners must find ways that others don’t, like offering better service or lower prices, to keep customers coming back. case 10 challenges faced by sari-sari store owners challenges faced themes table 11 presents the challenges faced, taken from the cluster themes from case one to ten. the table shows the challenges faced and themes that surfaced among the data gathered. the cluster themes revealed themes including financial challenges, customerrelated challenges, market competition challenges, operational challenges, and inventory management challenges. cases one to ten reveal key challenges faced by sarisari store owners. customer-related issues, such as engaging customers and being approachable, are critical but hindered by limited resources and training (reyes, 2022). financial challenges include pricing pressures from competition and inflation, which affect profitability (staff, 2025; sun star davao digital, 2024). operationally, fluctuating sales, inventory management, and credit extension pose sustainability risks (junnel, 2023; tan et al., 2022; eku, 2024). market competition from larger stores and saturation from new entrants intensify difficulties, alongside problems like theft and financial management (junnel, 2024; staff, 2025). inventory challenges unreliable suppliers, stock shortages, and product damage also impact sales and profitability, highlighting the need for strong supplier relations and proper storage (junnel, 2024; dti, 2024). strategies they applied in running their business pa ge 21 9 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 213-224, 2025 furthermore, the participant emphasized that the most effective strategy involved a pricing strategy that offered affordable prices, combined with a warm welcome and excellent customer service. believing that by being nice and always smiling, it can attract customers who might have passed their store to go to another one. also, it’s important to have a positive attitude and not to lose hope. it also recommended having a committed and positive mindset for successful sari-sari store operation. alternatively, the participant relied solely on providing a good approach to the customer, which involved giving importance to warmth and friendliness by smiling and avoiding strictness. the participant said it needs to “entertain them well” and not be “strict”. think of it like this: if you’re always smiling and being nice, people will want to come to your store instead of some other one, even if it’s closer to them. that personal touch makes customers feel good, and they’ll keep coming back. it’s all about building a loyal crew of regulars. strategies applied by sari-sari store owners in running their business table 12: presents the first case on strategies they applied in running their business supporting quotes cluster themes “kanang medyo barato ang baligya…” “the one where the goods are a bit cheaper” value pricing “think positive lang jod ka kanang ayaw ka walag paglaom jud” “you just really need to think positie, don’t lose hope” think positively “kung nay customer kailangan entertainon jod nimog tarong, dili pod na nimo striktahan, mag smile jod kapermamenti para ang customer bisan layo, ma agian nila ang imong tindahan nga pikas kay muanha sila sa imoha…” “if there’s a customer, you really need to entertain them well. you shouldn’t be strict with them. you should always be smiling so that the customer, even if they’re far away, will see that your store is different, and they’ll come to you” good customer service table 13: presents the strategies applied by sari-sari store owners in running their business supporting quotes cluster themes “kung nay customer kailangan entertinon jod nimog tarong, dili pod na nimo striktahan, mag smiling jod kapermamenti para ang customer bisan layo, ma again nila ang imong tindahan nga pikas kay muanha sa imoha… “if there’s a customer, you really need to entertain them well, and don’t be strict with them. you should always be smiling so that the customer, even if they’re far away, will notice that your store is different and will come to you instead of the other one” good approach to customer strategies applied by sari-sari store owner furthermore, the participant emphasized several key strategies to stay in the business operations effectively, including price monitoring, being competitive, and identifying lower-priced suppliers. the participant also acknowledges building strong customer relationships to address customers’ queries. participants know that customers always look for the cheapest price, so owners must be competitive. they do this by monitoring the prices of the stores and actively searching for lowerpriced suppliers to keep their own costs down. however, it also understands that price isn’t the only factor. building solid customer relationships is just as crucial. by being friendly and approachable it creates a welcoming environment that makes customers feel valued. this personal connection often becomes the main reason customers return, building loyalty that is essential for a small, neighborhood business to thrive. table 14: presents the strategies applied by sari-sari store in running their business supporting quotes cluster themes “monitoron nimo ang ilang presyo para makabalo ka kung unsa ilang strategy sa pakig compete” “you monitor the competition’s prices, so you’ll know what their strategy is” price monitoring “makig compete jod ka mao jod na ang isa sa pinaka importante” “you really have to compete, that’s truly one of the most important things” be competitive “sa presyo kung aha ang barato, mangita sad suppluy na barato” “regarding the price, if you find one that’s cheap, you should also look for a cheap supplier” lower priced supplier “sa paghalubilo sa customer is importante jod na, kay kung dili ka kabalo mag entertain sa imong customer biyaan jod mo or walay mopalit sa mga baligya” “interacting with the customer is really important, because if you don’t know how to entertain your customer, they will truly leave you or no one will buy your goods” building customer relationship pa ge 22 0 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 213-224, 2025 in case 15, the participant considered securing capital in running the business, knowing that a small investment can double with good profits. also, considering suppliers’ suggested retail price (srp) to set fair prices. additionally, participants recommend avoiding renting, which allows them to keep their prices lower for customers and increase their own profit. strategies applied by sari-sari store owner table 15: presents the strategies applied by sari-sari store owners in running their business supporting quotes cluster themes “first jod is need jod cyag capital, once ang gamay na kwarta mudako mag double-double ang kita,tungod sa ginansya” “first, you really need capital. once that small amount of money grows, your earnings will double because of the profit” secure capital “mostly jod sa akoa is depende sa akong gi komprahan nga supplier, din mag asks ko pila ang srp” “for me, it mostly depends on the supplier i buy from. then i ask how much the srp (suggested retail price) is” consider suppliers suggested retail price (srp) “dili ka mangabang ug building kay nganu once mangabang ka is kinahanglan pod ka mutaas sa presyo kay tungod pod ang bayad sa imong gi rentahan nimo” “you shouldn’t rent a building, because once you rent, you also need to increase your prices because of the payment for what you’re renting” avoid renting a building strategies of sari-sari store owners in running their business table 16 presents the strategies of the owner, highlighting the supplier with a lower price as it affects the sari-sari store pricing strategy. low-cost suppliers help keep prices affordable and attract customers. buying products from a supplier who offers lower prices. this helps them to sell items at cheaper prices, which attracts more customers. good customer service makes customers happy, encouraging them to come back. the store owners focus on giving good customer service by being friendly and helpful. when customers feel valued, they are more likely to come back and buy again. these two strategies work together to help store owners stay competitive and successful. these strategies help store owners stay competitive and keep their business successful. by keeping prices low and treating customers well, sari-sari stores can build trust and loyalty in their communities. this simple but effective approach helps small stores survive in tough markets. table 16: presents the strategies applied by sari-sari store owners in running their business supporting quotes cluster themes “…usa sa akong gibuhat is didto ko ga comprahan sa barato para inig baligya nako ubos rasad ako presyo” “…one of the things i do is buy from a cheaper supplier so that when i sell, my price is also low” lower cost supplier “…ug kini ang ganahan sa customer samot nag mayo ka modala sa imong customers” “…and this is what customers like, especially if you handle your customers well” good customer service table 17: presents the strategies applied by sari-sari store owners in running their business supporting quotes cluster themes “pag naay customer imo gyud e-entertain kay para ang customer magbalik-balik jod na samot ng barato rasad imong gi baligya” “when there’s a customer, you should really entertain them so that the customer will keep coming back, especially if your goods are also sold cheaply” entertain customer effectively “akong gi consider ang price kay ganahan man ang customer sa barato pero dapat dili sad ka lugi” “i consider the price because customers like cheap goods, but you also shouldn’t lose money” lower pricing strategies of sari-sari store owners in running their business in a similar manner, table 17, which is the strategies applied by the sari-sari store owner, participant entertained customers effectively, resulting in customer loyalty, and providing affordable prices to increase sales at the same time, with no losses. the store owners give good attention to customers, which makes customers want to come back again and again. this builds strong loyalty and helps keep sales steady. the set prices are low enough to attract buyers but still high enough to avoid losing money. these strategies help store owners increase sales and keep their business going strong. strategies applied by sari-sari store owner pa ge 22 1 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 213-224, 2025 in addition, table 18 shows the strategies sari-sari store owners use to succeed. the participant emphasized effective communication, such as engaging customers to foster loyalty, and offering lower prices on products to attract customers and stay competitive. good communication and attention to customers build loyalty, encouraging them to buy again. furthermore, the participant sought suppliers with lower service fees, as this can allow the sari-sari store to offer competitive pricing. strategies applied by sari-sari store owner table 18: presents the strategies applied by sari-sari store owners in running their business supporting quotes cluster themes “sa price nako is dili ra kayo nako mahalan para ang customer is ganahan ug palit sa ako kay if barato imong baligya dili nana siya muadto sa lain tindahan” “i try hard to make sure my goods are complete, especially with what customers really need” provide low prices “…kanang strategy pod nako ang pagpansin or pag kanang e-entertain ang mga customer para pagkaila nami dri na dayon siya magdum-dum sa among tindahan if naa silay paliton…” “…my strategy is also to pay attention to or entertain customers so that when they get to know us, they will immediately remember our store when they need to buy something” good communication to earn customers loyalty “… dayon kuan pod ayy kaning pagmagtinda ka pariah aning sar-sari store mangompra jod ka didto sa kanang barato ra para pagbaligya nimo is dili ra kayo mahal.” “... then also, when you sell like in a sari-sari store, you really have to buy from a cheap supplier so that when you sell, it’s not too expensive.” supplier with lower price table 19: presents the strategies applied by sari-sari store owners in running their business supporting quotes cluster themes “… tas kanang gapangutang natural naman jod na,kibali ako nalang gina ingnan if kanus-a dapat nila bayaran para dili sad ko ma ipit.” “…and those who buy on credit, that’s really a natural thing. so, what i do is i just tell them when they need to pay so i don’t get in a bind.” determining payment deadlines to debtors “… kung gusto ka makalamang maningkamot ka nga makumpleto imong paninda kay kung unsa ilang kinahanglanon nila nimo mahatag nimo dayon” “...if you want to have an advantage, you need to strive to complete your stocks because whatever they need, you can give it to them right away” full stocks similarly, the participant found that, regarding customers’ debt, the owner emphasized setting payment deadlines to mitigate potential risk. additionally, participants recommended maintaining complete stock levels to provide high-quality service to customers. these strategies help owners manage their cash flow and keep customers happy. clear rules and good stock availability are key to a successful store. table 11 shows two main problems sari-sari store owners face: keeping the store open every day and competition. they must sell goods daily to earn money and keep the business going. at the same time, many other sellers make it hard to sell their items. these problems make running the store difficult. store owners need to work hard to attract customers and make sure they always have products to sell. if they fail to do this, their business may lose customers and income. strategies applied by sari-sari store owner table 20: presents the strategies applied by sari-sari store owners in running their business supporting quotes cluster themes “ang akoa lang gina siguro is naa koy baligya and pagnaay magpalit ug manginahanglan sa akong baligya mahatag nako” “what i just make sure of is that i have something to sell, and if someone wants to buy and needs my goods, i can provide it…” consistent availability of product “… dayon ako sad na pagka tao dali ra doolan kanang murag approachable ba kay kining dili man sad ko strict, so kibali kuan naka tabang sad na siya para maka halin sad.” “...also, i am the kind of person who is easy to approach, like, approachable, because i’m not strict, so i guess that also helped me to sell.” strong customer connection furthermore, table 30 presents the strategies participants used to run the business, highlighting the consistent availability of products to meet customer needs. additionally, participants considered a strong customer connection, which helps increase sales. these core practices help increase sales and maintain customer trust. pa ge 22 2 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(3) 213-224, 2025 additionally, owners use competitive pricing, effective inventory management, and product variety tailored to local demand. strategic store location and clear financial management also contribute to sustaining and growing the business. together, these strategies create a reliable, customer-friendly buying experience that supports the success of sari-sari stores. strategies applied themes the table shows the strategies applied by sari-sari store owners to address their challenges. the data revealed financial management, marketing, and operational efficiency strategies. sari-sari store owners use value pricing and monitor competitors to stay competitive, supporting trust and steady sales (gano-an, 2020). building strong customer relationships through personalized service boosts loyalty and referrals (sun star davao digital, 2024). avoiding rent cuts costs, allowing more investment in stock and smooth operations, with many separating business and household finances. careful credit management balances loyalty and cash flow (eku, 2025), while reinvestment focuses on inventory due to limited financial access (gano-an, 2020). owners prioritize consistent stock and full product range to reduce lost sales and maintain competitiveness (sun star davao digital, 2024; anoos, 2024). table 21 presents the strategies applied by sari-sari store owners, taken from the cluster themes from case one to ten. table 21: theme: strategies applied cluster themes (ct) themes secure capital; avoiding renting a building; determining payment deadlines financial management strategies value pricing; price monitoring; lower pricing; provide low prices; good customer service; building customer relationship; entertain the customers effectively; good communication to earn customers loyalty; strong customer connection marketing and competitive strategies consider the suppliers suggested retail price (srp); lower priced supplier; supplier with lower cost consistent availability of products; enough level of stock; full stocks operational efficiency strategies the identified best practices best practices for sari-sari store owners in cabanglasan may include maintaining sound financial management by securing sufficient capital, minimizing fixed costs such as rent, and diligently tracking both sales and expenses. adopting marketing and competitive strategies, such as value pricing, monitoring competitors, and building strong customer relationships through excellent customer service, can help attract and retain loyal customers. operational efficiency is also crucial, with owners ensuring consistent product availability and adequate stock levels to avoid lost sales and meet community needs. research from the department of trade and industry (2024) and anoos (2020) affirms that these combined approaches foster resilience, sustainability, and competitiveness among small retail businesses. conclusion the results reveal that sari-sari stores strategies to apply a such as financial management strategies, operational efficiency strategies, marketing and competitive strategy, competitive pricing, and customer service and relationships sto navigate challenges on sari-sari stores experiences in cabanglasan. this study underscores the importance of supporting sari-sari stores through targeted interventions such as financial literacy training, technology adaptation assistance, and community-based initiatives that strengthen social capital. by understanding the real-life experiences and strategies of sari-sari store owners, policymakers, community leaders, and entrepreneurs can develop more effective programs to ensure the continued viability and growth of these small but essential businesses in cabanglasan. the resource-based view (rbv) posits that a sari-sari store sustained competitive advantage comes from its unique and valuable resources. for sari-sari stores, this is seen in the owners’ personal relationships and social capital, which are intangible but crucial resources. these resources allow owners of the stores to foster customer loyalty, and receive community support offer credit (utang), creating a competitive edge that is difficult for larger retailers to replicate. meanwhile, resilience theory highlights the ability of sari-sari store owners to standout coming from adversity. the study shows the adaptability and resourcefulness of sari-sari store owners through their efficient management of limited resources and additional innovations, which are key components of resilience and resourcefulness. these theories suggest that the survival and success of sari-sari stores are not just a matter of luck but a direct result of their ability to leverage distinct, relationship-based resources and adapt and overcome systemic pressures. references aaresearchindex. 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(2023). empowering the sari-sari stores. techshake. https://www.techshake.asia/stories/ packworks-empowering-the-sari-sari-stores pa ge 1 pa ge 28 0 american journal of economics and business innovation (ajebi) hardship financing in healthcare among rural residents in the gaibandha district: an application of binary logistic regression most. sabiha sultana1, md. shawkat ali2* volume 4 issue 2, year 2025 issn: 2831-5588 (online), 2832-4862 (print) doi: https://doi.org/10.54536/ajebi.v4i2.5387 https://journals.e-palli.com/home/index.php/ajebi article information abstract received: may 15, 2025 accepted: june 23, 2025 published: august 07, 2025 high out-of-pocket expenditures lead to financial hardship in the absence of health insurance coverage, which is prevalent in lowand middle-income countries, including bangladesh. households often incur “hardship financing” when they face additional losses by borrowing from a bank, microfinance, or moneylender (with interest) and selling assets, which was 31.4% of 516 sampled respondents in the rural areas of the gaibandha district in bangladesh, selected as the study area. in contrast, financing in healthcare by current income or savings, and borrowing from relatives or friends (without interest), is termed “no hardship financing”, which was 68.6%. to investigate the factors affecting the risk of “hardship financing” as the outcome variable with “yes or no” category, a binary logistic regression was applied, including six independent variables that made statistically significant contributions to the model, such as age, education, family size, the distance to the hospital, outpatient expenditures, and chronic illness. subsidized healthcare services or health insurance schemes, and accessing to a wealthier social network were suggested, which may protect against the risk of hardship financing. besides, establishing more healthcare facilities in remote areas with assured quality has been emphasized. hence, to achieve universal health coverage, policymakers should consider the significant factors associated with hardship financing. keywords bangladesh, binary logistic regression, gaibandha district, hardship financing, out-of-pocket 1 school of social sciences, humanities and languages, bangladesh open university, bangladesh 2 department of economics, jahangirnagar university, savar, dhaka, bangladesh * corresponding author’s e-mail: ssrony_bou@yahoo.com introduction all member countries of the united nations (un) are committed to achieving universal health coverage (uhc) as part of the sustainable development goals (sdgs)-3, aiming to ensure financial risk protection for all by 2030 (tadiwos, 2025; undp, 2019). hence, uhc aims to provide access to quality healthcare without facing financial hardship (kolesar et al., 2023). financial hardship is particularly prevalent in lowand middleincome countries due to limited health insurance coverage and high out-of-pocket (oop) payments. in turn, high oop payments increase economic vulnerability and lead to long-term poverty among households. limited access to health insurance and unexpected oop payments can lead to asset depletion, debt, and reductions in essential consumption, which can prevent access to healthcare. this may eventually result in financial catastrophes, distress financing, and impoverishment (islam et al., 2017; leive & xu, 2008; russell, 2004; chuma & ezeoke, 2012). health expenditures are considered catastrophic when they exceed a certain percentage of household income or expenditures (tadiwos, 2025). besides, health expenses that impoverish individuals or households are defined as those that exceed the internationally or nationally agreed-upon poverty line (smit, 2009). there are an estimated 930 million (12.7% of the global population) people worldwide who face catastrophic health expenditures (che) because they sacrifice at least 10% of their household budgets to finance their healthcare (who, 2015). financing in healthcare includes sources such as current income or savings; borrowing from relatives or friends (without interest); borrowing from a bank, microfinance, or moneylender (with interest); and selling assets. households often incur “hardship financing” when they face additional losses by borrowing from a bank, microfinance, or moneylender (with interest) and selling assets. on the other hand, financing in healthcare by current income or savings, and borrowing from relatives or friends (without interest), is termed as “no hardship financing” (binnendijk et al., 2012). the second category has been regarded as less burdensome than the first in various studies (asfaw et al., 2010; kruk et al., 2009; steinhardt et al., 2009). however, the consequences may differ between those of richer households and poorer ones. bangladesh has an extensive infrastructure in the healthcare delivery system. however, every year, an estimated 150 million people suffer severe financial hardship, and 100 million falls below the poverty line because of high healthcare expenditures (tahsina, 2018). in addition, public and private health services coexist in bangladesh, with a dual healthcare system. in the public sector, outpatient, inpatient, and preventive care are provided largely. whereas, curative care is mainly provided in outpatient and inpatient settings in the private sector (islam et al., 2017). however, people often lack access to quality healthcare at an affordable cost, as they expect. in 2020, the oop expenditures by households constituted a total of 68.5% (two-thirds) of the total health expenditures (the) in bangladesh, followed by 23.1% pa ge 28 1 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 280-290, 2025 from government healthcare financing. the remaining portion, including development partners, contributed 5%, while ngos contributed 2%. additionally, private corporations, autonomous bodies, and voluntary health insurance, in combination, contributed 2% to healthcare financing (bnha, 1997-2020). it is noted that approximately five million people in bangladesh are impoverished by large oop payments for healthcare every year (van doorslaer et al., 2006; ahmed et al., 2013). generally, in most low-income rural settings, there is an irregular flow of income, which instigates financial hardship. consequently, different types of suffering may occur, such as cutting a meal from a household’s regular food menu or a child’s schooling. however, indepth studies regarding factors associated with ‘hardship financing’ in healthcare among people in the rural areas of northern bangladesh are quite limited. the study will focus on how rural people of the gaibandha district finance their healthcare expenditures. besides, the study will identify the factors associated with hardship financing in healthcare among respondents. materials and methods research approach the study was explorative, using both quantitative and qualitative data. study focus a cross-sectional study was carried out in the rural areas of the gaibandha district, which was selected as the study area. the survey was conducted from february 2019 to march 2019 and focused on the rural people of the gaibandha district. sampling a simple random sampling technique was used in two ways for the study. firstly, four upazilas were selected from seven upazilas of the gaibandha district, named fulchhari, gaibandha sadar, gobindaganj, and sundarganj (bbs 2011). secondly, a total of 516 respondents were selected finally by using the same technique for interviewing. sources of data the primary data was collected from the respondents in the study area. relevant books, journal articles, web pages, the bangladesh budget, and the “population and housing census, 2011, zila report: gaibandha” served as the sources of secondary data. data to assess the socio-economic status, the survey questionnaire included socio-economic factors such as gender, age, family size, education, occupation, and annual income. besides, the respondents were asked about their inpatient and outpatient healthcare expenditures in the year preceding the survey. the respondents were asked whether they had suffered from any type of chronic illnesses. to identify chronic illness, respondents were asked a set of questions related to disease symptoms, length of illness, and regular medicine use. hence, staying in a hospital for more than 24 hours has been considered inpatient care. on the other hand, outpatient care includes expenditures on drugs, diagnostic tests, and consultations with healthcare practitioners staying in a hospital for less than 24 hours. the inpatient care included medical direct expenses and hospital admissions of the respondents. besides, the respondents were asked about the distances to the hospital from their residences (travel distance in kilometers). to investigate the sources of healthcare financing, the respondents were asked whether they had used current income, savings, borrowing from relatives, friends, neighbors, banks, moneylenders, or microfinance, and money received by selling assets. data analysis and presentation data has been analyzed using spss version 26. to investigate the factors affecting the risk of hardship financing among rural residents in the gaibandha district, “binary logistic regression” was applied. thus, “hardship financing” is the outcome variable, being a binary category with “yes or no”. a 5% level of significance was used for the study to show the statistical significance. ms excel was used for data presentation and tabulation. limitations of the study variations in knowledge and understanding regarding health conditions, memory recall issues, and overlapping symptoms among patients may lack of accuracy in self-reporting illness episodes. the cross-sectional nature of the study rendered it incapable of capturing seasonal variations in household income or illness-related expenditure and coping strategies. in addition, it is not possible to draw the same conclusions elsewhere without reliable and sufficient data. results and discussion socio-economic profile of the sampled respondents table 1: the socio-economic status of the sampled respondents variables frequency (n) percentage gender male 340 65.9 female 176 34.1 age lowest up to 30 197 38.2 pa ge 28 2 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 280-290, 2025 31-45 198 38.4 45 above 121 23.2 marital status unmarried 3 0.6 married 502 97.3 widow/divorce 11 2.1 family size lowest up to 3 378 73.3 4 to 7 133 25.8 >7 5 1.0 number of children 0 to 3 427 82.8 4 above 89 17.2 education primary 221 42.8 secondary and higher secondary 80 15.5 graduation / masters 24 4.7 no education 191 37.0 occupation service holder 117 22.7 business 110 21.3 farmer 94 18.2 daily labor 195 37.8 annual income lowest up to 100000 224 64 100001-200000 139 26.9 200000 above 47 9.1 chronic illness yes 276 53.5 no 240 46.5 distance to hospital (km) lowest up to 3 129 25 4-20 278 53.9 20 above 109 21.1 table 2: healthcare expenditures from suffering any major disease among the study respondents variables frequency (n) percentage households with inpatient care costs last year (bdt) lowest up to 1000 322 62.4 1001-10000 109 21.1 10001-25000 51 9.9 25000 above 34 6.6 households with outpatient care costs last year (bdt) lowest up to 1000 185 35.9 1001-5000 312 60.5 5000 above 19 3.7 pa ge 28 3 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 280-290, 2025 about 65.9 % of the respondents were male and 34.1% of the respondents were female. most of the households were male-headed who were responsible for key decisions at the household level. as a larger portion of the male household heads are usually engaged in their occupation or performing daily duties during the daytime, all were not present at home while interviewing. the mean age of the respondents was 38 years, and the age distribution ranged from 18 to 80 years. a large percentage of respondents, 38.2%, were age level from lowest up to 30 years, which has been considered as younger individuals. a total of 38.4% were age level of 31-45 years, whereas 23.2% were 45 years and above old and needed the care the most. hence, there is a greater possibility of suffering from illness for older individuals than younger individuals because of decreasing immunity as a general consideration. hence, daily labor was the main occupation in the study areas among rural residents, with a large percentage of 37.8%. a total of 22.7% were service holders, although most of them were employed in informal sectors, such as salesmen and waiters, and a very small portion was employed in formal sectors. about 21.3% were selfemployed in businesses, and 18.3% were self-employed in agriculture. on average, the annual income was bdt 112,852, with a minimum of bdt 18,000 and a maximum of bdt 650,000. furthermore, 64% of them reported their household income earning less than bdt 100000, 26.9% reported bdt100001 to 200000, and 9.1% reported above bdt 200000 annually. a larger portion of respondents (37%) had no formal education, 42.8% had primary education, 15.5% had secondary or higher secondary education, and only 4.7% had a graduation or higher degree. the average family size was five (5). the family size ranging from one to three (1-3) was 378 (73.3%), which accounted for the highest number of respondents. those with household sizes of four to seven (4-7) were 133 (25.8%), while those that had family sizes greater than seven (>7) were 5 (1.0%). it is noted that about 20 households had no children. a total of 82.8% of children were below 3, 17.2% of above 4. about 53.5% had been suffering from chronic illness, whereas 46.5% had not. healthcare expenditures table 2 shows that the majority of respondents (62.4%) noticed their inpatient expenditures (table 2) were up to bdt1000. on the other hand, 21.1% noticed the amount of bdt1001-10000, 9.9% noticed of bdt10001-25000, and 6.6% noticed of bdt25000 above. for outpatient expenditures (table 2), the majority of respondents (60.5%) noticed their outpatient expenditures were bdt10015000, followed by 35.9% noticing at the lowest up to bdt1000, and only 3.7% noticing bdt5000 above. healthcare financing to meet the health expenditures (table 3), the major portion of the sampled respondents resorted to using their current income, savings, and borrowing from relatives/neighbors/friends, and hence they were considered to have no hardship financing. besides, they often sold their assets or borrowed money with interest to finance their healthcare expenditures and were considered hardship financing (binnendijk et al., 2012). based on the criterion, hardship financing was found among 31.4% of the sampled respondents during the year preceding the survey, and the remaining 68.6% had no hardship financing. binary logistic regression (blr) analysis in regression analysis, an association between a response variable and one or more explanatory variables is determined. however, there is often a situation where the outcome variable is discrete, with two or more possible values (hosmer & lemeshow, 2000). hence, a blr is used to model the relationship between a dichotomous dependent variable, which is binary rather than continuous and multiple continuous or categorical independent variables (hair et al., 2010; hyeoun-ae park, 2013). in the study, a blr analysis was applied between hardship financing as the dependent variable with “yes” or “no” category and the independent variables with gender, age, marital status, education, occupation, family size, number of children, income, distance to the hospital, chronic illness, inpatient expenditures, and outpatient expenditures. however, a multivariate analysis was used under the blr analysis to identify the factors influencing hardship financing while paying healthcare expenditures. the significance value (p-value) of the wald test has been used in the blr analysis to determine whether the predictor variables meaningfully contribute to the model (vakhitova et al., 2018). assumptions of blr analysis blr analysis requires certain assumptions to be satisfied to give a valid result. they are as follows: table 3: healthcare financing of the study respondents variables frequency (n) percentage covering costs by using present income 175(33.8) 341(66.2) covering costs by using savings 61(11.8) 455(88.2) covering costs by borrowing from relatives/neighbors/friends 357(69.1) 159(30.9) covering costs by selling assets 146(28.2) 370(71.6) covering costs by borrowing from banks/moneylenders/microfinance 80(15.5) 436(84.3) pa ge 28 4 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 280-290, 2025 the categories for a dependent variable must be mutually exclusive and exhaustive it means that every data point should fall into only one category (mutually exclusive), and the categories provided should cover all possible outcomes (exhaustive). the assumption was checked by defining the categories were defined that no single data point logically fell into more than one category. besides, the assumption was checked with the numerical data, where the ranges did not overlap. binary dependent variable there must be a dichotomous dependent variable, which was checked as dichotomized into “yes” or “no” categories (hosmer et al., 2013). independence of observations the observations should be independent of each other. a simple random sampling has been applied to collect the data, ensuring the independence of each observation. besides, clustering was avoided, which might introduce dependencies. no multicollinearity among predictors a key assumption in logistic regression is that the explanatory variables should not be highly correlated with each other. by using tolerance and variance inflation factor (vif), multicollinearity can be detected easily. the vif is defined as the reciprocal of tolerance as follows: vif= 1/ tolerance the tolerance value (table 4) close to 1 indicated that there was little multicollinearity, which can be accepted. whereas a value close to zero suggests that multicollinearity may be a threat (senaviratna and cooray, 2019). however, the calculated value of vif was <4, which shows no multicollinearity in the dataset (jahan, 2022). large sample size predictor variables should consist of at least 10 events per variable as a general rule of thumb (peduzzi et al., 1996). hence, there were 12 (twelve) predictor variables, and the events should be 120 (one hundred and twenty). however, 516 (five hundred and sixteen) respondents were selected for the study, which shows a large sample size. variables of the study the dependent variable was hardship financing, categorized as “yes” or “no”. the independent variables used in the study were gender, age, marital status, education, occupation, family size, number of children, income, the distance to the hospital, chronic illness, inpatient expenditures, and outpatient expenditures table 4: nature of the dependent variable with the category codes categories of hardship financing codes yes 1 no 2 table 5: nature of the independent variables with the category codes designation of variable description of independent variables codes x1 (x1(1) =male, x1(2) =female) gender of respondent 1=male, 2=female x2(x2(1) =lowest up to 30 years, x2(2) =31-45 years, x2(3) =45 years above) age of respondent 1=lowest up to 30 years, 2=31-45 years, 3=45 years above x3(x3(1) =unmarried, x3(2) =married, x3(3) =married) marital status of the respondent 1=unmarried, 2=married, 3= widow/divorce x4 (x4(1) =lowest up to 3, x4(2) =4 -7, x4(3) =7 above) family size of the respondent 1= lowest up to 3, 2=47, 3= 7 above x5(x5(1) =0 to 3, x5(2) =4 above) number of children 1= 0 to 3, 2=4 above x6(x6(1) =primary, x6(2) =secondary / higher secondary, x6(3) =graduation / masters, x6(4) = no education) education level 1= primary, 2=secondary / higher secondary, 3= graduation / masters,4= no education x7(x7(1) =service holder, x7(2) =business, x7(3) =farmer, x7(4) =daily labor) occupation 1= service holder, 2=business, 3= farmer, 4= daily labor x8(x8(1) =lowest up to 100000, x8(2) =100001-200000, x8(3) =200000 above) annual income (bdt) 1= lowest up to 100000, 2=100001200000, 3=200000 above x9(x9(1) =lowest up to 3, x9(2) =4-20, x9(3) =20 above) the distance of the hospital from the patient’s residence (km) 1= lowest up to 3, 2=4-20, 3=20 above x10(x10(1) =yes, x10(2) =no) chronic illness 1= yes, 2=no x11(x11(1) =lowest up to 1000, x11(2) =100110000, x11(3) =10001-25000, x11(4) = 25000 above) inpatient expenditures (bdt) 1= lowest up to 1000, 2= 100110000, 3= 10001-25000, 4= 25000 above x12(x12(1) =lowest up to 1000, x12(2) =10015000, x12(3) =5000 above) outpatient expenditures (bdt) 1= lowest up to 1000, 2= 1001-5000, 3= 5000 above pa ge 28 5 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 280-290, 2025 checking model adequacy in table 6 to 10, the full model, containing all predictors, was statistically significant, as indicated by a chi-square value of 123.061 with df = 24, p-value = .000, meaning p < .001, which suggests that the model could distinguish between respondents who reported incurring hardship financing and those who did not. the model explained table 6: omnibus tests of model coefficients chi-square df sig. step 123.061 24 .000 block 123.061 24 .000 model 123.061 24 .000 table 7: hosmer and lemeshow test step chi-square df sig. 1 6.845 8 .553 table 8: model summary step -2 log likelihood cox & snell r square nagelkerke r square 1 519.078a .212 .298 a. estimation terminated at iteration number 5 because parameter estimates changed by less than .001. table 9: classification table observed predicted hardship financing percentage correct yes no hardship financing yes 77 85 47.5 no 40 314 88.7 overall percentage 75.8 between 21.2% (cox and snell r-square) and 29.8% (nagelkerke r-square) of the variance incurring hardship financing and correctly classified 75.8% of cases as a whole. in the hosmer-lemeshow test, a high p-value indicates the model fits the data well (p> 0.05). in this case, it suggests that the model’s predictions are consistent with observed outcomes, implying a good fit. table 10: collinearity statistics g en de r a ge m ar ita l st at us e du ca tio n o cc up at io n fa m ily s iz e n um be r o f ch ild re n in co m e d is ta nc e to th e ho sp ita l c hr on ic ill ne ss in pa tie nt ex pe nd itu re o ut pa tie nt ex pe nd itu re vif 1.116 1.308 1.081 1.215 1.388 1.302 1.293 1.282 1.113 1.115 1.469 1.491 tolerance .896 .765 .925 .823 .721 .768 .773 .780 .898 .897 .681 .671 parameter estimates of binary logistic regression binary logistic regression was used to assess the factors associated with incurring hardship financing for healthcare services. as shown in table 11 (parameter estimates), six independent variables made statistically significant contributions to the model, such as age, education, family size, the distance to the hospital, outpatient expenditures, and chronic illness. on the other hand, the influence of gender, marital status, occupations, the number of children, income, and inpatient expenditures was found to be insignificant. table 11: parameter estimates of binary logistic regression variables (category) β (s.e) wald df sig. expβ 95% ci lower bound upper bound intercept=1 -2.293(1.089) 4.431 1 .035*** x1 gender (ref: female) pa ge 28 6 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 280-290, 2025 male .471(.258) 3.340 1 .068 1.602 .966 2.654 x2 age (ref:45 above years) lowest up to 30 years .853 (.326) 6.862 1 .009*** 2.348 1.240 4.446 31-45 years .711(.295) 5.816 1 .016*** 2.037 1.142 3.631 x3 marital status (ref: widow/divorce) unmarried -1.213 (1.566) .601 1 .438 .297 .014 6.394 married -.499 (.806) .383 1 .536 .607 .125 2.949 x4 family size (ref: 7 above) lowest up to 3 -1.949 (.669) 8.497 1 .004*** .142 .038 .528 4 to 7 -1.452 (.600) 5.856 1 .016*** .234 .072 .759 x5 number of children (ref: 4 above) 0 to 3 -.312 (.344) .820 1 .365 .732 .373 1.438 x6 education (ref: no education) primary .198 (.281) .494 1 .482 1.218 .702 2.113 secondary / higher secondary -.106 (.389) .074 1 .785 .899 .419 1.928 graduation / masters 1.848 (.713) 6.720 1 .010*** 6.346 1.570 25.656 x7 occupation (ref: daily labor) service holder .028 (.345) .007 1 .936 1.028 .523 2.022 business -.336 (.317) 1.120 1 .290 .715 .384 1.331 farmer .555 (.397) 1.952 1 .162 1.742 .800 3.795 x8 annual income (ref: 200000 above bdt) lowest up to 100000 -.389 (.491) .628 1 .428 .678 .259 1.773 100001-200000 -.760 (.484) 2.470 1 .116 .468 .181 1.207 x9 distance to the hospital (ref: 20 km above) lowest up to 3 -1.251 (.435) 8.268 1 .004*** .286 .122 .672 4-20 -1.149 (.408) 7.943 1 .005*** .317 .143 .705 x10 chronic illness (ref: no) yes -.828(.244) 11.538 1 .001*** .437 .271 .705 x11 inpatient expenditures (ref: 25000 above bdt) lowest up to 1000 .620 (.491) 1.596 1 .206 1.859 .710 4.865 1001-10000 .709 (.509) 1.943 1 .163 2.032 .750 5.506 10001-25000 -.240 (.525) .208 1 .648 .787 .281 2.201 x12 outpatient expenditures (ref: 5000 above bdt) lowest up to 1000 1.851 (.641) 8.343 1 .004*** 6.366 1.813 22.351 1001-5000 .846 (.585) 2.090 1 .148 2.330 .740 7.336 notes: ***p significant at 0.05 for the wald test pa ge 28 7 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 280-290, 2025 the logistic model a multiple linear regression model can be written as follows where the left-hand side expresses the log-odds or logit: the younger respondents were more likely to experience hardship financing than the older respondents. education the positive coefficient (β=0.198) with the primary education level, the negative coefficient (β=-0.106) with the secondary and higher secondary education level, and the positive coefficient (β=1.848) with the graduation/ master’s level represented the change in the log-odds of incurring hardship financing compared to those with no education. hence, the respondents with primary education and graduation/master’s level had a much higher likelihood of experiencing hardship financing than those without education. in contrast, the respondents with secondary and higher secondary education had less likelihood of experiencing hardship financing than the respondents with no education. the or [exp(β)=1.218] indicated that the respondents who had primary education were 1.218 times (21.8%) more likely to report hardship financing than those who had no education; the respondents who had secondary and higher secondary education were 0.899 times (10.1%) less likely to report hardship financing than those who had no education; the respondents who had graduation/ master’s degree education were 6.346 times (534.6%) more likely to report hardship financing than those who had no education, holding all other variables constant. thus, education level was a good predictor of incurring hardship financing by the recorded value of the odds ratio, and was statistically significant with hardship financing. family size the estimated change in the logit/log-odds for every 1 member increases with the family sizes, lowest up to 3 and 4-7 members at -1.949 and -1.452, respectively. thus, the negative coefficients (β=-1.949 and β=-1.452) represented that the respondents of the family size lowest up to 3 or 4-7 members were less likely to incur hardship financing than those of 7 or above. the or [exp (β)=0.142] indicated that the respondents of the family size lowest up to 3 were 0.142 times (85.8% lower) less likely to incur hardship financing compared to the reference category (the respondents with family sizes of 7 and above. added to this, the or [exp (β) =0.234] indicated that respondents of family sizes of 4-7 members were 0.234 times (76.6% lower) less likely to incur hardship financing than those of 7 and above. distance to the hospital the estimated change in the logit/log-odds of hardship financing for every 1 km increases with the distance of the hospital from the residence. the coefficients (β=1.251, when the respondents lived within the distances of the hospital of lowest up to 3 km and β=-1.149, when the respondents lived within the distances of the hospital between 4-20 km) represented the estimated change in the log-odds of incurring hardship financing compared to the respondents who lived within the distances of above the equation can be re-written also as follows: where π is the event probability, α is the y-intercept, b1.......bk are parameters of the slope, and x1....xk are the explanatory variables. α and β’s is estimated by the maximum likelihood estimator (mle) approach (abdulqader, 2017; peng et al., 2002). the model of binary logistic regression the following model was run: where α (alpha) is the intercept (2.293), x1, ......., x12 are the explanatory variables, β1,........., β12 are the regression coefficients, and ɛ the error term. factors influencing hardship financing by using blr analysis in the blr analysis, regression coefficients and odds ratios (or) were interpreted with factors affecting hardship financing. they were as follows: socioeconomic and demographic parameters with hardship financing the β’s are the regression coefficients (table 7), indicating the direction of the relationship between the independent variables and the logit of hardship financing. hence, a direct or positive relationship exists between them when β’s is positive. on the other hand, a negative relationship exists between the two when β’s is smaller than zero (negative). the analysis is as follows: age level the estimated value of β implies that the estimated change in the logit/log-odds of hardship financing is for every 1-year increase in age level. the positive coefficients (β=0.853 and β=0.711) indicated that the respondents in the age level lowest up to 30 and between 31-45 years were more likely to incur hardship financing compared to the respondents aged 45 and above. besides, the age level was statistically significant with hardship financing. the or [exp (β)=2.348] indicated that the respondents of the age level lowest up to 30 years were 2.348 times more likely to experience hardship financing compared to the reference category (the respondents of the age 45 and above). added to this, the or [exp (β)=2.037] indicated that the respondents in the age level between 31-45 years were 2.037 times more likely to experience hardship financing than the respondents aged 45 and above. hence, pa ge 28 8 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 280-290, 2025 20 km. as the coefficients were negative, it expressed that the respondents who lived closer to the hospital (less than 20 km) were less likely to incur hardship financing compared to those who lived across away (above 20 km). the or [exp (β)=0.286] indicated that the respondents who lived within the distances of the hospital at the lowest up to 3 km, were 71.4% less likely to incur hardship financing than the respondents who lived within the distances of above 20 km. added to this, the or [exp (β)=0.286] indicated that the respondents who lived within the distances of the hospital between 4-20 km were (or 68.3%) less likely to report hardship financing than the respondents who lived within distances of above 20 km, holding all other variables constant. however, the distance was statistically significant with hardship financing. healthcare expenditures with hardship financing annual outpatient expenditures the positive coefficients (β=1.851, when the respondents’ annual outpatient expenditures were up to 1000 bdt and β=.846, when the respondents’ annual outpatient expenditures were between the 1001-5000 bdt) represented the change in the log-odds of incurring hardship financing compared to the annual outpatient expenditures above 5000 bdt among respondents. the or [exp (β)=6.366] indicated that the respondents with annual outpatient expenditures up to 1000 bdt were 6.366 times more likely to incur hardship financing than those with annual outpatient expenditures of above 5000 bdt. the or [exp (β)=2.330] indicated that the respondents with annual outpatient expenditures between 1001-5000 bdt were 2.330 times more likely to report incurring hardship financing than those with outpatient expenditures above 5000 bdt annually, holding all other variables constant. thus, a strong and statistically significant relationship existed between annual outpatient expenditures and hardship financing. nevertheless, the analysis confirmed that annual outpatient expenditures were a strong predictor of incurring hardship financing by the recorded value of the odds ratio. morbidity parameters with hardship financing chronic illness the negative coefficient (β=-0.828) represented the change in the log-odds (logit) of incurring hardship financing among respondents who have suffered from chronic illness compared to those having no chronic illness. however, it expressed that having a chronic illness among respondents reduced the likelihood of incurring hardship financing compared to the reference category (the respondents having no chronic illness). the or [exp (β) =.437] indicated that the respondents having chronic illness had 56.3% lower odds (1 0.437 = 0.563 or 56.3% decrease) of incurring hardship financing compared to the reference category (the respondents who have no chronic illness). however, it expressed that the respondents with chronic illness were less likely to require hardship financing compared to the reference category. nevertheless, the chronic illness was statistically significant with hardship financing. discussion the younger respondents may face more financial instability, which leads to seeking hardship financing. on the other hand, the older respondents may be more financially established, which reduces their need for hardship financing. the respondents with primary education have limited opportunities for a stable job. this allowed them to face financial instability, and increased the likelihood of their incurring hardship in financing them. the respondents with secondary/higher secondary education have better job opportunities with better stable income. this allowed them to plan and manage healthcare financing in a better way, which reduced incurring hardship of financing. the respondents with an education level of graduation/ master’s degree may have higher living standards. it enhanced their living expenditures even in healthcare, leading to financial stress. moreover, the graduates don’t always get their job they expect. however, a mismatch between education level and the demands of the job market exists. thus, on one side, the underemployment situation among graduates and on the other side, increased expenditures even in healthcare led to a financially unstable situation. the individuals with large family sizes may face higher financial pressure due to more dependents. hence, the situation led them to rely more on hardship financing. in contrast, smaller families may have fewer financial obligations or be better able to manage their finances. the respondents who lived closer to the hospital were financially more relieved by spending less money on seeking healthcare than those who lived farther distances from the hospital. thus, they were facing less financial hardship. on the other hand, the respondents who were living far from the hospital were delaying in seeking treatment, which led to more suffering from illnesses and facing financial hardship. the respondents with lower outpatient expenditures were more likely to incur hardship financing than the respondents with high outpatient expenditures. although the result may seem quaint at initially, it reflected immeasurable socioeconomic dynamics and healthcare access in bangladesh. households incurring lower outpatient expenditures often belong to poorer socioeconomic conditions. thus, the lower outpatient expenditures don’t necessarily indicate lesser healthcare needs but rather financial constraints which limits their ability to seek or afford care. consequently, even minimal outpatient expenditures can strain their limited resources, leading to hardship financing mechanisms such as borrowing or selling assets. on the contrary, high outpatient expenditures may reflect greater healthcare needs and financial ability, which allowing them to access in healthcare services without financial hardship. moreover, pa ge 28 9 https://journals.e-palli.com/home/index.php/ajebi am. j. econ. bus. innov. 4(2) 280-290, 2025 a time gap between the inflow of income and outflow of health expenditures can lead to hardship financing (binnendijk, 2014). added to this, the incalculable timing of hospitalization and the urgent need for large amounts of funds increase the risk of hardship financing. having a chronic illness, the respondents were facing less hardship financing compared to those who had no chronic illness, which was an exception. many indirect costs could be generated, such as loss of income of the chronically ill patient, and transportation costs, which could independently lead to the risk of hardship financing. however, the study explored that the respondents with chronic illnesses might plan better for healthcare expenditures compared to those with sudden illnesses (without chronic illnesses) and those incurring no hardship financing. conclusion improvement in healthcare accessibility can be ensured by financial assistance. education cannot be a safeguard for financial distress; thus, educational outcomes should be aligned with labor market demand. however, the government should take initiatives to promote a better job market to reduce the unemployment situation. besides, education policies should be developed by emphasizing skills relevant to the present job market to reduce underemployment situations. thus, this will reduce the financial distress in healthcare financing. moreover, the policymakers may extend financial support to people suffering from non-chronic diseases for those facing financial hardship. those initiatives would enhance financial risk protection and would mitigate vulnerability due to the devastating economic effects of health shocks. the frequency of outpatient healthcare utilization is substantially higher than that of inpatient healthcare utilization, which is a crucial consideration. hence, health reforms are needed to tackle a less stable (declining) financial situation due to high outpatient expenditure, which is a significant predictor of financial hardship. thus, subsidized healthcare services or health insurance schemes can be introduced to reduce the economic burden among respondents. 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